“Let’s worry about Social Security when it’s a problem. Today, it is not a problem,” Reid said to applause.
In an MSNBC interview, he added: “Social Security does not add a single penny, not a dime, a nickel, a dollar to the budget problems we have. Never has and, for the next 30 years, it won’t do that.”
Social Security, until now a huge lender to the government, will begin demanding repaiment to its trust fund to cover the shortfall. If fully repaid, the trust fund can fully finance benefits until 2036, when people currently about 40 years old will begin to retire. Once the trust fund runs out, monthly benefits will decrease by about a quarter.
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Such statements have not been true since at least 2009, when the cost of monthly checks regularly began to exceed payroll tax collections. A spokesman said Reid stands by his comments and his view that Social Security is entirely self-financed. But Reid’s position has frustrated some Democrats who argue that fixing Social Security — the government’s single-largest program — would go a long way toward restoring confidence among future retirees and the nation’s investors.
“It’s the one thing I’ve had the most difficult time grasping,” said Erskine Bowles, the former Clinton White House chief of staff who co-chaired Obama’s fiscal panel with former GOP senator Alan Simpson.
The Bowles-Simpson plan would have righted the system’s finances with a combination of payroll tax increases and reductions in scheduled benefits, mainly years down the road. It would have hit upper-income workers while raising benefits for the most needy, those with average lifetime earnings of less than $11,000 a year. “By making these relatively small changes, you make it solvent and you make it be there for people who depend on it,” Bowles said. “I thought that’s what we as Democrats were supposed to be for.”
Just as the GOP has rejected any form of tax increase to contain the debt, however, Reid and House Minority Leader Nancy Pelosi (D-Calif.) have ruled out any reduction in government retirement benefits. Last week, Reid softened his stand, backing a Democratic proposal to the supercommittee that included the change in the Social Security inflation index. In return, however, Democrats demanded $1.3 trillion in new tax revenue — which Republicans instantly rejected, leaving the ideological divide as wide as ever.
Even that modest change to Social Security is drawing fire, however, from a powerful network of organizations representing the elderly, unionized workers and traditional liberals. For years, these groups have cast any proposal to trim the growth in retirement benefits as unnecessary — and as a mean-spirited attack on the elderly.
In recent weeks, AARP, the nation’s largest and most influential seniors organization, has been airing television ads in which an older man warns viewers that “some in Washington want to make a deal cutting the Social Security and Medicare benefits we worked for,” instead of cutting “waste and loopholes.” AARP’s legislative director, David Certner, said the ads reflect the popular view that Social Security should not be dragged into a separate debate over the nation’s escalating debt.
“We paid into these programs all our lives,” he said. “This is our money. Congress has no business cutting into this program.”
The public relations campaign has proved effective, particularly in the wake of a recession that devastated private retirement accounts and left even younger people anxious about the future. Eighty-two percent of Americans worry that Social Security will not deliver promised benefits, according to a recent poll for Americans for a Secure Retirement. Fifty percent oppose cutting the program “no matter what.”
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