Can the conservative plot to destroy Social Security be stopped?

Once the "third rail" of American politics, the popular program now finds itself in right-wingers' crosshairs

By Steven Rosenfeld

Published February 14, 2014 1:38PM (EST)

             (<a href=''>zimmytws</a> via <a href=''>Shutterstock</a>)
(zimmytws via Shutterstock)

This article originally appeared on AlterNet.

AlterNetA new effort to build bipartisan consensus on fortifying Social Security was unveiled in Washington on Friday that shows the promise and perils of the evolving debate on the how tens of millions of aging Americans will support themselves in coming years.

On the promising side, an extensive public engagement process by a new centrist group, the Program for Public Consultation (PCP),found vast bipartisan agreement to strengthen Social Security now through progressive tax increases and even increasing some benefits. On the perilous side, the starting line for its discussion is the tedious rightwing drumbeat about revenue shortfalls two decades from now, which distract from focusing on today’s retirement security crisis and what steps can address more immediate human needs.

“They did not brief respondents on the retirement crisis or ask them if they had saved enough for retirement,” said an analyst with one of the more progressive reform groups, who attended the PCP briefing but commented on background. “So respondents were tasked with the narrow job of eliminating the shortfall, rather than devising the best Social Security policy.”

After several decades where the political debate on Social Security has been dominated by right-wingers who want to either eliminate, privatize or cut it, there’s new momentum in Washington to step back and starting discussing how Social Security can be fixed for today’s recipients and Americans who will soon retire. Like all political debates, how the problem is defined has a lot to do with what solutions are offered.

What’s needed now, the analyst said, was “a discussion of people and their retirement insecurity—especially Generation Xers and millenials. Those advocating cutting Social Security say it is to protect our children and grandchildren, yet they will need it even more than today’s retirees do.”

The Program for Public Consultation is a relatively new group whose board is made up of a dozen former Democratic and Republican congressmen, and another two-dozen experts who wear many hats as policy centrists in Washington. Their foundation-funded initiative is noteworthy not only because it will be repeated in congressional districts in 2014, but because its early findings support taking specific steps now that progressives have been touting for years—and for which there is huge public support to do so.

For example, after holding workshops last July where 738 people took part, PCP polled participants and found that 76 percent backed the most progressive revenue solution: eliminating the little-known cap on taxable income that funds Social Security. People only pay taxes on the first $117,000 of their income, not investments, for the social insurance program. That step alone would eliminate the projected shortfall two decades from now and generate a surplus funds to expand current benefits by one-sixth, PCP Director Seven Kull said at the press briefing.

PCP also found strong support, 72 percent, to increase the minimum monthly benefit for retirees—which, at $760, is below the federal poverty line. And it found that 73 percent also favored increasing benefits once people reach age 80. The majority, 59 percent, also supported reducing Social Security payments to wealthy Americans who didn’t need it. Those poll results reflect sizeable majorities to act now to expand the program.

But on the perilous side, the starting line for PCP’s exercise reflects the conservative bias that elevates concern about projected finances in 2033 above whether today’s benefits are enough, let alone in two decades. PCP mostly frames the challenge as ensuring retirees do not see a 23 percent cut in benefits in 19 years due to inadequate income tax revenue. Anti-tax Republicans and Wall Street financiers have cited those projections to call for cuts now, or political compromises that will not ensure that tens of millions of people age with dignity and stay out of poverty, which was why Social Security was created in the 1930s Great Depression.

Seizing The Political Third Rail

Nonetheless, this new Washington-based initiative signals a changing political landscape and willingness to tackle an issue that was long thought to be political suicide—tinkering with America’s most popular government-run social insurance program.

“When we talk about Social Security, many of us will immediately think about the third rail idea—that you can’t really touch this because it’s too hot,” said Marvin Kalb, the ex-CBS and NBC reporter, in opening remarks as he moderated a panel presenting PCP’s findings. “Well this study that’s before us today is called, ‘Is It Really a Third Rail’ and ‘How the American People Would Reform Social Security.”

“The overall ground is to show public respondents and people who want to take the exercise how is the problem painted by the people who are responsible for painting it—for showing the elected members of Congress how the problem looks,” Kull said, going through the project’s policy-shaping process. “It goes back to trying to simulate the experience that members of Congress have.”

