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February 12, 2014
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A new effort to build bipartisan consensus on fortifying Social
Security was unveiled in Washington on Friday that shows the promise and
perils of the evolving debate on the how tens of millions of aging
Americans will support themselves in coming years.
On the
promising side, an extensive public engagement process by a new centrist
group, the Program for Public Consultation (PCP),
found
vast bipartisan agreement to strengthen Social Security now through
progressive tax increases and even increasing some benefits. On the
perilous side, the starting line for its discussion is the tedious
rightwing drumbeat about revenue shortfalls two decades from now, which
distract from focusing on today’s retirement security crisis and what
steps can address more immediate human needs.
“They did not brief
respondents on the retirement crisis or ask them if they had saved
enough for retirement,” said an analyst with one of the more progressive
reform groups, who attended the PCP briefing but commented on
background. “So respondents were tasked with the narrow job of
eliminating the shortfall, rather than devising the best Social Security
policy.”
After several decades where the political debate on Social Security has been
dominated
by right-wingers who want to either eliminate, privatize or cut it,
there’s new momentum in Washington to step back and starting discussing
how Social Security can be fixed for today’s recipients and Americans
who will soon retire. Like all political debates, how the problem is
defined has a lot to do with what solutions are offered.
What’s
needed now, the analyst said, was “a discussion of people and their
retirement insecurity—especially Generation Xers and millenials. Those
advocating cutting Social Security say it is to protect our children and
grandchildren, yet they will need it even more than today’s retirees
do.”
The Program for Public Consultation is a relatively new group whose
board
is made up of a dozen former Democratic and Republican congressmen, and
another two-dozen experts who wear many hats as policy centrists in
Washington. Their foundation-funded initiative is noteworthy not only
because it will be repeated in congressional districts in 2014, but
because its early findings support taking specific steps now that
progressives have been touting for years—and for which there is huge
public support to do so.
For example, after holding workshops
last July where 738 people took part, PCP polled participants and found
that 76 percent backed the most progressive revenue solution:
eliminating the little-known cap on taxable income that funds Social
Security. People only pay taxes on the first $117,000 of their income,
not investments, for the social insurance program. That step alone would
eliminate the projected shortfall two decades from now and generate a
surplus funds to expand current benefits by one-sixth, PCP Director
Seven Kull said at the press briefing.
PCP also found strong
support, 72 percent, to increase the minimum monthly benefit for
retirees—which, at $760, is below the federal poverty line. And it found
that 73 percent also favored increasing benefits once people reach age
80. The majority, 59 percent, also supported reducing Social Security
payments to wealthy Americans who didn’t need it. Those poll results
reflect sizeable majorities to act now to expand the program.
But
on the perilous side, the starting line for PCP’s exercise reflects the
conservative bias that elevates concern about projected finances in
2033 above whether today’s benefits are enough, let alone in two
decades. PCP mostly frames the challenge as ensuring retirees do not see
a 23 percent cut in benefits in 19 years due to inadequate income tax
revenue. Anti-tax Republicans and Wall Street financiers have cited
those projections to call for cuts now, or political compromises that
will not ensure that tens of millions of people age with dignity and
stay out of poverty—why it was created in the 1930s.
Seizing The Political Third Rail
Nonetheless,
this new Washington-based initiative signals a changing political
landscape and willingness to tackle an issue that was long thought to be
political suicide—tinkering with America’s most popular government-run
social insurance program.
“When we talk about Social Security,
many of us will immediately think about the third rail idea—that you
can’t really touch this because it’s too hot,” said Marvin Kalb, the
ex-CBS and NBC
reporter, in opening remarks as he moderated a panel presenting PCP’s
findings.
“Well this study that’s before us today is called, ‘Is It Really a
Third Rail’ and ‘How the American People Would Reform Social Security.”
“The overall ground is to show public respondents and people
who want to take the exercise how is the problem painted by the people
who are responsible for painting it—for showing the elected members of
Congress how the problem looks,” Kull said, going through the project’s
policy-shaping process. “It goes back to trying to simulate the
experience that members of Congress have.”
