Social Security reform debate stirs in Congress
WASHINGTON (Reuters) - While Congress brawls over how to shrink a $1.6 trillion budget deficit this year, an even tougher battle has begun over cutting popular Social Security retirement benefits to achieve long-term savings.
It's unclear whether Congress will be able to agree on how to reform the massive government pension program, which has provided a social safety net for the elderly since 1935.
That in part will depend on whether President Barack Obama throws his weight behind a reform effort that politicians of all stripes fear could be full of political risks. While the president has invited a conversation on Social Security reform, so far he has not offered specific proposals.
Undercutting Social Security reform efforts is the fact that if left alone, the retirement benefits will keep flowing unimpeded until 2037, according to government estimates last year.
Social Security has been generating surplus tax revenues for years. But with the surplus vanishing because of an onslaught of new retirees and because the surplus has been used to finance tax breaks and other government programs, the Social Security now has to be paid back.
"We're going to have a Social Security solvency bill next week that deals with age adjustment and means testing," said Senator Lindsey Graham, who is working on legislation with newcomer Rand Paul, a Tea Party activist.
Graham did not give details but an age adjustment would raise the age for full retirement benefits from the current level, which already is gradually increasing to 67. Means testing would diminish Social Security benefits for the wealthy.
"I've never seen a better moment to deal with Social Security in a bipartisan fashion than right now," Graham told reporters, saying company-backed pension plans "are going by the wayside" and "a lot of Americans are going to outlive their 401k (retirement) plans."
Tinkering with Social Security as a way to reduce federal budget deficits, which now contribute to a $14 trillion national debt, could face strong opposition from Obama's Democrats.
The House of Representatives on Tuesday voted to extend government funding for two more weeks, a move that would avert a federal shutdown but do nothing to resolve the bitter debate over the federal budget.
A group of Senate Democrats on Monday circulated a letter to fellow senators urging support for legislation that would kill any measure to "reduce Social Security benefits or privatize Social Security" unless two-thirds of the Senate and House of Representatives went along -- a difficult hurdle.
Among the Democrats signing the letter were Sherrod Brown, Debbie Stabenow, Sheldon Whitehouse and Daniel Akaka, who face re-election next year.
In their letter, the Democratic senators pointed out that Social Security currently does not face a fiscal crisis and "will be able to pay 100 percent of promised benefits to every eligible recipient for the next 26 years."
They added: "After that, if nothing is done, there will still be enough funding to pay 78 percent of promised benefits."
A 22 percent cut in benefits then would hit retirees hard, however, Republican aides point out.
Meanwhile, House Republican leaders vow to tackle "entitlement program" costs when they write a fiscal 2012 budget outline in coming weeks. Entitlement programs include Social Security, as well as Medicare and Medicaid, the government-backed health programs for the elderly and poor.
Last week, in a speech at Harvard University, House Majority Leader Eric Cantor said their Social Security reforms would be aimed at those who are now 54 and younger.