What We Learned About the Future of Social Security at the Fiscal Responsibility Summit
Note: I’ll be on 1600 with David Shuster tonight around 6:10 PM ET to discuss this — jh
My overall sense after reading the pool reports and hearing what various people had to say is that reforming Social Security is very much on the table now, but how that gets done — and when — is something that is being negotiated.
While Peter Orszag’s desire to segregate Social Security from Medicare and Medicaid was something he reinforced in his breakout session on Healthcare, most summit participants seemed to be operating within the "grand bargain" framework that Obama communicated to George Stephanopolous in January — which includes "tax reform, healthcare reform, entitlement reform including Social Security and Medicare, where everybody in the country is going to have to sacrifice something, accept change for the greater good."
Obama’s summary reflects the position he has long held that the Social Security system is in need of repair, and that there is "bipartisan" interest in addressing it now:
There was a healthy debate on Social Security, but also a healthy consensus among some participants, including Congressmen Boehner and Hoyer as well as Senator Graham and Senator Durbin, that this was a moment to work in a bipartisan way to make progress on ensuring Americans’ retirement security. And I think one of the things we want to do is to figure out how do we capture that momentum.
The Social Security breakout session was led by Larry Summers, director of the National Economic Council, and Gene Sperling, counselor for domestic policy at Treasury. "Summers and Sperling each conveyed a sense that the administration will try to move on health care before Social Security, although SS will come soon after," says the report. If that’s true, then Ezra Klein’s anonymous White House source — who told him "there’s no intention to touch Social Security in the foreseeable future" — was not telling the truth.
Sperling also accepts the "grand bargain" frame about "shared sacrifices":
I think there may be a lot more openness than we thought in the past for people to have an honest discussion about the shared sacrifice necessary to have Social Security solvency. That this would be a sure thing they could count on, and they could count on for the next 50 to 75 years.
Ezra says "If you want to worry about the administration’s intentions, I’d note this quote from Sperling." As the person the administration used to anonymously float disinformation, one would hope Ezra would worry.
Summers said that health care has "overwhelming importance" in achieving "longterm budget control." He said: "But Social Security is also crucial to the nation’s longterm fiscal health, and Social Security is our most important government program." He essentially said – and this is paraphrase here — that the downturn of the financial markets had diminished the political appetite for converting part of SS to private retirement accounts. Here is a quote: In light of "the events in the market the last couple years, the sense of the need for government to take a core public responsibility for Social Security. . . has been strengthened, at least in many people’s minds. Though not perhaps all minds."
(As a side note, Ezra also takes Andrew Sullivan to task for making what seems to me a quite obvious statement: "Obama wants to tackle the insolvency of the big three entitlement programs: Medicare, Medicaid and Social Security." Ezra says: "There is no Social Security threat. And that can’t be wished away or dismissed. The administration knows that." How that gets rationalized with Summers’ and Sperling’s comments I’m not sure.)
As Digby notes, one of the ways that reformers hope to overcome lack of political will with regard to tampering with Social Security is by attacking process. Because nobody wants to be responsible to their constituents for cutting benefits, they believe that taking the decision away from those who can be held electorally accountable is imperative. The Gregg-Conrad plan for a "budget task force" would have done just that, but as TPM reported, that got scrapped because of liberal opposition to the whole idea (which is why it continues to be important to make noise about it).
From the Healthcare breakout session:
At issue was whether to name a commission that would circumvent the legislative process, come up with concrete proposals on taxes and entitlement, and – if a supermajority could be reached within the commission – present those proposals to Congress for a guaranteed up-or-down vote with little to no amendments possible.
To advocates, Congress has shown there is no other choice.
"Procedure drives policy," Sen. Gregg said. "We need a procedure that will allow Congress to reach a conclusion."
"It is unrealistic to think that a system that has delivered this problem is going to take us to a better place," said Sen. Bayh.
Obey, Spratt, Van Hollen and "liberal interest group representatives" pushed back, so Conrad suggested a compromise:
Sen. Conrad, one of the commission idea’s author, said they could do a hybrid, in which smaller commissions take up health care, taxation and Social Security for a year. At the end of that year, they try to merge the proposals and make sure they interact in a way that makes sense and tackles the overall fiscal problem.
Mr. Zandi warned that there was no time to deliberate. International lenders would be only so tolerant. Washington needs to signal very soon that on the other side of the two-year stimulus, there will be a serious effort to bring the deficit down and deal with the debt. If for that reason only, naming a commission now could help.
"The president is deadly serious about getting everybody’s arms around this problem," Mr. Schiliro said.
"I’m an old fashioned guy," Mr. Obey concluded, suggesting the president lock everyone in a room with three bottles of gin.
"Let’s go with that plan," Sen. Conrad agreed.
Zandi is echoing a concern sketched out in the New York Times yesterday, namely that there is a need to take action and "send a reassuring signal to markets and to foreign investors who worry about the nation’s huge looming liabilities for promised social benefits."
It’s noteworthy that there is Democratic support for this in the Senate from both Bayh and Conrad. Here’s what Conrad had to say when prompted by Obama:
CONRAD: Many of us believe it’s going to take some special process to bring all of the players together to write a plan so that we see the tradeoffs between what’s available for health care reform, which without question is the 800-pound gorilla; Social Security, which also has to be addressed for the long term; and revenue.
Revenue is the thing almost nobody wants to talk about, but I think if we’re going to be honest with each other, we better recognize that is part of the solution, as well. And it’s very hard to know what you are going to do with Medicare unless you know what revenue is going to be. Very hard to know what you’re going to do with Social Security without knowing what revenue is going to be. So somehow we’ve got to come together around a plan, and of course that depends on presidential leadership, which you certainly provided here today.
THE PRESIDENT: All right. Thank you.
And here is David Walker, head of the Peterson Institute, in an exchange with the President:
WALKER: You touched on the remarks on the balance sheet. As a former controller, we are $11 trillion in the hole on the balance sheet and the problem’s not the balance sheet. It is off balance sheet. $45 trillion in unfunded obligations. You mentioned in January about the need to achieve a Grand Bargain involving budget process, social security, taxes, health care reform. You’re 110% right to do that. Question is, how do we do it?
Candidly, I think it takes an extraordinary process that engages the American people, provides for fast track consideration and with your leadership that can happen. But that’s what it’s going to take.
OBAMA: Okay. Well, I appreciate that. Again, when we distribute the notes coming out of the task forces, I want to make sure that people are responding both in terms of substance and in terms of process. Because we’re going need both in order to make some progress on this.
Yesterday five reporters asked Robert Gibbs about Social Security and pressed him about the formation of such a panel. He refused to give a straight answer, or rule out the possibility that one would be thus empowered. The President’s assurance that "process" needs to be addressed is probably gives a good indicator about why he wouldn’t.