New GOP Congress Fires Shot At Social Security On Day One [picture)

With a little-noticed proposal, Republicans took aim at Social Security on the very first day of the 114th Congress.

The incoming GOP majority approved late Tuesday a new rule that experts say could provoke an unprecedented crisis that conservatives could use as leverage in upcoming debates over entitlement reform.

The largely overlooked change puts a new restriction on the routine transfer of tax revenues between the traditional Social Security retirement trust fund and the Social Security disability program. The transfers, known as reallocation, had historically been routine; the liberal Center for Budget and Policy Priorities said Tuesday that they had been made 11 times. The CBPP added that the disability insurance program “isn’t broken,” but the program has been strained by demographic trends that the reallocations are intended to address.

The House GOP’s rule change would still allow for a reallocation from the retirement fund to shore up the disability fund — but only if an accompanying proposal “improves the overall financial health of the combined Social Security Trust Funds,” per the rule, expected to be passed on Tuesday. While that language is vague, experts say it would likely mean any reallocation would have to be balanced by new revenues or benefit cuts.

House Democrats are sounding the alarm. In a memo circulated to their allies Tuesday, Democratic staffers said that that would mean “either new revenues or benefit cuts for current or future beneficiaries.” New revenues are highly unlikely to be approved by the deeply tax-averse Republican-led Congress, leaving benefit cuts as the obvious alternative.

The Social Security and Medicare Boards of Trustees estimated last year that the disability insurance program would run short of money to pay all benefits some time in late 2016. Without a new reallocation, disability insurance beneficiaries could face up to 20 percent cuts in their Social Security payments in late 2016 — a chit that would be of use to Republicans pushing for conservative entitlement reforms.

“The rule change would prohibit a simple reallocation! It will require more significant and complex changes to Social Security,” Social Security Works, an advocacy group, said in a statement Tuesday. “In other words, the Republican rule will allow Social Security to be held hostage.”

Policy wonks who follow Social Security saw the GOP rule change as a play for leverage.  morehere