This week on Facing the Future, Dr. Wendell Primus, Visiting Fellow at the Brookings Institution and a former Senior Policy Advisor to Speaker of the House Nancy Pelosi, reacted to new budget projections from the Congressional Budget Office (CBO) and described a plan he co-authored last year to keep the Social Security trust fund from becoming insolvent in 2032.
“The report released last week by the Congressional Budget Office ought to be a wake-up call to all members,” Primus said. “The worst thing about these rising deficits is we’re basically making our children and grandchildren pay for the interest costs.”
Despite the alarming numbers, Primus expressed “grave doubts” that the president and Congress would produce a budget this year that makes a dent in the deficit.
“The political fact of life,” he said, “is you can only reduce the deficit by increasing taxes or cutting benefits and services. And unless the two parties are willing to go over that cliff together, it’s very hard to reduce the deficit. If we’re going to do something about these deficits, both parties are going to have to work together, and it’s going to require a lot of presidential leadership. And that presidential leadership is lacking right now.”
Another fiscal problem on Primus’ radar screen is the looming insolvency of the Social Security Old Age and Survivors Insurance Trust Fund (OASI). The Social Security trustees and CBO are both projecting that OASI will be depleted in 2032 if no action is taken. According to CBO’s latest projections, trust fund depletion would trigger benefit cuts averaging 28 percent.
Last year, Primus and two colleagues released a framework for Social Security reform. “Solving the problem of restoring solvency to Social Security is political pain,” he observed. “You can only get there by raising taxes or cutting benefits.”
He believes that Social Security reform should be considered in the broader federal budget context. “A very important element of all this is how much financing should Social Security take versus long-term care, versus reducing elderly poverty, versus all the other priorities that the budget has to deal with – child poverty, disaster funding, defense needs, etc. And to me, there’s a limit on how much we can afford to spend on the Social Security problem.”
Primus described his plan in very rough terms as “about a third on tax increases, about a third on benefit reductions, and then a third on immigration policy and universal coverage.” He said, “The right rhetoric that members ought to have right now is saying, ‘I want to work with the other party, and I want to reach a compromise on Social Security. It’s not going to be necessarily my ideas.’ The two parties have to work together to reach a compromise, and neither party should be saying no benefit reductions or no tax increases. They’ve got to be willing to compromise.”
One idea he warned against is allowing Social Security to borrow funds from the Treasury. “I do not think we want to go to general fund financing,” he said, “because then it’s Katie bar the door. I mean, what’s the limit? The original creators of our Social Security system were very smart and said, no general fund borrowing. I worry that other elements of the budget wouldn’t get their due if we finance benefits from general revenue.”
To get Social Security reform enacted, Primus recommended the model that President George H.W. Bush used to reach a bipartisan budget agreement in 1990. Primus recounted that “Bush nominated the chairman and ranking member from the Appropriations Committee, the Budget Committee, and Ways and Means and Senate Finance committees, and then the leadership. So you basically had 22 members of Congress sitting around a table with the President’s team, the OMB director, the Treasury Secretary, maybe the Social Security Commissioner in this case, and the Chief of Staff to the President.”
“Members have got to own this,” he said, “and the thing I want to stress is that deficit reduction and restoring solvency is political pain. So whoever gets elected president in 2028, really has to orchestrate the two parties to go over that cliff together and acknowledge the political pain.”
Hear more on Facing the Future. Concord Coalition Senior Advisor Bob Bixby hosts the program each week on WKXL in Concord, N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses 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 Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
