By Mike Lillis - 06/23/11 12:20 AM EDT
Some leading House Democrats warned Wednesday that Social Security cuts are a nonstarter as lawmakers search for places to slash trillions of dollars in federal spending.
And they aren’t mincing words.
Democratic leaders had hoped recent GOP proposals to scale back or privatize Social Security benefits would be a political albatross around the necks of Republicans, much as Rep. Paul Ryan’s (R-Wis.) plan to privatize Medicare has proven largely unpopular with the public.
The Democrats’ message was largely lost, however, with the arrival of the online sex scandal involving former Rep. Anthony Weiner (D-N.Y.), which dominated headlines for the first three weeks of June.
With Weiner’s resignation at midnight Tuesday, Democratic leaders immediately began an effort to make up for lost time.
Rep. Jan Schakowsky (D-Ill.) said the combination of Republican proposals to overhaul Social Security and Medicare benefits would hit seniors doubly hard.
“Seniors get the double whammy — higher healthcare costs and deeper benefit cuts,” she said. “It’s a bad formula for anyone.”
Republicans in both chambers have floated proposals in recent weeks to overhaul Social Security in the name of preserving the program and reducing deficits.
In the upper chamber, Sen. Kay Bailey Hutchison (R-Texas) is proposing to shave 1 percentage point from the annual cost-of-living adjustment, or COLA, which is designed to align Social Security payments with inflation.
In the House, Rep. Pete Sessions (Texas), chairman of the National Republican Congressional Committee, introduced a bill this month that would allow workers to opt out of Social Security. Instead, employees could immediately shift that portion of their wages (6.2 percent) from the traditional program to private retirement accounts.
“Our nation’s Social Security Trust Fund is depleting at an alarming rate, and failure to implement immediate reforms endangers the ability of Americans to plan for their retirement with the options and certainty they deserve,” Sessions said. “To simply maintain the status quo would weaken American competitiveness by adding more unsustainable debt and insolvent entitlements to our economy when we can least afford it.”
The Democrats dispute those claims, noting that the Social Security Trust Fund is solvent enough to pay full benefits for nearly 30 years. They’re also taking the Republicans to task for blaming Social Security for the nation’s deficit troubles.
“Social Security has not contributed to these deficits,” Rep. Xavier Becerra (Calif.), vice chairman of the Democratic Caucus, said Wednesday. “Why should Social Security … cover the costs of the real drivers of the deficits, which were the Bush tax cuts, the unpaid wars in Iraq and Afghanistan and … the recession?”
It’s not only Republicans the House Democrats might have to contend with. On Wednesday, Sen. Charles Schumer (D-N.Y.) indicated that upper-chamber Democrats are seriously eyeing an extension of the payroll-tax holiday in an effort to stimulate consumer spending — a proposal the House Democrats rejected on Wednesday for fear it will undermine Social Security’s sole funding source.
“You can provide tax relief that would serve as a stimulus, without touching the revenue stream dedicated to Social Security,” Rep. Ted Deutch (D-Fla.) said.
Garamendi noted that a payroll tax extension also relies on additional borrowing to make up for the loss in revenues. “You simply add it to the deficit,” he warned.
The House Democrats on Wednesday rejected the notion of raising the retirement age in order to trim Social Security costs — an idea some more centrist Democrats have left on the table.
“Raising the retirement age is a benefit cut,” Deutch said.
“Someone who earns $50,000 a year [is] paying 6 percent, but someone who’s earning $5 million per year is paying less than 1 percent,” Deutch said.
Negotiators from both parties are scrambling this week to finalize a deal to combine enormous spending cuts — championed by Republicans — with legislation to raise the debt ceiling, which leaders on both sides support. Led by Vice President Biden, the negotiations are scheduled to continue at least through Thursday.
Rep. Chris Van Hollen (D-Md.), a participant in the Biden talks, said Tuesday that negotiators from both parties have agreed that any Social Security reform should be tackled separately from any deal on the debt ceiling. Becerra, however, isn’t convinced that Republicans won’t try to sneak in one of their reform proposals.
“What we may hear one day is certainly overwhelmed by what we’ve heard for many, many weeks out of this new Republican Congress,” Becerra said Wednesday. “They want to not only cut benefits for Social Security, but they’re willing to end Medicare.”