The Real Story Behind Obama’s Radical U-turn on Social Security

The Real Story Behind Obama’s Radical U-turn on Social Security

© Kevin Lamarque / Reuters

In May 2012, ABC broke into its daytime coverage to show President Obama endorsing same-sex marriage, the culmination of years of activist work to take the idea from the radical fringe into the mainstream. We saw an economic version of that this week, and while none of the networks fired up their “Breaking News” graphics for it, the impact on society could be just as large, and the people who helped make it happen should be just as lauded.

“It’s time we finally made Social Security more generous,” said the president in Elkhart, Indiana, to applause, “and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.” This was totally unexpected: We knew the Elkhart speech was about the economy, but we didn’t know Obama would concur with a rallying cry on the left for several years now: Expand Social Security.

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This movement crystallized from research into the looming retirement crisis. Too many Americans are headed into their golden years without nearly the kind of savings needed to maintain their standard of living. And their defined-benefit pensions have gradually transitioned into defined-contribution plans like 401(k)s, which have rewarded Wall Street with hidden and excessive fees while eating away at individual gains. The change also shifted market risks from employers onto employees, who must hope to avoid a drop in stocks as they hit retirement age.

Research from just a few months ago found that the median family has only $5,000 saved in their 401(k) retirement account. And lower-income Americans are unlikely to have access to any retirement plan at all. Social Security was not designed to become a national retirement system by itself, but that’s what it’s become for Americans in the bottom half of the income distribution.

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Despite all this, the initial impulse from the Obama administration was to use Social Security cuts as a bargaining chip in a larger deal with Republicans. Grand bargain talks from 2011 to 2013 repeatedly invoked a different way to calculate the consumer price index (known as “chained CPI”), which would have resulted in $1,000 less a year for the average 85-year-old. Obama put chained CPI in his fiscal year 2014 budget.

Contrary to some after-the-fact snickering, this was a very credible threat, and it allowed Republicans to point to a Democratic president favoring entitlement cuts. Only the Tea Party’s unwillingness to consider anything resembling a compromise saved retirees from cuts.

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At first, liberal groups played defense on chained CPI, accustomed to mobilizing in opposition rather than staking out a bolder claim. But the expansion movement can really be traced back to one blogger: Duncan Black, popularly known as “Atrios,” who waged an initially lonely crusade in a series of 2012 columns in USA Today, explaining why the retirement crisis was coming and how expanding Social Security represented the cleanest solution.

Eventually, Black found adherents. The New America Foundation, in a groundbreaking proposal, called for an entirely new, $11,000-a-year universal benefit on top of Social Security. By mid-2013, most major liberal groups adopted an old bill from former Iowa Sen. Tom Harkin to modestly expand Social Security with more generous cost-of-living increases that better reflect rising medical costs for seniors. By 2014, chained CPI was out of the president’s budget.

The reason Social Security expansion was a wedge issue waiting to be wielded is that it’s massively popular. People recognize the unfolding retirement crisis in their own lives, whether with their parents’ finances or their own. Expanding the program consistently rated as a 75-25 issue, taking in even a majority of Republicans, even when introducing the concept of paying for it with higher taxes on the wealthy (typically by scrapping the payroll tax cap that has a $100,000 a year worker pay as much into the Social Security program as LeBron James).

Lawmakers followed the rank and file consensus. Elizabeth Warren jumped aboard the Harkin bill in late 2013. A House bill quickly got dozens of co-sponsors. Sen. Joe Manchin of West Virginia, who holds down the conservative wing of the Democratic Party, endorsed an expansion amendment. Bernie Sanders made it a campaign plank, one that Hillary Clinton eventually had to endorse, albeit in a more targeted fashion.

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Now President Obama, who started this all by embracing the opposite position years ago, has explicitly endorsed the expansion of Social Security. This victory is a great credit to Duncan Black and everyone who moved a minority opinion in the corridors of power in the Democratic Party into the mainstream.

There are wildly varying ways to claim support for Social Security expansion, ones that are modest and ones that are disruptive. But before the question, even among Democrats, was how much to cut Social Security; now the question is how much to expand it.

The skeptic would say that one party moving to a new position doesn’t magically make that law. In fact, there’s evidence that presidential-level endorsements can polarize issues that have widespread support. But look what’s happening in the Republican Party, which skews older and has a greater stake in Social Security in the immediate term.

I’m not going to try to break through what I imagine are surgically sutured hair follicles and get into Donald Trump’s mind, but he recently said: “There’s no way a Republican is going to beat a Democrat when the Republican is saying, ‘We’re going to cut your Social Security’ and the Democrat is saying, ‘We’re going to keep it and give you more.’”

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Politically, Republicans know that Social Security cuts equal political death. The same was true of opposition to same-sex marriage, which is why most of the GOP caucus just stopped talking about it.

The path to Social Security expansion can’t go through the courts the way marriage equality did, and it will take a lot more work. But the center-left, in Washington and in the country, is on board. And that is a testament to the power of taking a stand and not relenting. Eventually, the world might just swing your way.