Wednesday, February 16, 2011

A Liberal Case for Social Security Reform

I raised this subject two months ago after the President's Debt Commission released its report. The nashing-of-teeth that's greeted the release of the President's 2012 budget over entitlements seems a good enough reason to raise again.

The most common liberal objection as I can tell is that reforms now won't guarantee conservatives won't come back three or six years from now demanding privatization or further cuts. And that's true. But the conservative case for post-reform privatization will be much weaker if the program has been put on the path to sustainable fiscal solvency. In such a case, conservatives won't have a basis for claiming there's a "crisis" if the program's annual reports begin to establish in the public mind that the program is indeed projected to be solvent for the next 75+ years. I'll return to this point later.

Broadly speaking, a liberal case for Social Security reform now is primarily one of political risk (combined with the economics and demographics affecting the program). Simply put, doing something now is better than waiting till later when the problem (long term actuarial imbalance) is worse. Beyond economics, the state of American politics might be worse later, too. If so, the "Overton Window" might have shifted towards a full dismantling of the program.

An additional factor worth mentioning is that for every year for the past two decades or so, Social Security's annual reports have projected the program to reach a point of insolvency at some time in the future. Many liberals tend to be dismissive of these projections in the sense that the year of projected insolvency is always said to be many years, usually several decades in the future. Why give in to pressure to reduce benefits now when the problem is many years away?

Well, one of the reasons is that because the program's funding gaps are reported every year, the public is made aware of them and legitimately or not, has cause to think the program's fiscal health is shaky. Hence the frequent mentions among polling respondents and radio call in shows that the system won't be there for "them" and will in fact be bankrupt. I have reason to attest that some version of this belief is common even among otherwise well-educated, politically involved, progressive people. Kevin Drumm recently made reference to a member of the political class' holding such an opinion.

It's tempting to castigate the media for its failure to properly educate the public or to blame members of the public, especially those who we think should know better, for this state of affairs. But the fact remains, these concerns and beliefs, while not totally accurate, do reflect information grounded in official publications and projections. And one way to help alleviate these concerns is to put the program back on solid footing for the long term.

The Social Security program, and its rich history for helping lift many of the aged out of poverty, will be the better for it. Let's not wait for 2028 or some other later year when the program's circumstances, and the public mood, could more than likely be considerably worse than today and supporters of the program have less room to maneuver. I'm not suggesting reform today will suddenly strengthen and improve everyone's perception of the program. But it would be a start.

On a related note, I largely buy in to the case made by Andrew Sprung and others that the best way for the President to lead on matters such as entitlements is through the Congress and negotiations with leaders from both parties, and not necessarily through the yearly budget requests or even for now, through public appeals. So I'm not necessarily looking for the President to be up front and vocal about this right now. But I do hope he and other progressives in and out of Congress begin to consider the matter of Social Security reform for the reasons discussed here.

Tuesday, February 15, 2011

Who's Defaulting?

Andrew Sullivan seems to think the U.S. is on the verge of fiscal default. How likely is this? What would cause it? The failure of Congress to increase the debt ceiling?

The term "default" has come up in several of Sullivan's recent posts, as in unless drastic budget cuts (or tax increases) are enacted to balance the budget right now the country will be in default/in a state of bankruptcy.

This seems a rather drastic and questionable interpretation of the current situation. For one thing, unemployment is still almost 10 percent; Surely this has something to do with our growing deficits. And up till now elites such as Fed Chairman Bernanke have warned Congress of the need to increase the debt limit unconditionally.

But I'll be curious to see if Andrew's invocation of "default" rhetoric will soon find it's way into the mouths and keypads of Media Villagers looking for a rationale to cut "entitlements".

The GOP's Entitlement Game

Matt Yglesias has an extremely shrill post up about the GOP and Social Security:

Right now we have conservatives simultaneously calling for huge spending cuts and also getting the line’s share of old people’s votes even while the vast majority of non-security spending is on old people. In essence, by first separating the domestic budget into “discretionary” and “entitlement” portions and then dividing the entitlement programs up into “what today’s old people get” versus “what tomorrow’s old people will get” the political class has created a large and vociferously right-wing class of people who are completely immune from the impact of their own calls for fiscal austerity. In my view, that reality is the biggest driver of our current political dysfunction. There’s some need for spending to be lower over the long term than it’s currently projected to go and I think it’s politically and morally vital that the adjustments be made in a balanced way. You frequently hear of the need to exempt everyone over the age of 55 from any possible cuts. That’s nice for them and encourages them to go right on complaining about out of control spending. But the average 55 year-old will still be alive and collecting benefits in 2035 so the long-term budgetary implications of this “let the geezers keep their full benefits while they whine about how Democrats are bankrupting the country” are actually pretty significant.

I agree with Yglesias and others in pointing out that Social Security is not the cause of the deficit or the debt that's accumulated over the past decade. All the same, if conservatives, teabaggers, and Media Villagers are going to clamor for "entitlement" cuts generally, and Social Security cuts in particular, then the cuts should apply to everyone, right now. No more of this "austerity for thee, but not for me" shell game.