Tim Penny: Clinton and Democrats Need to Address Social Security
Tim Penny is the president and CEO of the Southern Minnesota Initiative Foundation, a former congressman from Minnesota, and a co-chair of the Committee for a Responsible Federal Budget. He recently wrote an op-ed featured in The Hill. It is reposted below.
Social Security turned 81 this past August. And at the ripe old age of 81, Social Security continues to be a vital program that provides income security for nearly 60 million people around the country and protects our most vulnerable citizens from what President Franklin Roosevelt called the “hazards and vicissitudes of life.”
Democrats should be proud of the Social Security legacy that Franklin Roosevelt put into place to prevent seniors from falling into poverty. But in order to protect that legacy and the retirement security of current and future retirees, Democrats — including Democratic Presidential nominee Hillary Clinton — must responsibly address the program’s financial challenges.
In fact, former President Bill Clinton warned about the dangers of ignoring the looming insolvency of Social Security during his presidency. “This fiscal crisis in Social Security affects every generation,” he said in a speech at Georgetown University in February 1998, adding that failure to address it not only affects baby boomers but also “raises the question of whether they will have enough to live on by unfairly burdening their children and, therefore, unfairly burdening their children's ability to raise their grandchildren.”
A couple of months later, President Clinton rightly declared that it would be “unconscionable if we failed to act, and act now, as one nation” to address this problem. Those words still ring true today and the level urgency to act is far greater now than it was then.
Social Security has been running cash deficits since 2010 and the trust funds are projected to run out of money by 2034 according to the program’s trustees. At that point there would be a steep, 21 percent across-the-board cut in benefits for all retirees, even the most vulnerable. That may seem like a long way off, but 2034 is when today’s 49 year-olds reach the normal retirement age and today’s youngest retirees turn 80.
There is still time to put Social Security on a financially stable path through changes that are phased in gradually while strengthening the safety net for those who need it. But the window of opportunity for a thoughtful solution is closing.
The longer we wait to take the necessary reforms, the harder the task becomes. For example, the reductions necessary to restore solvency entirely through changes in benefits for new retirees will be 50% greater in ten years than would be necessary today.
Solely raising taxes on the wealthy, by applying the payroll tax to incomes above $250,000 as Hillary Clinton has suggested, will only close 70%-80% of the solvency gap and 33% to 50% of the program’s structural gap, before accounting for costs of any benefit enhancements. And, a revenue-only solution will not receive the bipartisan support that has been essential to the standing of the Social Security program.
Secretary Clinton has also stated that she wants to expand the program for those who need it most, such as elderly widows and caregivers. The best approach would be to include these enhancements within the context of a plan that fixes Social Security’s financing crisis. Obviously, protecting and expanding benefits is impossible if the money isn’t there to pay them.
Clearly, a responsible plan to restore Social Security’s finances will require the parties to come together and agree to both increase the revenue coming into the program and slow the growth in benefits that being paid out.
Getting bipartisan agreement on a plan to make Social Security solvent will be difficult, but a compromise can be reached that has “wins” for both parties — reducing the pressure for future tax increases (Republican win), strengthening poverty protections for seniors (Democratic win), removing uncertainty by making Social Security financially sound for future generations (Americans win).
Bill Clinton took an important step during his Presidency by beginning a national dialogue on Social Security, but unfortunately was not able to follow the dialogue with action. If elected President, Hillary Clinton should take the next step by following the example of President Ronald Reagan and House Speaker Tip O’Neill to create a bipartisan commission on Social Security. A commission can create the political space to reach a principled compromise that would ensure Social Security’s solvency just as the Greenspan Commission did in 1982-83.
The most important thing Hillary Clinton and Democrats can do to strengthen retirement security and protect the legacy of Social Security is to fix the program’s long-term finances. Calling for the program’s solvency isn’t selling out seniors; rather, it is ensuring that benefits will be there, not just for them but for their children and grandchildren.
In the words of President Bill Clinton, “It would be unconscionable if we failed to act, and act now, as one nation renewing the ties that bind us across the generations.”
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the Committee.