A fight over Social Security reform could wind up splitting the Democratic caucus in the Senate, Vermont’s Bernie Sanders warned yesterday.  Unions have lined up against any change in benefits for Social Security and have begun warning Barack Obama to avoid the entitlement debate in his State of the Union address.  Sanders says he counts Harry Reid among his allies in this fight:

The battle lines are forming within the Democratic Party over the charged question of reforming Social Security in the days leading up to President Obama’s State of the Union address.

Liberals, such as Sen. Bernie Sanders (I-Vt.), and labor unions, such as the AFL-CIO, AFSCME and SEIU, have taken a firm stand against cutting Social Security benefits. …

Sanders told The Hill on Friday that a group of Senate Democrats may support raising the retirement age. But he said there is also a faction of the caucus, led by Senate Majority Leader Harry Reid (D-Nev.), staunchly opposed to benefits cuts.

“I raised my concerns on this payroll tax holiday and it was raised by a number of other Democrats — Harry Reid was very strong on the Social Security issue,” Sanders said.

Sanders claimed that Republicans would fight the end of the FICA “holiday” in 2012 and call it a “tax hike” in the next election cycle.  However, Republicans didn’t push the FICA tax holiday in the first place; that idea came from Democrats.  The tax deal Obama cut with Republicans included the employee-side temporary reduction, which the GOP didn’t oppose but didn’t enthusiastically support, either.  Public statements from Republicans at the time indicated that they weren’t interested in extending it beyond this year.

However, Sanders knows that the GOP have to start reforming entitlement programs to get the budget reductions they promised.  The unions want to stop those from occurring, even though the option without entitlement reform would be widespread reductions in the federal workforce, which leaves them over a barrel politically and economically.  Unfortunately for Sanders, a large number of his colleagues have to stand for re-election themselves, and with 77% of voters demanding reductions in federal spending, the pressure to comply will be more than the unions can rebuff.

A fight over Social Security reform could split Democrats ahead of the next election, and perhaps even split Obama from the Senate as well.  If Obama backed serious Social Security reform in his effort to triangulate, along the lines Bill Clinton did with welfare reform, then it will make any naysayers in the Senate look even more out of touch ahead of their re-election bids next year.  They will fall in line instead — but only if Republicans seize the initiative and make it an issue in 2011 as part of the budget-reform fight.