Overhauling Social Security: Politically Possible?

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Overhauling Social Security: Politically Possible?

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Apr 19, 2011

BY CHRISTINA HARTMAN ANCHOR CHRISTINA HARTMAN You're watching multisource U.S. news analysis from Newsy. Still no federal budget for 2012 -- but another, more hush-hush budget battle is already looking ahead to 2037. That’s when the Congressional Budget Office expects Social Security to go broke. JAMES FREEMAN, WSJ: “Medicare and Social Security are growing faster than the economy, faster than ... more BY CHRISTINA HARTMAN ANCHOR CHRISTINA HARTMAN You're watching multisource U.S. news analysis from Newsy. Still no federal budget for 2012 -- but another, more hush-hush budget battle is already looking ahead to 2037. That’s when the Congressional Budget Office expects Social Security to go broke. JAMES FREEMAN, WSJ: “Medicare and Social Security are growing faster than the economy, faster than the incomes are growing.” (VIDEO FROM FOX NEWS) Senate Majority Leader Harry Reid has said Social Security can’t be touched -- but in a Face the Nation interview Sunday - Democratic Senator Mark Warner says the once-forbidden fruit might now be edible. SEN. MARK WARNER: “Let me assure you we'll make everybody mad with our approach. ... All the entitlement programs looking at how you make Social Security more sustainable. ... Part of this is just math. 16 workers for every one retiree 50 years ago and three workers for every retiree now.” Last week three Republican senators unveiled with a plan to reform Social Security -- and they say they can do it without raising taxes. Utah Republican Senator Mike Lee -- Lindsey Graham of South Carolina -- and Rand Paul of Kentucky are proposing to raise the retirement age to 70 over the next twenty years. They also want to reduce benefits for workers making an average of $43,000 a year or more. The Wall Street Journal’s David Wessel expects some kind of deal to happen. Unlike health care -- he says -- both sides seem willing to talk about changes to Social Security. DAVID WESSEL: “Neither side has ruled anything in or ruled anything out on Social Security. Some think that’s a recipe for cutting a deal on fixing Social Security because it’s the one thing they haven’t backed themselves into a corner. ... Some combination of raising taxes, perhaps raising the ceiling on the wages subject to the payroll tax and some changes to the benefit structure to adjust for inflation in a way that costs less money and to raise the retirement age.” That doesn’t mean the debate isn’t getting at least a little ugly. Critics of any proposed cuts to Social Security benefits say they disproportionately hurt the poor and the working class. In a guest contribution for the progressive blog firedoglake -- Nancy Altman calls the plan outrageous. “[It] slashes benefits drastically but continues to require workers to pay the same level of contributions specified under current law. … Graham, Lee, and Paul propose to ‘borrow’ those excess contributions, all $6.2 trillion worth, the way a school yard bully borrows – with no intention ever of repaying the money.” She explains her rationale with this chart. Social Security can’t pay out in FULL after 2037 -- but she says if Congress does nothing -- recipients will still get around 75 percent until at least 2080. But the editorial board at the conservative Washington Times says there’s a lot for Democrats to like about the Lee-Paul-Graham plan for Social Security. “Benefits would be means tested so that ‘the rich’ would receive less money than they put into the system. It sounds like the sort of progressive idea Democrats ought to embrace... [N]obody nearing retirement now would lose assistance under the reform proposal. Democrats don’t seem particularly worried that the consequence of waiting is that the only option for retaining promised benefits would be to impose several trillion dollars in new taxes.” Finally - on Daily Finance - Charles Warner argues - Social Security isn’t in as dire shape as opponents would have you believe - but it COULD benefit from a few changes. “...it would be relatively easy to make modest changes to Social Security to close the gap that will emerge in 2037. Among the options: Raise or eliminate the cap on Social Security taxes, which are now paid by employers and employees on only the first $106,900 of income.” President George W. Bush tried to privatize Social Security -- but was unsuccessful. Most analysts agree private plans will likely stay off the table this time around. 'Like' Newsy on Facebook for updates in your news feed. Get more multisource video news analysis from Newsy. Transcript by Newsy. less Tags: social security, budget, cbo, congressional budget office, economy, medicare, social security, entitlement, entitlement programs, retire, elderly, u s news, multisource, harry reid, reform, benefits, workers, labor, tax, cap, privatize