When the Ryan Roapmap to Prosperity/2013 Republican House Budget was released some otherwise sharp observers like Ezra Klein claimed it just gave Social Security a pass:
Here is Paul Ryan’s path to a balanced budget in three sentences: He cuts deep into spending on health care for the poor and some combination of education, infrastructure, research, public-safety, and low-income programs. The Affordable Care Act’s Medicare cuts remain, but the military is spared, as is Social Security. There’s a vague individual tax reform plan that leaves only two tax brackets — 10 percent and 25 percent — and will require either huge, deficit-busting tax cuts or increasing taxes on poor and middle-class households, as well as a vague corporate tax reform plan that lowers the rate from 35 percent to 25 percent.
Well Ezra got played. Actually Ryan built in language designed to force a ‘reform’ of Social Security IN THE VERY FIRST YEAR. And in a way certain to be based on a cuts only ‘fix’ that by the way can be fully blamed on the President and two Presidential appointees or at worst the ‘bipartisan’ process involved. But understanding why this is so requires some unpacking of the language and the underlying concepts Ryan uses to hide his fingerprints.
Below the fold will be found the bulk of Sec 704 of the Legislative Text of the 2013 Chairman’s Mark of the House Republican Budget. (pdf) The bold portions are added by me and discussed below the text and in comments.
(b) POLICY STATEMENT ON SOCIAL SECURITY.—It is the policy of this resolution thatCongress should work on a bipartisan basis to make Social Security sustainably solvent. This resolution assumes reform of a current law trigger, such that:
(1) If in any year the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund annual Trustees Report determines that the 75-year actuarial balance of the Social Security Trust Funds is in deficit, and the annual balance of the Social Security Trust Funds in the 75th year is in deficit, the Board of Trustees shall, no later than September 30 of the same calendar year, submit to the President recommendations for statutory reforms necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th-year. Recommendations provided to the President must be agreed upon by both Public Trustees of the Board of Trustees.
(2) Not later than December 1 of the same calendar year in which the Board of Trustees submit their recommendations, the President shall promptly submit implementing legislation to both Houses of Congress including his recommendations necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year. The Majority Leader of the Senate and the Majority Leader of the House shall introduce the President’s legislation upon receipt.
(3) Within 60 days of the President submitting legislation, the committees of jurisdiction to which the legislation has been referred shall report the bill which shall be considered by the full House or Senate under expedited procedures.
(4) Legislation submitted by the President shall— (A) protect those in or near retirement; (B) preserve the safety net for those who count on Social Security the most, including those with disabilities and survivors; (C) improve fairness for participants; (D) reduce the burden on, and provide certainty for, future generations; and (E) secure the future of the Disability Insurance program while addressing the needs of those with disabilities today and improving the determination process.
Okay a lot to unpack here. In the Annual Report of the Trustees of Social Security one finds three different measures of actuarial balance/solvency: ‘Short term’ (10 years), ‘Long term’ (75 years), and ‘Infinite Future’. Actuarial balance is defined as having each actuarial period show a positive Trust Fund balance with an ending balance equal to one year of reserves. For ‘short term’ the test is stricter, it requires that EACH YEAR in the period show that one year of reserves (Trust Fund Ratio = 100), while long term limits itself to the actuarial period as a whole and its last year. Under current law the Trustees are required to recommend Congress take action whenever the combined Trust Funds fail the short term test. In so doing the Trustees also supply numbers for a cuts only or revenue only fix whether implemented immediately or at the point of actual shortfall but don’t make SPECIFIC recommendations, that being the job of the Legislative branch.
The Ryan Roadmap changes this in multiple fundamental ways. Currently Social Security on a combined basis and the Old Age Trust Fund in isolation pass the short term test with some comfort. On the other hand the Disability Trust Fund failed it some time back. Still Congress is not forced to do anything at all but monitor the situation. But if we take the long term test Social Security has been in failure mode each of the last 20 years plus. The Ryan Budget changes current law to make the long term test the ‘trigger point’ and as such mandates that SOCIAL SECURITY IS BROKEN RIGHT NOW. And moreover under this law MUST BE FIXED AND PERMANENTLY THE FIRST YEAR AFTER REPORT RELEASE.
That is far from ‘sparing’ Social Security as Klein would have it, Ryan actually puts it at the front of the line for Presidential and Legislative action. Under this language the release of the next Trustees Report after enactment triggers a Sept 1 deadline for a specific set of recommendations to the President, and for the President by Dec 1 to submit those recommendations or others constrained by the language of the act to establish ‘sustainable solvency’ to Congress which in turn starts a 60 day clock for the entire committee process and an ‘expedited process’ to be followed by the House and Senate after that.
While there is no strict statutory deadline for release of the Social Security Report prior to the last few years it was released like clockwork on March 30, meaning that this legislation even if enacted wouldn’t normally be triggered until the 2014 Report. On the other hand the SS Report has been released late the last few years and so in Ryan’s dreams this process could be triggered THIS YEAR with action to be completed by next Summer at the latest.
And it is at this point that we get the turd in the punchbowl. Under Ryan’s bill the initial recommendations have to be approved by BOTH the Public Trustees. Which if the Public Trustees were selected by some apolitical process under criteria that they actually serve the public interest at large might just be seen as isolating the recommendations from the explicitly political Trustees (under law the Commissioner of Social Security, and the Secretaries of Treasury, HHS, and Labor). But instead the Public Trustees are explicitly political with a legal mandate that they come from different parties. Moreover there is little to prevent a President from choosing an opposite party Public Trustee sympathetic to his goals or perversely choosing a same party Trustee hostile to the majority position of his own party.
Which is what we have now. The two current Public Trustees are Charles (Chuck) Blahous, previously Bush’s point man on privatization, for the Republicans and Robert Reischauer for the Democrats. A polite way of describing Reischauer would be ‘deficit hawk’ and ‘entitlements crisis’ promoter. Less polite people (like me) would describe him as Peter G Peterson’s representative to the Social Security Trustees. While Blahous is rather unapologetically employed by the Koch Brothers’ funded Mercatus Institute at GMU. And per Ryan EITHER or BOTH have an effective VETO on the initial recommendations. So while there would not be an official ‘Reischauer-Blahous Commission’ that is kind of a distinction without a difference. Because lets just say it is not hard to predict what the ‘Commission’ recommendations are going to look like, compared to them Chained-CPI would be a love tap. Which may be the plan all along. Not least on the part of the White House.
Now reality based Kossacks might well point out that the Roadmap is D.O.A. Which is of course correct. On the other hand just today Dick Durbin, formerly a certain Senator Obama’s mentor, introduced a plan for a ‘bi-partisan’ Social Security Commission that would itself introduce a fact track process eerily similar to the one in the Roadmap. And you don’t have to be a raving paranoid to not predict that Presidential or Democratic Senate leadership appointments to that Commission are likely to resemble Erksine Bowles and Robert Reischauer more than say Senators Sanders and Begich.