For decades, Washington has addressed its most intractable policy deadlocks by appointing blue ribbon commissions to try to resolve the differences – almost always with the same disappointing results.
The Greenspan Commission, for example, created in 1982 to seek a bipartisan plan to avert the threatened bankruptcy of Social Security, spun its wheels for nearly a year until President Ronald Reagan and Democratic House Speaker Thomas (Tip) O'Neill stepped in to push through a compromise that saved the day. Former Democratic Senator Bob Kerrey of Nebraska wrangled a promise from President Bill Clinton in 1993 to support a commission on entitlement reform, but its recommendations were largely ignored.
After all this, Sen. Richard J. Durbin of Illinois, the second ranking Democrat in the Senate, thinks yet another commission is in order – this one to again tackle the growing insolvency of the Social Security trust fund. Durbin said Wednesday during a breakfast hosted by the Wall Street Journal that he will soon unveil a plan to create a bipartisan panel to recommend to Congress measures to guarantee the solvency of the retirement program for the next 75 years.
The new panel would strongly resemble the structure of the presidential commission co-chaired by former Senator Alan Simpson, R-Wyo., and former Democratic White House chief of Staff Erskine Bowles. The Republican and Democratic members would be given a few months to devise a proposal to be submitted to the House and Senate for an expedited review and vote. Lawmakers would be able to offer substitutes to the commission's proposal, provided it meets the same test of 75-year solvency.
Durbin said there are a number of promising proposals for reining in the cost of Social Security, while also preserving the underlying benefits and programs. Those provisions include gradually raising the age of eligibility by a year and adopting a less generous Labor Department formula for determining cost-of-living adjustments.
Social Security, a bedrock of many seniors' retirement portfolio, has long been considered the Third Rail of politics – touch it and you die. About 157 million Americans pay Social Security taxes and 56 million collected monthly benefits in 2012. About one household in four receives income from Social Security. The average benefit in January 2012 was $1,230 a month for retired workers.
Since Congress and the reform commission headed by former Federal Reserve Board Chairman Alan Greenspan tackled the system's last big problem in 1983, Republicans and Democrats alike have generally steered clear of any serious effort to tamper with the program.
Today, Social Security, essentially a pay-as-you-go program, is by no stretch of the imagination in as bad shape as it was during the early days of the Reagan administration, when the trust fund faced imminent bankruptcy. Nonetheless, the retirement program's expenditures have begun running ahead of its non-interest income.
Last April, the Social Security Trustees estimated that, absent policy changes, the combined Social Security trust funds would be exhausted in 2033 — three years earlier than they had forecast in the previous year's report. After 2033, Social Security could pay three-fourths of scheduled benefits using its tax income even if policymakers took no steps to shore up the program.
The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011. The Trustees project it will average about $66 billion between 2012 and 2018, and then rise steeply as the economy slows after the recovery is complete and the number of beneficiaries keeps growing at a substantially faster rate than the number of workers who contribute.
Despite the president's new charm offensive to try to win over support of some rank-and-file Republicans, Durbin says the chances of Obama and Congress reaching agreement this year on a "Grand Bargain" of deficit reduction and Medicare and tax reform are slim. House Republicans and congressional Democrats, for example, are far apart over ways to overhaul Medicare in order to slow spending. Without such a deal, he said, the next best thing would be a push to address Social Security's long-term financial headaches.