Could The GOP Turn Social Security Into A Perennial ‘Crisis’ Like The Debt Limit?

With a fight over Social Security brewing in the new Republican Congress, advocates are worried that a possible GOP angle is to turn Social Security into a perennial crisis in much the same way raising the debt limit has become. By setting up a series of forcing events, the argument goes, Republicans would be able to create an ongoing crisis atmosphere around Social Security that would create a pretext for dramatic changes to the 80-year-old program.

As TPM has documented, the House passed a rule on the first day of the new Congress that prohibited the routine transfer of tax revenue between Social Security’s retirement and disability funds, the latter of which will stop being able to make full benefit payments starting in late 2016. The transfer, known as reallocation, has been done under Democratic and Republican administrations multiple times in the past, most recently in 1994, but the new House rule forbids it unless it is accompanied by measures that improve the overall solvency of Social Security.

House Republicans have been transparent about their intentions of using the new rule to force a debate on changes to the program, while advocates and Democrats warned that the rule could lead to benefit cuts. But there is another possibility: Republicans could pass a short-term reallocation that would set up another shortfall a few years down the road — and one that could arrive under a new Republican president.

It would in theory turn Social Security reallocation into something akin to the debt ceiling of the last few years: A formerly routine accounting move that the GOP is now trying to use as a leverage point to advance conservative proposals. Advocates told TPM that it was a scenario they were taking seriously.

“Just as with the debt limit, Congress could require regular short-term action, keeping a climate of crisis and requiring new legislation frequently,” Nancy Altman, co-director of Social Security Works, told TPM. Advocates are pushing for a clean reallocation, which is projected to keep both funds solvent until 2033.

It isn’t just advocates dreaming up this scenario, though — conservative wonks and the lead Social Security actuary have floated the possibility of a short-term fix. It could take a number of forms: The retirement fund could loan money to the disability program, which then must be paid back by a certain time and with interest, which would be intended to force Congress to look at changes to the program so that the loan could be paid off. Or, alternatively, the debt would be waived if cost-saving changes to the program were made. It might not be their first choice, but it’s an option.

“That presumably would keep pressure on Congress then to do some sort of reform sooner, rather than 20 years down the road,” Jason Fichtner, a senior research fellow at George Mason University’s Mercatus Center, who has written on the inter-fund borrowing proposal and was a top official at the Social Security Administration under President George W. Bush, told TPM.

Another possibility, outlined to Politico by Steven Goss, Social Security’s lead actuary, is a very small ‘clean’ reallocation that skirts the fine print of the House rule, but would only cover a year or so. That would lead to a similar scenario to the one Republicans are seizing now in the very near future.

These are options being watched closely by Social Security advocates, who say they’ve heard that House leadership might be interested in taking that course.

“That’s a very real concern. Whether it plays out that way, it remains to be seen,” Webster Phillips, senior policy analyst for the National Committee to Preserve Social Security and Medicare, told TPM. “Even if in the end there is some kind of a reasonable outcome, that will be just a great deal of anxiety that’s created in the minds of the 11 million people who are receiving disability benefits.”

If congressional Republicans do take the short-term route, expect that last point — the uncertainty for Social Security recipients — to be a major talking point from the advocacy groups.

“We can’t imagine why Congress would take this path, when there’s a simple solution that puts both of Social Security’s funds on a steady financial path through 2033,” T.J. Sutcliffe, a program director at The Arc, which represents the disabled, told TPM. “People who apply for DI, or who look to DI for essential income, are often living in extremely precarious financial situations.”

“What would a short-term action on DI say to people who rely on benefits,” she continued, “or to the workers who are currently paying into the system and may need to apply for DI in the future?