Third Way Perspectives
May 31st, 2013
There are a lot of charts, numbers, and projections in the annual report released by the Social Security Trustees Friday, but they really boil down to this: Social Security’s trust fund has 20 years to live.
Started in 1935 as the first major strand in America’s safety net, Social Security will arrive at insolvency at the venerable age of 98. By ignoring this reality, Congress is guaranteeing that the program’s reserves will expire, forcing benefits for the retired and disabled to immediately fall by 23 percent starting in 2033.
But the retired and disabled won’t be the only victims. The rising cost of Social Security and health care programs is crowding out investments in kids and future generations. In the mid-1960s, the federal government spent three dollars on investments — in education, research, and infrastructure — for every one dollar on entitlements. In 2023, it will spend one dollar on investments for every five dollars on entitlements. That means less money for teaching kids, curing diseases, and building roads.
The question now is whether the same dysfunctional Congress that cannot seem to muster enough votes to name a post office can touch the third rail of politics, to keep Social Security from going down and taking public investments with it.
To that we answer a loud no and yes. No, Congress is unable to develop and pass a Social Security solvency plan with the necessary super majority in the Democratic Senate and a majority in the Republican House. That piece of legislation is a fantasy. But the same two chambers could pass a law that outsources the job to a commission, to develop the plan and leave Congress in the position with only two choices: vote yes on the commission plan to save Social Security or vote no to let its financing dry up. Read the rest of this entry »
February 27th, 2013
This piece was originally published in Politico.
As the sequester blame game hits fever pitch this week, Republicans’ stance on taxes is simply indefensible, falling hundreds of billions short of even their own prior positions. But as Democrats, we also share a large portion of responsibility for the coming cuts to domestic discretionary spending, as the party has decided in both action and rhetoric that meaningful fixes to the major entitlement programs of Medicare, Medicaid and Social Security are off-limits.
Think about it. Over the past three years, from debt ceiling deals to the supercommittee and the fiscal cliff, social insurance programs have escaped virtually unscathed while every other category of spending took some hit and revenue grew. And because of the sheer enormousness of the Big 3 entitlements, Democrats face a serious new crisis that is closer to home and will linger long past the sequester: There is now barely a farthing left in the budget for any new investments.
Over the past century, Democrats can boast two major economic legacies. The first is the safety net programs of the New Deal and the Great Society — successful programs that lifted the elderly and vulnerable out of poverty. The second is the New Frontier investment programs defined and expanded under President John F. Kennedy. These investments in science, space, defense, education, as well as highways, rails, ports and medical breakthroughs helped power the U.S. economy during the latter half of the 20th century.
Tags: Congress, cowan, cuts, Democrats, domestic, entitlements, fiscal cliff, kessler, Medicaid, Medicare, obama, Politics, reform, Republicans, sequester, social security, Spending, taxes, third way Posted in Economic Program
January 31st, 2013
This piece was originally published in The Hill.
The phone rings in the house of an undocumented immigrant who has lived here for decades. The person on the line offers her a deal. If she registers with the US government, goes through a criminal background check, and pays a fine, she will be forever allowed to work, travel, and conduct her affairs in America without fear of deportation. For her children, even better — they will be given a fast-track path to citizenship. And down the line, once more is done to secure the border, she can get in the back of the line and eventually earn her citizenship as well.
Is there any chance she would say no?
On Monday, a bipartisan group of 8 Senators released an immigration reform proposal that would offer exactly that scenario to undocumented immigrants. Yet many reform advocates reacted warily to the plan, and even the Administration offered a few pointed criticisms in its otherwise favorable statement. In particular, they argued that using a “trigger” of border security to determine when some immigrants can move from a provisional legal status to a permanent one with a path to citizenship is unacceptable.
October 26th, 2012
by Jim Kessler
This piece was originally featured in Politico.
This week, some of the most vocal progressive organizations planted a flag in the ground in opposition to a grand bargain budget agreement in the lame duck Congress. Led by AFL-CIO President Richard Trumka, who Tuesday wrote an op-ed in POLITICO, “Americans don’t want ‘grand bargain,’” these groups made a particular point in opposing any fixes to Social Security and Medicare. If too many progressives follow suit, this could not only damage our economy but also hurt the middle class and put retirement entitlements in ultimate danger.
For nearly a century, progressives have fought to construct a secure and comprehensive safety net. With the passage of the Affordable Care Act in 2010, that mission is essentially complete. Now our challenge is to maintain the safety net as we approach the most consequential demographic aging in the nation’s history. Any responsible approach to fixing the safety net must necessarily include a balance of measures that make the programs healthy and solvent — new revenue, modest reductions in benefits to some recipients and a commitment to working class people that we will not raise payroll taxes on them in the future. We also believe the time to make these changes is now, for the following reasons: Read the rest of this entry »
October 3rd, 2012
This piece was originally posted on the Huffington Post.
Paul Krugman is one of America’s intellectual treasures, but he is stunningly off when it comes to the deficit. He argues that if re-elected, Obama should “just say no” to all efforts to seek a major budget deal. In so doing, he belittles Bowles, Simpson and others who warn about a looming and potentially crippling fiscal crisis. He’s not the only deficit denier, but Mr. Krugman is so respected by the left wing of the Democratic Party that his arguments could prove quite problematic.
His recent column opens with perhaps the most dangerous and short-sighted argument, namely that our historically low U.S. treasury rates prove that “we are not facing any kind of fiscal crisis.” But our rates are not at historic lows because of our chronic deficits, rather in spite of them. We are (in the eyes of those seeking to purchase the safest debt possible) the cleanest port-o-potty at the county fair thanks to the awful state of much of the rest of the world’s beleaguered economies. Read the rest of this entry »
August 3rd, 2012
by Jim Kessler
Should Social Security be left out of this discussion, as Mr. Matthews suggests? Is it really only the health care entitlements we need to contain?
He is correct, and we showed in our paper, that over the past 50 years, all of Social Security’s growth relative to GDP has occurred in the first 20 years and has stayed roughly static since. But five percent of the economy is a lot. It’s roughly equal to Medicare, Medicaid and CHIP combined. And it’s not going to stay static – that is a certainly. In less than two decades, Social Security is poised to jump from 5.0% to 6.0% of GDP, according to CBO. One point may not seem like a big deal, but it represents a 20% rise in the cost of Social Security relative to the size of the economy. That’s not peanuts, especially since (as Mr. Matthews rightly points out and we also show in our paper) our health care entitlements will sprint ahead much faster. Read the rest of this entry »