April 5, 2011
Despite Republican leaders' pronouncements that its budget resolution would “not punt” on entitlements, the plan released Tuesday morning by Wisconsin House Budget Chairman Paul Ryan backs off from the bold Social Security reforms he embraced last year.
Ryan’s “The Path to Prosperity” outlines sweeping reforms to Medicaid and Medicare, which contribute to GOP calls for more than $6.2 trillion in federal spending cuts over the next decade. However, it leaves Social Security unscathed, with no changes in benefits or retirement age increases. Instead Ryan skirted the issue by installing undefined “trigger” levels that when hit would require the president to act. His plan signals a departure for Ryan, who has proposed and stood behind Social Security reforms in the past—even though they have not been widely embraced by his party because of the fear of political backlash.
As Ryan describes it, the reason Republicans chose to exclude Social Security from the plan was largely political. “We went back and forth on this,” he said in a speech at the American Enterprise Institute this afternoon. “We thought that if we put (a proposal) out there it would just be too tempting for Democrats to attack and that it would set us away from actually coming together to talk about this.”
His 2010 “Roadmap for America’s Future,” called for partially privatizing Social Security by allowing workers under 55 to invest part of their Social Security taxes into private retirement accounts, and gradually increasing the retirement benefit eligibility age. The President’s bipartisan fiscal commission, which Ryan served on, proposed slowly raising the retirement age to 69, cutting annual cost of living adjustments, and increasing the amount of income subject to Social Security payroll taxes.
“What he had originally proposed in his Roadmap seemed very much ideological—he couldn’t even claim that what he was doing to Social Security was intended to reduce the deficit because CBO’s score on what he proposed showed his proposal would actually cost money,” said Christian Weller, a senior fellow at the progressive Center for American Progress. According to CBO’s score of the Roadmap, federal spending for Social Security would be higher under Ryan’s plan than under continuation of current policy until 2060, CBO found. “I think leaving Social Security out here shows that Paul Ryan wants to put the emphasis largely on deficit reduction and less so on ideology,” Weller added.
“Social Security, most people understand, has nothing to do with the deficit,” Rep. Jan Schakowsky, D-Ill. told The Fiscal times. “People feel personal ownership of that program. It’s not a gift from the government, it’s their money, it’s their trust fund, they don’t want to see it cut, and I think the GOP is starting to recognize that it goes after it at its peril.”
To House Republicans, however, Ryan's budget represents a step in the right direction. “The budget sets in motion a process to save all three entitlement programs—Medicare, Medicaid, and Social Security—without changing benefits for anyone at or near retirement age,” said Rep. Tom Cole, R-Okla. “I’m confident that once people get a look at the budget in its entirety, they will agree that all of the entitlement programs are covered.”
The plan's small savings for Social Security is a reflection of political risks said Bob Bixby, executive director of the Concord Coalition—a group that says Social Security reform is crucial to reduce the nation’s deficit. “In the ten-year time frame you probably don’t get much savings from Social Security reform because you have to phase in changes slowly, particularly if you are going to exempt any changes for current beneficiaries,” he said. “It may be that they decided the political cost wasn’t worth it.” Meanwhile, Democrats and liberal groups argue that Social Security is not a cause of the nation’s $1.6 trillion deficit—and should be left intact.
This year, Social Security will pay out more in retirement, disability and survivors’ benefits than it recoups in payroll taxes for the first time since 1983. Though positive cash flow will return in 2012, the program will fall permanently back into deficit starting in 2015, according to the program’s 2010 trustees report.