How the Debt Ceiling Deal Affects Social Security

The debt-ceiling deal, formally called the Budget Control Act of 2011, has three components:

• $917 billion in discretionary spending cuts over the next 10 years. 
• Creation of a powerful joint committee of Congress, a so-called “Super Committee.” Its task is to recommend another $1.5 trillion in deficit reduction for an up-or-down vote in Congress by December 23, 2011. No changes to the committee’s plan are allowed.  
• A trigger mechanism to enact across-the-board cuts if the Super Committee fails, with cuts split equally between defense and non-defense programs; Social Security is exempted.

The following describes how Social Security could be affected and presents a chart showing how the Super Committee will operate:

• $917 billion in discretionary spending cuts over 10 years; Social Security, Medicare and Medicaid are not affected. Non-defense programs would be cut by more than $550 billion and defense programs would be cut by about $350 billion.
   
• Establishment of a bipartisan Super Committee charged with identifying at least another $1.5 trillion in deficit reduction that could include Social Security cuts, as well as Medicare and Medicaid cuts. This Super Committee of 12 lawmakers, appointed equally by the Democratic and Republican leaders of the U.S. House and U.S. Senate, will report to Congress by November 23, 2011. If a majority of its members reach agreement on all or a portion of a $1.5 trillion deficit-reduction plan, it will get an up-or-down majority vote by December 23, 2011. There can be no amendments or Senate filibuster. The committee can consider cuts to any program and also whether to raise revenues. 
  
  Republicans say they only will appoint Super Committee members who oppose new revenues. We need to be sure that Democrats appoint members opposed to cutting Social Security and other vital programs. Already, during debt negotiations it was proposed that Social Security’s cost-of-living adjustment (COLA) be changed by adopting the chained CPI (Consumer Price Index). That would cut Social Security benefits by $112 billion over 10 years.  
   
• $1.2 trillion in automatic cuts would be triggered if failure of the Super Committee to put forward a plan or for Congress to approve it; Social Security and Medicaid would be exempted. Automatic cuts would be divided equally between defense and non-defense programs. Social Security, Medicaid, unemployment insurance, and other programs for low-income families would be exempted from these cuts. Automatic cuts to non-defense programs would include a cut of up to 2 percent of the amount that would be paid to Medicare providers and insurance plans each year between 2013 and 2021. There would be no cuts to benefits.

This Fact Sheet as a PDF