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Tuesday, May 10, 2005

Fact -- Social Security "Cuts"

Bush Proposes Slowing Growth of Social Security Benefits for Future Retirees

Democrats call it a "cut." Compared to what?

April 29, 2005

Modified: April 29, 2005


President Bush announced April 28 that he is embracing a proposal to address Social Security's financial shortfall by slowing the growth of future benefits for higher-income and middle-income workers, but not for lower-income workers.

Bush said, "I propose that future generations receive benefits equal to or greater than the benefits today's seniors get." Democrats called the proposal a deep benefit cut. But which side is right? Would benefits be equal, or would they be cut?

Both sides have a claim to accuracy, but neither is giving the full story and thus leaving citizens confused. The fact is that the current Social Security benefit formula would cause benefits for future retirees nearly to double in buying power over the next 75 years, even after adjusting for inflation.

What Bush is proposing is a plan that freezes benefits at their current buying power for upper-income workers, while other workers would continue to see benefits rise faster than inflation.

Compared to the buying power of benefits paid to today's retirees, that would not be a "cut" for anybody. Compared to the rising level of benefits provided by the current formula, that would mean a "cut" for upper-income and middle-income workers. And for the bottom 30 percent of earners, those making $25,000 a year, there would be no "cut" at all.

Read the full article.