Defending Social Security should be next on Obama’s to-do list

Since the midterm elections, President Obama has taken decisive action on immigration reform, climate change and relations with Cuba. Now, the new Republican-controlled Congress has handed him another opportunity to act boldly – by leaving a legacy as a strong defender of Social Security.

House Republicans signaled this week that they are gearing up for a major clash over the country’s most important retirement program. In a surprise move, they adopted a rule on the first day of the new session that effectively forbids the House from approving any financial fix to the Social Security Disability Insurance (SSDI) program unless it is coupled with broader reforms. That would almost surely mean damaging benefit cuts that would be terrible for retirees struggling in the post-recession economy.

Update: White House 2016 budget proposes revenue reallocation from Social Security retirement to disability trust fund

Republicans see an opening for benefit cuts in the SSDI trust fund. It is under severe financial pressure and on track to be exhausted at the end of 2016, when 11 million of the most vulnerable Americans would face benefit cuts on the order of 20 percent.

The rational solution is a reallocation of resources from Social Security’s Old-Age and Survivors Insurance Trust Fund (OASI). Such reallocations have been done 11 times in the past, and funds have flowed in both directions. Shifting just one-tenth of 1 percent from OASI to SSDI would extend the disability fund’s life to 2033.

Instead, House leaders appear to be maneuvering to push through an SSDI fix during the lame duck session following the 2016 elections. Such as 11th-hour package would likely impose cuts to the retirement program, including higher retirement ages and reduced annual cost-of-living adjustments. Legislators wouldn’t have to explain a vote for benefit cuts to their constituents

I explain the numbers in my Reuters column today, and the Center on Budget and Policy Priorities has an excellent post analyzing the issues.

More broadly speaking, Mr. Obama and other Democratic leaders have been presented a great opportunity here to re-locate their spines on Social Security and reclaim the legacy of FDR. If the White House needs a playbook, look no further than remarks Mr. Obama himself made in a speech at the National Press Club in April, 2005, during the debate about President George W. Bush’s plan to privative Social Security (skip to 8:40 for Mr. Obama’s remarks).

Social Security advocates were scrambling this week to mount opposition to the House rules move.

Max Richtman, National Committee to Protect Social Security & Medicare:

“Today’s unprecedented House vote preventing a routine rebalancing of the Social Security Disability Trust Funds puts politics ahead of policy and partisanship ahead of people. This House Rules change would allow a 20% benefit cut for millions of disabled Americans unless there are broader Social Security benefit cuts or tax increases improving the solvency of the combined trust funds. It is difficult to believe that there is any purpose to this unprecedented change to House Rules other than to cut benefits for Americans who have worked hard all their lives, paid into Social Security, and rely on their Social Security benefits, including Disability, in order to survive.

A modest and temporary reallocation of part of the 6.2 percent Social Security tax rate to the DI Trust Fund would put the entire Social Security program on an equal footing, with all benefits payable at least until 2033. Democrats and Republicans have authorized this same strategy eleven times without controversy (including four times during the Reagan administration); however, this new House majority would rather play politics with the livelihoods of millions of Americans than solve this important funding issue. This sends a clear message to middle-class families about the House majority’s priorities — targeting Social Security for cuts clearly ranks high on their list.”

AARP CEO Jo Ann C. Jenkins:

On behalf of our nearly 38 million members and all individuals age 50 and older, we are writing to express our strong concern with a last minute amendment to HR 5, the House Rules Package for the 114th Congress that would effectively limit potential options regarding Social Security, including options to protect benefits under the Social Security Disability Insurance Program. Under the amendment, the House could only consider legislation affecting any part of the Social Security program if the overall effect of the changes improved Social Security’s Old Age and Survivors (OASI) trust fund. While we strongly support Social Security and believe Congress should act sooner rather than later to ensure Social Security’s finances for the coming decades, the amendment made public today is unduly narrow and limits the House’s ability to consider the full range of options for addressing issues facing Social Security.

