Social Security’s Porcupine Politics

For decades, Social Security has been considered a ​“third rail” of American politics: touch it and you’ll get burned in the next election. George W. Bush only pushed for partial privatization of the insurance system after he began his second term, and his proposal went nowhere in Congress. 

Five years later, altering Social Security is back on the agenda. In February, Obama created the bipartisan ​“National Commission on Fiscal Responsibility and Reform” to recommend ways to reduce the federal deficit, which is expected to reach $1.6 trillion this year. Convening the commission’s first meeting in April, Obama said that ​“everything has to be on the table.” Helping set that table, he appointed one of the country’s most outspoken critics of Social Security and other ​“entitlements” to co-chair the commission: Alan K. Simpson.

Simpson, a 78-year-old former Republican senator from Wyoming, knows what threatens America. ​“This is about your children,” Simpson said about federal deficit reduction on PBS’ Newshour in February, after his appointment. ​“This is about the future of America. This country is going to the bowwows unless we deal with the entitlements and Social Security and Medicare.”

Simpson supported Bush’s plan to privatize Social Security, which would have allowed people to divert a portion of their Social Security payments to the stock market. He isn’t the only commission member speaking about cutting Social Security. Erskine Bowles, Obama’s other appointee to co-chair the commission and a top Democratic fundraiser, said in March, ​“We’re going to mess with Medicare, Medicaid and Social Security.” If the status quo continues, said Bowles, who served as Bill Clinton’s chief of staff, ​“America is going to be a second-rate power, and I don’t mean in 50 years.”

According to the nonpartisan Congressional Budget Office (CBO), this year Social Security will pay out more in benefits than it receives in payroll taxes, a threshold the government hadn’t expected to cross until about 2016.

Other government expenditures are climbing more rapidly than expected during the 2010 fiscal year, in part due to the recession and continued high unemployment. According to the CBO, unemployment benefits will be up $39 billion, or about 83 percent over last year, and Medicaid will be up $17 billion, or 15 percent.

Federal Reserve Chairman Ben Bernanke laid out America’s quandary in April during a speech at the Dallas Regional Chamber of Commerce: ​“To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”

The National Committee to Preserve Social Security and Medicare believes the deficit reduction panel will mainly target one thing: Social Security, which Barbara Kennelly, president of the advocacy organization, says ​“has not contributed one dime to our nation’s bleak debt and deficit picture.”

“To the contrary, Social Security’s trust fund surplus has been used for years to help balance the federal books,” Kennelly says. ​“Our hope is that this Presidential Commission will … ensure Social Security does not become a piggy bank to pay for the fiscal failures of the past.”

In December, the 18-member commission will issue its recommendations, which must be approved by 14 members. (Ten members are Democrats, and eight are Republicans.) Expect the group to advocates changes to Social Security, and expect Simpson to be right about what kind of national debate will follow: ​“It’s going to be like giving dry birth to a porcupine.”