Pro-Growth Social Security Reform

Blog Post
Wednesday, October 14, 2020

On the latest Facing the Future, I was joined by Senior Policy Director and Senior Vice President at the Committee for a Responsible Federal Budget, Marc Goldwein, Concord Coalition Executive Director, Bob Bixby, and Concord’s Policy Director, Tori Gorman. We discussed Goldwein’s paper on pro-growth Social Security reform and how it might need to be adapted in the post-COVID era, how presidential candidates are approaching fiscal policy right now and the status of pandemic-relief legislation negotiations.

[Note: Portions of this week's Facing the Future can be seen in the video clip posted below.]

In 2019, The Concord Coalition commissioned a series of papers on five topics with the idea of putting forth a fiscally-responsible economic growth agenda at a time when projected long-term economic growth was waning and the nation’s fiscal picture was worsening every year. 

Little has changed with that long-term trajectory, but much has changed in the near term, as the country battles COVID-19 and the economy struggles to rebound from the effects of the pandemic. With millions suffering now and the long-term picture no better, Concord is revisiting its agenda to determine how it should be adapted to our new reality. 

The month of October will feature discussions on each of the five key topics, continuing with Social Security this week. You can read the 2019 policy paper on pro-growth Social Security reform by clicking here

Bixby provided background as to why Social Security was included as a topic of focus in a fiscally-responsible economic growth agenda.

“At a fundamental level, it does affect the economy through its effect on the federal budget,” Bixby said. “It also has an effect on the economy by the signals it sends about the workforce -- how long people are going to work, how much they are going to pay in taxes, how they’re going to afford retirement.” 

He added that the program is unsustainable in its current form as a fiscal matter, but solutions should not be thought of as just a menu of “cut here or raise taxes there.”

“We should think of it as a long-term strategy of enhancing economic growth as well,” Bixby said. 

Goldwein said, “Our goal in writing this pro-growth Social Security reform was not to get a bigger economy in 2019 or 2020, it was to get bigger, more sustained growth over the next 10, 20, 30, 50, 75 years.” 

“We do need to make sure Social Security is financially sustainable and there for future generations,” he said. “We do need to make sure that benefits are distributed fairly and equitably, and the same with taxes.” 

He added that Social Security reform can be a key tool for growth by increasing work and labor-force participation and increasing savings and investment in the economy. 

“We can’t pretend Social Security reform is all candy; there will be tough choices, but we need to stop thinking of it as entirely tough choices,” Goldwein said. 

It is an opportunity to improve the program, address inequities in the system, and it is an opportunity to increase incomes, he added. More income for workers, more income for savers. It can be a win for the economy, households and vulnerable seniors. 

When asked how the Social Security system and retirees have been impacted by the pandemic, Goldwein said that retirees, although the most victimized by COVID-19, have been among the most financially insulated from the crisis. 

“The stock market is higher now than at the beginning of the year and Social Security has continued to pay full benefits,” he said. “Most, from a financial aspect, have done pretty well throughout this crisis; however, I do worry about older workers because it’s not necessarily safe for them to go into the office in many cases.” 

Social Security as a whole has suffered because fewer people are working and contributing payroll taxes. As a result, the trust funds supporting the system are projected to become exhausted a year or two earlier than before the pandemic, around 2031. 

“The Social Security trust funds are in worse shape now, and it’s more urgent now that we address it,” Goldwein said. 

 

Bixby also shared insights as to how presidential candidates are approaching fiscal policy now and where their focus should eventually turn. 

“The immediate debate ought to be on how you bring the virus under control and how you restart the economy … until you do those things the budget is going to continue to hemorrhage red ink,” Bixby said. “However, we are electing someone that is going to be presiding over the economy not just for the next several months, but for the next four years, and so we need to hear about how they will address the post-pandemic economy.” 

“I think it is important for voters to scrutinize that because the budget was on an unsustainable path before the pandemic hit,” he said. “And even when you look at when the effects of the pandemic wane … back to “normal” is trillion-dollar deficits and rising because of long-term structural issues in the federal budget.” 

Those long-term issues ought to get at least as much attention as a fly that lands on the Vice President’s head, Bixby added. 

“We do have one presidential debate left, and it would be good if a question was asked on how you rebuild a post-pandemic economy,” Bixby said. “It would be good to have any such proposals tested in an adversarial debate.” 

You can read more of Bixby’s insights by clicking here.

Gorman joined the program to provide an update on the state of pandemic-relief legislation negotiations. 

“Unfortunately, I think a lot of the negotiations have been about window dressing right now,” Gorman said. “Proposals have been made from both sides, and both sides have come up with creative reasons to say no.” 

The opportunity between now and the election for a big relief package is virtually zero, she added. 

“That doesn’t mean that I think there won’t be a fifth pandemic relief bill, I think there will, but I think that will either fall into the lame duck or 2021,” Gorman said. “Which is really, really unfortunate because a lot of the pandemic relief measures passed earlier in the year have exhausted their resources, a lot of temporary job losses are becoming permanent and there are new rounds of layoffs happening in major industries.” 

Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Play Music or with an RSS feed. Follow Facing the Future on Facebook and watch videos from past episodes on The Concord Coalition YouTube channel.