There has been almost no recent legislative consideration of issues facing Social Security broadly or options to address such issues. One notable exception is Social Security Disability Insurance. The Social Security Trustees have notified Congress that the payroll taxes allocated to the Disability Insurance (DI) trust fund will be inadequate to pay full disability benefits starting as early as 2016 and proposed legislative options to modestly modify the payroll tax allocation to adequately maintain both OASI and DI solvency. Both the House and Senate have held hearings on this issue and have been expected to address the shortfall this Congress.

The amendment to HR 5, by proposing a new point of order, would limit the House’s ability to consider all options to address a shortfall in the DI trust fund, including a potential reallocation of payroll tax dollars. This type of shortfall has occurred numerous times in the past – in both the OASI and DI trust funds — and Congress has timely acted to protect promised benefits, including the option of reallocation of trust fund dollars. AARP supports reallocation of payroll taxes to ensure the overall solvency of the combined OASDI trust fund and to protect disability benefits from potential cuts. Because the amendment to HR 5 undermines Congress’s ability to fully consider all potential legislative solutions — particularly options successfully considered many times in the past — we urge the House to reconsider the proposed Social Security amendment.

The SocialSecurityWorks coalition:

Republican opponents of Social Security have not wasted even a single day in their plan to dismantle Social Security brick by brick. What should be a dry, mundane exercise — the adoption of new rules by the newly convening House of Representatives — has turned into a stealth attack on America’s working families.

A technical amendment, known as “reallocation” — something that has been done many times over the history of Social Security, something that few persons other than actuaries and other Social Security experts ever know about — must be enacted in the current Congress to ensure that all Social Security benefits continue to be paid in full and on time. The change is analogous to what investors do when they rebalance their accounts, but in the case of Social Security, a failure to rebalance will result in an unnecessary and completely avoidable cut in benefits paid to workers who have serious and permanent disabilities and to their families.

Like other stealth attacks against the American people’s Social Security, the groundwork is being laid in advance. It will suddenly explode sometime in the next two years. The rule change would prohibit a simple reallocation! It will require more significant and complex changes to Social Security. In other words, the Republican rule will allow Social Security to be held hostage – something we anticipated and warned about in our new book, Social Security Works! Why Social Security Isn’t Going Broke and How Expanding It will Help Us All (The New Press, 2015)

This is no way for elected officials, who are supposed to be servants of the people, to treat American citizens. Hostage-taking to force changes that the American people do not want to a vital program like Social Security is no way to run the United States of America.

One of the strengths of Social Security is its universality. It is based on the principle that we are stronger together. It is an old tactic of the program’s opponents to seek to divide and conquer. They seek to turn young against old by falsely claiming that too much is being spent on the old. They seek to turn African Americans against whites with the preposterous claim that Social Security is unfair to blacks. (We document and refute these and many other claims in our new book). This time they seek to drive a wedge between retired workers and disabled workers by claiming that reallocation helps the disabled at the expense of the old – another preposterous claim. All of these divide-and-conquer strategies are intended to turn Americans against each other so that all of their benefits can be cut.

But if senior, disability, workers, women’s, veterans, civil rights, faith-based and other groups stand together – as they have in opposition to privatization and recent benefit cut proposals – this stealth effort to pull apart our Social Security will be defeated. And if citizens from around the country let their representatives know that it’s time to expand Social Security to address the nation’s retirement income crisis, not cut it, all of us will be better off.

