Under the Social Security model the president has sort-of laid out, everyone who makes more than $20,000 a year will face cuts in their benefits. Paul Krugman did an exemplary job yesterday explaining why this is a raw deal for everyone who isn’t rich, but the Center on Budget and Policy Priorities moves the ball even further today.
The CBPP notes that the conventional wisdom, over the last couple of weeks, is that the bottom 30% of the population would be shielded from cuts in Social Security. The middle class would be screwed, the rich would make out like bandits with tax cuts, but at least low-income families would know that their Social Security benefits would be secure. Except, based on a document that the White House gave reporters in a press briefing on May 4, that’s not exactly true and a substantial number of low-income beneficiaries would be subject to cuts.
The affected low-income individuals are members of the following beneficiary categories:
* Elderly widows with low incomes who receive a Social Security benefit based on their deceased husband’s earnings record. If the husband was not in the bottom 30 percent of wage-earners, the widow’s benefits would be reduced. (In total, four million widows aged 65 or older receive survivors benefits; this figure includes widows at all income levels.)
* Divorced elderly spouses with low incomes who receive a Social Security spousal benefit based on their former spouse’s earnings record. (To qualify for these benefits, the spouse must have been married for at least ten years and not be remarried.) If the ex-spouse was not in the bottom 30 percent of wage-earners, the divorced spouse’s benefits would be reduced, even if she herself was in the bottom 30 percent of the earnings distribution.
* Children with low incomes whose parent has died and who receive Social Security survivor benefits. This group includes children under age 18, children under age 19 who are in school full time, and adult children who became disabled before age 22. Here, as well, if the deceased parent was not in the bottom 30 percent of the wage distribution, the survivors benefits would be reduced. (In total, two million children receive survivors benefits.)
I guess this is the way the White House avoids the “class warfare” argument — even low-income beneficiaries face benefit cuts under Bush’s plan. What a relief.