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Responding to President's Social Security Benefit Cuts Proposal

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Peter D. Hart Research Associates, Inc.
1724 Connecticut Avenue, N.W.
Washington, D.C. 20009
202-232-8134 FAX


TO: Americans United to Protect Social Security
FROM: Guy Molyneux and Geoffrey Garin, Hart Research
DATE: May 3, 2005
RE: Responding to Bush’s Social Security Benefit Cut Proposal


President Bush has now added a significant component to his Social Security privatization proposal: reductions in benefits for the 70% of future retirees who earn over $20,000 per year, a proposal called “progressive price indexing” by its author. Privatization supporters are treating this like a major new development, which they hope will provide new momentum to the president’s badly faltering campaign to privatize Social Security. In fact, opponents of privatization should see this as an important new opportunity to explain the dangers of the Bush plan to the American people.

Opponents of privatization need to understand, and articulate, that this “new idea” represents only a minor adjustment to the benefit cuts we always expected from the president. These are basically the same broad-based benefit cuts we have always claimed would be part of the Bush plan. After many denials from privatization supporters – accepted by some news organizations – we now have the proof, from the president’s own mouth. This is a vindication of our criticism of the President’s privatization plan, and we should act that way.

Indeed, a new CNN/USA Today/Gallup poll reveals that the public opposes the president’s benefit cut proposal by 54% to 38%. This is not surprising – in January we found that 56% opposed cutting benefits for people with retirement incomes of over $50,000, a far smaller and more affluent group than those targeted for cuts under the president’s plan. The public simply does not want to see large cuts in Social Security benefits – that is why so many congressional Republicans are keeping their distance from the new Bush proposal.


Key Message Points. While we have not had the opportunity to conduct new opinion research since the president’s press conference, past polls and focus groups provide enough guidance to shape our message.

  1. The president has proposed “benefit cuts,” not “progressive price indexing.” We should not embrace the harmless-sounding label used by Bush and his supporters, but call this what it is: a proposal to make large cuts in Social Security benefits for most future retirees. Call it a “benefit cut” or “middle-class benefit cut” proposal.

  2. This is about large benefit cuts for most Americans, not just the rich. The president says that he will reduce benefits for the “well off,” but in fact everyone making over $20,000 will get their benefits cut. These cuts are also very substantial: benefits for an average wage earner will be cut by 40% (Center for Economic and Policy Research, worker retiring in 2080). Always emphasize that retirees receive these benefit cuts even if they do not choose a private investment account. And be aggressive in challenging the suggestion that low-income people benefit from this plan: no one gets a benefit increase, including the poor.

  3. The benefit cuts in the Bush plan are larger than the cuts he says will result if no action is taken to change Social Security. The president warned again this week that “failure” to act will result in a 30% reduction in benefits (without mentioning that such cuts wouldn’t happen until at least 2041). However, his plan would cut starting benefits for an average worker by even more, 40%. Some news organizations have mistakenly reported that the average retiree does better under the Bush proposal than if no changes are made (“funded benefits”). However, the opposite is true. Such comparisons fail to account for the fact that the Bush plan doesn’t actually achieve solvency. An “apples-to-apples” comparison shows that most future retirees would do better under the current system.

  4. Bush has now revealed the real agenda: This is an effort to cut Social Security benefits, so that he doesn’t have to repay the money borrowed from Social Security. This is not about Social Security’s “solvency,” but protecting tax breaks and other priorities. At his press conference, President Bush repeated his extraordinary claim that there is no Social Security trust fund available to fund benefits between 2020 and 2051. Clearly, the president does not think America should honor its legal and moral obligation to repay money borrowed from Social Security, preferring to use those funds for tax cuts for the wealthy and his other priorities. But why should the United States pay back foreign governments like China and Saudi Arabia, yet refuse to pay back our own Social Security system? Moreover, the president has not made a single proposal that strengthens the financing of Social Security. If the president were concerned about Social Security’s ability to pay future benefits, wouldn’t he propose ways to help it pay those benefits? If he were concerned about inaction leading to cuts in benefits, would he propose to cut benefits even more?

  5. President Bush has not produced a plan that strengthens Social Security. While it is being reported that Bush has now delivered a complete Social Security plan, the fact is that his plan only addresses about half of the funding shortfall over the next 75 years (57%, Center on Budget and Policy Priorities). More importantly, the public is not indifferent regarding whether “solvency” is achieved through increasing revenue or reducing benefits. For the American people – and for us – fixing the Social Security “problem” means finding a way to fund benefits as fully as possible. Benefit cuts are the problem, not the solution. Benefit cuts should be the last resort in fixing Social Security, while the Bush plan maks them the first – indeed, the only – resort. A plan that relies only on cutting benefits has not “fixed” Social Security.


Secondary message points:

  • Continue to use "privatization," as well as "benefit cuts," to describe the Bush plan. We know that voters have come to call the Bush approach "privatization," a label that undercuts support for the plan. We should focus more attention on "benefit cuts" over the next few weeks, but also continue to remind voters that the plan would "privatize" Social Security (or, is a "risky privatization scheme").

  • Do not get entangled in debating "progressivity" or "means-testing" – keep the focus on Bush’s proposal for broad and deep benefit cuts. The Bush benefit cut proposal has put some privatization opponents on the defensive, because we do, after all, believe in "progressivity." However, we must not allow Bush to create a debate over whose benefits should be cut, which takes benefit cuts as a given. For us the question is: Should large cuts in Social Security benefits be made? (And remember, low-income people do not get a benefit increase; they are only shielded from the benefit cuts everyone else receives.)

  • Don’t focus your criticism on the idea that the Bush proposal turns Social Security into a "welfare program" or "poverty program." Some argue that "indexing" benefits as Bush proposes will make Social Security politically unsustainable in the future, because higher-wage voters pay high taxes in exchange for very meager benefits. While this is true, we recommend using this argument only if talking to very sophisticated "opinion leader" audiences. It's a very complex and speculative argument, requiring an analysis of the foundations for Social Security’s political support that most people have never contemplated. This debate also allows privatizers to claim the moral high ground by advocating a "progressive benefit structure," and puts us in the awkward position of seeming to denigrate means-tested assistance programs.

  • Remember that people who choose a private investment account still face the "privatization tax," an additional cut which – combined with indexing – will nearly wipe out guaranteed benefits for many Americans. Some younger people may not worry a lot about these cuts in guaranteed benefits, because they are not sure the current system can provide promised benefits. Our best chance to reach these people is telling them about the privatization tax ("offset") that takes back 70% or more of their private account through additional cuts in their guaranteed benefit.

  • The president has made a bad plan even worse. We should take advantage of the fact that the president is portraying this as an addition to his privatization plan, and point out that a risky and unpopular plan has now been made even worse. At every opportunity, reinforce the growing public perception that "the more you know about the Bush plan, the worse it is."


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