In Congress, stark differences on urgency of Social Security reform

WASHINGTON–Social Security reform is suddenly all the rage on Capitol Hill. But lawmakers couldn’t be discussing the politically-volatile issue in more starkly different terms.

“The Social Security system is scheduled to run out of money, and that would lead to enormous cuts” in benefits, warned Sen. Joseph Lieberman, a Connecticut independent. “So the sooner we deal with the problem, the less harsh the cuts will be.”

Lieberman said he plans to join with Sen. John McCain, R-Ariz., to propose specific changes to the program-possibly a mix of benefit reductions, tax increases, and other steps-to shore up its long-term solvency. The pair plans to discuss the issue soon after this week’s congressional recess.

Sen. Richard Blumenthal, on the other hand, has teamed up with other Senate Democrats on a proposal that would make it harder for Congress to enact any benefit cuts or other significant changes to Social Security.

“It’s solvent for the next 20 years,” Blumenthal said of the safety-net retirement program that now serves 50 million Americans. “It has a surplus now. It will have an even bigger surplus in 2023, of about $4.2 trillion.”

In 2037, the program will be in financial trouble, he acknowledged. But even at that point, Blumenthal noted, the program would have enough money to pay out a significant portion of promised benefits.

Last week, Blumenthal joined Sen. Bernie Sanders, an independent from Vermont, to introduce legislation that would require a two-thirds majority vote for any proposal aimed at cutting Social Security benefits, raising the retirement age, or channeling a portion of Social Security revenues to private investment accounts.

“Now is not the time, in the midst of this deficit debate, to be talking about reducing or cutting Social Security… or in any way diminishing its current guarantees,” Blumenthal said.

He and other Democrats said that any changes to address Social Security’s long-term solvency need to happen on a separate track from the current wrangling over how to rein in Washington’s deficit spending, projected this year to be nearly $1.5 trillion, and to trim the nation’s $14 trillion debt.

“There’s a trend that’s developing here, and it’s a disturbing one,” said Rep. John Larson, D-1st District. He compared the debate in Washington over the deficit and Social Security reform to the one that played out in Wisconsin over cutting state spending and curtailing unions’ bargaining rights.

“Just like in Wisconsin, the real agenda wasn’t the givebacks,” Larson told a group of municipal leaders from Connecticut last week. “The real agenda was to eliminate collective bargaining. And just like in Washington, the real agenda isn’t the deficit. The real agenda here is to privatize Social Security.”

Rep. Rosa DeLauro echoed those concerns, saying that Republicans were forcing a debate over entitlement reform as a way to raid those programs for deficit reduction.

“These are folks wanting to use Social Security as a piggy bank to deal with deficit reduction,” she said. But, she said, Social Security is not contributing to the current deficit problem and it doesn’t face an imminent financial crisis.

DeLauro said Congress will eventually have to tinker with Social Security to ensure the program’s long-term solvency. But she said it can be dealt with fairly easily.

Right now, the Social Security payroll tax applies only to the first $106,800 in wages. “You can lift the cap immediately” to get new revenue into the program, DeLauro said. “But it’s not part of a slush fund to deal with deficit reduction… That is a separate issue.”

But Lieberman and others, including Rep. Jim Himes, D-4th District, said entitlement programs can’t be separated from the debate over the nation’s long-term fiscal health.

They note that mandatory spending programs like Medicare, Medicaid, and Social Security account for more than 40 percent of the federal budget. If those are excluded from the current political conversation about reining in federal spending, then any cuts will disproportionately target domestic social programs.

“The longer we wait to fix the budget, the more ground we lose on our key priorities like education and transportation infrastructure and the more interest we pay to finance the debt,” Himes said in a statement last week. Taking entitlements off the table, along with defense spending and interest on the national debt, leaves only about 18 percent of the federal budget available for cuts, he said.

Himes has said he could support several of the recommendations of President Barack Obama’s fiscal commission to address Social Security.

Those include raising the cap on payroll taxes, as DeLauro advocated, as well as more controversial steps such as hiking the retirement age and slowing the growth of future benefit checks.

In its December report, the commission noted that when Franklin Roosevelt signed Social Security into law, the average American’s life expectancy was 64, and the Social Security retirement age was 65. Today, life expectancy is 78 and Americans spend 20 years on average in retirement.

Furthermore, in 1950, there were 16 workers paying into the system for every 1 retiree getting benefits. Today, that ratio is 3 to 1. And it will only shrink as the Baby Boomer generation swells Social Security’s rolls.

“Unless we act, these immense demographic changes will bring the Social Security program to its knees,” the commission stated. “The do-nothing plan would lead to an immediate 22 percent across-the-board benefit cut for all current and future beneficiaries in 2037.”

Lieberman said the only politically “realistic” way to address the issue is through a combination of steps that will be anathema to both Democrats and Republicans. He said he wouldn’t support cuts to current retirees, but for “new people coming on” in the future, along with tax increases for higher-income brackets. “And probably an increase in the retirement age, slowly with some consideration for people in hard labor jobs so they can retire earlier,” Lieberman said.

He said he and McCain were working on a more specific proposal. He shrugged off the criticism that the effort to put Social Security into the larger deficit mix could subject it to a funding raid.

“You’ve got to deal with these programs. Social Security is going to go bankrupt. The benefits won’t be there,” he said. “I’m trying to save Social Security and reduce the deficit. That’s what we’re working on.”

Whether the effort will gain any traction remains far from clear. As New York University professor and former Brookings fellow Paul Light wrote, “1983 marks the last time Congress cut Social Security benefits, raised taxes and lived to tell about it.


In a 2005 commentary, Light noted that lawmakers passed those changes under incredible pressure, including a possible disruption in the processing of benefit checks because of revenue shortfalls.

“There was a real and pressing deadline for action,” he said. This time around, many might feel like they have plenty of time to solve the problem.

“This country faces a lot of very serious crises, which should be dealt with yesterday,” said Sanders, the Vermont lawmaker pushing the bill to require a supermajority in the House and Senate for any changes to the retirement program. “Social Security happens not to be one of them. If you have a program that has a $2.6 trillion surplus that can pay out every benefit owed to every eligible American for 26 years, that is a not a crisis situation.”