Andrew Cuomo and the liberal case for Social Security cuts
The Washington Post, February 10, 2011
Andrew Cuomo's gutsy new budget just put Social Security on the chopping block in ways President Obama won't dare to when his own budget is unveiled next week. The lesson liberals need to learn is that Cuomo is visionary to have done so. The irony is that Cuomo himself almost certainly doesn't realize what he's done.
"Wait," baffled readers are saying. "New York's governor has nothing to do with Social Security—what is Miller talking about?" Let me explain.
Though it got little notice amidst our obsession with Egypt, the fiscal plan Cuomo released the other day seeks to completely reframe the way we talk about budgets. Armed with a PowerPoint presentation, Cuomo shined a light on New York's dirty fiscal secret: spending in many programs soars each year because of obscure formulas that bear no relationship to economic conditions or competing public demands. Medicaid and education are the chief offenders, with both slated automatically to rise a stunning 13 percent next year. Honoring such increases would require either deep cuts elsewhere or undue tax hikes in a fragile economy.
What's more, as Cuomo points out, a call for a 6 percent increase in those areas instead of 13 percent is officially reckoned to be a 7 percent "cut." This is obviously absurd. But New York's powerful Medicaid Industrial Complex and the state's education machine have had the juice to get the rules written this way. It's a formula for ever-higher taxes, business flight and Empire State decline. So Cuomo should be cheered for saying the scam can't go on.
But here's where it gets fascinating. As a matter of logic and policy, there is no way to distinguish the game on which Cuomo has blown the whistle from the way Social Security works. This places Cuomo's common sense on a collision course with his party's insistence that Social Security be left untouched.
To see why takes some brief background. Liberals love to blast conservatives for hatching evil schemes to gut Social Security. The assault often works, partly because the most extreme right-wingers are, in fact, prepared to let grandma fend for herself. But there's a crucial fact that few liberal defenders of Social Security's chastity understand: The program now promises hefty increases in benefits for future retirees—increases that are built into Social Security's formulas, just as with New York's unsustainable Medicaid rates. And these in creases will be a major threat to other liberal priorities in the years ahead.
I'm not talking about the way benefits are hiked each year to keep up with inflation—no problem there. But under current formulas, the starting benefit levels slated to be enjoyed by future retirees are substantially higher than they are now. For example, today's medium-wage retirees get a benefit of about $18,000. Similar retirees in the year 2030 are slated to get roughly $24,000 in today's dollars; by 2050, the number in today's dollars rises to $29,000. Doubling the number of retirees on Social Security as the boomers age is already a major fiscal challenge—doubling them and then atop that promising a 60 percent increase in benefits creates a budget monster that should frighten the left.
Advocates for these built-in increases (which didn't exist before the late 1970s) say Social Security should always replace the same portion of wages as it does today; since real wages will grow as the economy grows, the logic runs, so should benefits. In theory, that's a worthy objective. But in an era when health care and pensions for seniors are poised to crowd out cash for every other public priority, or else require tax increases beyond what even liberals think would be good for the economy, this shouldn't be the left's only objective.
Thinking anew means asking a federal version of Andrew Cuomo's question. Should Democrats really say trillions in automatic pension increases over today's levels are "untouchable," when there's no similar "trust fund" guaranteeing great teachers for poor children, universal preschool, repairs for America's crumbling roads and sewers or help for [insert your favorite non-elderly priority here]?
If you're with me this far, you've grasped a piece of common sense that sadly can't find expression in our infantile political culture. Repeat after me: "Social Security is indispensable to our seniors' economic well-being and also a program whose autopilot increases should be trimmed to leave room for other progressive priorities." There! That wasn't so hard, was it?
It'll take a while for Democrats to catch on to this; with some elections still looking winnable on the low road, the White House won't be testing the left's capacity for enlightened self-interest anytime soon. But Andrew Cuomo has tacitly made the liberal case for "cutting" Social Security. The conversation he's seeded is destined to come; the only question is when.
