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By: FEDweek StaffAlthough the most recent set of major changes to Social Security were the result of a White House-established commission’s work, two Presidential commissions that have examined the program since then have not yielded tangible results, says a report for Congress.
The report from the Congressional Research Service sounds a discouraging note on the prospects for assigning to a new commission the work of building a consensus on how to address the problem of a dwindling trust fund, set to run out in about 10 years. After that point, the program would only be able to pay only about 80 percent of currently promised benefits out of ongoing income.
It noted that the 1983 amendments to Social Security—to address a similar funding program then pending—arose from the National Commission on Social Security Reform (commonly called the Greenspan Commission), which then-President Reagan stood up “after his proposal favoring benefit reductions failed to gain support.”
“The amendments included measures that increased revenues (e.g., new revenues from the taxation of benefits), reduced costs (e.g., increased the full retirement age), and expanded coverage (e.g., for newly hired federal employees), among many other provisions. With the legislation, the program’s average projected cost and revenue rates were relatively close over the long-term 75-year period,” it says.
However, those projections proved to be optimistic for reasons including rising life expectancy and the decline in the ratio of workers to beneficiaries as the birth rate slowed and the Baby Boom generation moved into retirement.
It noted that in 2001, then-President Bush formed a similarly named President’s Commission to Strengthen Social Security tasked with making recommendations to “modernize and restore fiscal soundness to the Social Security system.” That commission produced three options, all of which involved some level of workers steering some of their Social Security payroll withholdings into savings accounts, with their traditional Social Security benefits reduced.
Nine years later, then-President Obama established the National Commission on Fiscal Responsibility and Reform (commonly known as the Simpson-Bowles Commission) to address Social Security among other programs. The commission failed to reach a consensus, and the co-chairs separately recommended increasing the amount of earnings subject to payroll taxes, modifying the benefit formula and cost-of-living adjustments, and extending coverage to all newly hired state and local workers, among others.
In both cases, “there was no congressional action” on the recommendations, the report said.
It added: “In 1983, reform proposals focused almost exclusively on financing problems: eliminating the financial shortfall by increasing revenues and reducing costs. The approach taken in 1983 may or may not reflect the policy objectives of lawmakers today. For instance, lawmakers may want to address the objectives, size, and scope of Social Security. Or policymakers may want to include Social Security reform as one part of a broader package of government wide policy initiatives.”
