Social Security: compromise vs. cave-in

No time for subtlety: an image from a commercial for Bruce Braley, the Democratic nominee for U.S. Senate in Iowa.

In a post titled “When Campaigns Poison Compromise,” Cook Political Report’s Amy Walter looks at this year’s congressional campaigns and worries that the way “both sides have boxed themselves in on tough issues like immigration, entitlements, and climate change on the campaign trail ultimately leaves little room for any meaningful compromise in a 2015 Congress.”

Most of her post deals with Democratic candidates “attacking GOP candidates for threatening to dismantle the Social Security and Medicare safety net.” Walter notes that Democrats running for Congress have run about twice as many ads referring to Social Security and Medicare as Republicans have. In Iowa, the Democratic nominee for U.S. Senate, Bruce Braley, is running an ad accusing opponent Joni Ernst of wanting to raise the eligibility age for Medicare and “privatize” Social Security. (PolitiFact rates this last claim “half-true,” based on Ernst’s imprecise language on the extent to which she might approve the investing of Social Security funds in the stock market.)

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And the Democratic Senate Campaign Committee is trying to save the seat of David Pryor in Arkansas with all-caps graphics that accuse his Republican challenger, Tom Cotton, of wanting to “CUT MEDICARE” and “MAKE SENIORS PAY MORE.”

Walter worries that Democrats elected using this tactic won’t be “willing to engage in substantive discussions about entitlement reform” when they get to Congress. She doesn’t say what reform should entail, but last week the Washington Post posted an interactive menu of possible ways to address the expected pressures on Social Security from the retirement of the large baby-boomer generation. There are proposals to reduce the money going out of the system, such as cutting benefits (either across-the-board or through means-testing), raising the retirement age and recalculating the cost-of-living adjustments (COLAs) that automatically increase benefits. One or more of these proposals may be needed to keep Social Security solvent, and Democratic candidates are indeed making it difficult for themselves to agree to any of them.

But there are also ways to increase the money going into Social Security. For example, Social Security taxes are now applied to annual wages only up to $117,000. But “rising inequality [has] pushed an increasing share of earnings above the ceiling,” according to the Post. As economist Dean Baker puts it, “The share of wage income that has escaped taxation in this way rose from 10 percent in 1983 to 18 percent in recent years.” Raising the cap to again cover 90 percent of income would bring in substantial new revenue.

Other revenue options include an across-the-board increase in the payroll tax, taxing health benefits and, as noted above, investing part of the Social Security Trust Fund in the stock market (which carries a certain amount of risk).

Democratic candidates are generally silent about increasing Social Security taxes, but the party does not seem to have “boxed” itself out of the idea. The question is whether the Republican Party would even consider Social Security reforms that might be defined as tax increases. I can’t find any statements from Republican candidates Cotton or Ernst ruling them out, so they may indeed be more flexible than their opponents. But opposition to tax increases is baked into just about every Republican campaign for any office in the United States. Americans for Tax Reform, headed by anti-tax activist Grover Norquist, claims that almost all Republican members of Congress have signed its Federal Taxpayer Protection Pledge "to oppose and vote against any effort to raise the federal income tax on individuals or employers,” as have candidates including Cotton and Ernst. The Pledge does not seem to cover payroll taxes, but it’s hard to imagine Norquist approving any Social Security reform plan that involves raising tax revenue.

So Democratic candidates may be sending the message that they won’t cave in — that is, they won’t sign on to Social Security reforms that cut benefits without raising revenue. This may be a “boxing-in” that will lead to continued gridlock, or merely the first move in hardball political negotiations that will eventually lead to a reform package that satisfies both sides.

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Dawna Sutton
4 years 3 months ago
Why does everyone refer to Social Security and Medicare as "entilement programs. Social security and medicare programs we the current "baby bomers" have contributed to all of our working lives. We earned it, we paid into it, it is not an entilement. WE can cure the funding problem by taking away the annual cap, and therefore all income is taxed, even the very rich must continue to contribute their share on ALL their income, not just the first 117,000. Everyone's entire income is taxed for each month of the year. There would be a lot more money comining in and this would cover any deficit in the current fund. Addressing medicare fraud should be the next issue and recovering the money that is stolen from this program. And then there is the "IOU's" that the government has never paid back into the system. When is this going to be paid back. How about paying it back NOW Welfare and medicaid are entilement programs that people of "low income" get, which tax payers all contribute to through our general taxes. As a society we are obligated to help the poorest of the poor.

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