Advancing a Free Society

My Contrary Take on Social Security and the President’s Budget

Friday, February 18, 2011

I read with interest Dr. Frisby’s post, “Obama Plays it Right on Social Security” – mostly because her conclusions were so fundamentally different from my own, even though she made several points along the way with which I agree.

Let’s start with my concessions first; I can absolutely see the point, made both by Dr. Frisby and in comments by White House staff, that it would have been counterproductive for President Obama to step forward in his budget with specific Social Security reform provisions.  But I see this explanation offered by White House staff as a straw man argument; there is a lot of middle ground between a specific plan and what the White House has done.  Their last two budgets, for example, left many details about health care reform unspecified.  There was still no doubt then about White House seriousness because they had put a placeholder in the budget outlining the broad fiscal contours of health care reform, and because all of their accompanying rhetoric stressed the positive advantages of reform and hammered on the unsustainability of the status quo.  None of this have they done on Social Security.

To the contrary, the White House budget speaks of Social Security primarily in terms of what they will not do (“privatize,” cut current seniors’ benefits, etc.)  The accompanying rhetoric has actually downplayed the urgency of Social Security’s financing problems (even to the extent of erroneous White House statements that Social Security is not now adding to the deficit).  This is not how one paves the way for action.  Thus far, the White House has acted as though all that they really need to do is not to take a potential bipartisan compromise off the table – by, for example, not explicitly criticizing their commission’s plan, or by cagily leaving CPI/COLA adjustments in play via their specification that reform mustn’t cut current seniors’ “basic” benefits.  But at some point one has to pivot from these technical niceties, and from arguing against specific changes, to making the case for reform.

If now is not the time for that pivot, it is difficult to conceive of when that time could be.  History shows that it is very tough to fix Social Security when one party controls both branches of Congress because the minority is in no mood to help the majority solve the problem.  Right now there is split control, a rare circumstance that also helped President Reagan get a bipartisan fix in 1983.  No one knows if this condition will remain after 2012.  The Congressional Budget Office has, moreover, just issued a fresh warning that program finances are even worse than recently projected.  Finally, a very rare, very fleeting amount of bipartisan cover now exists via the comprehensive recommendations of a majority of the president’s fiscal commission.  If this moment passes, it will not be so easy to regenerate.  Republicans were initially very skeptical of the commission; its credibility as a vehicle for bipartisan compromise was hard-won over many months.  Re-establishing such credibility through a second process – especially if everyone knows the White House walked away from the first one -- is not a slam-dunk.

We need to remember that in 1980s terms (the time of the last Social Security rescue), we are already well into 1983.  The commission has already reported. The mid-term elections have already occurred.  In fact, this is actually a relatively later phase even than the conclusion of the Greenspan Commission process was, because the Greenspan Commission was unable to agree on a full, comprehensive plan (the last stages of its construction took place in the Congress).  Today there is already a complete plan, brokered through the president’s commission process, that has won support from legislators as politically distant as Senator Dick Durbin and Senator Tom Coburn.  For the Obama Administration to distance itself from that product now is basically the equivalent of the Reagan Administration getting up from the table in March, 1983, and saying after the substantive agreement had been put together, “We’re not ready to commit to specifics yet.”  That is a cue for legislators to run away, fast.

Another very important point: this can’t ever happen unless there is a substantive place to go.  It is not realistic to expect a Republican House to approve a Social Security plan that is qualitatively to the left of the President’s own commission.  Nor is it plausible to believe that the President would set aside his own commission’s recommendations only to agree to a package qualitatively to the right of them.  The most promising template for compromise must therefore be something roughly near where the commission ended up.  I have difficulty concluding that a package approximating the contours of the commission plan is now more easily reassembled from the ground up, absent the cover previously provided by such figures as Erskine Bowles, Al Simpson, Alice Rivlin and Judd Gregg.

President Obama’s budget might be shrewd political positioning (I have my doubts there, too), but it clearly moves us further away from Social Security reform.  As we speak, the Senate “Gang of Six” is negotiating legislation based on the commission’s proposals, or at least of some subset of them.  Perhaps they will complete a Hail Mary pass and succeed in bringing many of their colleagues around, despite the conspicuous absence of public support from the White House.  Both Democrats and Republicans will be looking to the White House for signals that it will support the product, and will not try to move it to the left (or, for that matter, to the right).  These signals could have been given in the president’s budget but were not, and thus now require a corrective effort to convincingly convey.  If this process somehow leads to reform, it will be in spite of the White House’s budget posture, not because of it.

(photo credit: The White House)