Cutting Benefits For The Wealthy Won't Help

From Dean Baker writing at Firedoglake (emphasis added):

According to stories based on leaks from the [Deficit Reduction] commission, it is considering a plan to raise Social Security benefits for the lowest income beneficiaries. This is a great idea, since many of the elderly live at, or only slightly above, the poverty line. A modest increase in benefits would make a big difference in their standard of living.

However, the geniuses on the commission want to pay for this benefit increase by cutting the benefits of the “affluent” elderly. The problem with this plan is that there are very few genuinely affluent elderly and their benefits are not much higher than the benefits of normal people.

While we can raise lots of money by taxing the richest 1 percent of the population, since they earn such a disproportionate share of the country’s income, we cannot save much money by cutting their benefits. When billionaire investment banker Peter Peterson tells audiences that he doesn’t need his Social Security benefit, he is only putting $40,000 a year at stake. We can zero out the benefit for Peterson and his wealthy friends and not have to change a single number in the Social Security publications since the difference would be within rounding error.

In order to get any substantial sum of money to increase benefits for low-income elderly and to eliminate the long-term projected shortfall, it will be necessary to cut benefits for people who earned $35,000 -$40,000 a year during their working lifetime. This means cutting benefits for people who worked as schoolteachers, construction workers, factory workers and other very middle class or working class jobs.