The Washington Post, February 10, 2011
Andrew Cuomo's gutsy new budget just put Social Security on the chopping block in ways President Obama won't dare to when his own budget is unveiled next week. The lesson liberals need to learn is that Cuomo is visionary to have done so. The irony is that Cuomo himself almost certainly doesn't realize what he's done.
"Wait," baffled readers are saying. "New York's governor has nothing to do with Social Security—what is Miller talking about?" Let me explain.
Though it got little notice amidst our obsession with Egypt, the fiscal plan Cuomo released the other day seeks to completely reframe the way we talk about budgets. Armed with a PowerPoint presentation, Cuomo shined a light on New York's dirty fiscal secret: spending in many programs soars each year because of obscure formulas that bear no relationship to economic conditions or competing public demands. Medicaid and education are the chief offenders, with both slated automatically to rise a stunning 13 percent next year. Honoring such increases would require either deep cuts elsewhere or undue tax hikes in a fragile economy.
What's more, as Cuomo points out, a call for a 6 percent increase in those areas instead of 13 percent is officially reckoned to be a 7 percent "cut." This is obviously absurd. But New York's powerful Medicaid Industrial Complex and the state's education machine have had the juice to get the rules written this way. It's a formula for ever-higher taxes, business flight and Empire State decline. So Cuomo should be cheered for saying the scam can't go on.
But here's where it gets fascinating. As a matter of logic and policy, there is no way to distinguish the game on which Cuomo has blown the whistle from the way Social Security works. This places Cuomo's common sense on a collision course with his party's insistence that Social Security be left untouched.
To see why takes some brief background. Liberals love to blast conservatives for hatching evil schemes to gut Social Security. The assault often works, partly because the most extreme right-wingers are, in fact, prepared to let grandma fend for herself. But there's a crucial fact that few liberal defenders of Social Security's chastity understand: The program now promises hefty increases in benefits for future retirees—increases that are built into Social Security's formulas, just as with New York's unsustainable Medicaid rates. And these in creases will be a major threat to other liberal priorities in the years ahead.
I'm not talking about the way benefits are hiked each year to keep up with inflation—no problem there. But under current formulas, the starting benefit levels slated to be enjoyed by future retirees are substantially higher than they are now. For example, today's medium-wage retirees get a benefit of about $18,000. Similar retirees in the year 2030 are slated to get roughly $24,000 in today's dollars; by 2050, the number in today's dollars rises to $29,000. Doubling the number of retirees on Social Security as the boomers age is already a major fiscal challenge—doubling them and then atop that promising a 60 percent increase in benefits creates a budget monster that should frighten the left.
Advocates for these built-in increases (which didn't exist before the late 1970s) say Social Security should always replace the same portion of wages as it does today; since real wages will grow as the economy grows, the logic runs, so should benefits. In theory, that's a worthy objective. But in an era when health care and pensions for seniors are poised to crowd out cash for every other public priority, or else require tax increases beyond what even liberals think would be good for the economy, this shouldn't be the left's only objective.
Thinking anew means asking a federal version of Andrew Cuomo's question. Should Democrats really say trillions in automatic pension increases over today's levels are "untouchable," when there's no similar "trust fund" guaranteeing great teachers for poor children, universal preschool, repairs for America's crumbling roads and sewers or help for [insert your favorite non-elderly priority here]?
If you're with me this far, you've grasped a piece of common sense that sadly can't find expression in our infantile political culture. Repeat after me: "Social Security is indispensable to our seniors' economic well-being and also a program whose autopilot increases should be trimmed to leave room for other progressive priorities." There! That wasn't so hard, was it?
It'll take a while for Democrats to catch on to this; with some elections still looking winnable on the low road, the White House won't be testing the left's capacity for enlightened self-interest anytime soon. But Andrew Cuomo has tacitly made the liberal case for "cutting" Social Security. The conversation he's seeded is destined to come; the only question is when.