Next Big Issue? Social Security Pops Up Again -- By 2016, Social Security will begin paying more in benefits than it collects in payroll taxes
Now that landmark legislation overhauling the health insurance system is about to become law, addressing Social Security’s solvency could well become the next big thing for President Obama and Congressional Democrats.
Central to the health care changes are hundreds of billions of dollars in reductions in Medicare spending over time and expansions of Medicaid. As some administration officials acknowledge, that effectively takes those fast-growing entitlement programs off the table for deficit reduction just as Mr. Obama’s bipartisan commission to reduce the mounting national debt gets to work.
That leaves Social Security, the other big entitlement benefits program and one that Mr. Obama has suggested in the past that he is willing to tackle. While its looming problems are not of the scale of those afflicting Medicare, it now stands as the likeliest source of the sort of large savings needed to bring projected annual deficits to sustainable levels, many budget analysts agree.
And, they say, packaging future reductions in the retirement program that Democrats zealously defend with tax increases that Republicans typically oppose would have the makings of a grand compromise to shrink the debt.
In Congress, the speaker of the House, Nancy Pelosi, and other Democratic leaders, who last year quashed White House talk of forming a Social Security task force, are not likely to be eager after the 14-month battle over health care to confront so controversial an issue, certainly not before November’s elections.
Early signs of disagreement have also been evident in the White House between members of the economic team, who generally favor addressing Social Security’s finances, and the political advisers, who resist it.
The president’s debt-reduction commission is likely to force the issue, even though it is not required to report its recommendations to Congress until Dec. 1, weeks after this year’s midterm Congressional elections.
Because 14 of the 18 commission members are required to agree on any recommendation to Congress, few people think the panel’s Democrats and Republicans will succeed in coalescing around a package of both short-term and long-range deficit reductions, as Mr. Obama directed. Yet some Democrats in the administration and in Congress say they privately expect that some proposals, including on Social Security, could well end up in Mr. Obama’s budget early next year.
By 2016, Social Security will begin paying more in benefits than it collects in payroll taxes, according to the annual report of government trustees; reserves in the form of government i.o.u.’s will be exhausted by 2037, after which incoming taxes will cover three-quarters of benefits.