Deficit Commission, CBO Scoring and the "Leninist Strategy" for Social Security Reform

by Bruce Webb

I have had occasion before to mention the “Leninist Strategy” for Social Security put forth in 1983 and followed by Social Security ‘reformers’ ever since. The strategy has three main pillars:

One: reassure current retirees that their benefits won’t be cut
Two: convince younger workers that left unreformed Social Security just won’t be there for them
Three: blame the Boomers

Well time has moved on since 1983 and increasingly pillars One and Three are coming into collision and this combined with CBO scoring methodology has put the Deficits Commission into a bind. One which I will outline below the fold.

A central tenet of the Cato endorsed “Leninist Strategy” for Social Security Reform outlined in Butler and Germanis (1983) was that benefits for those in or approaching retirement should not be affected (p.549). This was billed as a matter of equity but was equally a bow to political reality. This tenet was maintained in the establishment of Bush’s CSSS (Commission to Strengthen Social Security) in 2001 as the first of the six Guiding Principles and most recently is a feature of the Ryan Roadmap which promises to hold at least initial benefits for workers 55 and older harmless.

Unfortunately this consistent upholding of Pillar One of the “Leninist Strategy” is undermining Pillar Three because workers 55 to 64 ARE Boomers and it is pretty hard to hold them responsible for ‘Crisis’ and yet give them a free pass, the rhetorical underpinnings of the “Leninist Strategy” are simply aging themselves out of effectiveness.

Adding to this rhetorical challenge for the ‘reformers’ is a methodological one deriving from CBO scoring. Traditionally both CBO and OMB score proposals over a ten-year time period and only occasionally peak over that horizon. But if as the current Ryan Roadmap does Ryan Roadmap: Social Security and promise that it “Preserves the existing Social Security program for those 55 or older” you get a ten-year CBO deficit score of near-zero. And if you define “preserves” and “existing” as also covering the COLA adjustment you almost equally kill any score for the next ten-year period.

This problem was largely self-created, those pushing for this Commission relied on a deliberate confusion of the concepts of deficit, debt and unfunded liability to use relatively short term deficits to sell’ solutions that realistically only address long-term debt and ‘liability’. In fact the official name of the Commission is Bipartisan National Commission on Fiscal Responsibility and Reform and its mission statement does not explicitly reference ‘deficit’ at all. Yet a search on ‘Obama deficit commission’ pulls up 10X the hits of ‘Obama fiscal responsibility commission’ and most of the latter reference the former anyway. For better or worse the MSM has settled on ‘Deficit Commission’.

A couple of years ago hardly anyone outside the policy world knew or cared much about CBO scoring, but a year of Health Care Reform has accustomed people to use that score as a touchstone. Adhering to the “Leninist Strategy” and the Ryan Roadmap for Social Security will return a big fat Zero as a CBO score. On the flip side most of the ‘fixes’ floating around out there give Boomers a mostly free pass. Which leaves the ‘Deficit’ Commission a tough choice: get a good score by sticking it to Boomers right away, and so angering the single largest demographic cohort of Americas precisely when they are in the prime voting year? or take the zero and try to sell Gen-X and the Millenials that taking huge future benefit cuts that do nothing to address short term deficits is just the price they have to pay for past excesses?

In my view Entitlements Crisis people over-played their hand. First they sat by while their allies in the Republican Party rather cynically used the savings from Medicare reforms in the HCR bill to be framed as “medicare cuts”, and second allowed the framing of the Fiscal Responsibility Commission to fall within “Obama deficits” when realistically they will have no short term effect. Not at least without significant short term political fallout. Should be interesting.