Obama Leaves Social Security Out
With President Obama's deficit reduction plan set to be released on Monday, we already have some idea of what will be in it: reductions in tax expenditures for wealthy individuals and corporations, changes to health programs, and other mandatory savings. We also now know what won't be included in the plan: Social Security reform.
Following a pattern that we have seen this year with the House Republican budget and the President's Framework, Social Security will be excluded from an otherwise comprehensive budget plan. The White House had previously seemed open to at least switching to the chained CPI, which would reduce Social Security cost-of-living adjustments (COLAs). Now, even that step appears to be off the table.
This is a mistake. Even if Social Security reform does not yield significant savings in the first ten years (if the policies are backloaded), it would still significantly improve the long-term outlook (which is part of the Super Committee's mandate, as we noted here) and it would avoid a sudden 23 percent benefit cut in 2036. Social Security's finances need to be remedied and the sooner, the better, because the longer we wait to address the program, the larger the changes will need to be. Just over the next ten years, the program will run cash flow deficits of about $500 billion.
We hope that the Super Committee does not follow this example and keeps all options on the table. Fencing off parts of the budget is not the way to go.