Amending Social Security: how to's surface during national debt talks
Obama put Social Security on the table as part of his bid to resolve the national debt crisis. He hasn't specified what the changes might entail, and Democrats in Congress oppose any cut in benefits. But the talks signify that politicians know reforms must come, eventually, to keep Social Security solvent.
Even if Social Security ends up untouched after the current round of wrangling over federal finances, the bipartisan negotiations have put Americans on notice: Even the most sacrosanct of federal programs is coming up for review and, before long, changes.Skip to next paragraph
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In his recent bid for a "grand bargain" to control future federal budget deficits and the national debt, President Obama put Social Security on the table, along with just about everything else.
With many of Mr. Obama's fellow Democrats set firmly against any reduction in entitlement benefits, and most Republicans stridently opposed to the tax increases that the president sees as a vital part of such a bargain, the idea to "go big" has proved extraordinarily difficult.
Such a package would deprive each party of a key talking point for the next election – the ability to stand as the party that "won't raise taxes" or the one that "won't cut Social Security" or Medicare.
But Obama's push to consider entitlement reform reflects a reality that Americans also recognize. Social Security needs to change if it is to remain solvent for future generations. And the urgency is rising. Already the program is paying out more in benefits than it draws in revenue – a pattern with no end in sight.
The battle over Social Security is distinct: It's the most popular of federal programs and the bedrock of retirement security for the typical household.
Political third rail
For that reason, Social Security has long been viewed by politicians in both parties as the quintessential "third rail" issue, something touched only at grave political risk.
Amid Obama's efforts at attaining the grand bargain, rumors spread that Social Security might be altered by scaling back the cost of living adjustment (COLA) by which senior incomes are adjusted for inflation. That idea stirred an immediate firestorm from advocacy groups that see it as a backdoor cut in benefits.
To call such a change controversial is an understatement. Many seniors, after two years in which the COLA formula left benefits static, already worry that their incomes don't keep pace with rising prices.
The news media, meanwhile, immediately put Obama in the hot seat: He had promised in his State of the Union message not to "slash" Social Security. So was there a difference in Obama's mind between "slash" and "cut"? In a July 7 briefing, a reporter pushed at length for White House press secretary Jay Carney to clarify the possible semantic nuance.
Social Security has captured headlines lately for another reason as well: If the two sides don't reach a deal and the cap on federal borrowing is not raised, Obama raised the prospect in a July 12 statement that the government might not be able to pay out checks to beneficiaries (currently 56 million Americans) on Aug. 3.
Paying government bills would indeed become very difficult around that day, economists say. But some experts on Social Security argue that the program has ways to keep its own checks flowing. And a protracted impasse over the borrowing limit is nearly unthinkable, given the concern that a partial shut-off of government funding could push a fragile economy back into recession.
What can be done?
So, setting aside talk of unpaid checks, how much trouble is Social Security in, and what can be done to fix it?