Alliance for Retired Americans:

On behalf of the four million members of the Alliance for Retired Americans, we are writing in strong opposition to the provision in the proposed House rules that establishes a point of order prohibiting reallocation from the Old Age and Survivors Insurance (OASI) trust fund to the Disability Insurance (DI) trust fund within the Social Security program. This procedural change to the House rules is unprecedented. It will have the effect of holding the DI trust fund hostage, and is a direct attack on seniors, disabled Americans and the Social Security trust fund. As you may know, reallocation between the OASI and DI trust funds is common practice and has occurred 11 times in the past. In 1983, during the Reagan Administration, funding from the DI trust fund was temporarily reallocated to the OASI program to cover anticipated shortfalls. Similarly, temporarily reallocating funds from the OASI trust fund to the DI trust fund during the next few years would extend the solvency of the DI trust fund for almost two decades. This rebalancing would not endanger the OASI, since the solvency of the combined trust funds would remain at 2033. Voting in support of this House rule constitutes a complete disregard for keeping the promise to hardworking Americans who have contributed to Social Security. The four million members of the Alliance for Retired Americans will be watching how Congress votes on this issue.

Sen. Sherrod Brown (D-Ohio)

“Today, House Republicans are trying to change rules that have been in place for decades as a way to attack social insurance,” Brown said. “Rather than solve the short-term problems facing the Social Security Disability program as we have in the past, Republicans want to set the stage to cut benefits for seniors and disabled Americans.”

Reallocation is a simple procedure used by Congress to rebalance how Social Security payroll tax revenues are apportioned between the two trust funds – the equivalent of transferring money from a checking to a savings account. Reallocation is commonsense, bipartisan policy that has been utilized by both parties 11 times since 1957- most recently in 1994. At that time, it was projected that reallocation would keep the trust fund solvent until 2016.

“Reallocation has never been controversial, but detractors working to privatize Social Security will do anything to manufacture a crisis out of a routine administrative function,” Brown continued. “Reallocation is a routine housekeeping matter that has been used 11 times, including four times under Ronald Reagan. Modest reallocation of payroll taxes would ensure solvency of both trust funds until 2033. But if House Republicans block reallocation, insurance for disabled Americans, veterans, and children could face severe cuts once the trust fund is exhausted in 2016.”

Here’s a link to an earlier column I wrote for Reuters laying out the SSDI issues and solutions.

Comments

  1. jtwaldman@aol.com says:

    Congress and Senate should give up their SSN!!!
    They can fix this problem! Seniors need their social security!

  2. I am in the 3rd stage of COPD.I am unable to afford new meds and so im allowing myself to pass away rather then burden my family.Im 60 years old so i guess you would cut my benefits 20%.I worked a steady job sense i was 16 years old.If you feel you must do this then take every case on its merit.There are millions of people like me that would much rather work then collect a check every month.To just say were gonna cut everybody would be be in many cases inhumane. Thank You for your time

  3. Mr. Whippet says:

    And this surprises anyone who’s been paying attention to Republican politicians? It kills me that retirees are one of the biggest demographics for the GOP, and they consistently vote these cretins into office, only to have them attempt to gut SS every chance they get. There is no crisis to be fixed, it’s entirely manufactured by the GOP and Fox “news.” Hopefully this latest ploy (on day 1 of the new congress no less) is used by Democrats during the 2016 campaigns so people start to understand what they’re getting when they vote for GOP politicians.

  4. James Smith says:

    This happens, I kill myself. Plain and simple

  5. I’m 30 years old I have had epilepsy all of life. I did for some time when I was little until I just couldn’t hardly do it anymore. I feel like this is totally unfair to all of us out there who seriously can’t work and the only income and more they can survive on is SSDI or SSI

  6. Republicans fight for tax breaks for the wealthy and Democrats work for the poor and average person.
    Why is this not clear to everyone ? Unless one is in the 1% why would they vote republican?

  7. Trillions go to fraudulent programs in the Military such as the multi-trillion boondoggle
    Fighter the F-35 Strike Jet, that is already over-budget, over-cost, too expensive and already outdated.
    But re-allocate a program that doesn’t contribute to the debt ceiling? I’ll have to die also. The Criminal republican conspiracy to destroy the working class, the paid-into all their lives are betraying everyone at the behest of their rich owners! Hell floweth over with the damned!

