House Republican leader Kevin McCarthy promises if he becomes speaker to delay a vote to increase the debt ceiling until Democrats and President Biden agree to cut Social Security. Why do Republicans want to cut Social Security?
Social Security has operated under a bipartisan agreement signed in 1983 by President Ronald Reagan. The legislation gradually increased the retirement age and indexed for inflation the Social Security tax (Federal Insurance Contributions Act) wage ceiling. It also built up a huge surplus.
But in 1984 Congress voted that the FICA tax surplus be invested in special U.S. Treasury bonds that may only be redeemed by the U.S. government. Congress used up that surplus for other government purposes, including several wars and tax cuts, turning that surplus into a debt owed by the government to the Social Security trust fund.
In 2010 Social Security benefits began exceeding FICA taxes. The Social Security Administration filled that gap by using the interest earned on the surplus held in the trust fund. When the interest is used up, the government must redeem those special Treasury bonds. Where does the government get the cash to do that? By raising taxes.
Congress could raise the FICA tax, which would be very unpopular with Americans already struggling financially. Congress could raise the income tax on high earners, but Republicans have already promised to make permanent the Trump tax cuts, which primarily benefit the wealthy. Or Congress could cut Social Security, which is what Kevin McCarthy promises to do.
Paula Singer
Lyman
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