PCP’s project, dubbed “
Voice of The People,” comes amid growing awareness that much of the 76-million-member Baby Boom generation—in all
demographics—has
not saved enough for their retirement, making Social Security and
Medicare their primary means of support. That’s because
employer-provided pensions have been vanishing for decades, and the
private investment plans that replaced them, such as 401Ks, are
insufficient. Only 20 percent of seniors, earning more than $58,000 a
year, will not rely on Social Security as their main income, the
National Academy of Social Insurance has
found.
Last
July, PCP enlisted 738 people from around the country in a process that
they call the “citizen cabinet model.” They first briefed the
participants as Congress’s staffers would brief elected officials—using
staff Republican and Democratic analyses from House and Senate
committees that deal with Social Security. They also used papers from
advocacy groups: the conservative American Enterprise Institute and
liberal National Academy Of Social Insurance. Then they convened groups
to go through the policy options, starting with separating facts from
partisan opinions. They noted the pros and cons of choices, and finally
polled participants on solutions.
The briefings started by
explaining Social Security’s basics, which are not complicated. The
social insurance program is funded by payroll taxes on the first
$117,000 of taxable income. Benefits are calculated by averaging
lifetime earnings, although lower-income people receive a larger
percentage than wealthier people. Today, average retirees receive $1,290
a month. The foremost problem presented was that after 2033 the revenue
paying for this level of support, after future cost-of-living
increases, will run out and benefits will have to be cut by 23 percent
unless “reforms” are undertaken.
The solutions presented were not
just what’s been noted on progressive websites—which favor increasing
Social Security taxes to cover the far-off shortfall and to expand
benefits now. Participants were asked whether benefits should be cut for
high income people who don’t really need them. They were asked if the
retirement age should go up; it’s now 66 and becomes 67 in 2027. They
were asked if payroll taxes should be increased slightly, and if the cap
on taxable earnings should raised or be scrapped.
They also were
asked if minimum benefits should be higher, and whether benefits should
go up again at age 80. Finally, they were asked what cost-of-living
formula should be used for calculating annual increases; one cutting
future benefit levels compared to what is used today (the so-called
chained CPI, which has been endorsed by President Obama) or another one
that’s more targeted to elderly buying trends, called the CPI-E.
Surprising Results
To
start, 72 percent of participants—66 percent Republicans, 82 percent
Democrats—had “positive” views of Social Security. Slightly more than
half said that the average monthly benefit was “about the same as you
expected.” More Republicans, 57 percent, said that they knew about “the
[revenue] shortfall,” compared to 50 percent of Democrats.
The way
these discussions unfolded—from prior knowledge, to briefings, to
discussing reform pros and cons, to voting on options—was noteworthy.
The longer people talked, the more certain approaches emerged with
growing bipartisan support, Kull said, until popular ideas crossed a
threshold. For example, two-thirds found it “at least tolerable to
reduce benefits for the top 25 percent of earners. Just under half found
tolerable reducing benefits for the top 40 percent,” PPC
reported. “Reducing benefits to the top 50 percent was found tolerable by only one-in-three, with little difference among the parties.”
In
other words, means-testing for Social Security benefits, is seen as a
fair policy—as long as people who will really need the monthly stipend
don’t see unnecessary cuts.
On raising the retirement age, “six in
ten found [it] at least tolerable raising the age to 68, with no
difference between the parties.” But 69 was too high for most Democrats
and for half the Republicans. And raising the onset of benefits to 70
was opposed by 75 percent.
Perhaps the most intriguing results
concerned raising or eliminating the cap on taxable earnings. When
provided with narrow partisan arguments, pro and con, for raising the
cap from $117,000 to $215,000 over 10 years, 66 percent agreed with the
case for raising it, while 59 percent agreed with the case against it.
Kull said this result wasn’t entirely a contradiction, but more a
measure of the strength of different positions.
When the case was
offered for eliminating the cap—“the incomes of the wealthy have been
growing by leaps and bounds, while the incomes of the middle class have
been stagnating”—76 percent agreed. Meanwhile, the argument against
eliminating the cap— “high earners just saw their income taxes,
investment taxes and Medicare taxes increased”—was the least convincing
of all, garnering only 47 percent support. Thus, the more time that
people took to understand the issue, the more support there was for the
most progressive solutions—raising taxes on those most able to pay in
order to fortify present and future benefits.
PCP’s spokespeople
said that their policy-making exercise, which they plan to take to
congressional districts in coming months, showed there was a middle path
possible to modernize the nation’s biggest social insurance program.
