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November 08, 2012

Reid Says “We’re Not Going to Mess With Social Security”

Posted in: Uncategorized

Peter Orszag’s column today, which I highlighted earlier, says that a deficit deal should include Social Security changes even while admitting they have nothing to do with the deficit. It’s worth pointing out that the Senate leadership is right now making a lot of statements that will be difficult to walk back on this matter, should Orszag’s old boss in the White House go along with his plan.

Harry Reid, for example, said brusquely “We’re not going to mess with Social Security.” Chuck Schumer agreed with him, though his comment included a heavy amount of wiggle room.

“I agree with Leader Reid. Social Security — even when Simpson-Bowles included it in their package, they didn’t add it to deficit reduction, because any changes you make in Social Security that bring in revenue stay in the Social Security system,” Schumer said during a breakfast meeting with reporters. “So I think that while Social Security has to be reformed and saved, the need is less immediate than with Medicare and Medicaid. And I think it is better to treat the two separately.”

“Has to be reformed and saved” is a bit unnerving, considering that the normal course of operations for Social Security is safe for 25 years, under current actuarial estimations.

In addition, the AARP, a group that caused much dismay last year when they appeared to waver on social insurance programs, has definitively warned against any changes, particularly from something like chained CPI:

“On behalf of millions of members nationwide and all Americans age 50 and older,” AARP CEO A. Barry Rand wrote in a letter to lawmakers Thursday, provided to HuffPost, “AARP writes to reiterate our opposition to adopting a chained consumer price index to calculate the Social Security cost of living adjustment for the purpose of reducing the deficit.”

In particular, the organization doesn’t want congressional negotiators to use an alternate measure of inflation for calculating Social Security’s cost of living adjustments, known as COLAs. The alternative measure, called the chained Consumer Price Index, would reduce the amount of COLAs over time. In October, the Social Security Administration announced a 1.7 percent increase in Social Security benefits — which average $1,235 per month for seniors.

“If Congress had already adopted CCPI, the 2013 COLA would be even less, at only 1.4 percent,” Rand wrote (click HERE for a PDF of the letter). “However, adopting a chained consumer price index to calculate Social Security COLAs is not a small benefit change — it will compound benefit reductions dramatically over time, resulting in an annual benefit that is roughly $1,000 (2012 dollars) lower by the time a beneficiary reaches age 85.”

Chained CPI is the way that some elites think they can sneak through a benefit cut without anyone knowing about it. This would also increase taxes, regressively, by changing the cost of living adjustment that moves tax brackets annually.

All of the above-mentioned actors have been less than steadfast on social insurance benefits in the past, in some cases the recent past. Prior experience demands that nobody put their trust in a politician who might want to make a deal. But it doesn’t hurt to point out these quotes, loudly, over and over, to make it that much more difficult to reverse course. You don’t have to believe a politician’s word; you just have to make it painful for them to go back on it.

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