Fiscal commissions have, since the 1980s, been seen as a way for Congress and presidential administrations to outsource discussing and solving the most difficult political problems to a process that avoids democratic debate and legislative safeguards. Right now, for example, momentum is building for a fiscal commission that would seek to reverse the federal government’s deficit spending habit—as if a commission’s findings would somehow make incredibly unpopular and unwise decisions such as cutting Social Security benefits easier to enact.
However, fiscal commissions have never achieved their aims of fast-tracking unpopular cuts while escaping the political consequences of the harm such cuts do. The truth is, most commissions themselves never even reach agreement on recommendations that meet the stated goals of the effort.
Even the 1983 Greenspan Commission, long hailed as the model of success, failed to achieve its goal of identifying a path to seventy-five-year Social Security solvency, leaving about one third of the gap for Congress to resolve. Bob Ball, a major player in the Greenspan Commission, famously wrote, “Nothing, however, should obscure the fact that the National Commission on Social Security Reform was not an example of a successful bipartisan commission. The commission itself stalled—essentially deadlocked, despite continuing to talk—after reaching agreement on the size of the problem that needed to be addressed. As a commission, that was as far as it got.”
In reality, commissions are the equivalent of consulting firms, brought in to bear the brunt of the grievances for unpopular ideas. At the end of the day, however, commissions can only make recommendations. The responsibility for voting on legislation remains in the Congress, and the approval or veto power of approved legislation remains with the president—and they are ultimately accountable to voters.
Still, every time the U.S. faces a “budget crisis” or “debt crisis” of some kind, there are inevitably calls for some kind of commission to address the problem. Earlier this year, there were discussions about having a commission related to the debt as we approached the debt ceiling.
Now, with the prospect of yet another government shutdown looming as Congress remains incapable of passing a budget, some members of Congress and others are once again calling for a commission to address deficits and debt. In fact, the House Budget Committee just announced a hearing on establishing a debt commission.
Fiscal Commissions Have Always Been About Cuts
While fiscal commissions have a poor record of finding workable solutions to political problems, one function they do well is framing the national conversation about a political issue. Fiscal commissions, for example, have typically framed fiscal problems as “crises,” and acceptable solutions as spending cuts. Sometimes revenue solutions are even explicitly taken out of consideration, as in President Bush’s Commission to Strengthen Social Security, under which a ”guiding principle” was that “Social Security payroll taxes must not be increased.”
Other times, a fiscal commission’s focus on cuts is necessitated by narrowly defined measures of success, such as tasking the commision with focusing exclusively on financing, not the beneficiaries who are impacted by any changes. In the 118th Congress, for example, H.R. 5779, the “Fiscal Commission Act of 2023,” set an explicit goal of a debt-to-GDP ratio of 100 percent or less, and “for any recommendations related to Federal programs for which a Federal trust fund exists, to improve solvency for a period of at least 75 years.” The Fiscal Commission Act of 2023 requires that the Congressional Budget Office provide budget estimates, both for individual policy provisions and the long-term budget, but importantly, does not require any estimates on the effect of provisions or the commission’s recommendations on individuals.
The omission of studying the impact of recommendations is not oversight, it is intentional. Demonstrating the effect of benefit cuts ahead of a commission’s vote—or a Congressional one—makes it less likely that the proposed cuts will pass. But not putting a distributional analysis of the impact of proposals on an equal ground with solvency or budget estimates is bad governance—it ignores the intent of these programs, which is to help people.
And so, for the past four decades, commissions have been launched time and again to address the federal government’s fiscal challenges, and often had the Social Security program in the crosshairs. As Table 1 below shows, most of the time, Social Security, budget, debt, deficit, fiscal, or retirement security commissions—if they propose any solutions at all—result in solutions heavily skewed toward Social Security benefit cuts rather than revenue increases.
Table 1
|
Congressional or Presidential Commissions on Social Security Solvency, Budget, Debt, Deficit, Fiscal, or Retirement Security, and Their Results, 1983 to Present
|
| Commission; Common Name (Year) |
Commission Recommendations |
Agreement Reached within Commission? |
Law Enacted to Modify Social Security? |
| National Commission on Social Security Reform; Greenspan Commission (1983) |
Commission package covered two-thirds of the long-term financial gap. Of the gap covered, 16 percent was due to expanding coverage of the program to other populations; 39 percent came from benefit reductions; and 45 percent came through revenue increases. |
The commission was able to reach a consensus for meeting the short-range and long-range financial requirements, by a vote of 12 to 3. |
Congress added an additional proposal to the commission package, to increase the Social Security Full Retirement Age from age 65 to age 67; 70 percent of the final bill savings came from benefit reductions; 10 percent from revenue increases; 20 percent by expanding coverage of the program. |
| Bipartisan Commission on Entitlement and Tax Reform (Kerrey–Danforth, 1994–95) |
None. |
While 30 out of 32 members agreed on the interim report defining the size of the problem, the commission failed to reach consensus on recommendations. |
No changes to Social Security. |
| President’s Commission to Strengthen Social Security
(President Bush, 2001) |
Model 1: No changes to traditional benefits for those who do not participate in voluntary individual accounts, but does not achieve solvency so additional changes to revenues and/or benefits are required. The additional benefit cuts or revenue increases required for solvency ranged between 0.96 and 2.34 percent of payroll.