PCP’s project, dubbed “ Voice of The People,” comes amid growing awareness that much of the 76-million-member Baby Boom generation—in all demographics—has not saved enough for their retirement, making Social Security and Medicare their primary means of support. That’s because employer-provided pensions have been vanishing for decades, and the private investment plans that replaced them, such as 401Ks, are insufficient. Only 20 percent of seniors, earning more than $58,000 a year, will not rely on Social Security as their main income, the National Academy of Social Insurance has found.

Last July, PCP enlisted 738 people from around the country in a process that they call the “citizen cabinet model.” They first briefed the participants as Congress’s staffers would brief elected officials—using staff Republican and Democratic analyses from House and Senate committees that deal with Social Security. They also used papers from advocacy groups: the conservative American Enterprise Institute and liberal National Academy Of Social Insurance. Then they convened groups to go through the policy options, starting with separating facts from partisan opinions. They noted the pros and cons of choices, and finally polled participants on solutions.

The briefings started by explaining Social Security’s basics, which are not complicated. The social insurance program is funded by payroll taxes on the first $117,000 of taxable income. Benefits are calculated by averaging lifetime earnings, although lower-income people receive a larger percentage than wealthier people. Today, average retirees receive $1,290 a month. The foremost problem presented was that after 2033 the revenue paying for this level of support, after future cost-of-living increases, will run out and benefits will have to be cut by 23 percent unless “reforms” are undertaken.

The solutions presented were not just what’s been noted on progressive websites—which favor increasing Social Security taxes to cover the far-off shortfall and to expand benefits now. Participants were asked whether benefits should be cut for high income people who don’t really need them. They were asked if the retirement age should go up; it’s now 66 and becomes 67 in 2027. They were asked if payroll taxes should be increased slightly, and if the cap on taxable earnings should raised or be scrapped.

They also were asked if minimum benefits should be higher, and whether benefits should go up again at age 80. Finally, they were asked what cost-of-living formula should be used for calculating annual increases; one cutting future benefit levels compared to what is used today (the so-called chained CPI, which has been endorsed by President Obama) or another one that’s more targeted to elderly buying trends, called the CPI-E.

Surprising Results

To start, 72 percent of participants—66 percent Republicans, 82 percent Democrats—had “positive” views of Social Security. Slightly more than half said that the average monthly benefit was “about the same as you expected.” More Republicans, 57 percent, said that they knew about “the [revenue] shortfall,” compared to 50 percent of Democrats.

The way these discussions unfolded—from prior knowledge, to briefings, to discussing reform pros and cons, to voting on options—was noteworthy. The longer people talked, the more certain approaches emerged with growing bipartisan support, Kull said, until popular ideas crossed a threshold. For example, two-thirds found it “at least tolerable to reduce benefits for the top 25 percent of earners. Just under half found tolerable reducing benefits for the top 40 percent,” PPC reported. “Reducing benefits to the top 50 percent was found tolerable by only one-in-three, with little difference among the parties.”

In other words, means-testing for Social Security benefits, is seen as a fair policy—as long as people who will really need the monthly stipend don’t see unnecessary cuts.

On raising the retirement age, “six in ten found [it] at least tolerable raising the age to 68, with no difference between the parties.” But 69 was too high for most Democrats and for half the Republicans. And raising the onset of benefits to 70 was opposed by 75 percent.

Perhaps the most intriguing results concerned raising or eliminating the cap on taxable earnings. When provided with narrow partisan arguments, pro and con, for raising the cap from $117,000 to $215,000 over 10 years, 66 percent agreed with the case for raising it, while 59 percent agreed with the case against it. Kull said this result wasn’t entirely a contradiction, but more a measure of the strength of different positions.

When the case was offered for eliminating the cap—“the incomes of the wealthy have been growing by leaps and bounds, while the incomes of the middle class have been stagnating”—76 percent agreed. Meanwhile, the argument against eliminating the cap— “high earners just saw their income taxes, investment taxes and Medicare taxes increased”—was the least convincing of all, garnering only 47 percent support.

In other words, the more time that people took ti understand the issue, the more support there was for the most progressive solutions—raising taxes on those most able to pay in order to fortify present and future benefits.

