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Social Security's defenders wary of deficit reduction commission

By Lori Montgomery
Washington Post Staff Writer
Wednesday, June 9, 2010; A03

One of the oddest Web posts making the rounds in Washington is a series of blurry videos from Capitol Hill showing people coming and going from a closed-door meeting of President Obama's new deficit commission.

The mundane scenes have a sinister cast for activists who say the commission is at work on a secret plan to gut Social Security. Nancy Altman, whose group, Social Security Works, shot the footage, says the threat to the nation's primary social safety net is greater now than at any time in the program's 75-year history.

"This is going to affect every single American if they reach agreement," she said. "People need to know what's going on."

The heated rhetoric is an ominous sign for Obama's deficit-fighting task force, which is charged with developing a bipartisan plan to stabilize the soaring national debt. Adjusting Social Security benefits is a likely point of consensus, commission members say. Now, some of the same activists who helped derail a 2005 GOP plan to restructure the program are threatening to rally the public against any proposal to cut benefits.

Their campaign to take Social Security off the commission's agenda has so far been limited to op-eds, online postings and thousands of postcards to lawmakers. But AARP, which lobbies on behalf of people over 50, recently fired a warning shot, urging the commission not to "unfairly target hard-earned benefits of millions of Americans." And several groups, including MoveOn.org and the Campaign for America's Future, are threatening to make Social Security an issue in the midterm elections.

"It's likely to be a pretty full court press," said MoveOn campaign director Daniel Mintz, whose group plans to ask candidates to sign a pledge opposing Social Security cuts. "We're going to demand solutions to the deficit that make corporations and the rich pay their fair share of taxes, rather than cutting benefits and squeezing the middle class."

The issue has already surfaced on the campaign trail. In Arkansas, where incumbent Sen. Blanche Lincoln (D) faced a tough primary runoff Tuesday, challenger Bill Halter ran TV ads accusing her of once voting to cut Social Security and Medicare.

"It will hurt Democrats if Democrats are seen as the party cutting Social Security benefits," said Roger Hickey, co-director of the Campaign for America's Future. "We're trying to prevent them from doing bad policy and bad politics."

The No. 1 expense

Budget experts say it would be difficult to significantly reduce future deficits without addressing the rising cost of Social Security. Benefit checks already make up the government's single largest annual expenditure -- just ahead of the Pentagon -- and the program's cost is forecast to grow rapidly as members of the enormous baby boom generation embark on a lengthy retirement expected to extend, on average, into their 80s.

"We have scheduled our system to have roughly one-third of the adult population on Social Security for one-third of their adult lives," said Eugene Steuerle, a senior fellow at the Urban Institute. "Is your 20th year in retirement a higher priority than educating your kids in the schools? Right now, our budget says yes."

Over the past month, deficit commission members have begun meeting in small working groups, including one subpanel, chaired by former Clinton budget director Alice Rivlin and Sen. Judd Gregg (R-N.H.), dedicated to Social Security. Other panels are focusing on other entitlement programs, such as Medicare, an even bigger budget problem, as well as discretionary spending and the tax system. If 14 of the commission's 18 members reach agreement on a deficit-reduction plan, congressional leaders have pledged to put it to a vote after the fall elections.

Commission members have declined to say what options they are considering, repeating the Obama mantra that everything is "on the table." But options for Social Security are no secret: In addition to boosting taxes, the lengthy list includes raising the retirement age for people now in middle age and trimming benefits for the wealthy.

House Majority Leader Steny H. Hoyer (D-Md.), a vocal supporter of the commission's goals, said he is advising rank-and-file Democrats not to dismiss any of those ideas as the campaign season gets into full swing.

"My advice to members is: Do not sign yourself into a corner," said Hoyer, who has been candid about the ugly choices involved in rebalancing the budget. "That's not because anybody intends to cut the benefits of any Social Security recipient today or tomorrow. But given the magnitude of the problems that confront us, do not limit your options."

Fearful of change

If pressed, some Democrats may find it hard to take Hoyer's advice. More than 50 million Americans received Social Security checks in April, including 37 million people over 65. For most retirees, the average monthly benefit of $1,168.60 is their main source of income, and proposals to change the program inspire fear.

Five years ago, when then-President George W. Bush proposed carving out a portion of Social Security taxes to create private retirement accounts, a coalition of progressive groups and advocates for the elderly organized to smother the plan. Even in a Republican Congress, the idea went nowhere. In 2006, Democrats campaigned against the plan and regained control of Congress.

Now some of the same groups are watching Obama's commission closely. They note that many of its members have publicly advocated cutting Social Security, including co-chairman Alan Simpson, a former GOP senator from Wyoming, who has chastised "greedy geezers" for fighting to protect their retirement checks while their grandchildren face a towering debt.

"Social Security is not the problem. It's simply becoming the target," said Barbara Kennelly, president of the National Committee to Preserve Social Security and Medicare.

Social Security has been self-supporting since 1935, with taxes paid by current workers financing benefits for current retirees. But people today retire earlier, live longer and have fewer children. As result, the number of workers for each retiree is expected to fall from about three to one now to two to one by 2050. Sometime in the next few years, taxes will no longer cover benefits.

The program's defenders argue that there is no crisis: If Treasury would repay billions of dollars in surplus Social Security taxes borrowed over the years, the program could pay full benefits through 2037. But many budget experts question whether supporting the existing benefit structure should be a cash-strapped nation's first priority.

"There is a level of intellectual consensus among everyone except the groups that are upset right now that things need to be re-examined," said David John, a retirement expert at the conservative Heritage Foundation.

At Social Security Works, Altman, a former tax lawyer who taught at Harvard University and assisted former Fed chairman Alan Greenspan on a 1982 commission credited with temporarily restoring Social Security's solvency, argues that there are better options than cutting benefits. Raising the income cap for Social Security taxes or imposing a tax on Wall Street transactions, she said, would raise enough to keep the program solvent for years.

"This is not a crackpot side of the debate," Altman said, citing polls showing broad public opposition to benefits cuts, even among conservatives. "My goal is not to further undercut people's confidence in Washington. But I don't feel like I can just be quiet when they are about to do what I feel is a real disservice to the American people."

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