“One
of the central issues that I get from reading this study is that for
those people who feel that there is no way around this third rail, there
is,” Kalb said. “If you address it from the point of view of what the
American people think about a possible solution, what you come up with
is that by sizeable majorities, both Democrats and Republicans, the
American people do feel that a sensible compromise is the way to go. And
that sensible compromise involves, on the one hand, obviously, raising
taxes, and on the other, limiting benefits that are available. But
balancing the two, in an intelligent way, can be done in the opinion of
overwhelming majorities of the American people.”
“I think this
is a wonderful moment to tackle Social Security because we’re not going
to have budget action for the next year or two,” said Alice Rivlin,
ex-Clinton White House budget director. “One of the cogent arguments
that the advocates for the elderly make was, ‘We do need to solve the
Social Security problem, but not in the budget context: don’t balance
the budget on the backs of the elderly and do it as something separate.’
Well now is our chance to do something separate.”
Living Wages And Minimum Benefits
Even
though these conclusions point to solutions championed by progressives
for a long time, it’s important to note that PCP’s public engagement
process is by no means the whole discussion. At PCP's press conference,
Ben Veghte, research director for Social Security Works, said the
discussion about “shortfalls” was not just about money, but also about
Social Security’s public purpose. When he asked if that was part of
PCP’s briefings, Kull replied that their process mostly relied on
congressional reports for issue analyses, and that point seemed like an
argument—a secondary concern—but he’d note the suggestion.
What
seniors who outlive their savings will live on in coming years—which is
forecast for tens of millions of baby boomers—is what gets lost when the
focus is mainly on preventing a projected 23 percent cut in benefits in
19 years. However, PCP’s report offered some stiking statistics that
highlight how different policies can mean big shorter-term differences
between falling into poverty or not.
For example, today’s minimum
benefit, about $770 a month, is currently below the federal poverty
line. To raise that to 125 percent of the poverty line, or about $1,150 a
month, “would increase the [projected 2033] Social Security shortfall
by 7 percent,” they reported. But at the press conference, Kull said
that eliminating the income tax cap would bring the Social Security
Trust Fund in 2033 to 117 percent of projected payouts. In other words,
that’s one simple way to strengthen and expand current and future
benefits.
The framing of this discussion, especially at this early
stage, is crucial. Another missing piece today would compare Social
Security benefits to the the minimum wage—since the idea of Social
Security is a social insurance program that provides a basic pension for
people with little other income.
Today’s average monthly retiree
benefit of $1290 would break down to $8.06 an hour if it were calculated
based on 40 hour weeks. That’s poverty-level income. Even President
Obama in the State Of The Union speech called for raising the federal
minimum wage to $10.10 an hour, which equates to $1616 a month. In
California, where living costs are higher, Republican Ron Unz is
bankrolling a fall 2014 state ballot measure to lift the state’s minimum
wage to $12 an hour—which translates to $1920 a month.
It’s
eye-opening to contrast what’s being discussed today as a minimum living
wage to what’s under discussion for Social Security payouts. As groups
like Program for Public Consultation take their policy-creating process
on the road, they are likely to hear that America’s retirement security
crisis is at hand now, and involves much more than just balancing the
projected books in 2033.
These are the individuals who have contributed to AlterNet's Retirement Crisis Reporting Fund:
Nancy
Adams | Maria Alvarez | Dolores Amato | Sara Baker | Jerry Banks |
Catherine Barnes | Patti Batchelder | Maryann Bayne | William Bell |
Hugo Benoit | Werner Bergman | Lisa Beutler | Patricia Bewley | Gary
Billey | Gary Binderimz | Rosemarie Blake | Bhikkhu Bodhi | Robert
Bottman | Christopher Boutelle | Angus Bowen | B. Bowers | Charles
Brainard | Kern Braswell | Catherine Brave | Jody Breslaw | Kim Brown |
Marilyn Bruning | Bonnie Burkart | John Burke | Jeffrey Cancilla | Alice
Canty | Dorothy Cinquemani | Kenneth Clark | Suzan Clausen | Robert
Cohen | Harriet Cohen | Sandra Colombo | Michael Conley | Casey Conner |
| Eugene Constant | Rachel Cooke | Peter Costello | Sydney Crawford |
Iris Culter | Kathleen Daugherty | Gary Davis | Michael Davis | Richard
Dawson | Jorge De Cecco | Kenneth Deed | Nandi Devam | Kim Dexter | J.A.
