Bill Keller wants Democrats to stop “recoiling” from entitlement reform and instead start endorsing some common sense ways of bringing Social Security into balance. He specifically mentions three proposals:
They include (1) gradually raising the retirement age to compensate for the fact that we now live, on average, 14 years longer than when F.D.R. signed Social Security into law. They include (2) obliging those of us who can really afford it to pay a larger share. They also include (3) technical fixes like aligning the automatic cost-of-living formula with reality.
If Bill Keller wants to reduce Social Security payouts, fine. But let’s at least get our facts straight:
- For the purposes of Social Security, it doesn’t matter how much overall life expectancy has changed since 1940. What matters is how much life expectancy has increased for those who turn 65. Answer: for men, it’s gone up from 12.7 years to 17 years. That’s an increase of 4.3 years. However, the retirement age has also gone up, from 65 to 67. That’s an increase of two years. The truth is that retirement age has very nearly kept up with the increase in life expectancy since FDR’s time.
- I’m not sure what this one means. If Keller means raising the cap on Social Security taxes, that would probably help. The share of earnings covered by Social Security used to be about 90%. Today it’s fallen to 83%. If this were raised back to its old level, it would solve somewhere between a sixth and a third of Social Security’s shortfall, depending on how and when it was phased in. However, Republicans are opposed to this since it would raise tax rates on the well-off.
- This is no mere “technical” fix. If you reduce Social Security’s inflation calculation, then you’re reducing Social Security payouts. It’s exactly the same as just cutting benefits. Matt Yglesias explains this well here. It’s also worth noting that if we truly think that “chained CPI” is a better measure of inflation than the one we use currently, then we should use chained CPI for all our inflation calculations. However, conservatives are opposed to this because it would it would affect the way tax brackets are calculated, which would effectively raise taxes on the rich. It’s Republicans who are the problem here, not Democrats.
I don’t want to pretend that Democrats are saints when it comes to entitlements. Generally speaking, though, there are a lot of Democrats who are open to the idea of a balanced set of Social Security reforms that cut benefits modestly and raise revenues. It’s Republicans who are dead set against this: they want privatization or nothing. And they especially don’t want anything that raises taxes on the rich. But without any hope of compromise, Democrats have little incentive to support unpopular entitlement changes on their own. They did this with Obamacare’s Medicare reforms and got buried in Republican attack ads in 2010.
There’s simply no real equivalency here. Sure, maybe Democrats should be a little more courageous about this stuff. But the real problem is Republicans. They just flatly reject compromise and promise to relentlessly attack Democrats if they do anything on their own. If you really want entitlement reform, it’s not Democrats that should be your target. It’s the GOP.