  8. Thomas Tepper says:

    this is a plan that is supported by money I,my relatives and all our past living and dead relatives have paid into since its inception. also,all the illegals that have used someone elses ssn to work,have had money paid into the system, even if the ssn was someone dead. so where is the money they paid in?? they couldn’t get it ,and illegals don’t get tax refunds,so the illegal worked with a bogus ssn,the money went into the system,what did the gov do with it?? probly gave theselves undeserved raises,and increased the defense budget,and still cut the food stamp program… wtf?? I have wirked since 16 yrs of age,only unemployed for 6 mons in the entire time. im 46 and have numerous back probs,s1l5 disc bone on bone,degen disc,disc fragments,hip implant hardware failure ,causing severe stabbing pain,pinched nerves in my back, unable to walk 2-3 steps fore extreme pain ,numerous hardware in hips and legs from botched surgery in my 20s,now fearful of another surgery making me worse,waking up during surgery,or dieing during surgery to name a few. have severe suicidal depresiion,and now you are going to take money I earned,and that is my lifeline to paying people to help me by getting my groceries,cooking,bathing(1 bath about every 15 days,nice,huh?) don’t be fooled,meds don’t solv all the probl=s. you gotta find the ones that work for each person,for each problem. and the side effects from meds,and the neeed to take something for the side effect,its like a reason for wanting to kill myself. now your going to make me try living what pitiful,limited life I have, on less of the money I earned,but they got a nice fat raise ,and still come close to shutting down the gov. but take from me,im too poor to defend myself. and if you just kick me off disability all together, I will probly just kill myself,then I wont be a problem for the precious geniuses ,my government. me and my problems,how dare me get sick, or hurt.

  9. Jere J. Cint says:

    um i just want to add here that i am a 31 year old bi-polar in recovery! Thanks to medi-caid and ssdi. My meds are more stable and i feel better most of the time….but i still hear voices and see things from time to time if you dont know someone who is suffering from a mental illness/disorder please try to educate yourself. I started working when i was 15 in a Hardware store…and had great success in my career choices but i noticed after college i started a kinda of downward spiral at the age of about 25-26 i really couldnt work more than a few months before i would have an episode and quit or get myself fired… i have had over 20 jobs since i was 15 some great some not so great. Regardless i know this much is true… if it hadnt been for govt asst. i would be dead right now and can echo the remarks of others on here… if this happens i will kill myself. I am just getting better if i am kicked off ect. i will be homeless and have no future and no point in living anymore. I know this sounds drastic but its the truth please stop this attempt to gut SSDI check the stats most people on SSDI need it…less than 1% are abusing the system i dont care weed them out whatever but please make this limited program available for those who really need it. Like the 99% of legit beneficiaries.

  10. Law and Order says:

    Our four fathers have given us the right to petition against the government. If all republicans want to answer to the Supreme Court why they refuse to meet their obligations of paying what has been inherently agreed to as an insurance claim does, let it be. Either pay what is due or return all the social security insurance fees embedded in the SS tax.

  11. I don’t understand how they can get away with this. They are just making up their own rules as they go along. The needy can never be punished enough. The rich can never be rewarded enough. Raising the cap on contributions would fix it. But no the rich will “suffer” if they have to contribute. the scare stories about how it will hurt the “job creators” is crazy.

    The sensible thing to do would be to come up with a plan to deal with the fakers. Maybe the reason that Repubs are rejecting that is because they already KNOW that there isn’t widespread fraud. I hope all those idiots who didn’t vote last year are happy. THEY LET THIS HAPPEN!

  12. i had worked for 19 years at the same job. i had seizures since i was 15 years old. on the 19 year there they told me it was to dangerous for me to work here because i had a seizure i never hurt my self or anyone . so they took my job from me . i filed for disability and got it then i ended up with diabetes 1 so i hope they dont mess with our ssd its hard to live without a job as it is i rather work but no one would hire me with this problem .

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