PCP’s spokespeople said that their policy-making exercise, which they plan to take to congressional districts in coming months, showed there was a middle path possible to modernize the nation’s biggest social insurance program.

“One of the central issues that I get from reading this study is that for those people who feel that there is no way around this third rail, there is,” Kalb said. “If you address it from the point of view of what the American people think about a possible solution, what you come up with is that by sizable majorities, both Democrats and Republicans, the American people do feel that a sensible compromise is the way to go. And that sensible compromise involves, on the one hand, obviously, raising taxes, and on the other, limiting benefits that are available. But balancing the two, in an intelligent way, can be done in the opinion of overwhelming majorities of the American people.”

“I think this is a wonderful moment to tackle Social Security because we’re not going to have budget action for the next year or two,” said Alice Rivlin, ex-Clinton White House budget director. “One of the cogent arguments that the advocates for the elderly make was, ‘We do need to solve the Social Security problem, but not in the budget context: don’t balance the budget on the backs of the elderly and do it as something separate.’ Well now is our chance to do something separate.”

Living Wages And Minimum Benefits

Even though these conclusions point to solutions championed by progressives for a long time, it’s important to note that PCP’s public engagement process is by no means the full whole discussion. At Friday’s press conference, Ben Veghte, research director for Social Security Works, said the discussion about “shortfalls” was not just about money, but also about Social Security’s public purpose. When asked if that was part of PCP’s briefings, Kull replied that they mostly relied on congressional reports for issue analyses, and that point seemed like an argument—a secondary concern—but he’d note the suggestion.

What seniors who outlive their savings will live on in coming years—which is forecast for tens of millions of baby boomers—is what gets lost when the focus is mainly on preventing a projected 23 percent cut in benefits 19 years from now. However, PCP’s report offered some striking stiking statistics that highlight how different policies can mean big shorter-term differences between falling into poverty or not.

For example, today’s minimum benefit, about $770 a month, is currently below the federal poverty line. To raise that to 125 percent of the poverty line, or about $1,150 a month, “would increase the [projected 2033] Social Security shortfall by 7 percent,” they reported. But at the press conference, Kull said that eliminating the income tax cap would bring the Social Security Trust Fund in 2033 to 117 percent of projected payouts. In other words, there’s one simple way to strengthen and expand current and future benefits.

The framing of this discussion, especially at this early stage, is crucial. Another missing piece today would compare Social Security benefits to the the minimum wage—since the whole idea of Social Security is to provide a pension for people with little other income.

Today’s average monthly benefit of $1290 would break down to $8.06 an hour if it were calculated based on 40 hour weeks. That’s poverty-level income. Even President Obama in the State Of The Union speech called for raising the federal minimum wage to $10.10 an hour, which equates to $1616 a month. In California, where living costs are higher, Republican Ron Unz is bankrolling a fall 2014 state ballot measure to lift the state’s minimum wage to $12 an hour—which translates to $1920 a month.

It’s eye-opening to contrast what’s being discussed today as a minimum living wage to what’s under discussion for Social Security payouts. As groups like Program for Public Consultation take their policy-creating process on the road, they are likely to hear that America’s retirement security crisis is at hand now, and involves much more than just balancing the projected books in 2033.

These are the individuals who have contributed to AlterNet's Retirement Crisis Reporting Fund:

