US - The campaign for the November mid-term Congressional elections is heating up in the US, and one topic raising temperatures is social security reform.

Depending on the outcome of the elections in the House and the Senate, the recommendations of the National Commission on Fiscal Responsibility and Reform (NCFRR), due by 1 December, will be received in a different political environment.

Last February, president Barack Obama created the NCFRR to craft a bipartisan plan to restrain entitlements, including social security, which was created 75 years ago to eliminate poverty among elderly Americans. But its anniversary celebrations have turned out to be the occasion for political campaigning that does not bode well for a bipartisan reform.

President Obama has himself said privatising social security was “a key part” of the Republican legislative agenda if they win a majority in Congress this autumn. He said that this plan is “wrong for America” and he will fight “to stop those who would gamble your social security on Wall Street. Because you shouldn’t be worried that a sudden downturn in the stock market will put all you’ve worked so hard for - all you’ve earned - at risk.”

To echo his words, Liberal Democrats have established the Strengthen Social Security Coalition, backed by George Soros-backed MoveOn.org and several unions such as the AFL-CIO and SEIU. They are putting pressure on candidates for Congress to promise to oppose privatisation, as well as any cut in the current system’s benefits, publishing name-by-name results on the internet.

To provide them with ammunition, the Nobel laureate professor Paul Krugman wrote a column in the New York Times declaring there is no such thing as a social security crisis. The whole debate about fixing its problems is only “about ideology and posturing” based on “bad-faith accounting”.

Krugman continues: “Conservatives hate social security for ideological reasons; its success undermines their claim that government is always the problem, never the solution. But they receive crucial support from Washington insiders, for whom a declared willingness to cut social security has long served as a badge of fiscal seriousness.” His conclusion is that Obama’s deficit commission cannot “call for deep benefit cuts, in particular a sharp rise in the retirement age”.

That is exactly one of the options the commission is discussing (the current retirement age is 66 for people born after 1942, and it will rise to 67 for people born after 1959) together with others: lowering benefits for wealthier retirees, trimming annual cost-of-living increases, increasing the share of earned income that is subject to social security taxes (under current law, income beyond $106,000 is exempt).

The commission is composed of 18 members - 12 are members of Congress, comprising six Democrats and six Republicans appointed by congressional leaders, plus there are four non-lawmakers chosen by the White House, which has also appointed the two co-chairmen, Democrat Erskine Bowles, a former White House chief of staff, and Alan Simpson, a retired Republican senator.

The latter, however, has been heavily criticised because of an e-mail he sent to the National Older Women’s League’s (OWL) executive director, Ashley Carson, comparing social security to “a milk cow with 310 million tits”, and defining her attempt to defend the entitlement programme as “babbling into the vapours”. OWL and other groups called for Simpson to resign from his position over the “offensive and sexist” email. He publicly apologised, but did not resign.

To be endorsed by the commission, an idea must garner 14 votes: it is not clear which kind of non-partisan proposal can be issued in this hot political climate, even though the most powerful group representing the elderly, the American Association of Retired Persons (AARP) has not opposed all changes. AARP director of public policy John Rother has said that acting sooner will allow for changes to be made gradually and will reassure younger workers that social security will be there for them.

Social security officials project that at the beginning in 2014, the programme will routinely pay out more in benefits than it collects in taxes, requiring it to draw on reserves that have been funding the rest of the government. By 2037, the reserves would be depleted and the programme would only be able to pay about 75% of promised benefits.

In 2005, former president George W Bush pushed unsuccessfully in favour of diverting a small portion of social security taxes into new individual private accounts that could be invested in stocks. But not even the Republicans supported the idea: they never brought it to the Congress floor and they have not resurrected it during this electoral campaign.
 

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