Earlier this week I published an article over at E21 explaining why the Gang of Six framework embodies a significant step backward for Social Security reform. This finding doesn’t, however, preclude constructive ideas to turn the package from a net minus to a net plus. Below I offer ten suggestions toward that end.
The list below starts with the things that I believe are minimally required, moving on to the more ambitious suggestions. It has something of a 4-2-4 pattern: the first four suggestions would ameliorate damage the proposal would do in its current form, the next two are process suggestions in the event the Gang cannot coalesce on substance, and the last four represent positive substantive aspirations.
- Strike the new “minimum benefit.” Per the Hippocratic Oath, “First, do no harm,” and the minimum benefit is tactically the most harmful element of the Gang’s package. I actually favor a new minimum benefit in the context of comprehensive reform, but there are at least three reasons why this one presents a huge problem. First, it undercuts the credibility of any budget plan to propose such a benefit “for five years,” as though Congress would readily allow it to sunset thereafter. Second, Social Security financial repairs become even less likely if the sweeteners are given away first. And third, as Keith Hennessey has noted, offering the benefit to counteract the effects of CPI reform undercuts the Gang’s message that said reform is a justified technical correction.
- Eliminate the plan’s procedural obstacles to Social Security reform. There are enough political and procedural barriers to Social Security reform; Congress hardly needs more. Strike all such restrictions, especially the requirement that reform proceed “if and only if” a deficit reduction plan first gets 60 votes.
- Return to the Simpson-Bowles financing standard. The Gang’s chosen Social Security metric (“75-year solvency”) is susceptible to accounting gimmicks and heavily biased toward repeated stopgap tax increases. To avoid a big substantive step backwards, embrace the fiscal commission’s adopted standard of attaining annual balance between taxes and expenditures over the long term.
- Explain Social Security’s real relationship to the larger budget. The Gang may be making the correct tactical judgment in separating Social Security reform from general deficit reduction discussions. Still, their work only becomes harder if their materials appear to countenance misinformation circulated by opponents of Social Security reform to the effect that the program has absolutely nothing to do with unified budget deficits. The Gang can only establish positive momentum if it is absolutely clear that reform is essential both from Social Security’s perspective and from a larger budget perspective.
- Draw a line in the sand against further Social Security accounting gimmicks. If the Gang is unable to embrace specific reforms, it could nevertheless function as an important guard against accounting gimmicks that undercut program financing integrity. They could pledge, for example, to fight any attempt to paper over an extension of the current Social Security payroll tax cut with further debt issuances from the general budget accounts.
- Set up procedures to facilitate Social Security reform. Process reforms are never a substitute for substantive ones. But as long as the Gang does focus on process, it could establish facilitating processes rather than barriers. They could, for example, propose removing existing barriers to reform in current budget reconciliation rules, or better yet establish a mechanism by which Congress votes on a sustainable-solvency package by a date certain.
- Establish general targets for benefits and taxes. Under current benefit schedules, Social Security costs will soar above 17 percent of worker wages by 2035, while average real per-capita benefits would grow enormously through that time. Even if the Gang is unable to agree on specific reforms, they could perform a valuable service by agreeing on general targets for annual cost rates and average per-capita benefit growth.
- Embrace Simpson-Bowles concepts, if not specifics. If the Gang is unable to agree on the specific provisions of Simpson-Bowles, the ball could still be advanced by endorsing the cost-saving concepts in its reform package. Such concepts include raising eligibility ages, slowing benefit growth above inflation for high earners, raising the cap on taxable wages, and bringing in state/local workers. (I believe this package is fair; in isolation I favor the first two and oppose the last two). Endorsing these concepts and explaining the policy case for each would advance the ball somewhat, even if there remained a negotiation over the relative reliance on each.
- Endorse as many elements of Simpson-Bowles as can be agreed to. The Gang stated that its reform package is pursuant to the Simpson-Bowles commission’s work, but declined to endorse its specific Social Security recommendations. Obviously, if it were easy for the Gang to agree on the specifics they would have done it by now. But the failure to endorse any specific reforms is problematic; their cause would be advanced via a bipartisan endorsement of as many specific reforms as possible.
- Make Simpson-Bowles better. The Simpson-Bowles proposal is well-thought-out and represents a reasonable bipartisan compromise. But there’s no reason a good proposal couldn’t be made better. Everyone will have a different definition of what constitutes improvement: my own would involve eliminating some of its complex benefit-claim options, and replacing some of its revenue-raising provisions with cost-saving measures to improve work incentives. The Gang’s preferences might be different, but there’s no reason they shouldn’t try to improve upon any Simpson-Bowles provisions that they dislike.
We all have a stake in whether the Gang is able to advance the ball with respect to a worthy cause: bipartisan cooperation on Social Security. These are among the steps that might be taken to repair some of the damage of the initial rollout and to move in a positive direction.
(photo credit: Matthew Rutledge)