The Congressional Spectator

Reconciliation Is Back

And just in time, giving the Bipartisan Committee a unique Social Security opportunity.

By 10.3.11

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When August's debt limit deal created the bipartisan deficit-reduction committee, it also created one of the most powerful legislative tools Washington has ever seen -- subject to neither amendment nor filibuster.

To say this would make it easy to reform Social Security would be naïve. Still, it would be an oversight not to recognize the unprecedented opportunity this presents.

The 12-member bipartisan congressional committee faces a tough job: achieving a deficit-reduction of "at least $1.5 trillion" in 2012-2021 in addition to the $917 billion in annual spending savings already mandated separately.

The deal's bipartisan congressional deficit reduction committee and its accompanying legislation closely tracks procedures in Washington's normal budget process, as laid out in the 1974 Budget Act. One aspect of that earlier legislation in particular stands out: reconciliation.

Under reconciliation, committees are assigned deficit-reduction targets and the resulting legislation is protected -- almost exactly as in the case of today's bipartisan committee and its legislative product. Reconciliation is therefore among Congress's most powerful legislative tools. There are expedited rules for its consideration and the Senate needs just a simple majority vote (filibusters are prohibited) to pass it -- just like the bipartisan committee's product.

However, in two crucial aspects, the bipartisan committee's mandate is more powerful. Under reconciliation, amendments are still allowed and Social Security cannot be touched: "[I]t shall not be in order in the Senate or the House of Representatives to consider any reconciliation bill… that contains recommendations with respect to… