Keep
Social Security Off the Table
By Andrew
Dobelstein President Obamas proposal to restrict the growth of Social Security by changing annual cost-of-living adjustments (COLAs) from the present Consumer Price Index (CPI) to a Chained Consumer Price Index represents a disingenuous departure from his earlier position to hold fast on Social Security.
Such a proposal
itself would have little effect on either Social Security benefits or on the
long-term Social Security Trust Fund needed to satisfy future beneficiary
claims.
The
Congressional Budget Office recently estimated that a chained CPI (CPI/U)
"would increase, on average, by 3 percentage points more slowly per year
than will the existing CPI," and that Social Securitys total outlays would
"decline by 4 percent, from currently scheduled outlays." This
option, CBO estimated, would improve the 75-year trust fund balance by only 0.2
percentage points of GDP and would extend the trust fund exhaustion date by
four years at the most.
Clearly, there have been confusions about how to
account for surpluses in the fund. Congress approved the use of a
"unified" budget by including Social Security Trust Fund operations
in the 1974 budget process, and accounting for Social Security taxing, spending
and its reserves has bounced back and forth: off-budget from 1935-1968;
on-budget from 1969-1985; off-budget from 1986-1990, for all purposes except
computing the deficit; and off-budget for all purposes since 1990.
Even before
President Bush proposed "privatizing" Social Security, Republican
lawmakers have been trying to appropriate these government-held funds.
There
is a second, more compelling danger from the president's proposal to change the
COLA. Such a proposal only confuses and compounds Social Security's long-range
problem. Social Security is solvent for at least 20 years under current
legislation, but the growing number of beneficiaries on the one hand, and the
shrinking number of workers relative to Social Security beneficiaries will only
continue to exacerbate Social Security's long-range problems.
Ever since its
beginning, financing Social Security has been controversial, and over the years
Congress has agreed to incremental changes in its financial and benefit
structure, only to discover that additional incremental changes quickly are
needed.
President Obama's willingness to include Social Security in debt
negotiations simply re-opens longstanding funding disputes before there is
sufficient intelligence available to guide a debate over the present nature of
Social Security and how it must be financed.
We
need to keep in mind that today Social Security provides financial benefit to
more 50 million people, over 18 percent of the population, that only 70 percent
of those beneficiaries are retired workers, that more children receive Social
Security payments than children who receive public welfare, and that Social
Security's redistributive formula has kept 40 percent of the elderly who would
otherwise be poor out of poverty. Social Security is no longer our
grandmother's retirement program.
It has become a comprehensive social
insurance program, and until this reality is seriously explored, politically
expedient proposals like changing the COLA are useless and damage Social
Security's credibility. A changed CPI? Dangerous political candy.
Dobelstein is a Professor Emeritus Social
Welfare at University of North Carolina at Chapel Hill
