Demanding the Possible from Social Security
The dead-end debate over Social Security’s solvency has long stymied any discussion of how to improve the program for its participants. Now may be the time to break that logjam. Here’s a way that progressive lawmakers can help to do so.
Hard as it is to conceive, the last time a significant improvement was made for a broad swath of Social Security participants was almost 30 years ago. Enacted as part of the 1983 Amendment to the Social Security Act, those changes – four modest benefit boosts for widows and divorced spouses – were swamped in the news coverage by the larger effort to keep the program funded. Thus has it been ever since.
The result, tragically, is that the national conversation over Social Security has been bottled up in a never-ending wrangle over how best to “save” the program. If it’s true – per Clausewitz, Jack Dempsey, or Mao Zedong, depending on your source – that “a good offense is the best defense,” then perhaps it’s time for progressive friends of Social Security to go on the offensive.
I tend to dislike military metaphors, but the essence of that adage is that if you can’t win on the front where you’re currently engaged, you should open another front where you can. The facts as to Social Security’s solvency lend plenty of support to those who argue that it doesn’t need to be restructured, privatized, or phased out – that there’s nothing wrong with the program that rising wages, full employment, and a sane national health care system can’t cure.
But even opening that conversation is a loser, since when it comes to government “promises,” most people tend to believe the worst. Better, perhaps, to open a new front in the Social Security wars by demanding long-needed improvements in the program.
In Washington-political terms, I’m suggesting that progressive Democrats in Congress set the terms for any changes to Social Security, even is those changes are intended to strengthen the program for the long run. The terms are, first, that these must not include means-testing, downward adjustments to the benefits formula, a hike in the retirement age, or payroll tax carve-outs for private accounts. Second, they must include significant updating and improvement of Social Security benefits.
The fundamental problem with the current Social Security discussion is that it proceeds with hardly any reference to the needs of the people the program actually serves – and who are its owners by all rights, since their payroll taxes fund it. By demanding that any package of changes to Social Security contain significant benefit improvements, Democratic lawmakers can restore that linkage and frustrate conservative and center-right efforts to define the program as a fiscal problem rather than a social necessity.
Now would be a great time to move the conversation this way. A retirement crisis is building up due to collapsing household assets, joblessness among older workers, and soaring health care costs. The current sluggish economic recovery – if it really is a recovery – has exacerbated the situation. People are more concerned than ever about their old age security. The fact that this has achieved so little visibility in national politics – to say nothing of the presidential campaign trail – is shocking.
We already know what improvements to Social Security are needed – at least some of them. At last month’s National Academy of Social Insurance (NASI) conference in Washington, I learned about two excellent reports that detail these improvements and integrate them into plans to shore up Social Security’s finances. Both should be required reading in Washington.
The Commission to Modernize Social Security, which was formed by a group of progressive think-tanks and advocacy groups, released its report, Plan for a New Future: The Impact of Social Security Reform on People of Color, last October. It called for modernizing the program by: updating the Special Minimum Benefit to 125% of poverty to support people who spent their working lives largely in low-paying jobs; restoring the student benefit up to age 22 for those attending college or vocational school; boosting benefits for low-income widowed spouses; and providing benefits to those serving as unpaid caregivers for children and other dependents.
To pay for these improvements, the commission recommended scrapping the cap on earnings subject to payroll tax; adding all new state and local workers into Social Security; slowly raising the Social Security payroll tax by one-fortieth of a percentage point over 20 years, keeping the hike well under the inflation rate; and expanding the payroll tax for both Social Security and Medicare to encompass salary reduction plans like flexible spending and retirement accounts.
Also in October, the Economic Opportunity Institute released its report, “Rebuilding the Foundation: Three Steps Toward a Secure, Dignified Retirement For All.” The plan it outlines would boost benefits for lifetime low-wage workers by adjusting the benefits computation formula to replace more income at the lower levels; raise benefits for elderly widows and widowers; and give everyone a long-needed boost by basing benefits on the worker’s 30 highest earning years, instead of the 35 presently used. The latter would especially help women who take years out of the workforce to be caregivers.
The EOI plan would pay for these changes in ways similar to the commission plan. It would scrap the cap; slap a surcharge on unearned income and devote the revenue stream to Social Security; and, in a novel approach, shift some of the Social Security trust fund investments from Treasuries into highly-rated state and local government bonds. That would ease federal indebtedness and make more funds available for transportation, energy, and other infrastructure projects.
There’s a good deal of overlap between the EOI and commission plans, which only underscores that many of these ideas have been around a long time and make good sense. Some variation of the proposals to create caregiver benefits and improve payouts to widows and divorced spouses featured prominently in the 2000 Gore presidential campaign and even garnered some verbal support from the Bush camp that year.
Today, they could help progressives raise an important political question: If Social Security needs to be “modernized” and “reformed,” per the criticisms of the right and center-right, then what does it mean to “modernize” and “reform”? How can such a thing be done without addressing the adequacy of benefits – that is, whether Social Security still succeeds at its function of providing income security for the elderly, disabled, and survivors? Thus far, the movement against Social Security has been able to skirt this question.
That they can do so is a sign of how far things have shifted politically over the past three decades. Benefit improvements, however modest, were included in the 1983 Amendments because in those days of yore, it was still politically imperative to do so. Nothing of the kind will happen again unless progressives start to actually make demands – which is to say, until they define the changes they want as, implicitly, possible. By tying support for any changes to Social Security to significant improvements in benefits, they can raise the stakes of the game and change the conversation in a politically popular way.
In an election year.