The left’s latest proposals embody a conscious effort to recast the Social Security debate by adopting a policy position well outside of longstanding mainstream opinion. For years, policy analysts have grappled with how to reconcile the growing gap between Social Security’s scheduled benefits and the financial resources available to pay for them. Conservatives generally prefer to slow cost growth, and progressives to raise taxes, while bipartisan proposals such as Simpson-Bowles land roughly halfway in the middle.
By their own account, the backers of these latest benefit-expansion proposals are trying to reset the Social Security debate by positioning themselves far afield from this bipartisan ground.
The accompanying graph gives a sense of how radical this attempted paradigm shift is. Social Security benefits have been growing steadily relative to inflation for many years. Even if Social Security were denied additional tax revenue to maintain solvency, beneficiary standards of living in 2035 would be nearly what they are today; by contrast, the program’s scheduled benefit growth could only be funded with a substantial tax increase. Further increasing benefits by, hypothetically, 20 percent, would mean more than a 50 percent rise in beneficiary living standards by 2035, and would also require workers to provide over 20 percent of their taxable wages to support one federal program alone. In some respects the recent maneuvering repeats the tactic employed with the Affordable Care Act (ACA, or so-called “Obamacare.”) Prior to the ACA, mainstream analysts had debated how much of the government’s enormous health care financing shortfall should be closed by raising taxes, and how much by slowing benefit growth. The ACA leapfrogged previous bipartisan discussion by increasing federal health spending commitments even beyond those deemed unaffordable under prior law. That radical shift is one reason why the ACA lacked bi partisan support, why its passage polarized the body politic, and why opposition to it remains entrenched within the political center and right nearly four years later. Proposals to further increase Social Security benefits represent a similar effort to dismiss bipartisan standards of fiscal responsibility.
Saturday, October 25, 2014
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