Model 2: Benefit reductions equal 100 percent of the financial gap (traditional benefit cuts equal to 1.87 percent of taxable payroll while the deficit was 1.86 percent of taxable payroll). Diverted 4 percent of payroll from the trust funds (up to $1,000) to individual accounts and relied on general revenue transfers to cover any transition costs as well as any future insolvencies for any reason.
Model 3: Benefit reductions equal to 104 percent of the financial gap (traditional benefit cuts equal to 1.94 percent of taxable payroll while the deficit was 1.86 percent of taxable payroll). Diverted 2.5 percent of payroll from the trust funds (up to $1,000) to voluntary individual accounts, which required an additional 1 percent contribution of the worker, and relied on general revenue transfers to cover any transition costs as well as any future insolvencies for any reason. |
The Commission failed to reach consensus on a set of recommendations and instead produced three different “models” with different parameters. |
No. |
| National Commission on Fiscal Responsibility and Reform
(Simpson–Bowles Fiscal Commission, 2010) |
Benefit reductions account for about two-thirds of the plan’s Social Security financing improvements over the next seventy-five years—and about four-fifths of the improvement in the seventy-fifth year. |
No. Only 12 of the 18 members agreed. Therefore, no official report could be issued to Congress. |
No changes to Social Security. |
| United States Joint Select Committee on Deficit Reduction (Supercommittee, 2011) |
No proposals put forward. According to the co-chairs, “…we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.” |
No agreement. |
No changes to Social Security. |
|
Source: Author’s compilation from various sources.
|
Social Security Has No Place in a Fiscal Commission
The simple fact is, Social Security does not contribute to the deficit. It is self-financing, and has accumulated massive surpluses in the form of bonds in the trust funds to pay current and future benefits. Further, it simply cannot add to the government’s publicly held debt, as it has no borrowing authority. Therefore, Social Security has no place in a fiscal commission.
Both the House and Senate—Republicans and Democrats alike—publicly opposed cutting Social Security benefits during the 2023 State of the Union address. A fiscal commission that includes Social Security, however, would be a back-door method of doing just that.
Ensuring Social Security solvency for a seventy-five year period is a difficult enough challenge to address on its own, as the experience with the Greenspan Commission showed. Any efforts to modify Social Security for solvency purposes must be done as a stand-alone effort, and must include not just actuarial or budget estimates, but also information on how any and all proposed changes would affect beneficiaries. Furthermore, the goals for such reform should stipulate not just an aim of seventy-five year solvency, but a goal for sufficient adequacy and equity of benefits. Otherwise, the pressure will always be on the side of benefit cuts instead of being balanced against the welfare of beneficiaries.
Tags: social security, social insurance
A Fiscal Commission Would Be a Fast Track to Cuts in Social Security Benefits
Fiscal commissions have, since the 1980s, been seen as a way for Congress and presidential administrations to outsource discussing and solving the most difficult political problems to a process that avoids democratic debate and legislative safeguards.1 Right now, for example, momentum is building for a fiscal commission that would seek to reverse the federal government’s deficit spending habit—as if a commission’s findings would somehow make incredibly unpopular and unwise decisions such as cutting Social Security benefits easier to enact.
However, fiscal commissions have never achieved their aims of fast-tracking unpopular cuts while escaping the political consequences of the harm such cuts do. The truth is, most commissions themselves never even reach agreement on recommendations that meet the stated goals of the effort.
Even the 1983 Greenspan Commission, long hailed as the model of success, failed to achieve its goal of identifying a path to seventy-five-year Social Security solvency, leaving about one third of the gap for Congress to resolve. Bob Ball, a major player in the Greenspan Commission, famously wrote, “Nothing, however, should obscure the fact that the National Commission on Social Security Reform was not an example of a successful bipartisan commission. The commission itself stalled—essentially deadlocked, despite continuing to talk—after reaching agreement on the size of the problem that needed to be addressed. As a commission, that was as far as it got.”2
In reality, commissions are the equivalent of consulting firms, brought in to bear the brunt of the grievances for unpopular ideas. At the end of the day, however, commissions can only make recommendations. The responsibility for voting on legislation remains in the Congress, and the approval or veto power of approved legislation remains with the president—and they are ultimately accountable to voters.
