CHAPEL HILL -- Now that the vitriol over the National Commission on Fiscal Responsibility and Reform (the "Debt Commission") has died down, it seems prudent to examine what the commission actually recommended, in the likelihood that President Barack Obama may rely on these recommendations as he works with the 112th Congress.
The president created this bipartisan commission by Executive Order on Feb. 18, 2010, asked then-UNC President Erskine Bowles and former Sen. Alan Simpson to co-chair it. Obama asked the panel to make recommendations by Dec. 1, 2010, "designed to balance the budget, excluding interest payments on the debt, by 2015" and "propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending."
If two-thirds of the members of this commission agreed to the report, Obama pledged to submit it to Congress. Because only 11 of the 18 members could reach agreement, the president was left with a bipartisan political "blueprint" of fiscal changes for his future consideration.
The commission received some harsh reviews, especially from liberal-leaning commentators such as Paul Krugman, who wrote in The New York Times that "Mr. Bowles and Mr. Simpson are trying to smuggle in the same old, same old - tax cuts for the rich and erosion of the social safety net. Can anything be salvaged from this wreck? I doubt it. The deficit commission should be told to fold its tents and go away."
The final recommendations of the commission, however, deserve a more sober reflection, and the recommendations on Social Security, one of the five areas studied by the commission, are the most clear-headed and useful since the 1982 Greenspan Commission's report that set Social Security on its present path.
Far from "tax cuts for the rich and erosion of the social safety net," the Debt Commission recommended the opposite for Social Security. It approached Social Security in the context of overall fiscal reform, and its recommendations were directed specifically to establishing fiscal stability for Social Security as a stand-alone program. These recommendations were much more comprehensive than simply cutting benefits and/or increasing taxes in order to impact the budget deficit.
Calling Social Security "the foundation of economic security for millions of Americans," the commission affirmed that "Social Security is far more than just a retirement program - it is the keystone of the American social safety net, and it must be protected."
Taken together the commission's eight Social Security recommendations would enhance benefits for low-income earners, increase benefit limits for more affluent beneficiaries, eliminate the current Social Security "tax cap" and at the same time ensure long-range solvency. The commission would gradually increase the retirement age, while creating a hardship exemption for those unable to work. It would bring into Social Security all newly hired state and local government employees.
These recommendations, along with the commission's assertion that "Social Security must do more to reduce poverty among the very poor and very old who need help the most," give Social Security a larger redistributive effect than the current program. They would increase the level of scheduled benefits for the lowest quintile of beneficiaries by 3.8 percent and decreasing scheduled benefits for the highest quintile by 18.7 percent by 2050.
Furthermore, recommendations would reduce the projected Social Security 75-year projected actuarial shortfall by 112 percent. If the commission's Social Security recommendations were combined with its tax reform recommendations, the panel concluded that "additional revenue will provide flexibility to moderate the changes in [Social Security] benefits or taxation recommended by the commission."
Like his predecessors, Obama has declared officially his intention to protect Social Security and stabilize its finances. Given the amount of public misunderstanding and misplaced political rhetoric about Social Security, the commission's candid recommendations make political and economic sense.
While there may be little hope that Obama will put forward the whole of his commission's report, or that Congress will be willing to adopt any or all of the recommendations, the panel's conclusions confirm the significance of Social Security as an essential part of the American political system and set forth progressive recommendations that would stabilize Social Security. It's time to move beyond the simplistic "raise taxes or cut benefits" mentality that occupies so much policy debate and move Social Security into America's 21st century.
Andrew Dobelstein is professor, emeritus, of social welfare policy at UNC-Chapel Hill and author of the 2009 book "Understanding the Social Security Act."
