Entitlements

Social Security Gets a Reprieve—for Now


Of the big government programs, Social Security is the most obvious candidate for President Barack Obama's reformist agenda. The President, however, mentioned the pension program only fleetingly in his Jan. 25 State of the Union address. "To put us on solid ground," Obama said, we should "find a bipartisan solution to strengthen Social Security for future generations." He stopped short of proposing benefit cuts, signaling that while he wants to fix a long-term funding shortfall, he won't be doing so this year.

That's some relief for defenders of the retirement program, who had been strapping on the armor for a fight with Obama over an increase in the retirement age or other steps aimed at assuring Social Security's solvency.

The struggle over the New Deal-era pillar probably isn't over. While Obama didn't call for sacrifice, nor did he repeat his 2008 campaign rhetoric that it is neither "necessary or fair to hardworking seniors to raise the retirement age." That omission has activists girding for a clash as the President's reelection campaign shifts into high gear. "There's a battle going on for his heart and soul," says Nancy J. Altman, an advocate for preserving Social Security who served as a senior aide on President Ronald Reagan's Social Security Commission. "You have to say, 'This is a sacred trust, and we can't break it.' "

Advocates for entitlement programs went on high alert after the President forged a tax-cut compromise late last year that included a $110 billion, one-year holiday on payroll taxes that fund Social Security. The groups include some core Democratic constituencies—and they aren't standing down, says Eric Kingson, co-director of Social Security Works and of the Strengthen Social Security campaign. He says more than 250 organizations, including the AFL-CIO and the Service Employees International Union, stand ready to fight any benefits cut. Barbara B. Kennelly, president of the National Committee to Preserve Social Security and Medicare, says her group gathered 780,000 petition signatures against shrinking benefits.

Such fears stem from the realization that Obama has a stronger hand to overhaul the program than either of his predecessors. He has surrounded himself with veterans of President Bill Clinton's reform effort, including Gene Sperling, Obama's new chief economic adviser, and budget director Jack Lew. A bipartisan commission Obama empaneled has recommended raising the retirement age to 69 by 2075. And midterm elections in November brought dozens of new Republican lawmakers to Washington with a mandate to cut spending. The public may be open to change, too, at least in principle: Polls show addressing the nation's $14 trillion debt ranks just below jobs as the top priority for Americans.

For all that, the President is battling the same headwinds that forced Clinton and President George W. Bush to forgo reform attempts until their second term. While the public may deplore the ballooning deficit, polls also show most Americans reject the changes Obama's commission said would be required to fix Social Security. A survey released on Jan. 18 by Greenberg Quinlan Roser Research, a Washington-based Democratic polling firm, found that 55 percent of respondents oppose raising the retirement age to 69—a proposal that the Senate's second-ranking Democrat, Dick Durbin of Illinois, said was "hardly radical." An additional hurdle: Unlike the last time Congress cut benefits and raised taxes, in 1983 under President Ronald Reagan, Obama can't argue the program faces an immediate funding crisis. While Social Security faces a long-term shortfall, the trust fund does not run out until 2037, according to a 2010 trustees report.

The bottom line: Obama may put off Social Security reform until a hoped-for second term, unless Republicans take the initiative.

Przybyla is a reporter for Bloomberg News.

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