After years of fending off cuts to Social Security benefits and having political courage defined as a willingness to “reform” the program, the grassroots left is taking a new approach and calling for Social Security expansion. Given the demographics (more old people, fewer workers) and the paucity of federal resources, it seems like a fool’s errand, but it’s one that’s in line with their party’s values, and one that could lead to political gold in a presidential election where the candidates hold such contrasting views.
The current program is fiscally sound through 2033, and after that taxes have to be raised or benefits cut. Yet endorsing expansion is rapidly becoming a litmus test for Democrats. “It started out as kind of a fringe idea, just like Bush’s privatization, but fringe ideas can sometimes catch on,” says Jim Kessler, co-founder of Third Way, a centrist Democrat group that opposes expansion as “a selfish idea” that benefits wealthier people more than those at the lower end of the earnings scale, and could crowd out spending on other progressive goals.
Former Maryland Governor Martin O’Malley, who is expected to challenge Hillary Clinton for the nomination and who was once a favorite of Third Way, is pushing expansion as part of his appeal to a Democratic base looking for an alternative to Elizabeth Warren, because she’s not entering the race. A Warren-sponsored budget amendment to expand Social Security recently failed in the Senate but won the votes of all but two Senate Democrats. Not surprisingly, no Republicans signed on, and so far Clinton has managed to steer clear of making any kind of explicit commitment.
In today’s populist environment, Clinton doesn’t want to be labeled “Wall Street Democrat,” yet she doesn’t want to be pushed left beyond where she is comfortable, and she doesn’t want to make promises that if elected president she’d find impossible to keep. There are progressive ways to expand Social Security that wouldn’t break the budget, says Paul Van de Water, with the left-leaning Center on Budget and Policy Priorities. For example, the payroll tax currently capped at $118,500 earnings could be re-imposed for incomes over, say, $250,000, and the benefits formula adjusted so the highest earners would get some benefit, but not a windfall, for their increased contribution.
The guessing is that Hillary Clinton, whether out of conviction or pragmatic reasons, is likely to be more progressive than Bill Clinton, who was on the verge of negotiating a deal with Republicans that would have included some privatization when the Lewinsky scandal put an end to the bipartisan grand bargain. Van de Water says from his perspective, it was one of the few good things to come out of that episode.
“The appeal she has to me—and I’m not a big Hillary fan—is she would make those choices her husband was about to make,” says Steve LaTourette, president and CEO of Main Street Partnership, whose mission is to advocate for pragmatic, common-sense solutions to the country’s problems. LaTourette was elected to the House in the 1994 GOP sweep and served almost 20 years representing an Ohio swing district. Social Security and the other big entitlement programs, Medicare and Medicaid, were two-thirds of the budget when he arrived, he said, and by the time he left Congress in 2013, they accounted for three-quarters of the budget.
LaTourette acknowledged that “We have to do something” to make the program demographically sustainable, but he was surprised when New Jersey Governor Christie proposed last week an increase in the retirement age plus means testing that would reduce and potentially eliminate benefits for high-earners. “I don’t know who he’s appealing to with that,” LaTourette said. “If it was designed to take a rightward turn, it’s a little late for that. I don’t think his campaign is going to catch fire.” Political analysts treated Christie’s surprise announcement taking on Social Security, the third rail of politics, as the equivalent of a Hail Mary pass to get back his creds in the presidential race with the conservative base.
At the least, Christie’s proposal guarantees that the other GOP candidates will be questioned in the upcoming debates that get underway in August about whether they would raise the retirement age for Social Security. Jeb Bush and Marco Rubio have already said yes, insuring a bright line between the GOP and any likely Democrat. While people are living longer, studies show those gains are in the upper half of the income scale, not the bottom half, where plenty of people depend on Social Security for all or most of their income.
There is justification for expanding Social Security in a world where fewer workers are eligible for traditional pension plans and people are not putting money away for retirement. Kathleen Kennedy Townsend, who last year joined a bipartisan group, the Center for Retirement Initiatives at Georgetown University, told The Daily Beast, “It doesn’t surprise me that we need to expand Social Security because the other options have collapsed.” Townsend is considering entering the race in Maryland to replace retiring Senator Barbara Mikulski, where two announced Democrats, Chris Van Hollen and Donna Edwards, support expansion. Townsend sees the issue as far broader than Social Security, and as Robert Kennedy’s eldest child, wants to be the voice of the 50 percent of Americans who lack retirement plans through their jobs.
This is not a campaign cycle during which Democrats are going to get courage points for calling for entitlement cuts. The politics have shifted, and a Democratic proposal in Congress calls for bumping up the payroll tax from 6.2 to 7.2 percent over time to pay for expanding Social Security. “It seems benign,” says Third Way’s Kessler. “Who could be against it? But if you sign on to it somebody will notice there’s a huge tax increase attached to it. It’s not going to hurt Democrats in the primary, but in the general election, no matter what office you’re running for it’s going to hurt politically.” Maybe so, but in the Warren wing of the Democratic Party, happy days are here again.