Deficit worries put changes on the table
WASHINGTON – Social Security’s strong political support is slowly growing shakier.
While no major reductions in benefits are likely anytime soon, the changes in Washington’s political landscape worry the system’s longtime backers, who held the first meeting of a new Senate Social Security Caucus on Thursday.
They see Republicans, who now control the House of Representatives, discussing ways to create private accounts with Social Security taxes. Centrist Democrats, while they’re not backing privatization, are discussing ways to save money by making smaller alterations to the system.
They’re in for a fight.
“Social Security has been the most successful social program initiated by the federal government in the history of this country,” said Sen. Bernard Sanders, a Vermont independent who’s the caucus’s leader. “We are getting very tired of hearing Republicans saying Social Security is collapsing.”
It’s not, and estimates are that its trust funds won’t be exhausted until 2037.
The system is subject to more scrutiny than usual, though, as lawmakers from both parties struggle for ways to pare record budget deficits and debt.
“Nothing can be sacrosanct. Nothing can be excluded,” Senate Budget Committee Chairman Kent Conrad, D-N.D., said of his budget-trimming efforts.
Veteran budget analyst Stan Collender said Washington’s evolving mood could be traced to three sources: Everyone is trying to be more cooperative, evidence is growing that Social Security’s financial strength is slowly ebbing, and lawmakers are eager to find ways to cut the deficit.
“Has there been a change? Probably,” Collender said. “In the past, when people talked about Social Security change, the answer was not just ‘No,’ it was ‘Hell, no.’ Now it’s ‘All right, I’m willing to let someone make a suggestion and I’ll listen.’ ”
Fueling the new worry is a report this week from the nonpartisan Congressional Budget Office that suggests Social Security may be more of a drain on scarce resources – or in need of strengthening – than had been thought previously.
The CBO said that if interest were excluded, the system would run a deficit of $45 billion this year and a total of $547 billion from 2012 to 2021.
Outlays for Social Security, the CBO said, will hit $727 billion this year, 4.8 percent of the gross domestic product. In 10 years, as baby boomers retire in big numbers and benefits increase, the CBO estimates those expenses will reach $1.3 trillion, 5.3 percent of the GDP.
In other words, the program could be a drain on an already-strained federal system, so the Capitol buzz is this: Something has to be done. But it’s difficult: About 53 million people got Social Security benefits last year, and the CBO estimates that will grow to 71 million by 2021.
The most die-hard supporters are Congress’ liberals, who see Social Security as a success in helping to pull many elderly people out of poverty.
Even with that track record, many changes are being discussed.
One is raising the retirement age, a suggestion that leaders of both parties floated last year.
Currently the full-benefit retirement age is 66 for those born from 1943 to 1954. It goes up two months for each birth year thereafter (66 years and two months for those born in 1955, 66 and four months for those born in 1956, etc.), until people born in 1960 or later get full benefits at age 67.
The proposal has hit some turbulence. The fiscal effects wouldn’t be felt for a long time, and when they were, the CBO found in a study last year, the savings would be minimal.
And, said Sen. Sherrod Brown, D-Ohio, a higher age is unfair to many workers: “People who dress like this in this town don’t think too much about people who work in a diner and can’t stay on their feet until they’re 70.”
Also being discussed is revising how the cost of living adjustment is calculated. It’s now pegged to changes in the government’s Consumer Price Index. Beneficiaries got no increases in 2010 or 2011.
Changing the cost of living, said Sen. Johnny Isakson, R-Ga., who’s working with Democrats to revamp the way Congress considers the entire budget, is “not a cut in benefit. It’s a change in the process.”
Sanders suggests revising the payroll tax structure. Currently, the tax is assessed only on the first $106,800 of income. On Thursday, Sanders talked about raising that cap. Brown, though, said that with Republicans adamantly opposed to any tax increase, that’s unlikely.
But the politicians clearly are stirring. In his State of the Union address, President Barack Obama urged Congress to “find a bipartisan solution to strengthen Social Security for future generations,” without “putting at risk” current retirees or people with disabilities and “without slashing benefits for future generations.” He also doused Republican hopes for private accounts.
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