Debt Ceiling Talks Touch 'Third Rail': Social Security

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, Carrie Budoff Brown, Staff Writer for Politico, discussed the potential role of Medicare and Social Security cuts in the debt ceiling negotiations.

Social Security savings

As Republicans and Democrats continue debate over the debt ceiling, budget items frequently referred to as political "third rails" could get fingerprints all over them.

Cuts to entitlement programs are dramatically unpopular, which usually keeps politicians from proposing changes to Social Security and Medicare. But what was once unthinkable for liberal voters and Democratic lawmakers is now a potential reality: Social Security benefit cuts are on the table as part of a deficit reduction deal, even as Republicans refuse to consider higher taxes for wealthy Americans. Carrie Budoff Brown said that there's only one way the Left would accept the austerity.

The question is, does the money that's generated from [benefit cuts]—$300 billion over ten years—will it go back into shoring up Social Security, which is what the president has always said he wanted to do if he dealt with Social Security in the context of a broader deficit reduction deal, or does it go to bringing down the debt?...That will say something about whether the president is shifting his priorities and strategy or stance.

If it goes to bringing down the debt, what will it say about the president's position?

There could be savings or revenues raised by cutting Social Security benefits, but if on the other side you don't see tax cuts eliminated for the wealthy, it'll be viewed as cutting benefits for Social Security recipients to maintain tax cuts for the wealthy.

One 'third rail' at a time

What's being considered is a change to the cost of living calculator that's used to determine Social Security benefit payments over the course of a beneficiary's retirement. The proposed calculator adjustment translates into something around a 3 percent overall cut in benefits that one receives over several decades.

Brown said that such a measure was considered not too long ago during another ferocious, partisan policy debate.

Changing the calculator was brought up frequently during health care negotiations, for example, and it goes back to just the fact that it can be interpreted as a benefit cut for Social Security beneficiaries. That's a really tough thing to sell to people, a hard thing to do politically.

Ironically, that tough sell on Social Security is insulating Medicare from similar cuts, according to Brown. Touching one "third rail" is a tall enough order for politicians as is.

Given that there's so much else being discussed, there's not as much of a focus right now on Medicare. But there are potentially hundreds of billions of dollars in savings they could be looking at.

Each side's bottom line

Restructuring entitlement benefits was supposed to be the last straw for Democrats: something they'd never support, never vote for, and never expect their leader to bargain with during a debt ceiling negotiation. And yet, here we are.

So where is the bottom line for Democrats? Where is it for Republicans? At what point do they throw up their hands and say 'no'? When do they concede, and where? Brown laid out familiar battle lines.

For Republicans, it's how you get the $1 trillion in new tax revenue potentially to get a $4 trillion deal...When it gets to scaling back tax cuts for wealthier families, letting the Bush tax cuts expire...Quite frankly, the numbers are not there in the House.

For Democrats, it's going to be using Social Security to pay down the debt. That's not going to happen. They want to keep Social Security walled off and I think they're going to have to see some kind of job creation effort, especially after today's job report—the idea of a payroll tax or more unemployment insurance.