First off, you gave us a dead link, or it doesn't work for me anyways.
1. Deeply cuts the benefits of middle-class families.The proposal would cut retirement benefits by more than 35% for young people entering the workforce today. Today’s 20-year old workers who retire at age 65 would see their benefits cut by 17% if their wages average $43,000 over their working lives, by 30% if their wages average $69,000 over their working lives, and by 36% if their wages average $107,000 over their working lives, according to the Social Security Chief Actuary.1 The proposed cuts would apply to retirees, disabled workers and their families, children who have lost parents, and widows and widowers.
You're talking about the proposed adjustments to the benefit bend points.
Figure 11: Social Security Bend Points
Bend Point Locations in 2010 dollars
$0 to $9,000 | Current 90% | Proposed 90% | In 2050 $0 to $15,000
$9,000 to $38,000 | Current 32% | Proposed 30% | In 2050 $15,000 to $63,000
$38,000 to $64,000 | Current 32% | Proposed 10% | In 2050 $63,000 to $102,000
$64,000 to $107,000 | Current 15% | Proposed 5% | In 2050 $102,000 to $173,000
>$107,000 | Current n/a | Proposed 5% | In 2050 $173,000 to tax max
So first off, today's 20 year old worker can't retire with full benefits at 65 today anyways, since retirement age will increase to 67 automatically in 2027 (when they turn 37). Second off, they already did the math, it's on page 56 of the new report. Based off the quintile system, bottom would see an increase of only 3.8% while 2nd would see an increase of 0.0%. All others lose. Top lose the most at -18.7%. I'll come back to this at the end of the piece.
2. Closes Social Security’s long-range funding gap primarily by cutting already low benefits, rather than by raising taxes on those who can most afford to pay. Ninety-two percent of Social Security’s projected funding gap is closed by cutting promised benefits, according to the proposal. The benefit formula change eliminates 45% of the projected shortfall, raising the retirement age eliminates 21%, and reducing the COLA eliminates 26%.2 Social Security's benefits are already inadequate – just $13,000 a year on average3 – and should not be cut further. Instead, Social Security’s long-range funding gap could be closed, as most Americans want, by requiring those employees (and their employers) who make more than $107,000 a year to pay Social Security taxes on all their wages, as the rest of us do who earn less.4
They do advise raising the cap, but not enough IMO.
"RECOMMENDATION 5.6: GRADUALLY INCREASE THE TAXABLE MAXIMUM TO COVER 90 PERCENT OF WAGES BY 2050.
As recently as the early 1980s, the Social Security payroll tax covered 90 percent of wages (in other words, 9 of every 10 dollars in wages were subject to the payroll tax). Since then, however, the taxable maximum wage cap (currently $106,800) has not grown as fast as wages above the cap; as a result, less than 86 percent of wages were subject to the payroll tax in 2009, and less than 83 percent will be subject to the tax by 2020. The Commission proposes to gradually increase the taxable maximum so that it covers 90 percent of wages by 2050. This recommendation would result in a taxable maximum of about $190,000 in 2020, versus approximately $168,000 in current law. The proposal will also de-link increases in the taxable maximum from increases in the Cost of Living Adjustment (COLA), allowing the taxable maximum to increase even in zero-COLA years."
3. Raises the retirement age to 69. This is a 13% benefit cut on top of the 13% cut already made when the retirement age was increased from 65 to 67, according to the Social Security Administration.5
They aren't technically raising the age, they're indexing it to life expectancy (based on a law passed during the Reagan admin). Fix the Reagan admin law, and then indexing is a better idea. That said, if life expectancy were to decrease, it would correlate to a decrease in retirement age. Because under the current law, if it was indexed to changes in life expectancy, the retirement age would go to 69 (in 2075). I personally am more in favor of a static line, since after a certain point it isn't really reasonable to ask the elderly to work further.
4. Raises the early retirement age to 64. Most Americans claim Social Security benefits at age 62 even though the benefits are currently reduced by 25%, when they do so.6 Millions take early retirement because they work in physically demanding jobs, have health problems, or can no longer find work. Raising the early retirement age will shut them out of the system when they are most vulnerable, potentially forcing them to seek disability benefits or welfare.
That's just plain wrong, they want to retain the 62 year mark early out.
