When President Bush won reelection in 2004, he rapidly set about outlining his second-term agenda, vowing in his Wednesday-afternoon victory speech to “strengthen” Social Security. President Obama’s second term offers fewer proactive, visionary opportunities. Instead, he faces a suite of unpleasant decisions foisted upon him and the nation regarding the federal purse, either by his own actions or those of others. But Obama, too, will likely tackle Social Security, hoping for a kinder fate than the one met by Bush, whose privatization plan, among other second-term shortcomings, enervated his ability to govern.
Bush’s plan to rewire the New Deal stalwart by diverting payroll taxes to private investment accounts appealed to his conservative base. It offered a cornerstone of what the Republican president termed the “ownership society.” Now Obama looks willing to deal on Social Security, but in the opposite direction, with reforms that speak to moderation—and perhaps over the objections of his liberal base, which turned out in surprising numbers to help seal his reelection.
Democratic strategists say they expect an eventual deal along the contours of what Obama and Republicans have batted around before. During last year’s debt-ceiling talks, Obama offered as part of the aborted “grand bargain” to alter the way that Social Security gauges inflation by shifting the program from the conventional consumer price index to a chain-weighted CPI. Other options include a gradual elevation of the retirement age, currently scheduled to rise from 66 to 67, that would cut costs, or a payroll-tax increase on high-income earners that would supply new revenue.
Boosting the retirement age, according to Jim Manley, a former aide to both Sens. Edward Kennedy and Harry Reid, represents “a nonstarter for just about everybody within that [Democratic Senate] caucus.” Higher earners have seen a far greater jump in life expectancy than lower earners, who rely more heavily on their monthly checks. And labor calls a change in cost-of-living adjustments nothing more than an algebraic rephrasing of benefit cuts.
Still, liberals have entrusted the president with cherished policy aspirations before—and yet the Bush tax cuts live on; a landmark announcement on gay marriage was wedged crudely into election season; the Guantanamo Bay detention camp remains open; and immigration reform and the Employee Free Choice Act are still unpassed.
The faith of the “Professional Left,” to borrow a phrase, in Obama’s progressivism has always been warped to the point that its vision has been obstructed. And, despite the dispositive support he received from liberals earlier this month, Obama could spot in Social Security the sort of proactive, rather than react-and-rescue, initiative scarce elsewhere on the docket.
Social Security’s most vocal, and best-funded, outside supporters sound confident that any tinkering remains well down the road.
The White House, indeed, wants to unparcel Social Security from the fiscal cliff and a package designed to reduce the federal debt and budget deficits. “We should address the drivers of the deficit, and Social Security is not a driver of the deficit,” press secretary Jay Carney said this week. “The president supports engaging with Congress on a separate track to strengthen Social Security for the long term.”
That backs up Senate Democrats, who might like a bit more distance between Social Security and cost-cutting measures. Reid as majority leader has ruled the issue outside the short-term talks. Majority Whip Dick Durbin, D-Ill., has called for a separate commission to examine Social Security and deliver recommendations to Congress by the end of 2013, adding to the proud history of blue-ribbon studies of the program.
The unions are watching. “We have political agreement with the leadership,” Service Employees International Union President Mary Kay Henry said of the legislative sequencing, with job-creation prioritized. Bill Samuel, government-affairs director at the AFL-CIO, said that Social Security should sit well back in a line of other legislation, including climate change, an area that Obama in postelection remarks made clear was not a burning priority.
A “hands-off” opening bargaining position makes sense, because the Left is mortified of what could happen; labor activists fanned out on the Hill on Wednesday to lobby against cuts to the safety net. But Obama also has incentives to bargain, and progressives to assent: Packaging Social Security reform with Medicare and Medicaid, effectively aggregating the savings, could soften the health care cuts by imposing tax hikes on higher-income seniors.
That means that Social Security could end up as part of a big deficit-reduction deal after all. Decoupling the issue now from the fast-track negotiations will only delay reform but not necessarily shelve it. The breadth of the gyre of deficit-reduction decisions that must be, or could be, made might increase the prospects for bipartisan Social Security reform, argued Jim Kessler, senior vice president for policy at Third Way, the center-left think tank. “It’s rare that you see members of Congress rushing to raise taxes,” he said. “That’s happening right now. And people are supporting it. So this is a special time right now.”
This article appeared in print as "Step Lightly."
This article appears in the Dec. 1, 2012, edition of National Journal as Social Security: Still Off-Limits?.