Conventional wisdom suggests that when it comes to changing Social Security, there's nothing new under the sun. To ensure its long-term stability, you have two choices: Raise taxes or cut benefits.
Yet there are many ways to go about these tasks, including some ideas that haven't been a part of the many past debates.
Despite recent controversy over whether Social Security is endangered, everyone agrees that there is no short-term crisis. But the program will be on the table when President Obama's deficit commission sits down to tackle the country's long-term fiscal issues later this year.
Experts of all political stripes have heaped skepticism the commission’s chances of coming to any agreement, given Republican members’ sworn opposition to tax hikes and Democrats’ desire to preserve current benefits.
“They're not going to have any success,” said Douglas Holtz-Eakin, president of American Action Forum, a new right-leaning think tank and a former head of the Congressional Budget Office. “I don’t see Jeb Hensarling and Andy Stern shaking hands at the end of this,” he said, referring to the anti-tax Texas Republican congressman and the head of the Service Employees International Union, both commission members.
Even if the commission fails to agree on recommendations, its deliberations may nonetheless shape the future debate over Social Security. “It'll provide at least some reference point for measures the president might want to include in” his next budget, said Robert Reischauer, president of the Urban Institute and another former CBO head.
But even among those like Reischauer and Holtz-Eakin, who agree that a serious long-term problem needs to be dealt with, there’s a familiar ideological divide. Conservatives want to put the emphasis on reducing or slowing spending growth, not raising revenue, while liberals tend to argue nearly the opposite.
“That has to be the number one priority: slow the growth of benefits,” said Holtz-Eakin.
Henry Aaron, a senior fellow at the Brookings Institution, countered that U.S. retirement benefits are skimpier than other countries and, compared to income, have been heading downward. “Given the modesty of benefits, I think benefit cuts should be well down on the list of priorities,” he said.
At the same time that they consider its overall fiscal health, many on the left seek to make the program more “redistributive,” to shift the burden up the income scale while shifting benefits down it.
Here are some of the proposals they will consider.
-- Raise the retirement age. Gradually raising both the retirement age and the "early retirement" age (at which people can start to draw reduced benefits) helps balance the books. The current retirement age is 66, and the early retirement age is 62. The official age also can be set to increase as life spans get longer.