Looking at the current political environment and gaming out the possible actions that could be taken it seems abundantly clear that progressives best course of action on Social Security is to simply refuse to even think about allowing any changes in the program. Progressives should also follow Harry Reid’s advice by sticking to this “just say no” position for decades to come.
Obviously, if and only if Republican agree to total ideological surrender and follow the will of the American people by just lifting the cap on the payroll tax to give the program solvency forever, progressives should agree. But the Republicans care more about tax cuts than anything, so this theoretical option isn’t on the table, leaving the best game plan as totally refusing any changes.
The worst-case scenario if progressive refuse to allow anything to happen
To understand why just saying no to anything short of full GOP surrender is a good strategy, you need to examine the worst-case scenario. If progressive refusal results in truly nothing being done for the next three decades, by around 2040, just the trust fund will have run dry. The program won’t go bankrupt or disappear. It will still be bringing in a large amount of revenue, but only enough to cover 80% of benefits. According to the CBO (PDF), “benefits would need to be cut by about 20 percent in 2040 to equalize outlays and revenue,” and benefits will remain basically at this slightly reduced level for decades afterwards.
While this is bad, remember this is the absolute worst case floor we are dealing with. The fact that most of the so-called bipartisan “compromises” being floated to “fix” Social Security would end up gradually cutting benefits to almost this same level by 2040 is a perfect reason why they should be rejected out of hand.
Future Congresses will never allow a sudden sharp cut in benefits
The political reality is that the worst case just won’t happen. If progressives do prevent any changes to Social Security, in 2040, that future Congress is highly unlikely to allow a sudden 20% cut. Just imagine the devastating political backlash against the party that let that happen to millions of seniors.
If we get to 2040 with no changes, most likely, Congress will pass a series of “temporary” or permanent extensions that will keep benefits intact. The overall Social Security shortfall in 2060 will only be 1.1% of GDP. That is a relatively modest price tag a future Congress is unlikely to have a problem approving. It is less than half of what the Bush tax cuts cost when passed, and 1.1% GDP is about what we spent last year on the wars in Iraq and Afghanistan.
Don’t allow the frog to be boiled slowly
The worst thing, politically, progressives can do is agreed to a “deal” that allows the frog to be boiled slowly with very gradual annual cuts. [cont’d.] It allows the enemies of social insurance to hide a massive slashing of the social safety net in a thousand yearly cuts and to buy off the current senior vote by promising them all the pain will only be felt by young people.
The closer to the 2040 any change to Social Security is made, the more likely voters will demand the benefits are kept strong because they will be directly affected. It is easy to get people to accept a big cut for people 40 years in the future, it is hard to get them to accept big cut to their own benefits four years in the future.
Time is on the progressives’ side
Social Security is on a great financial footing for decades and the closer we get to 2040, the more likely any “fix” will be less focused on benefit cuts. There is absolutely no reason progressive should even entertain any changes to the program unless they are 100% progressive changes.