I heard him on Hannity.
The explanation is that it finally does away with the “Base Line Budget” that assumes 7% increase per year.
So by eliminating the built in 7%, and then subtracting 1%, it adds up to big cuts.
If we start with $100 and use the two accounting methods we get:
Year 1 $99.00 vs. $107.00
Year 2 $98.01 vs. $114.49
Year 5 $95.10 vs. $140.26
Year 10 $90.44 vs. $196.72
So the “Penny Bill” would cut the budget by 54% over 10 years vs. the current base line budgeting.
“The explanation is that it finally does away with the “Base Line Budget” that assumes 7% increase per year.”
Yea, that’s what I was essentially saying. But the 7% is needed to include COLAs and rising medical costs. If you get rid of it, the people receiving the benefits will feel a lot more pain than the simple 1% being advertised...which is why it can’t fly (as much as I’d love it to).
“The explanation is that it finally does away with the “Base Line Budget” that assumes 7% increase per year.”
...so looking at it just from the viewpoint of the Social Security Administrator. He’s asked, how much do you need next year - and he sees that enrollment is going to go up by 2%, thanks to the boomers, and that inflation is predicted to be 4%. So he says that he needs 6% more. Instead he gets 1% less, for a total shortage of 7%.
At that point what choices does he have? Assuming that he’s only permitted to cut benefits, rather than change policy - he will have to pay existing and new recipients 93 cents on the dollar, from what they would have otherwise received (administrative costs for SS is practically nothing...cutting costs that will make a difference there). The next year, exactly the same thing...93% of the buying power from the prior year, or around 86% of today’s buying power.
That goes on for 7 or 8 years, and, as you alluded to, the buying power for those recipients will be cut in half.
While that’s fine with me and WILL happen anyway (even if it takes hyperinflation to get there) since we simply don’t have to means to keep on this trajectory...there would be a REVOLUTION of the elderly if this plan got serious traction now - most old people would prefer hyperinflation (as they really don’t believe, or cannot bring themselves to believe, that their generations have bankrupted the country).