Social Security Can Show a Way Forward
Years of failed budget negotiations have illustrated the political difficulties of a big budget deal. Neither political party is willing to touch their preferred part of the budget without significant concessions from the other side. However, there may be a way forward. In a blog post featured in the Hill, Jim Kessler and Gabe Horwitz suggest that tackling Social Security reform may be a way to break the logjam.
We've written about the cost of delay of waiting to reform Social Security. The program will be insolvent by 2033, and the longer that lawmakers wait to address our entitlement programs, the harder they will be to fix. As an example, achieving solvency solely through benefit cuts would require a 40 percent larger cut in 2033 than if it were enacted today. We've released the interactive tool the Social Security Reformer to illustrate how Social Security could be brought back into balance.
Kessler and Horwitz argue there are two reasons why Social Security reform could help lawmakers break through the political impasse:
First, there is more agreement on Social Security solutions among Democrats and Republicans than meets the eye. And second, a deal to fix Social Security may be the only way to make progress on every fiscal issue that concerns Democrats and Republicans—from sequester to the debt ceiling—providing an incentive for both parties to act.
The solutions in Social Security may be easier because there are a limited number of reform options. The bipartisan plans suggested by Bowles-Simpson and Dominici-Rivlin have laid out the broad outlines of reform, combining modest tax and benefit changes with protections for low-income beneficiaries. As Kessler and Horwitz argue, arriving at a solution on Social Security could lead to progress in other areas of the budget, like "ending sequestration, increasing public investments, and reforming the tax code."
With hundreds of billions of dollars of new revenue locked in to preserve Social Security, suddenly solutions to other vexing fiscal problems fall into place. The pressure to find significant new revenue through tax reform is dramatically lessened. Chain-weighting the Consumer Price Index creates billions in program savings and increased tax revenue. That money can be used to increase discretionary spending held captive under sequestration, meaning Democrats get new spending on investments without adding a dime to the deficit. Finally, the debt ceiling could be hiked substantially, because fixing Social Security has the added benefit of improving our long-range fiscal outlook by trillions of dollars.
Lawmakers should address Social Security soon, as the program becomes more difficult to reform the longer they wait. But now, there is an extra reason to reform Social Security. It could be the key to unlocking a budget deal that could finally put our national debt on a sustainable downward path.
Click here to try our Social Security Reformer.