Barack Obama may avoid mentioning Social Security in his speech today, but the Senate may not let him off the hook. Both Democrats and Republicans in the upper chamber demanded movement on reform to salvage Social Security with calls for higher retirement ages. The Hill reports that a small group of Democrats have demanded reform — enough to give Republicans the votes to force it:
Several Democratic senators are separating themselves from their leadership and encouraging President Obama to cut Social Security benefits by raising the retirement age in order to keep the entitlement solvent.
Sens. Tom Carper (D-Del.) and Sen. Dianne Feinstein (D-Calif.) and Sen.Joe Lieberman (I-Conn.), who caucuses with the Democrats, are all openly calling for reform, and making it plain that the party is disunited on the issue when a titanic debate over debt is gathering momentum.
If the president called for raising the Social Security retirement age by a year or two, phased in slowly over several decades, these senators say they could support him.
Later, Republicans answered with a plan for hiking the retirement age and means-testing benefits:
Three Republican senators on Wednesday will propose a Social Security reform package that would raise the retirement age to 70 and cut benefits for the wealthy.
Sens. Lindsey Graham (S.C.), Rand Paul (Ky.) and Mike Lee (Utah) previewed their proposal on Fox News, saying that it will put the entitlement program on a long-term path to solvency without raising taxes.
The senators said that their plan would gradually raise the retirement age from 67 to 70 and would not affect individuals age 56 or older. Graham said that the proposal uses the same formula Congress used to raise the retirement age from 65 to 67, so that people born in 1970 would become the first group to have a retirement age of 70.
Means-testing is a sensitive topic. Social Security is positioned as an earned pension system, not a welfare system, although in reality it’s closer to the latter than the former now. Means-testing will be popular in the same way that higher taxes on the wealthy are, ie, as a class-warfare argument. However, disconnecting benefits from contributions will turn Social Security into an explicit wealth-redistribution system, and it’s likely to lose more political support in the long run — and for little real benefit, as the issues of solvency hardly involve benefit payments to the wealthy but the structural issues of longer payments to everyone through extended life expectancy:
Having both Republicans and Democrats working on Social Security reform in the Senate makes it more likely that some sort of bipartisan compromise will emerge. If Obama fails to get ahead of this effort in the same way he failed to get ahead of budget cuts and entitlement reform in the last few weeks, the White House will lose even more credibility in political leadership.