Back when "grand bargain" fever was gripping Washington earlier this year, progressive activists mounted an uphill campaign against their allies in the White House and the Capitol, warning there would be hell to pay if President Obama went forward with his plan to trim Social Security benefits.
Thanks in part to their effort, along with Republican recalcitrance and changing economic realities, Democrats have abandoned any plans to mess with the social safety net, at least for the moment. The federal deficit has fallen precipitously this year -- Treasury actually ran a surplus in June -- and with it, the impetus for a "grand bargain" trading safety net cuts for increased tax revenue has evaporated. (This may have been the White House's plan all along.)
Now, as Obama prepares to deliver a major speech on the economy today, the scrappy activists who were until recently playing defense against cuts are turning around and pushing to increase Social Security benefits.
"Social Security is the most effective anti-poverty program in history. Forget cutting it -- we need to double down on success and make it even stronger," Jim Dean, the chair of Democracy for America, will say in an email to supporters today.
The coalition of leading progressive groups, including the Progressive Change Campaign Committee, Democracy for America, Credo Action, MoveOn.org, Progressives United and Social Security Works, are joining together to back a plan introduced by Democratic Sens. Tom Harkin and Mark Begich to boost benefits and shore up Social Security's finances for the better part of the next century.
These kinds of economic justice issues are Harkin's bread and butter, but Begich, who is up for reelection this year in deep-red Alaska, is an interesting addition. In May, he made a splash by breaking with Obama on Social Security cuts. His leadership on this issue suggests he thinks expanding the social safety net will not only not hurt him, but actually help him politically, even in one of the most Republican states in the union.
And there's reason to believe he's right -- Social Security is overwhelmingly popular. A new PPP poll commissioned by DFA and the PCCC found that 51 percent of Kentucky voters support the Harkin-Begich framework, which would boost benefits for 75-year-old workers by $452 per year and by $807 per year for 85-year-olds. Twenty-four percent said they didn't support the plan, and another 24 said they weren't sure.
Obama's budget called for changing the way inflation is calculated for Social Security by switching to the "chained CPI" (consumer price index) formula, which would have the effect of reducing benefits. Begich and Harkin have each introduced slightly different plans, but both would also change the inflation formula. Their change, however, to the "CPI-E," better accounts for the fact that seniors spend disproportionate amounts of their income on health care, the price of which grows faster than the price of goods overall.
To pay for this expansion, and to ensure the solvency of all of Social Security for decades into the future, the plan would eliminate the income cap on Social Security FICA taxes. Currently, income above $113,700 is exempt from the tax, meaning someone who makes $1 million a year pays the tax on only about a tenth of their income. The new poll commissioned by the groups found that 62 percent of Kentuckians support removing the cap, while 20 percent oppose it and another 18 percent are unsure.
Some liberals have criticized the idea of removing the cap, arguing that it would undermine the political strength of Social Security by making the plan more of a redistributional welfare system than a social insurance scheme. But others point out that the cap means the current Social Security tax is regressive, charging poor and middle-class Americans a larger portion of their income than millionaires and billionaires.