CQ TODAY ONLINE NEWS
June 15, 2011 – 9:21 p.m.
Social Security Lingers as Issue for Some GOP Lawmakers
By David Harrison, CQ Staff
Rank-and-file Republicans in the House and Senate are continuing to push for changes to the Social Security program, despite leaders’ acknowledgement that it probably will not be part of an agreement on raising the national debt limit.
In recent weeks, Republicans have filed legislation and held hearings urging an overhaul of the program, which a recent report said would run out of money by 2036. Their insistence suggests that even if Social Security is not part of a debt deal, at least some in the GOP are intent on laying down markers for future discussions.
Sen.
Hutchison said the timing of her bill was intended to nudge negotiators to consider including it in the talks being led by Vice President
“I think it needs to be part of the debt ceiling overall package,” she said. “We cannot really address our financial situation with just discretionary spending cuts.”
Democrats have been adamant that Social Security should not be included in the current talks, and Republican leaders have indicated that they will fight for cuts to the two health care entitlement programs — Medicare and Medicaid — but acknowledge that changes to the retirement program are unlikely.
Still, Hutchison’s ideas, which are similar to those advanced in 2010 by President Obama’s bipartisan deficit commission, are shared by many in her caucus. In April, Republican Sens.
Neither of the Republican proposals would increase payroll taxes.
Report Findings
In the House, committees have held hearings to discuss the findings of the Social Security and Medicare trustees’ report released last month. The report found that last year, for the first time, Social Security paid out more in benefits than it received in payroll taxes, a gap that is expected to widen as more baby boomers start collecting benefits.
In the past, tax money not used to pay for benefits was invested in specially issued Treasury bonds. Those bonds earn interest, which so far has allowed the Social Security trust fund to grow despite the increase in benefits paid.
In the coming years, however, the program will be forced to redeem some of those bonds to pay benefits. By 2036, the trustees say, the fund will be dry. Tax receipts will be able to cover only about 75 percent of benefits.
“The Republican freshmen and many others have the belief that if you’re going to actually deal with entitlement spending and the like, this is a once-in-a-lifetime opportunity where everything has to be on the table, or it won’t be dealt with in the foreseeable future,” David John, a Social Security expert at the conservative Heritage Foundation, said.
Social Security Lingers as Issue for Some GOP Lawmakers
But neither party’s leadership has been keen to address Social Security, which former Speaker Thomas P. O’Neill Jr., D-Mass., famously described as the third rail of politics. In an April speech, Obama said that while Social Security needed to be strengthened for future beneficiaries, it was not driving the nation’s deficit problems and could be addressed in bipartisan talks later — but only in a way that would not put current retirees at risk, cut benefits for future retirees, or privatize the program.
House Budget Chairman
More recently, Senate Minority Leader
‘We Can Really Make a Difference’
Graham said leaving Social Security out of the debt discussion was a “huge mistake.”
“You can’t get there from here,” he said. “Social Security’s going to go broke. We should put it on the table to save it from bankruptcy.”
Hutchison said that unlike Medicare, which is famously complex, “Social Security is one where we can really make a difference.”
While there is agreement in both parties that the program must be altered to address future shortfalls, lawmakers are divided on what those changes should be and when they should be made. Democrats say that because the Social Security trust fund can still finance benefits for more than two decades, there is no need to rush into action. Social Security spends only what it brings in, they say, and therefore does not contribute to the national debt.
Republicans counter that because Social Security’s revenues are converted to Treasury bonds, the program is, in effect, a creditor of the government. Should the program have to cash in those bonds, the government would have to borrow more money to pay beneficiaries.
“The system is broke and you know it,” said Texas Republican
“Sure they’ve got pieces of paper over there, but that’s not real,” he said, referring to the Treasury bonds that constitute the trust fund.
Privatization Plans
Democrats, however, see privatization as Republicans’ ultimate aim. While talk of creating private retirement accounts has mostly faded since President George W. Bush’s proposal in 2005, Rep.
Social Security Lingers as Issue for Some GOP Lawmakers
Republicans “never liked Social Security when it started in the 1930s, and periodically their true sentiment resurfaces,” California Democrat
While both Graham and Hutchison support private accounts, both said that Democratic control of the Senate and the shaky stock market make that approach politically impossible.
Should the GOP succeed in getting Social Security changes attached to a debt deal, John, of the Heritage Foundation, said it had a shot at passage.
“If there is a big spending deal,” he said, “and if those of us who support Social Security reform manage to get Social Security as part of that overall package, then we’ve got a chance to get it done.”