Economy

5 Biggest Threats To Social Security From New Republican Congress

America's most vital social program is imperiled in 2015.

Photo Credit: Christopher Halloran / Shutterstock.com

With Republican majorities taking over both the House and Senate, it's instructive to look back to 2006, when the Democrats upended a dozen years of GOP legislative dominance—the era of Newt Gingrich, Dick Armey, and a “Republican Revolution” that many believed would last forever.

One of the catastrophes that brought down the curtain on that period was, of course, the failure of the Bush administration's wars in Iraq and Afghanistan. Another, perhaps less well remembered, was Bush's clumsy attempt to sell Congress and the public on a plan to privatize Social Security.

Politicians do, sometimes, learn from their mistakes, and since then, the Republicans have avoided direct attacks on the country's biggest, most vital, and most popular social program. Instead, they've proceeded indirectly: encouraging center-right Democrats to join them in “reforming” Social Security, and pushing an assortment of policies that chip away at the program rather than directly cutting or eroding benefits.

Social Security is nowhere near the top of Washington's agenda as the 114th Congress is seated. But the November election could prove to be a turning point nevertheless. Here are the top five reasons why:

1. The Democratic center-right is not dead yet: Business-friendly Democrats were some of the biggest losers in November. They are also the Democrats most eager to prove their devotion to bipartisanship by working with Republicans to cut Social Security. Seemingly, their loss was a backhanded victory for pro-Social Security progressives, many of whom kept their seats in part by defending the program.

But not so fast! Sen. Mark Warner of Virginia, perhaps the highest profile member of the Democratic center-right, who barely squeaked through to reelection in November, was named to a leadership position later that month. That counterbalances the creation of a new post to be filled by progressive champion, Sen. Elizabeth Warren of Massachusetts.

Meanwhile, Gina Raimondo, the Rhode Island state treasurer and Wall Street booster who fought to slash public employees' pensions, has become a new media darling after being elected governor. Raimondo's policies “provided a template for how politicians in Washington could try to rein in Social Security and Medicare spending, if they wished,” New York Times columnist Frank Bruni wrote, dubbing Raimondo “a Democrat to watch in 2015.”

2. President Obama is still president: The Obama administration has put Social Security on the table repeatedly in its budget negotiations with congressional Republicans. The president said nothing as he campaigned for Democrats last year to suggest his views have changed. In 2015, the top item on his economic agenda will be to push a secretive trade treaty, the Trans-Pacific Partnership, through Congress. He has made clear that he will defy his own party's lawmakers to do so.

Deals like the TPP have led to lost jobs and stagnating incomes for American workers. Wage stagnation has been the biggest factor in slowing the growth of Social Security's trust fund over the better part of the past three decades. The president's failure to grasp the direct link between workers' wages and Social Security's fiscal health ups the odds that he will press a deal that aggravates this trend.

3. Paul Ryan is more powerful than ever: In the new Congress, the Republican from Wisconsin will chair the House Ways and Means Committee. This makes him an even bigger force on Social Security policy than he was as Budget Committee chair, when he repeatedly called for hobbling the program. The new Congress will likely have to make adjustments to keep one portion of Social Security, the Disability Insurance (DI) trust fund, from running short in the next two years. With Ryan heading up their response, the Republicans are more likely to insist on drastic changes to the entire program rather than going the less harmful route of shifting assets from the DI fund's counterpart, the Old Age and Survivors' trust fund.

4. Rightward shift at the CBO: The Congressional Budget Office is the Hill's numbers cruncher on the economic and budgetary impact of present and proposed policy. The incoming Republican leadership have made clear they will replace director Doug Elmendorff, a centrist, with someone more to their ideological liking.

A rightward shift at CBO couldn't come at a worse time for Social Security. Conservative policy analysts have been working to convince Congress and the public that there is no retirement crisis in America. In 2014, they persuaded the Social Security trustees to eliminate replacement-rate information from the trustees' annual report—data that have consistently shown Social Security only replaces about 40 percent of pre-retirement income, one of the lowest rates in the developed world. The CBO also issues a respected set of projections for Social Security, and its estimated replacement rate is only slightly more optimistic. With a new director under the thumb of the House majority, those estimates could be radically revised or else eliminated from the CBO's report.

5. Blocking police reform: What do the deaths of Michael Brown and Eric Garner and the nationwide protests against racially biased policing have to do with Social Security? It's almost axiomatic that programs like Social Security, based in mutual aid and a strong feeling of community solidarity, work best in societies with minimal social-cultural divisions. The beginnings of the long political war against Social Security roughly coincided with the 1970s backlash against the Civil Rights movement.

In November, the House Republican leadership blocked a bipartisan bill to curb transfers of military weapons and equipment to local police—one of the flashpoints of the crisis between police and the African American community. The new Congress may well consider more measures that intensify the anti-Ferguson, law-and-order reaction. That would only deepen a racial divide that undermines support for broad-based programs like Social Security.

Disturbing as these circumstances are, there are countervailing forces. A study last year by the National Academy of Social Insurance found that Americans remain tightly attached to Social Security: 85 percent said the program's benefits are more important to them now than ever, and 72 percent said Congress should consider increasing future benefits. Four bills to enhance benefits were introduced in the 113th Congress; the NASI survey findings suggest their sponsors should intensify efforts to pass them.

Doing so is not only essential to maintaining old-age standards of living, but would be an effective counterpunch against lawmakers who prefer to see benefits reduced. Additional leverage could be gained by tying Social Security improvements to the reauthorization of the Older Americans Act and full funding of the important services it provides.

Countervailing Forces
But the most promising development for defenders of Social Security may be the powerful grassroots movement in favor of a higher minimum wage. In 21 states in 2015, including four that proved to be Republican strongholds in November—Alaska, Arkansas, Nebraska, and South Dakota—the minimum wage will increase this year. By 2016, 29 states will have a higher minimum wage than the federal government sets, according to the Economic Policy Institute.

Higher wages mean higher payroll tax revenues, bolstering Social Security's finances and giving workers more leeway to save money that can supplement their Social Security retirement benefits. Immigration reform, building on Obama's executive order allowing some 5 million undocumented immigrant workers to apply for work permits—and Social Security numbers—could help as well by bringing them into the higher paying, mainstream workforce.

Another force mitigating against Social Security cuts, perversely, could be the recent, and very troubling, moves against public- and private-sector pension plans. Raimondo's success at cutting Rhode Island's retirement benefits—if they survive a court challenge—will make public employees more dependent on Social Security, not less. And Congress' recently passed “cromnibus” spending bill makes it easier for sponsors of multiemployer plans to cut benefits—even for current retirees who were counting on them. How likely is it that the 10 million-plus unionized workers covered by these plans will stand by for measures that reduce their Social Security?

Increasingly beleaguered, American households need Social Security to do more for them. But this enormous, and enormously vital program, is intimately entwined with every aspect of their working lives. Public and private pensions, international trade deals, race relations, the minutiae of Washington fiscal policy—in 2015, Social Security's defenders will have to keep an eye on all of these balls if they want to preserve and enhance it for the future.

 

 

Eric Laursen is an independent journalist who writes The People's Pension blog. He is the author of The People’s Pension: The War Against Social Security from Reagan to Obama (AK Press, Spring 2012) and a co-author of Understanding the Crash (Soft Skull Press/Counterpoint, Spring 2010). 

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