A group of Republican lawmakers is working towards achieving a balanced federal budget by cutting down government expenditures, which includes programs like Social Security. Here’s why it matters: If their plan becomes law, some elderly citizens could face significant reductions in the benefits they’ve received throughout their lives.
According to a report from Bloomberg, the initiative was disclosed on June 14 by conservative members of the U.S. House. Among its primary components is the intention to increase the full retirement age (FRA) at which senior citizens can receive their complete benefits. The Republican Study Committee (RSC), comprising 176 House Republicans, endorsed a financial outline that would gradually raise the FRA to 69 years for individuals turning 62 in 2033. The existing FRA stands at 66 or 67, depending on one’s birth year, with an FRA of 67 for all Americans born in 1960 or later.
According to Bloomberg, people who plan to retire early will receive lower lifetime payments if the retirement age is increased. Notably, those who claim benefits at 62, the earliest eligibility age, might face substantial reductions in their payouts.
Legislators from both ends of the political spectrum have been striving to devise a solution for Social Security before the depletion of the program’s Old Age and Survivors Insurance (OASI) Trust Fund, an event projected to occur within the next decade or so. Upon depletion, Social Security would rely solely on payroll taxes for funding, which currently only covers about 77% of existing benefits.
While many Democrats advocate for strengthening Social Security through higher payroll taxes or scaling back benefits for affluent Americans, Republicans have predominantly concentrated on streamlining or privatizing the program. During an interview with Fox News, House Speaker Kevin McCarthy (R-Calif.) revealed that the debt limit bill for this month is just the beginning of a bigger plan by the Republicans, which includes additional reductions.
McCarthy said that this is not the end, and there are still challenges to overcome. To identify the cutbacks, 11% of the budget needs to be closely examined along with the entire budget. The major part of the budget is mandatory spending, including Medicare, Social Security, and interest on the debt.
Republicans assert that failing to modify Social Security could result in a 23% reduction in benefits once the trust fund is depleted. Raising the retirement age is being proposed to mitigate the immediate impact. The RSC claims that their proposition, involving approximately $16 trillion in spending cuts and $5 trillion in tax reductions, would bring equilibrium to the federal budget in seven years.
According to U.S. Representative Ben Cline (R-Va.), who chairs the RSC’s Budget and Spending Task Force, the RSC budget proposes reasonable measures to prevent a looming debt crisis, manage inflation, encourage economic development, protect national security, and eliminate funding for President Joe Biden’s priorities.
The Democrats showed opposition to the proposal and immediately pushed back. U.S. Representative Brendan Boyle (D-Pa.), who leads the Democratic side of the Budget Committee, stated that they would make sure every American family is aware of the House Republicans’ plan. He added that it would force Americans to work longer hours for less pay, face higher family expenses, weaken the nation, and shrink the economy. He also pointed out that billions of dollars would be wasted on special interests and the ultra-wealthy.
Simultaneously, White House Press Secretary Karine Jean-Pierre issued a statement asserting that the RSC budget “amounts to a severe assault on Medicare, Social Security, and the public’s access to healthcare coverage and prescription medications.”
While the proposal might secure passage in the Republican-led House, its chances of becoming law are limited—particularly while President Biden remains in office. Even if the Democrat-controlled Senate somehow endorses the bill, a presidential veto by Biden would be highly likely.