Dingman | Elizabeth DiPalma | Patricia Dodds | John Doheny, Jr. |
Gloria Donohue | Don Dougherty | Albert Driscoll | Stu Duckman | Ronald
Dumont | Kim Ecclesine | Nancy Eckel | Cynthia Ellsmore | Edwin
Engelmann | Judith Espovich | Virginia Eyman | Matthew Farrell | Karen
Fedorov | Perrin Ferris | Thomas Firpo | Carolyn Fletcher | Christopher
Flores | Terry Fontenot | Barbara Ford | Thomas Friel | Linda Fulton |
Larry Gaylord | Marion Gehlker | David Glater | Nancy Goldberg | Donald
Goldmacher | Alison Gomez | Florence Granowitter | Emily Greene | David
Griscom | Terrence Grywinski | Shawn Hansen | Debra Harpole | Louise
Harris | George Hart | Stuart Hartley | Bill Healey | Geoffrey Hendricks
| Robert Henning | Marion Hirseman | Martin Hittelman | Cathy Hoot |
James Hopkins | David Huhn | Will Husa| Ayed Hyder | Linda Irenegreen |
Aaron Jacobs | Bobie Johnson | Wynn Kapit | Elizabeth Kelley | Jae
Kenworthy | Ronald Kestler | Anita Kichefski | Jeremy Kilborn | W.
Kimzey | Kerry Kleiber | Denise Kobylarz | Sandra Korn | Nancy Kranich |
John Kyper | Bruce Lee | Marilyn Lee | Theodore Leibowitz | Carol
Lemieux | Henry Lesnick | Betty Leyerle | Ellen Linnemanstons | Robert
Lipsyte | Joan and Wallace MacDonald | Susan MacMillan | Charlene Maker |
Barry Maloney | Josepha Maly | Tommy Mandel | Lawrence Mar | Louis
Mariani | Joseph Mastalski | Annie Masters | Chris Matthews| George
Matkovits| Kay Matthews| Frank McEvoy| Gail McMullen| Kevin Meismer|
Elizabeth Mewhinney| Mary Micek| Rosemary Migas | Claire Mills |
Jonathan Morris | Nina Murano | Christine Murphy | John Murrill |
Deborah Mytels | Jean Naples| Peter Nasatir| Aileen Nelson| Terrance
Newton| Deborah Nitasaka| D. Ocker| Janet Ohlhausen| Clifford Olin|
Judith Pearson| Charles Percival | Jeanne-Marie Peterson | Mary Peterson
| Cynthia Peterson | Ted Pfeiff | Brian Porter | Rudolph Radau | Joseph
Rainho | Richard Rayford | Lisa Reswick | Debbie Richards | Sharon
Richey | Leonard Rifas | Marvin Ritzenhaler | Nancy Roca | Edwin Rogers |
Sue Rosen | Richard Ross | Nancy Ryan | Susan Salazar | Joseph Sanchez |
Terry Sanders | Elizabeth Sands | Carole Sauriol | Carol Scher | Scott
Scherman | Wanda Schertz | Gerda Seaman | Carolyn Semiglasow | Marlene
Shaner | Elaine Simon | Crystal Sloa | Sara Sogut| Helen Sohne|
Priscilla Solomon| Wayne Stinson| Patricia Stroud| Francis Sullivan,
Jr.| Jyun Takagi| Tasmin Taylor| Diane Thatcher | C. Thompson | Keith
Thornton | Lisa Tomchesson | Priscilla Toth | Catherine Twohill | Eric
Weis | Teresa Welborn | Wilma A. Wheeler | Joel White | Dolores Whitman |
Terry and Barbara Williams | Hugh Wilson | Liddy Wilson | Carroll M.
Wilson | Eric Wilson | Jack Wilson | Charles Witt | William Woodward |
James Woolsey | Eleanor Wynn | Christine Wynne | David Yamada | Leroy
York, II | James Young | Marian Zaouk | Susan Zencka
Steven Rosenfeld covers
democracy issues for AlterNet and is the author of "Count My Vote: A
Citizen's Guide to Voting" (AlterNet Books, 2008).
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