Social Security is next big issue

By Jackie Calmes
March 22, 2010

WASHINGTON - Now that landmark legislation overhauling the health insurance system is about to become law, addressing Social Security's solvency could well become the next big thing for President Barack Obama and congressional Democrats.

Central to the health care changes are hundreds of billions of dollars in reductions in Medicare spending over time and expansions of Medicaid. As some administration officials acknowledge, that effectively takes those fast-growing entitlement programs off the table for deficit reduction just as Obama's bipartisan commission to reduce the national debt gets to work.

That leaves Social Security, the other big entitlement benefits program and one that Obama has suggested in the past that he is willing to tackle.

While its problems are not of the scale of those afflicting Medicare, it now stands as the likeliest source of the sort of large savings needed to bring projected deficits to sustainable levels, many budget analysts agree.

And, they say, packaging future reductions in the retirement program that Democrats zealously defend with tax increases that Republicans typically oppose would have the makings of a grand compromise to shrink the debt.
"You would think that there ought to be a way to get together and talk about a balanced package of some changes in benefits and some increases in revenues that would actually help Social Security," said James Horney, the director of federal fiscal policy at the Center on Budget and Policy Priorities, a liberal- leaning research organization.

Some liberals, however, already have begun mobilizing to oppose any changes to Social Security benefits, arguing that the program does not face an imminent crisis.

Yet Rep. Steny Hoyer, the moderate Democrat who is the House majority leader, gave a speech this month in which he called for the two parties to compromise on a mix of tax increases and benefit reductions to avert fiscal chaos.

Early signs of disagreement also have been evident in the White House between members of Obama's economic team, who generally favor addressing Social Security's finances, and the president's political advisers, who resist it.

The president's debt-reduction commission is likely to force the issue, even though it is not required to report its recommendations to Congress until Dec. 1, weeks after this year's midterm congressional elections.

Erskine Bowles, a former White House chief of staff under President Bill Clinton who is the commission co-chairman along with Alan Simpson, a former Republican senator from Wyoming, said: "As Sen. Simpson and I have said all along, everything is on the table. No one has mentioned to me taking anything off the table."

Because 14 of the 18 commission members are required to agree on any recommendation to Congress, few people think the panel's Democrats and Republicans will succeed in coalescing around a package of both short-term and long-range deficit reductions, as Obama directed.

Yet some Democrats in the administration and in Congress say they privately expect that some proposals, including on Social Security, could well end up in Obama's budget early next year.

"Whether or not the budget commission reaches a conclusion, and I think the odds have to be against that, Obama is going to have to say something about the long-term budget, and ignoring Social Security altogether is not politically possible if you want to do that," said Henry Aaron, an economist at the Brookings Institution.

By 2016, Social Security will begin paying more in benefits than it collects in payroll taxes, according to the annual report of government trustees.

Reserves in the form of government IOUs will be exhausted by 2037, after which incoming taxes will cover three-quarters of benefits.

http://www.twincities.com/national/ci_14735532?source=rss