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Shortly after Congress reconvenes in November, the Fiscal Commission’s co-chairmen, Alan Simpson and Erskine Bowles, will begin lobbying individual commissioners behind closed doors. They will conjure up the predictable specter of passing on debt to our children in order to browbeat Democratic commissioners into recommending significant cuts to Social Security and Medicare. Democrats’ political losses will likely strengthen the hand of the Commission’s fiscal hawks, who have Social Security, Medicare and other key social programs in their cross-hairs.
But never mind this post-election nightmare for just a moment. Yesterday, at the New America Foundation’s conference, “Revising Policy Assumptions in the Wake of the Great Recession: Implications for the Social Contract,” I was reminded that we have the rhetorical and policy tools to turn the Commission’s narrative about our social safety net on its head. Although all of the conference’s speakers were thoughtful and informative, it was fittingly University of Texas economist James K. Galbraith, whose father, the legendary John Kenneth Galbraith, first coined the phrase “conventional wisdom,” more than fifty years ago, who led the charge against Washington’s current debt-obsessed “conventional wisdom” with the greatest gusto.
Where Fiscal Commission wonks like Alice Rivlin and her backers at the Peterson Foundation have scared the public into believing that Social Security will impede future economic growth, Galbraith highlighted Social Security as a potential source of economic stimulus. Rather than raise the full retirement age, as Rivlin and so many others have suggested, Galbraith proposed that we temporarily make full benefits available at the early retirement age of 62. Doing so would encourage older workers to retire, thereby freeing up jobs for younger workers entering the labor market. Galbraith suggested that the added benefits for early retirees, many of whom have been forced to swallow the 25% cut that comes with early retirement because they could not find work, or work in physically demanding professions, would be a popular way to increase consumer demand. Galbraith also proposed lowering the age of eligibility for Medicare to 55, which would grant even greater consumer power to older workers, particularly those who have lost their jobs, and reducing employers’ private healthcare costs.
Upon closer examination, Galbraith’s plan to use Social Security and Medicare to jump-start the economy seems like a long-shot. Lowering the Social Security and Medicare eligibility ages, even temporarily, would be dead on arrival in Congress, and worse still, would potentially undermine confidence in the Social Security Trust Fund’s ability to pay full benefits. But Galbraith offers two valuable lessons for dejected liberals worried about the fate of America’s favorite government programs:
Our framing of social insurance issues should focus on their positive effects on the economy. For example, we need to point out that Social Security poured nearly $700 billion into our economy in 2009 alone. As well as serving as a crucial safety net, Social Security is economic stimulus, plain and simple. Similarly, when speaking about an increase in the full retirement age, it is important to remind people that making people work longer prevents jobs from becoming available to new entrants in the labor market.
In addition, it never hurts to start with a strong negotiating hand. Democrats have made the mistake in the past of offering policies with compromises built in to them, only to find that by the time they pass into law they are millimeters to the left of Republican proposals. The coming fight over Social Security is a perfect test-case for adopting new tactics. If they want to raise the retirement age, we should talk about lowering it and strengthening other aspects of the program. We need to learn from conservatives whose skilled bargaining has succeeded in moving the center further and further to the right.
The next issue where we can test this approach is in the absence of a cost-of-living (COLA) adjustment for Social Security benefits for the second year in a row. Rep. Earl Pomeroy (D-ND), Chairman of the House Subcommittee on Social Security, has introduced the Seniors Protection Act of 2010, which would provide each senior with a one-time payment of $250 in place of the COLA. Progressives need to make passing Pomeroy’s measure in the lame-duck session of Congress a top priority if we are to gain an upper hand over the Commission before it releases its findings. Were we to succeed, the payments would pump money into the economy and give us the upper hand against the austerity crowd that is pushing cuts. Were we to fail, we would still re-frame the narrative and harden our negotiating position in advance of the Commission’s proposals.
If we listen to Professor Galbraith and fight fear with economic empowerment, we may just stop the Fiscal Commission in its tracks.