I just got off the phone with Willie Smith, Earl Blumenauer’s district director. Before I get to that, I’ll give you Blumenauer’s on-the-record statement:

While I appreciate Matt Bai’s article in The New York Times focusing on my commitment to cut wasteful government spending, such as military and agricultural subsidies, I would like to point out one area where I take modest exception to how my comments have been interpreted in this story.

I do not believe, nor have I ever said, that the Social Security trust fund is either like a “lottery” or “make believe money.” As my Congressional Website points out, and as anyone who has heard the countless number of presentations that I have given will tell you, the Social Security trust fund is backed by the full faith and credit of the United States Government which has never and will never default on its commitments.

This was the entire point of my post today about Bai’s article. He attributes something to Blumenauer that he never said, doesn’t believe and specifically repudiates. I have an email in to the New York Times’ Public Editor on the subject. Matt Bai basically lied in his story. And by the way, Blumenauer is right. The Social Security Trust Fund is real, and it’s enough to keep the program in good fiscal shape for 27 years.

Now, there’s a second half to this, and that’s Blumenauer’s thoughts about what we do with Social Security going forward, to address longer-term issues. Here’s more from that HuffPo clarification:

In this ‘Decade of Decision,’ all Americans must participate in a grown up conversation about essential government services we support. Social Security is a part of that equation–but an important one. Analysis shows that the trust fund will remain solvent until 2037, yet for the first time in over 25 years, we are spending more than we collect in taxes. So while we have some time to get it right, the longer we wait to have this discussion and to enact solutions, the harder this will become.

I will continue to strongly oppose any effort to privatize or weaken the Social Security system. I also encourage all Americans–whether they’re Progressive, Conservative, or somewhere in between–to join me as we have the discussion of how Social Security can remain strong and solvent for generations to come, and how we have a meaningful conversation about what America needs and how to pay for it.

So this is where things need further clarification, hence my discussion with Blumenauer’s district director. He reiterated that the Congressman thinks we “need to have a conversation” about the program, and that making fixes sooner rather than later is a good plan. But he also said that no changes should affect current or near-future retirees, and he agreed with the proposition that the prospect of benefit cuts later is no reason to make benefit cuts now. “We reject that,” the aide said.

Basically, his position is this: privatization should be taken off the table, and he has not endorsed any other tweaks or ideas. He thinks we should look at progressive price indexing, nor has he taken increases in the retirement age off the table. However, he believes that raising the payroll tax cap from its current limit of $106,000 is both more popular and more effective in ensuring solvency going forward. “Raising the retirement age doesn’t have the same longevity projections,” said Smith.

“Earl hasn’t said ‘This is what I’d do’ about anything,” he continued. “This is more about educating people about the future of the program and coming to a solution that protects it.”

I strongly disagree that we should take a look at raising the retirement age, already slated to go up, or progressive price indexing. In 2005, Jason Furman, who now works for the Obama Administration, wrote a paper for the Center for Budget and Policy Priorities, explaining all of the problems with PPI, including the fact that, as it was then constructed, it would represent a benefit cut for those with average incomes.

Progressive price indexing would impose substantial benefit reductions on average workers. Progressive price indexing would reduce annual benefits for an average wage-earner who is 25 today and retires in 2045 by 16 percent or $3,523 (in inflation-adjusted 2005 dollars), relative to the benefits that the worker would receive under the current benefit structure. For an average-earner who retires in 2075, the benefit reduction would be 28 percent or $7,629 in today’s dollars. These are much larger benefit reductions than those included in alternative plans that achieve sustainable Social Security solvency through a mix of revenue increases and benefit reductions (as the 1983 Social Security legislation did).

Progressive price indexing would transform Social Security over time to a program that provides a modest retirement benefit largely unrelated to income. Because progressive price indexing produces very large reductions in benefits over time for high earners, substantial benefit reductions for average earners, and no reductions for low earners, it eventually eliminates most differences in benefit levels. Ultimately, most beneficiaries would get the same monthly benefit, despite having paid in very different amounts in payroll taxes.

Under current law, “high earners” (those whose earnings are 60 percent above the earnings of the average earner) receive Social Security benefits that are 33 percent higher than the benefits that average earners get. Under progressive price indexing, this difference would shrink to only 7 percent for workers retiring in 2075, and the difference would be eliminated entirely by 2100. This raises the question of whether broad political support for Social Security can be sustained if workers pay very different amounts of payroll taxes but most workers receive the same level of benefits.

Read the whole thing.

Blumenauer wants to “have a conversation,” but the deficit commission has taken away that entire conversation and put it in the hands of an unelected panel operating in secret. Congress would only be able to vote up or down, and wouldn’t have any say over changes. So it’s Barack Obama, by empaneling the commission, who stifled that conversation. What’s more, it’s deeply disheartening to the base, who don’t expect Social Security to be cut on a Democratic President’s watch.

Blumenauer’s office plans to get back to me with their opinion on the Alan Simpson controversy.

David Dayen

David Dayen