Chuck Blahous has a very good article at e21 detailing the winners and losers of the Bowles-Simpson proposals on Social Security.
He lists three winners and three losers. Atop the list of winners are low-income workers, a striking aspect of the proposals. Blahous writes:
Low-income workers and those who advocate for them would achieve a great victory if Simpson-Bowles were enacted. This is far and away the single most striking substantive feature of the proposal. The program’s substantial fiscal shortfall would be closed without a toll on those on the low-income end, either on the benefit or tax side…Whereas today the maximum-wage earner receives more than three times that provided to a “very low” earner, under Simpson-Bowles this ratio would be less than 2:1 by 2050. In sum, benefit growth on the high end would be constrained while on the low end it would be accelerated. In addition, low-income workers would have added security via the reduction of the threat of insolvency-triggered benefit cuts.
This feature of Simpson-Bowles is so pronounced that advocates for the poor should be aggressively vocal in support of the plan. If they choose not to be, they will need to find a rationale based on factors other than the plan’s substantive impact on low-income workers.
Republicans should pounce on this, especially when one considers the second group of winners on Blahous’s list: fiscal conservatives. Blahous writes that with a few changes, the proposal would effectively balance Social Security’s books through spending constraints rather than tax increases. He points out that this is especially the case if we act soon. The longer we wait, the more inevitable tax increases become.
The implications of these two groups of winners are significant:
- Social Security would and should be more generous to those who haven’t earned very much during their lifetimes. It would push the program more into the direction of a safety net for the elderly years, and encourage higher-income earners to be saving.
- Republicans can claim they want to focus increasingly on those in need in federal programs and oppose our growing arsenal of middle class entitlement programs. This should be part of a broader program that includes repealing Obamacare and focusing on creating growth for the middle class instead.
- Urgency has to be the name of the game in entitlement reform. Solvency through cuts is possible, but only if we start the ball rolling now. The GOP needs to capitalize on the public’s sentiments regarding public spending and show – complete with charts, graphs, and videos – how tax increases become more likely the longer we wait.
(The other winner, by the way, is any supporter of bi-partisan reform; and the three losers are tax increasers, advocates of funded savings accounts, and those who would like to scare seniors for political advantage)