Social Security debate reignites

Social Security is surging to the forefront of the political debate ahead of the race for the White House in 2016.

The entitlement program has been thrust into the spotlight by a fight over the Social Security disability fund, which is expected to run dry by the end of next year.

The looming shortfall is stirring a burst of activism on the left, with Sen. Bernie Sanders (I-Vt.), a likely 2016 candidate, and liberal hero Sen. Elizabeth Warren (D-Mass.) warning of an assault on the program from Republicans in Congress.

{mosads}”We’ve known for years that Social Security Disability Insurance is set to run low in 2016, and most people assumed that another bipartisan reallocation was coming,” Warren wrote Wednesday in an email to supporters. “But now, thanks to the Republican ideological war on our most important national safety net, disabled Americans could suddenly face a 20 percent cut in their Social Security checks next year.”

Republicans have pushed back hard, and say they are the ones seeking to fix a broken program.

“The fact of the matter is, the Social Security Disability Insurance Trust Fund is going broke, going broke next year. Not in 2024, not in 2080, next year, 2016,” Rep. Tom Price (R-Ga.), the House budget chairman, told The Hill in an interview last month.

The battle over the disability fund is fueling a broader debate over Social Security and what should be done to prevent it from someday going insolvent.

Republicans are expected to put forward their own plans for reforming Social Security next month, when they introduce a new budget blueprint that they have promised will balance the books in 10 years.

But the extent to which Republicans will suggest changes to the retirement program — long known in Washington as the “third rail” of politics — as they seek to win back the White House and hold their congressional majorities remains unclear.

Democrats are eager for a confrontation over the program, having blasted House Republicans earlier this year for passing a rule that established a procedural hurdle that makes it more difficult to replenish the disability fund through a reallocation of the payroll tax.

Sanders, with his eye on a run for the White House, has seized on the issue to make the case for extending Social Security by raising taxes on the wealthy.

“If Republicans are serious about extending the solvency of Social Security beyond 2033, I hope they will join me in scrapping the cap that allows multi-millionaires to pay a much smaller percentage of their income into Social Security than the middle class,” Sanders said. 

More than 59 million retired workers and nearly 9 million disabled people receive benefits from Social Security each month. The benefits are paid for by the payroll tax that employees and employers have to pay each month. The amount of earnings that are subject to the payroll tax is capped at $118,500.

Income above $118,500 is not subject to the payroll tax, which Sanders said is “patently unfair.”

“If we apply the Social Security payroll tax to income above $250,000, we could immediately bring in enough revenue to the Social Security trust fund to extend it for decades and also be able to increase benefits,” he said.

If Congress fails to act, payments from the disability fund would be cut by 20 percent in January 2017.

The retirement fund, meanwhile, is projected to run out of its reserves in 2033, forcing benefits to be reduced over time. In December, the Congressional Budget Office estimated that if Congress shifted resources from the retirement fund to the disability fund, both funds would be exhausted in 2030.

While those projections sound dire, Social Security could still pay around three-quarters of benefits for several more decades if it became insolvent.

The National Academy of Social Insurance (NASI), however, has found that most Americans don’t want to see any cuts to their benefits and are willing to pay more taxes in order to preserve the program.

In one of its surveys, 83 percent agreed with a proposal like Sanders’ that would raise Social Security taxes on top earners. That included 71 percent of Republicans, 92 percent of Democrats and 84 percent of independents.

Both parties have treaded carefully around the issue of Social Security in recent years, mindful of the backlash that President George W. Bush suffered in the mid-2000s when he pushed a plan to partially privatize the program.

President Obama took a political hit a few years ago when he proposed a switch to what is known as chained consumer price index (CPI) for Social Security, a formula that would likely result in cuts to benefits over time.

The White House scrapped the idea in its next budgets after Democrats skewered the plan.

Obama’s latest budget blueprint, meanwhile, asks Congress to reallocate the payroll tax to the disability fund, a proposal Republicans describe as “robbing Peter to pay Paul.”

At a hearing last week, Sen. Kelly Ayotte (R-N.H.) said she wants to see a “concrete proposal” from the White House that offers a long-term plan for Social Security.