Fiscal hawks’ double standard for Social Security cuts vs. tax cuts

 The Committee for a Responsible Federal Budget (CRFB) has taken sides in a scuffle between Social Security advocates and former Senator Alan Simpson. This scuffle concerns Simpson’s colorful defense of Social Security proposals within the report he co-authored with fellow Fiscal Commission co-chair Erskine Bowles—a report CRFB has gone to great lengths to champion.

Click here to continue reading on the Economic Policy Institute's Working Economics blog.

CRFB was responding to a letter signed by young budget and social insurance experts—myself and others at EPI included—disagreeing with Simpson’s claim that the Bowles-Simpson proposals would strengthen the program for our generation. The merits of these proposals aside, CRFB is shamelessly cherry-picking baselines in response to the letter. Whereas CRFB and other fiscal hawks use a current policy baseline for almost all budget projections—e.g., assuming the continuation of the Bush tax cuts past their scheduled expiration—CRFB doesn’t adopt the same convention when it comes to Social Security. This is hypocritical and reveals what can only be described as a biased policy agenda.

In order to minimize the severity of the Bowles-Simpson cuts, CRFB’s defense of the Bowles-Simpson Social Security plan revolves around a comparison of projected future benefits proposed by Bowles-Simpson relative to benefits payable under current law. However, comparing benefits under Bowles-Simpson to payable benefits assumes that Congress will allow an abrupt 25 percent reduction in Social Security benefits when the trust fund is exhausted in 2033 since Social Security is prohibited from borrowing and benefits are generally funded through a dedicated payroll tax rather than general revenue.

Click here to read the full post on the Economic Policy Institute's Working Economics blog.