Advancing a Free Society

The President’s Budget: Obama Plays It Right on Social Security

Tuesday, February 15, 2011

There is much to be said about the president’s proposed 2012 federal budget, coming in at $3.73 trillion, that the White House released Monday morning: some bad, some ugly, some indifferent. But there is one way that the White House played it just right. The President did not propose specific reforms to the Social Security system.

To the Right and some “Third Way” Democrats, this view is heresy to the Church of Fiscal Responsibility. The Republican talking points characterize the budget as yet another demonstration of the president’s lack of commitment to putting the country’s fiscal house in order. (These are the Republicans, who, mind you, have not coalesced around a comprehensive entitlement reform plan themselves.) As reported by POLITICO, Rep. Paul Gosar (R-AZ) took advantage of the Valentine’s Day release to quip with pun intended, “I’m heartbroken.... I was waiting for leadership.”

Heresy and heartbreak aside, making major changes to America’s core social insurance program will require a grand compromise of the sort best done behind closed doors. As it has been in the past, reaching agreement on Social Security reform will follow the domestic policy equivalent of Mutually Assured Destruction in nuclear arms policy. Republicans will grudgingly consent to tax increases (on the wealthy). Democrats will unenthusiastically agree to benefits reductions. And the political party establishments agree not to use those compromises as issues in the next general election campaigns. Instead, everyone runs on a feel good message that Washington works again and Social Security has been saved.

For that sort of bargain to be struck, the meat of the bipartisan reform plan needs to be worked out before being thrown out to the media frenzy. Imagine what would have happened if the president had come out with a detailed plan in his budget. The Republicans in Congress would have felt compelled to publicly criticize it. Overblown statements of opposition would have been made that would have either locked Republicans into policy positions or, at the least, made it politically costly for them to support some of the president’s proposals at a later date. In response, the White House would start picking on Republican reform ideas that it might otherwise be brought around to support.

The Social Security language the White House choose to use in the budget indicates that the president is ready to begin the Social Security reform dance with the Republicans - but out of the public spotlight, for now. In the budget, the White House invokes the example of the last great Social Security back room deal: the 1980s agreement brokered by Speaker Tip O’Neill and President Reagan. The White House does layout six guiding principles for reform, but none seem to lock the president into any meaningful positions. There are the usual platitudes about “strengthening Social Security for future generations” and “restoring long-term solvency.” And even the more concrete statements leave the president with room to maneuver once a bargain is reached. If, for example, the president agrees to slow benefit growth by switching from wage indexing to price indexing, did he really violate his pledge that “the Administration will not accept an approach that slashes benefits for future generations”?

Some critics of the president’s budget have said that he is punting on Social Security reform until a budget crisis emerges when Congress hits the deadline for passing a Continuing Resolution or raising the debt ceiling. The president thinks, or so the story goes, that once a budget crisis arises, he’ll be able to get more from Republicans nervous about a government shutdown and repeating the mistakes of the 104th Congress.

At this point, I’m choosing to believe that this is less about legislative gaming and more about careful tending of the negotiation process. This is the president who said he came to Washington to change the way it worked, but his effective silence on Social Security reform in his budget shows me that he’s willing to follow some Washington rules that could get big things done.

We Do Big Things. Right, Mr. President?