Congress sleeping past the alarm on Social Security

Chuck Blahous writes today that Congress still has time to reform Social Security, the least complicated of the entitlement programs run by the federal government, but time is running out.  In his Washington Post opinion essay, the former Bush administration economic adviser emphasizes the points he made in his recent book, Social Security: The Unfinished Work (Kindle link here), and uses the opportunity opened by Harry Reid’s Rip Van Winkel demand to stress the need for speed now.  Ironically, the program’s supposed defenders may wind up destroying the program through their tactical delay:

So what would happen instead? If we delay until 2031, taxpayers would already be providing $280 billion annually in additional general revenue (read: income taxes), just to redeem trust fund bonds and to keep benefit payments flowing. These obligations of general revenue would be nearly as great as the amount required to fix the shortfall after 2037.

Given those circumstances, what would legislators do? Would they impose sudden benefit reductions and tax increases more than three times larger than in 1983, to preserve Social Security’s continued ability to finance itself? Or would they shrug and say, “Well, general-income taxpayers are effectively subsidizing Social Security already. Let’s just formally have them keep doing it.”

The answer seems obvious. Faced with a choice between wrenching benefit cuts and/or payroll tax increases vs. tearing down the wall between Social Security and the rest of the budget, legislators will tear it down.

And that would be the end of Social Security as we know it. No more separate trust fund. No more special parliamentary protections. No longer would benefit payments be shielded from the chopping block by the rationale that they were funded by separate payroll tax contributions. Social Security would be financed from the general revenue pool, and its benefits would thereafter have to compete with every other federal spending priority.

Predictions in politics are dangerous, but I make one here for the record: If Social Security repairs are delayed several more years, then within one generation from now we will witness the end of Social Security as we have long known it. The irony would be that the program was done in by its supposed defenders.

Democrats appear to belatedly awakening to this very danger.  The Post also reports that a significant number of Senate Democrats have split away from Reid’s assurances of twenty years’ naps and want to start addressing Social Security reform now:

A growing number of Democratic lawmakers say they are willing to consider controversial measures such as raising the retirement age and reducing benefits for wealthier seniors as part of a compromise with Republicans to cut spending on the programs and stabilize them for future generations.

But senior lawmakers such as Senate Majority Leader Harry M. Reid (Nev.) and Sen. Charles E. Schumer (N.Y.) are lining up against them, arguing that tampering with Social Security would harm the elderly — as well as the political fortunes of Democrats hoping to maintain control of the White House and the Senate in 2012.

The dispute, long simmering behind the scenes, is poised to erupt into public view. Reid has scheduled a rally Monday on Capitol Hill to show “support for Social Security and opposition to cuts in benefits,” according to an e-mail sent to liberal activists. And House Democrats this week signaled their intention to use Social Security as a cudgel in next year’s elections by launching an ad campaign accusing 10 GOP lawmakers in swing districts of plotting to cut the program.

Meanwhile, Third Way, the centrist Democratic think tank, plans to release a memo Friday arguing that the deficit has emerged as an uncommonly powerful political issue and that 2012 voters will reward the party that takes bold action to restrain government spending — including overhauling Social Security, Medicare and Medicaid.

Clearly, the public has awoken to the crisis, even if Reid and Schumer keep hitting the snooze button.  That’s the subject for today’s editorial cartoon by Nate Beeler, who uses the recent story from Reagan National Airport to illustrate just how many issues a sleeping Congress have let buzz the tower:

Be sure to check out Nate’s blog for more of his excellent work, featured at the indispensable Examiner.

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David Strom 6:01 PM on March 29, 2023