Nancy Adams | Maria Alvarez | Dolores Amato | Sara Baker | Jerry Banks | Catherine Barnes | Patti Batchelder | Maryann Bayne | William Bell | Hugo Benoit | Werner Bergman | Lisa Beutler | Patricia Bewley | Gary Billey | Gary Binderimz | Rosemarie Blake | Bhikkhu Bodhi | Robert Bottman | Christopher Boutelle | Angus Bowen | B. Bowers | Charles Brainard | Kern Braswell | Catherine Brave | Jody Breslaw | Kim Brown | Marilyn Bruning | Bonnie Burkart | John Burke | Jeffrey Cancilla | Alice Canty | Dorothy Cinquemani | Kenneth Clark | Suzan Clausen | Robert Cohen | Harriet Cohen | Sandra Colombo | Michael Conley | Casey Conner | | Eugene Constant | Rachel Cooke | Peter Costello | Sydney Crawford | Iris Culter | Kathleen Daugherty | Gary Davis | Michael Davis | Richard Dawson | Jorge De Cecco | Kenneth Deed | Nandi Devam | Kim Dexter | J.A. Dingman | Elizabeth DiPalma | Patricia Dodds | John Doheny, Jr. | Gloria Donohue | Don Dougherty | Albert Driscoll | Stu Duckman | Ronald Dumont | Kim Ecclesine | Nancy Eckel | Cynthia Ellsmore | Edwin Engelmann | Judith Espovich | Virginia Eyman | Matthew Farrell | Karen Fedorov | Perrin Ferris | Thomas Firpo | Carolyn Fletcher | Christopher Flores | Terry Fontenot | Barbara Ford | Thomas Friel | Linda Fulton | Larry Gaylord | Marion Gehlker | David Glater | Nancy Goldberg | Donald Goldmacher | Alison Gomez | Florence Granowitter | Emily Greene | David Griscom | Terrence Grywinski | Shawn Hansen | Debra Harpole | Louise Harris | George Hart | Stuart Hartley | Bill Healey | Geoffrey Hendricks | Robert Henning | Marion Hirseman | Martin Hittelman | Cathy Hoot | James Hopkins | David Huhn | Will Husa| Ayed Hyder | Linda Irenegreen | Aaron Jacobs | Bobie Johnson | Wynn Kapit | Elizabeth Kelley | Jae Kenworthy | Ronald Kestler | Anita Kichefski | Jeremy Kilborn | W. Kimzey | Kerry Kleiber | Denise Kobylarz | Sandra Korn | Nancy Kranich | John Kyper | Bruce Lee | Marilyn Lee | Theodore Leibowitz | Carol Lemieux | Henry Lesnick | Betty Leyerle | Ellen Linnemanstons | Robert Lipsyte | Joan and Wallace MacDonald | Susan MacMillan | Charlene Maker | Barry Maloney | Josepha Maly | Tommy Mandel | Lawrence Mar | Louis Mariani | Joseph Mastalski | Annie Masters | Chris Matthews| George Matkovits| Kay Matthews| Frank McEvoy| Gail McMullen| Kevin Meismer| Elizabeth Mewhinney| Mary Micek| Rosemary Migas | Claire Mills |  Jonathan Morris | Nina Murano | Christine Murphy | John Murrill | Deborah Mytels | Jean Naples|  Peter Nasatir| Aileen Nelson| Terrance Newton| Deborah Nitasaka| D. Ocker| Janet Ohlhausen| Clifford Olin| Judith Pearson| Charles Percival | Jeanne-Marie Peterson | Mary Peterson | Cynthia Peterson | Ted Pfeiff | Brian Porter | Rudolph Radau | Joseph Rainho | Richard Rayford | Lisa Reswick | Debbie Richards | Sharon Richey | Leonard Rifas | Marvin Ritzenhaler | Nancy Roca | Edwin Rogers | Sue Rosen | Richard Ross | Nancy Ryan | Susan Salazar | Joseph Sanchez | Terry Sanders | Elizabeth Sands | Carole Sauriol | Carol Scher | Scott Scherman | Wanda Schertz | Gerda Seaman | Carolyn Semiglasow | Marlene Shaner | Elaine Simon | Crystal Sloa | Sara Sogut| Helen Sohne| Priscilla Solomon| Wayne Stinson| Patricia Stroud| Francis Sullivan, Jr.| Jyun Takagi| Tasmin Taylor| Diane Thatcher | C. Thompson | Keith Thornton | Lisa Tomchesson | Priscilla Toth | Catherine Twohill | Eric Weis | Teresa Welborn | Wilma A. Wheeler | Joel White | Dolores Whitman | Terry and Barbara Williams | Hugh Wilson | Liddy Wilson | Carroll M. Wilson | Eric Wilson | Jack Wilson | Charles Witt | William Woodward | James Woolsey | Eleanor Wynn | Christine Wynne | David Yamada | Leroy York, II | James Young | Marian Zaouk | Susan Zencka

Steven Rosenfeld

Steven Rosenfeld is the editor and chief correspondent of Voting Booth, a project of the Independent Media Institute. He has reported for National Public Radio, Marketplace, and Christian Science Monitor Radio, as well as a wide range of progressive publications including Salon, AlterNet, the American Prospect, and many others.

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