Social Security's simple fix blocked by politics

Erik Paulsen
Republican Rep. Erik Paulsen meets one on one with constituents at a grocery store in Eden Prairie as part of a "Congress on Your Corner" event. He said President Barack Obama should take the lead on addressing Social Security's coming insolvency.
MPR Photo/Mark Zdechlik

To address the nation's ongoing debt problem, many budget experts say Congress should first address Social Security — the federal government's largest program.

Shoring-up Medicare, another big government expense, is sure to be complicated. But those same budget experts say fixing Social Security would be relatively simple.

The Congressional Budget Office says about $1 out of every $5 the federal government spent last year went to Social Security. The CBO estimates that in 20 years, Social Security won't have enough money to cover the cost of providing benefits.

"The things that need to be done about Social Security are well known and not very drastic," said Alice Rivlin, who served as President Bill Clinton's Office of Management and Budget director.

If lawmakers are serious about getting federal spending under control, Rivlin said they should start with Social Security.

"I've been saying that for quite a long time but nobody has been listening," Rivlin said. "Maybe they will listen now."

Rivlin and others say relatively small tax increases and benefit reductions for future recipients could shore up Social Security for the foreseeable future.

So why are lawmakers standing on the sidelines?

"One reason it might not be happening is that politics is not a logical process always," said Robert Bixby, the director of the Concord Coalition, a Washington-based group promoting an end to deficit spending.

Like Rivlin, Bixby said fixing Social Security is not complicated.

But Bixby said if you're trying to get elected, the last thing you need is an opponent running around telling voters you want to reduce benefits and raise taxes, which is exactly what most agree needs to be done to ensure Social Security's solvency.

"It's like an easy layup for a political campaign to say 'my opponent will take away your Medicare or my opponent wants to destroy Social Security,' " Bixby said.

The last major Social Security fix happened in 1983 under President Ronald Reagan. Lawmakers headed off a crisis then by raising taxes and cutting benefits.

Third-term Republican Rep. Erik Paulsen, who represents Minnesota's 3rd Congressional District, promotes himself as a "reform-minded" leader.

But Paulsen is not pushing to the front of the line to fix Social Security. He said that's up to someone else.

"Reagan was able to do it very successfully with a Democratic Congress," he said. "I do believe that leadership on both sides of the aisle are going to be looking to the president to sort of offer some ideas and thoughts on it."

Some Republicans hope Paulsen will challenge DFL Sen. Al Franken next year.

Entitlement spending is sure to come up in Franken's re-election campaign. But Franken said he's not worried about being accused of cutting benefits and raising taxes.

"I give voters a lot of credit in Minnesota," Franken said. "Minnesota voters are very engaged and they understand that these issues are complex."

Franken said the first thing to do to address Social Security's projected insolvency would be to raise the cap on income subject to the Social Security payroll tax. Franken said a lot of wages are no longer subject to the tax because some people are making much more money than they were a generation ago.

"In 1983 during the Reagan administration when Social Security was reformed, 90 percent of income in the United States was subject to FICA taxes. Now it's 83 percent," Franken said.

Franken said he would also consider raising the retirement age for Social Security recipients three to four decades in the future.

In a time of such dysfunctional national politics, some political observers believe if lawmakers could seal a deal to fix Social Security, they might feel emboldened to start addressing some bigger problems, including unsustainable growth in the cost of Medicare.

"A good argument can be made that if the parties could come together and solve Social Security, a relatively easy problem, that they might develop some new habits to finding some solutions to these even large problems that we face on health care," said Steven Smith, a political scientist at Washington University in St. Louis.

But, unlike 1983 when Social Security was just months away from running of money, there's no emergency right now — insolvency is 20 years out.

Still, the experts say, the longer the inevitable fix is delayed, the more painful the solution will be.

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