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Social Security Reform

Legislative Issue Update - October 2007

In the early 1980’s, the staff counsel to then Speaker of the House Tip O’Neill said, “Social Security is the third rail of American Politics. You touch it and you die.” For more than two decades, while the country’s critical retirement security program grew ever more fiscally unstable, Congresses and Presidents accepted the “third rail” warning and failed to address the system’s need for reform.

Defying the “third rail” conventional wisdom, President Bush made Social Security a focal point of his legislative agenda for 2005.

The President advocated allowing voluntary personal retirement accounts for younger workers with no change in the system for anyone born before 1950, and opposed trying to save the system with large tax increases on workers or employers. He urged bi-partisan participation in finding a solution, and promised to “work with members of Congress to find the most effective combination of reforms … and listen to anyone who has a good idea to offer.”

Opponents in Congress refused to even discuss the issue unless the President first abandoned his support for any type of personal retirement accounts. Some also insisted that the President abandon his opposition to tax increases; yet even after the President offered to consider raising the cap on income subject to the payroll tax, none of his opponents would come to the table to talk.

Unfortunately, partisanship and political rancor trumped policy in 2005, so all efforts to even seriously debate Social Security Reform were stalled.

This issue, and reform of the other fiscally unstable entitlements, will have to be addressed by Congress at some point, and there is some hope that the new Leadership will be willing to come to the table rather than simply opposing all options.