"RECOMMENDATION 5.5: GIVE RETIREES MORE FLEXIBILITY IN CLAIMING BENEFITS AND CREATE A HARDSHIP EXEMPTION FOR THOSE WHO CANNOT WORK BEYOND 62. Allow Social Security beneficiaries to collect half of their benefits as early as age 62, and the other half at a later age. Also, direct the Social Security Administration to design a hardship exemption for those who cannot work past 62 but who do not qualify for disability benefits."
However it does increase the penalty from 25% to 50%, so that is a problem. Assuming that is the current penalty, I've seen enough incorrect info in this piece to be suspicious. Considering that the exemption is supposed to be designed for those who don't qualify for disability, one would assume they would make it easier to achieve than the current SSDI system. In addition, if there were delays in receiving the exemption, they could still claim and have an income source (unlike SSDI) and then receive the back pay for the missing benefits. For what it's worth, they also mention that SSDI should be reformed to make it easier to achieve benefits, but then go on to say that it's out of the scope of the commission.
5. Discriminates against lower-wage workers. Over the last quarter century, life expectancy of lower-income men increased by one year compared to five years for upper-income men. Lower-income women have experienced declines in longevity.7 Yet, the higher retirement age applies to rich and poor, healthy and sick, alike. In effect, the proposal says to lower wage workers that they must work longer because the rich are living longer!
Except that the poor will also gain a hardship exemption, to retire with full benefits at age 62. This age number is also no indexed to life expectancy. The question becomes how would SSA establish the hardship exemption, which they won't be answering since the bill died in committee. So there really isn't much point to talking about it.
6. Reduces the annual Cost of Living Adjustment (COLA) for Social Security beneficiaries. The “chained CPI” proposal would reduce benefits by 0.3% a year on average.8 This will result in a 3.7% cut in benefits after 10 years in retirement beginning at age 65 and a 6.5% cut after 20 years, according to the Social Security Chief Actuary.9 If anything, the COLA should be increased because it does not adequately take account of skyrocketing medical costs, which hit seniors and people with disabilities hardest.
C-CPI-U (Chained CPI), is a slight of hand to reduce inflationary rates. However CPI-U DOES count medical costs and energy costs. Year long CPI-U for Oct 2010 showed an increase in Energy costs of 5.9 and medical services of 3.6 (gasoline was 9.5 fuel oil 14.5). So yes, they're tracked, and Chained (C-CPI-U)is based off of Urban (CPI-U). What C-CPI-U does is some magical math which is supposed to work out so that if the price of bananas skyrockets while oranges stay flat, the price increase for bananas is weighted less because they assume more people will buy oranges instead. I'm not clear if this applies to energy prices or medical services, I need to do more research.
Source:
http://www.bls.gov/cpi/cpid1010.pdf | pg. 3
However, this isn't a nefarious plot to kill the SS COLA, the reason they want C-CPI-U is because they want to apply it across the board in ALL systems that are currently indexed to Inflation.
7. Hurts current retirees, contrary to promises made by the Co-Chairs. The change in the COLA calculation would begin in 2011 and affect all beneficiaries, not just retirees.
Yeah except for this:
RECOMMENDATION 5.2: REDUCE POVERTY BY PROVIDING AN ENHANCED MINIMUM BENEFIT FOR LOW-WAGE WORKERS. Create a new special minimum benefit that provides full career workers with a benefit no less than 125 percent of the poverty line in 2017 and indexed to wages thereafter.
and this:
RECOMMENDATION 5.3: ENHANCE BENEFITS FOR THE VERY OLD AND THE LONG-TIME DISABLED. Add a new “20-year benefit bump up” to protect those Social Security recipients who have potentially outlived their personal retirement resources.
The one thing the detractors don't want to talk about, and possibly the MOST important part of the bill. The glass floor.
Back to the bend points, the bill died in committee, so you can put those bend points where ever you want to put them. I'd personally make the number 100|75|10|5, and then dump the cap. Who cares, we're just talking about something that is dead in the water, we can do whatever we want with it now. What we shouldn't do is panic over this, and toss the baby out with the bath water. There ARE good things in this proposal, lets actually discuss them when we talk about it. There is more at play here than in previous times as well, since the authors operated under the assumption that the two sides were sane and willing to compromise. 20-30 years ago that might have been true, but today it is not. Would the Republicans have been willing to accept this, back then, maybe, today, no because they act like spoiled little brats who demand everything be done their way or the highway. Governing involves drawing a consensus, something the Republicans are no longer capable of doing, and why this proposal was doomed to death the moment the committee was conceived. Lofty ideals are great, but if they don't get the votes they don't go anywhere.