The House Ways and Means Committee has invited members of the public to comment on the Bowles-Simpson and Domenici-Rivlin plans to restore solvency to Social Security.
But there’s a glaring omission: from reading the committee’s description of the two plans — and its draft bills — you’d never know that both Bowles-Simpson and Domenici-Rivlin urged significant increases in Social Security taxes.
Ways and Means focuses solely on the benefit reductions in the two packages. Those savings would come from a proposal to use the chained CPI for computing cost-of-living adjustments; from scaling back benefits, especially for medium and higher earners; and from adjusting Social Security benefits for rising life expectancy (either by hiking the retirement age, as in Bowles-Simpson, or by further paring the benefit formula, as in Domenici-Rivlin). Ways and Means also notes that both plans propose to improve benefits for certain long-term, low-paid workers.
But revenue increases made an important contribution to long-run solvency in both Bowles-Simpson and Domenici-Rivlin. (See graph.) Because the benefit cuts would be phased in gradually, the 75th year paints a truer picture of the long-run policy mix than does the average over 75 years. We didn’t think revenue increases contributed enough in Bowles-Simpson — they made up only one-third of its savings over 75 years and just one-fifth in the 75th year — but they weren’t absent.
Social Security is a popular program, and poll respondents of all ages and incomes express a willingness to support it through higher taxes.
We think a balanced solvency package must include revenue increases, not just benefit cuts. (The program’s benefits are already extremely modest, both in dollar terms — the average retired worker or widow receives less than $1,300 a month — and by international standards.) And a well-crafted package would also make targeted improvements to the Supplemental Security Income program — which is distinct from Social Security but has important overlaps — and would replenish the Disability Insurance trust fund.
Neither Bowles-Simpson nor Domenici-Rivlin quite measures up by those criteria, and we urge policymakers to do better. But failing to tell the public that both plans included significant revenue increases is disingenuous.