Samuelson: put Social Security on the table

In an op-ed on realclearpolitics.com, the Washington Post's mustachioed columnist, Robert Samuelson, argues compellingly that Social Security benefits need to be included as part of the fiscal cliff discussions.

Protecting retiree benefits is the left's political equivalent of the right's "no new taxes" pledge. Congressional Republicans are abandoning their untenable position. Now it is time for President Obama and congressional Democrats to do the same. As long as they don't, they aren't bargaining in good faith, or in the national interest. ...

He lays out the dollar amounts:

Doubters should ponder the numbers. In fiscal 2012, non-interest federal spending totaled $3.251 trillion. Of that, $762 billion went for Social Security, $469 billion for Medicare (insurance for the 65 and over population) and $251 billion for Medicaid (insurance for the poor -- two-thirds goes for long-term care for the aged and disabled). Altogether, that's 46 percent of non-interest spending. Defense, $651 billion and declining, was 20 percent.

As baby boomers retire and health costs rise, this spending will mount. In 2010, there were 40 million Americans 65 and older. By 2020, that number is projected to be 55 million; by 2030, 72 million. ...

Since Social Security transfers money from the young to the old, Samuelson points out that in many cases that is the poor giving to the rich:

One argument is that most elderly are poor; benefit cuts will further impoverish them. Not so. The Administration on Aging reports that in 2010, 25.9 percent of households headed by someone 65 or older had incomes exceeding $75,000; 19.4 percent had incomes from $50,000 to $74,999; and 18.8 percent had incomes from $35,000 to $49,999. ...

A growing problem is that Social Security taxes no longer cover the present costs of the program:

Finally, it's often said that Social Security -- no one makes this argument for Medicare -- doesn't add to the budget deficit because benefits are still covered by payroll taxes. Again, not true. In 2010, benefits exceeded taxes and are expected to do so indefinitely. The Congressional Budget Office estimates the gap to average 10 percent over the next decade and to be 20 percent by 2030. This bloats deficits. ...

Samuelson wants the changes to Social Security to be equitable:

The trick is to cut retiree benefits while minimizing the impact on the elderly poor. There are ways to do this: changing the benefit inflation-adjustment formula, fully taxing Social Security payments (affecting mostly the affluent elderly), gradually raising eligibility ages. ...