Does the budget deal include benefit cuts?

Many of us reacted to the tentative budget deal with surprised relief. Assuming the agreement holds, the White House was able to lift the debt ceiling and end the sequester without losing limbs in the process, as my colleague Ross Eisenbrey aptly put it. This time the administration resisted the urge to throw red meat to the other side’s lions.

Inevitably, the deal will intensify dissent on the right. But there is also a surprisingly heated debate about the seemingly benign Social Security provisions among advocates, some of whom view any cost savings as benefit cuts and say an off-budget program with a dedicated funding stream should not be discussed in budget negotiations (though they don’t object to including transfers to the disability program in this budget deal). In particular, a vocal minority opposes a provision that would no longer allow people to take advantage of the “file and suspend” strategy, whereby someone eligible for both retirement and spousal benefits delays take-up of the former to receive a larger benefit at age 70, while receiving the latter in the interim (most people without clever financial advisers simply receive the higher of the two benefits whenever they apply).

Eliminating “aggressive Social Security-claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits” was something the president included in his fiscal-year 2015 budget, not something the administration reluctantly agreed to. And most advocates,, to which EPI belongs, think it’s a loophole that needs to be closed, since the purpose of the delayed retirement credit is to equalize lifetime benefits, not to give savvier beneficiaries who can afford to delay take-up a little something extra. The dissidents counter that a benefit cut by any other name is still a benefit cut, and say it’s a strategy that can help divorced women, who can be particularly vulnerable in retirement.

The dissidents make a strong case with feminist appeal. But it’s still double dipping even if a few people who take advantage actually need a larger benefit. In the end, it all seems a distraction from the benefits of the agreement, which include averting large benefit cuts to disabled beneficiaries.