The co-chairs of the president’s deficit commission made a surprise announcement of a press conference today. During the press conference they released a preliminary report–the “Co-Chairs’ Proposal”–on the commission’s potential recommendations, which have not been endorsed by commission members (or the president). The report calls for changing the way Social Security benefits are indexed, tying them to inflation rather than wages. Since the tax is on wages, it seems logical to tie the benefits to wages. A change to inflation would create significant cuts in benefits, particularly as many seniors’ expenses result from items such as prescriptions, which increase in cost far faster than the general inflation rate.
The report was leaked to Bloomberg and as a result, Bloomberg reported:
* Nobody but Bowles and Simpson endorses this
* The plan “will propose cuts to Social Security and Medicare, as well as reductions in income tax rates in exchange for curbing tax breaks,” according to a GOP aide who attended the meeting.
* Jan Schakowsky says “this is not a package I could support.”
* Durbin says there is not going to be “an up or down vote” on this.
You can read the document here:
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf.
It is odd that this press conference was held without prior notice and while the president is out of the country. Here’s the president’s press office response:
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THE WHITE HOUSE
Office of the Press Secretary
___________________________________________________________
For Immediate Release November 10, 2010
Statement on the Initial Bowles-Simpson Bipartisan Fiscal Commission Proposal
“The President will wait until the bipartisan fiscal commission finishes its work before commenting. He respects the challenging task that the Co-Chairs and the Commissioners are undertaking and wants to give them space to work on it. These ideas, however, are only a step in the process towards coming up with a set of recommendations and the President looks forward to reviewing their final product early next month,” said White House spokesperson, Bill Burton.
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Note: This is certainly no endorsement of the proposal.
Exit polls from last Tuesday elections released today showed that the vast majority of voters do not want to cut Social Security benefits: http://tpmdc.talkingpointsmemo.com/2010/11/poll-voters-would-rather-tax-the-wealthy-than-cut-social-security.php
Finally, perhaps lost in the hullabaloo around the chairs’ draft report is this OTHER report, released today by the National Academy of Social Insurance (NASI), “Strengthening Social Security for the Long Run.” Janice Gregory, president of NASI, had an excellent OpEd in The Hill today, discussing some of the points of the report. Check out the report as well as a useful PowerPoint presentation from the NASI presentation this morning: https://www.nasi.org/events/126/event-presentations.
Sure seems as though it would be better to have the nonpartisan experts at NASI figuring out how to ensure Social Security’s longevity than the two chairs of the deficit commission, both of whom approached their work from a “we must cut Social Security” perspective.
The Best Possible Life 
Just in: this comment on the Co-Chairs’ preliminary report:
Statement of Eric Kingson, Co-chair, Strengthen Social Security Campaign on the Release of the Fiscal Commission Co-chairs’ Proposal
November 10, 2010
“The Fiscal Commission Co-Chairs’ proposal is an equal opportunity disaster. It cuts benefits for today’s seniors and persons with disabilities. It cuts Social Security benefits for virtually every American alive today and yet to be born.
“It cuts benefits for today’s middle-aged and middle-income workers who have already sustained huge losses in their retirement savings due to loss of housing equity and 401K/IRA savings. It cuts benefits for the youngest workers by raising their retirement age to 68. And for today’s toddlers by raising theirs to 69!
“The President and every member of Congress should declare the Social Security benefit cuts dead on arrival, just as Americans would have made them DOA if they had been given a chance to vote on this plan last Tuesday.“
The Strengthen Social Security Campaign is comprised of more than 215 organizations representing more than 50 million Americans. [Note: The Frances Perkins Center is a member of this coalition.]
And this from the Economic Policy Institute:
Statement of John Irons, Economic Policy Institute Research and Policy Director, on Deficit Commission co-chairs’ preliminary proposal
Today the National Commission on Fiscal Responsibility and Reform released a preliminary proposal as devised by co-chairs Alan Simpson and Erskine Bowles. While the specifics of the proposal are not yet set in stone, the report shows that the commission is running severely off track.
In particular, nearly half of the adjustments come from cuts to discretionary spending – a portion of the budget that is not responsible for long-term deficits. The suggested reductions include a wide range of cuts that would cost jobs and increase financial burdens on working families. For example, the report suggests cutting the federal workforce by 10%, or 200,000 jobs, by 2020. The proposal suggests increasing health care fees on low-income veterans. It proposes budget cuts to national parks, the Smithsonian, water programs and airports. It even suggests eliminating funding for the Corporation for Public Broadcasting (sorry, Elmo). In total, the reductions in discretionary spending would be 16% below the president’s request in his 2011 budget, and 18.5% below the 2020 levels.
The report also does little to increase tax revenue, with only about 5% of the savings coming from increased general revenue (4.8% in 2015 and 6.4% over 10 years). On health care costs—the prime driver of longer-term deficits—the report suggests “establishing a process” to control cost growth. The commission makes several changes to Social Security, mainly in the form of benefit cuts for all but the bottom fifth of the income distribution, but also states that the program changes would not be used for deficit reduction—thus placing their work on Social Security outside the mandate of the commission.
More importantly, there is little acknowledgement that unemployment remains high and it is expected to remain high for years. By beginning austerity in 2012, the report does not allow enough time for the economy to recover, nor does it call for the policies necessary to get the economy back on track. The spending reduction of over $68 billion in 2012 ramping up to $140 billion in 2015 would mean a slower economy and higher unemployment for an already weakened labor market. (See also John Irons and Andrew Fieldhouse on the Pew-Peterson Commission on Budget Reform’s report, also released today.)
This preliminary set of policies strongly suggests that the commission leaders are not addressing the root causes of the long-term deficit. It’s time for the Obama administration to become more engaged in the bipartisan commission it established, or to make it clear that the commission does not represent their viewpoint on these issues.