Barron’s editorial page editor ponders prospects for Social Security reform

Thomas Donlan devotes his latest Barron’s editorial commentary to the politically difficult task of touching Social Security.

Not since 1983 has Congress made significant changes in the basic provisions of Social Security. Even that package nearly failed, despite the pressure of an imminent collapse of the retirement program.

Only heavy pressure from the bipartisan team of realists, President Ronald Reagan and House Speaker Tip O’Neill, won congressional support for modest increases in taxes coupled with benefit cuts gradually imposed over decades.

Then, as now, it took a crisis for Congress to do important things; then as now a crisis wasn’t enough without leadership.

The Bipartisan Policy Center’s commission members include former senators, former governors, former advisors to Social Security and other government agencies, economists, and lobbyists for business and labor. Unfortunately, the commission lacks anyone with current power.

The advantage of employing has-beens is that they have nothing to lose by putting their cards on the table. Their report is close to what they should have done 15 or 20 years ago, if they could have done anything. …

… The biggest selling point of the reform plan is the alternative. According to its actuarial calculations, Social Security is heading for the rocks. If Congress continues to sit on its hands, 2035 will be the last year of Social Security as we have known it. Its trust fund will be exhausted. After that, benefits can only equal tax revenues, and that would require a 23% cut for every beneficiary.

The Bipartisan Policy Center commission and its consultants say that their full package, including increased savings, would leave virtually all Americans a little better off than they would be with the 23% Social Security cut, while significantly reducing poverty among older Americans and allowing future increases in benefits.

It’s hard to be optimistic about any bipartisan plan for anything these days, but it’s easier than total denial of one of America’s biggest financial challenges.