The former U.S. Comptroller General David Walker responds to Winning Progressive about Social Security “reform.” (More)
In our previous post about Thomas Friedman’s obsession with promoting “centrist” third parties, Winning Progressive referenced the Social Security “reform” efforts of the Peter G. Peterson Foundation and its former Director, David Walker. Within hours of that post going up, Mr. Walker, who is now the CEO of the Comeback America Initiative, provided the following response to our post via a Communications Assistant at his organization:
I read with interest the article on ‘Thomas Friedman’s Destructive Obsession With Third Parties Continues.’ The article contains several false statements. For example, the Peterson Foundation never sought to “privatize Social Security”, and as a former Public Trustee of Social Security and Medicare, I have publicly opposed such efforts in the past. Second, Social Security has been in a negative cash flow position since 2010. Therefore, since the unified budget is calculated in a cash basis, Social Security has been adding to federal deficits since 2010. In addition according to the latest Trustees’ Annual Report, Social Security has unfunded promises of over $9 trillion and growing.
If your readers want to know what my views are on a range of social insurance, defense, health care, tax and other key issues they should read the book Comeback America (available here), and the Restoring Fiscal Sanity Report at www.tcaii.org.
We appreciate Mr. Walker’s response, and agree that when he was head of the General Accounting Office, Mr. Walker rightly criticized President George W. Bush’s Social Security privatization scheme on the grounds that private retirement accounts would exacerbate Social Security funding challenges.
As for Mr. Walker’s current views on Social Security “reform,” he has reportedly proposed the following in his book:
1. Increasing Social Security benefits for lower income people who have worked at least 30 years
2. Reducing benefits for middle and high income people through wage indexing or some other means
3. Raising the retirement age, and then indexing it to average life expectancy
4. Raising the income cap for the Social Security payroll tax to around $150,000
5. Establishing a mandatory individual savings account program through an additional 2 to 3 percent payroll deduction
While advocates of proposals such as numbers 2, 3, and 5 listed above (often with number 1 offered as a sweetener) do not use the politically unpopular word “privatize,” the approach would greatly weaken the long term political stability of Social Security by reducing benefits for middle class Americans, reducing the number of people receiving benefits, and getting the camel’s nose of individual savings accounts under the tent.
Mr. Walker correctly notes that the Social Security Trustee’s report identifies some short and long term funding issues for Social Security. But the short term problems are the result of the Bush Recession. As for the long term, the Social Security Trust Fund is projected to continue to grow until 2022 and to remain solvent through 2036. After that, three-quarters of benefits could continue to be paid out through 2086 even if no changes are made.
The easiest way to address the long term fiscal issues faced by Social Security is to entirely lift the income cap so that the payroll tax applies to all levels of income, and to increase the payroll tax by 1%. Such an approach would ensure the viability of the Social Security program for nearly 75 years, without weakening the program or creating risky and administratively burdensome private savings accounts.