Still, every time the U.S. faces a “budget crisis” or “debt crisis” of some kind, there are inevitably calls for some kind of commission to address the problem. Earlier this year, there were discussions about having a commission related to the debt as we approached the debt ceiling.
Now, with the prospect of yet another government shutdown looming as Congress remains incapable of passing a budget, some members of Congress and others are once again calling for a commission to address deficits and debt. In fact, the House Budget Committee just announced a hearing on establishing a debt commission.
Fiscal Commissions Have Always Been About Cuts
While fiscal commissions have a poor record of finding workable solutions to political problems, one function they do well is framing the national conversation about a political issue. Fiscal commissions, for example, have typically framed fiscal problems as “crises,” and acceptable solutions as spending cuts. Sometimes revenue solutions are even explicitly taken out of consideration, as in President Bush’s Commission to Strengthen Social Security, under which a ”guiding principle” was that “Social Security payroll taxes must not be increased.”
Other times, a fiscal commission’s focus on cuts is necessitated by narrowly defined measures of success, such as tasking the commision with focusing exclusively on financing, not the beneficiaries who are impacted by any changes. In the 118th Congress, for example, H.R. 5779, the “Fiscal Commission Act of 2023,” set an explicit goal of a debt-to-GDP ratio of 100 percent or less, and “for any recommendations related to Federal programs for which a Federal trust fund exists, to improve solvency for a period of at least 75 years.” The Fiscal Commission Act of 2023 requires that the Congressional Budget Office provide budget estimates, both for individual policy provisions and the long-term budget, but importantly, does not require any estimates on the effect of provisions or the commission’s recommendations on individuals.
The omission of studying the impact of recommendations is not oversight, it is intentional. Demonstrating the effect of benefit cuts ahead of a commission’s vote—or a Congressional one—makes it less likely that the proposed cuts will pass. But not putting a distributional analysis of the impact of proposals on an equal ground with solvency or budget estimates is bad governance—it ignores the intent of these programs, which is to help people.
And so, for the past four decades, commissions have been launched time and again to address the federal government’s fiscal challenges, and often had the Social Security program in the crosshairs. As Table 1 below shows, most of the time, Social Security, budget, debt, deficit, fiscal, or retirement security commissions—if they propose any solutions at all—result in solutions heavily skewed toward Social Security benefit cuts rather than revenue increases.
Table 1
Congressional or Presidential Commissions on Social Security Solvency, Budget, Debt, Deficit, Fiscal, or Retirement Security, and Their Results, 1983 to Present
(President Bush, 2001)
Model 2: Benefit reductions equal 100 percent of the financial gap (traditional benefit cuts equal to 1.87 percent of taxable payroll while the deficit was 1.86 percent of taxable payroll). Diverted 4 percent of payroll from the trust funds (up to $1,000) to individual accounts and relied on general revenue transfers to cover any transition costs as well as any future insolvencies for any reason.
Model 3: Benefit reductions equal to 104 percent of the financial gap (traditional benefit cuts equal to 1.94 percent of taxable payroll while the deficit was 1.86 percent of taxable payroll). Diverted 2.5 percent of payroll from the trust funds (up to $1,000) to voluntary individual accounts, which required an additional 1 percent contribution of the worker, and relied on general revenue transfers to cover any transition costs as well as any future insolvencies for any reason.
(Simpson–Bowles Fiscal Commission, 2010)
Source: Author’s compilation from various sources.
Social Security Has No Place in a Fiscal Commission
The simple fact is, Social Security does not contribute to the deficit. It is self-financing, and has accumulated massive surpluses in the form of bonds in the trust funds to pay current and future benefits. Further, it simply cannot add to the government’s publicly held debt, as it has no borrowing authority. Therefore, Social Security has no place in a fiscal commission.
Both the House and Senate—Republicans and Democrats alike—publicly opposed cutting Social Security benefits during the 2023 State of the Union address. A fiscal commission that includes Social Security, however, would be a back-door method of doing just that.
Ensuring Social Security solvency for a seventy-five year period is a difficult enough challenge to address on its own, as the experience with the Greenspan Commission showed. Any efforts to modify Social Security for solvency purposes must be done as a stand-alone effort, and must include not just actuarial or budget estimates, but also information on how any and all proposed changes would affect beneficiaries. Furthermore, the goals for such reform should stipulate not just an aim of seventy-five year solvency, but a goal for sufficient adequacy and equity of benefits. Otherwise, the pressure will always be on the side of benefit cuts instead of being balanced against the welfare of beneficiaries.
Notes
Tags: social security, social insurance