THE BLOG

Social Security: Correction or Rejection

07/26/2011 06:38 pm ET | Updated Sep 25, 2011

For 28 years, Congress has rejected all attempts to preserve the solvency of the Social Security system. For the past 15 years, everyone has recognized that some correction had to be made, but, as we all know, nothing has been done to improve it. I sit here, holding in my hand, the testimony of my friend, Stanford G. Ross, to the Senate Committee on Finance on May 25, 2005.

Ross was Commissioner of Social Security under Jimmy Carter, Public Trustee of the Social Security and Medicare Trust Funds under George H.W. Bush and Bill Clinton and Chairman of the Social Security Advisory Board under Clinton and the younger Bush. He knows the trouble we're in now, and he knew it back in 2005. He said then "The rancor and present discussion of Social Security is unprecedented." That rancor ranked well below the current level of acrimony between the two parties.

Ross went on to say that "For nearly 70 years, since its enactment, the Social Security system has been broadly supported by Republican presidents and administrations as well as Democratic presidents and administrations. Bipartisan approaches supporting Social Security were taken under presidents Eisenhower, Nixon, Ford, Reagan and George H.W. Bush." "...the concepts underlying the systems are sound and the values they reflect of providing income protection for the elderly, disabled, and their spouses and dependents on a universal, contributory basis are widely shared by Americans."

I would suggest, in 2011, that "the rancor and present discussions of Social Security is unprecedented", far exceeding that of 2005. When President Obama hinted last weekend that Social Security concessions might be made, Democrats objected. It sounded like that cuts in Medicaid were more acceptable and Social Security still remains the sacred cow.

In 2005, Ross proposed a plan to eliminate a 1.92% deficit projected by the Social Security Agency. He spelled it out on page eight of the above document, where interested readers may find it. But briefly put, he suggested possible revenue enhancements that would cover half of the deficit, and possible benefit adjustments that would cover the second half. The second half included an "increase [in] reaching retirement age in [the] future as necessary." He also suggested revamping household benefits and "other changes in benefit formulas". He suggested no big bites, just a half dozen nibbles that would end the deficits.

The Republicans on the Committee rejected it out of hand. They were backing president Bush's plan to privatize Social Security by permitting recipients to invest part of their savings in non-government investments. (If we look back to 2008, we know how well that would've worked out.) So their rejection was natural. However, Ross could not understand why the Democrats rejected it, too. He asked one of the Democrats why they had rejected his plan. The reply was "You don't understand, Social Security is our [political] issue." Nobody wanted a correction, because nobody wanted a solution. Republicans wanted privatization as part of the end of "big government", and Democrats wanted to keep the issue alive because it helped them win votes.

Once again, take a look at Ross' solution and then let's see what the politicians will do now.