November 22, 2014

CONCORD CO-CHAIRS KERREY & RUDMAN WARN AGAINST THE ‘DO NOTHING' PLAN FOR SOCIAL SECURITY REFORM

WASHINGTON --  In an op-ed published today in The Washington Post, The Concord Coalition's Co-Chairs, former Senators Bob Kerrey (D-NE) and Warren B. Rudman (R-NH), warned against defaulting to the “do nothing” approach to Social Security reform. Kerrey and Rudman urged critics of the few specific reform plans that exist to come up with their own plans for shoring up the Social Security system.

For the full text of this op-ed, follow this link:
http://www.washingtonpost.com/wp-dyn/articles/A6698-2002Aug11.html

Excerpts from the op-ed:

“Wall Street's slump and the disappearing budget surplus are already shaping this year's campaign rhetoric on Social Security reform. It's easy to see why. These events have taken two cherished free lunch options off the table. Politicians can no longer claim that investment returns from a never-ending bull market or general revenue transfers from perpetual budget surpluses will save them from making hard choices.

“This development should spark a more realistic debate on genuine reform options. But there is a clear danger that without a free lunch to promise, politicians will fall back on an equally bad option --  the Do Nothing Plan. Voters shouldn't let that happen...

”Doing nothing means deep benefit cuts or steep payroll tax increases for future generations, which is why the Social Security Trustees continually warn that prompt action is essential.

“Suppose that a member of Congress introduced legislation called 'The Social Security Do Nothing Act.' Under this bill, promised retirement benefits would be cut by 16 percent for today's 30-year olds, by 29 percent for today's 20-year olds, and by 35 percent for today's newborns. Alternatively, payroll taxes would suddenly go up by roughly 40 percent in 2041. How many politicians would rush to endorse this bill? None. And yet these are the choices under the Do Nothing Plan...

.”It is certainly fair to criticize reform plans on policy grounds. But it is fundamentally unfair to judge them against a standard that assumes the current system can deliver everything it promises. It can't. Today's Social Security system promises far more in future benefits than it can possibly deliver. The relevant comparison for any reform plan is with what current law can deliver, not what it promises.

“No realistic reform plan looks good when compared to the false hypothetical of a perfectly solvent system. Reformers have the burden of saying what changes they would make to a system that is very popular but unsustainable. Critics can sit back and take pot shots at politically painful options without ever having to say what they would do instead.

"We have a simple suggestion to improve the dialogue. Critics...should come up with their own plans for shoring-up Social Security. They should be specific about the benefit cuts and tax increases they recommend and the amount of general revenues that would be required. A real debate could then take place...

“We should stop playing political shell games with this issue. If we do not have the political will to solve the Social Security problem now, there is no hope of doing so when the baby boomers start collecting benefits --  not just for Social Security but for Medicare and Medicaid as well. The problems facing our health care programs are much more daunting and difficult than Social Security. These three programs together are expected to double as a share of the economy within 30 years, putting unthinkable pressure on tax rates, the economy and the budget...

“Politicians of both parties should get behind specific reform plans or be held accountable for supporting the consequences of the Do Nothing Plan.”