Rose DeLauro Says Budget Conference Won’t Tinker With Social Security
I noted late last week that there was some chance that the conference committee appointed for the 2010 budget was going to attempt some funny business with Social Security. After all, there are indications that Senate Budget Committee Chairman Kent Conrad extracted a promise to do something with Social Security in exchange for agreeing to reconciliation for health care. And as one of the House conferees they picked Rep. Allen Boyd (D-FL), who was the only Democrat to support Bush’s Social Security privatization plan back in 2005.
Amanda Terkel spoke to Rep. Rosa DeLauro, one of the other conferees, yesterday and she said in reply:
DELAURO: As far as my understanding is concerned, is that there is not going to be any reference to Social Security. Social Security will be a discussion that will come in our overall health care debate, but my understanding is that at the moment, it is not part of the budget conference.
That’s fairly reassuring, though I don’t really understand why Social Security is part of our “overall health care debate.” To look at it generously, if congress were to succeed in putting health care on some kind of sustainable trajectory, it would then be time to talk about how to do you pay for that sustainable trajectory, and perhaps Social Security should be part of that discussion. Thus far, though, I still think it’s far from clear whether or not we’re going to get a sufficiently serious health reform at all and I don’t think that dragging Social Security into the conversation improves those odds.
13 Responses to “Rose DeLauro Says Budget Conference Won’t Tinker With Social Security”
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April 28th, 2009 at 8:34 am
Or, you know, not. If health care were on some kind of sustainable trajectory, then that takes care of the actually looming entitlement problems, Medicare / Medicaid. So there’s no need to add Social Security to a discussion about how to pay for anything. Those same people shrieking about the fascist socialism of a return to Clinton-era income tax levels can STFU about the desperate need to plunder Social Security for revenue.
April 28th, 2009 at 8:56 am
Realistically speaking, we’re going to have to address this this Social Security crisis at some point. Any responsible observer can see that a major hike in benefits is unavoidable. We might as well begin the discussion about how the wealthy are going to pay for all this.
For instance, should seven-digit earners face a punitive level of taxation? Or should it be merely confiscatory?
April 28th, 2009 at 9:10 am
anonymous, I like the way you think.
April 28th, 2009 at 9:51 am
Too bad. Tinkering is a good thing, and if Congress could tinker more often we would probably not be in this mess.
April 28th, 2009 at 10:16 am
though I don’t really understand why Social Security is part of our “overall health care debate.”
Huh?
The “overall healthcare debate” is budget reconciliation! There will be no healthcare debate outside budget reconciliation, as there aren’t the votes to do anything outside reconciliation.
April 28th, 2009 at 10:26 am
I don’t really understand why Social Security is part of our “overall health care debate.”
1. Medicare and Medicaid have problems.
2. In Washington, you cannot separate Medicare and Medicaid from Social Security.
3. Therefore, Social Security must be part of the overall health care debate.
Why, one would think Matt Yglesias had never read a column by David Broder or Richard Cohen in the Washington Post!
April 28th, 2009 at 10:29 am
Hi, I’m Al. I don’t know what “overall” means.
Believe it or not, Al, there actually will be business taken up by Congress regarding health care and entitlement financing other than in this legislative session, and there will be quite a bit of debate, both formal and inform, about those subject in the runup to the budget reconciliation process.
April 28th, 2009 at 10:33 am
There will be no healthcare debate outside budget reconciliation, as there aren’t the votes to do anything outside reconciliation.
Only 18 months away from said votes! Then Al can become really unhinged.
April 28th, 2009 at 11:09 am
Connection is pretty obvious, isn’t it? We reduce the severity of the health care funding crisis, and we become more productive, and wealthier, and therefore the Social Security funding becomes even more of a non-issue than it already is.
April 28th, 2009 at 11:26 am
Anonymous @ #2: you da man. It’s way past time this particular Overton Window gets opened.
April 28th, 2009 at 1:01 pm
If you poke around in the numbers you can see that the best solution to Social Security’s shortfall projected for the 2040s (2041 SSA, 2049 CBO) is not via progressive taxation but instead policy directed to increase Real Wage for wage workers. Under the current model Real Wage is projected to settle out at 1.1% per year.
The outlook for Social Security deteriorated badly from 1993 to 1996, it then experienced a massive improvement between the 1997 Report and the 2001 Report and then more or less stalled. If we take a look at the right hand column in the following table what do we see?
http://www.ssa.gov/OACT/TR/TR08/V_economic.html#188118
Real Wage: 1990-1995 0.6%; 1995-2000 2.9%; 2000-2005 0.2%
Social Security doesn’t need Real Wage increases at Clinton era rates (though that would be a nice), all it needs is for Real Wage to come in at the rates we had in the sixties. To meet the Trustees’ Low Cost alternative which results in a fully funded Social Security system with no needed change in tax or retirement system we would need ultimate Real Wage at 1.5%, Productivity at 1.9%, and Real GDP at 2.9%.
We don’t need to party like it is 1999 (in retrospect some of that was bubble), all we need to do is rock like it is 1966 (a very good year for sex, drugs and rock and roll by the way). Really the argument against Low Cost really boils down to “Sorry we have changed policy and particularly tax policy is a way that has concentrated income at the top” and then implicitly claim our hands are tied.
Well bullshit, the road to economic justice is to focus on initial distribution and not redistribution. What was different about 1966 and early 2006? Well you can start with the White House and both Houses of Congress firmly in the hands of Democrats, strong unions and a 70% top marginal rate.
EFCA and sunsetting Bush tax cuts doesn’t get us back to 1966. Nor in isolation does an increase in minimum wage with a subsequent indexing system. Nor vigorous enforcement of labor laws. Nor does replacing predatory student loans with Direct Loans and more Pell Grants to allow more people to afford education to allow them to earn better Real Wages.
The argument that wages are magically set at marginal productivity is just more Voodoo from the EMH people who have managed to suppress wages in favor of executive compensation and returns to capital. Those changes were aided and abetted by the economic conservatives that dominate the Republican Party and a wing of the Democratic Party. We can and should target wages by policy and in doing so not only restore some economic balance but also ‘fix’ Social Security along the way.
Get us back to 1.5% Real Wage or better and a lot of things are possible. And Democrats are in a position to restore us to something closer to the 1966 economic order and make that happen.
April 28th, 2009 at 1:03 pm
Oops in para six I pointed out some things that wouldn’t get us ALL THE WAY back to 1966. But each is a good step down that road.
April 28th, 2009 at 5:11 pm
By the way, Social Security payroll taxes are already less than outflows:
The only way Social Security won’t reach into their Treasury Bonds in 2009 is because of the $17 billion in income taxes expected to be paid on Social Security benefits this year, but it will be tight. Next year, I suspect payroll taxes will remain low and I suspect income taxes for those on SS will be down as well.