Mr. Bush's most recent "plan" for Social Security has been portrayed as a cut in benefits for the wealthy that will benefit the poor. While an ingenious sales pitch - in a Machiavellian sort of way - the assertion is false. The plan is really a shifting of income from those making more than $25,000.00 a year to the wealthiest. I'll explain below.
Social Security benefits of those making more than $25,00.00 per year will undeniably be reduced. No one, not even Mr. Bush, disagrees about that. But how does the wealthiest of us benefit given their Social Security benefits are reduced as well? The answer is simple. Their income taxes are minimized and their tax cuts protected. Remember, Social Security currently owns Treasury bonds of $1.5 trillion and that it's expected to increase to over $3.5 trillion by 2018 at which point the bonds will have to be periodically cashed-in to assist in the payment of benefits for the baby boomers. When these bonds are cashed in the Federal Government will have to find the cash to pay them off. Some of the money will be found by simply refinancing the bonds, but some of the money will have to come out of the general revenue funds, which are generated from income taxes. Income taxes, as we all know, are disproportionately paid by the wealthiest of us. So, in order to pay off the bonds either income taxes will have to be increased, tax cuts rolled back, or governmental programs cut. My suspicion is that Mr. Bush fears tax increases or that his vaunted tax cuts will need to be rolled back. In short, cutting Social Security benefits for those making over $25,000.00 reduces the financial stress placed on the general revenue funds when it comes time to pay off the bonds owned by Social Security, which would have to be paid off disproportionately by the wealthiest. The middle class loses Social Security benefits already earmarked for them and the wealthiest gain by reduced income tax liabilities. This isn't about cutting the Social Security benefits of the rich to help the poor, it's about cutting Social Security benefits of those making over $25,000.00 to protect Mr. Bush's tax cuts.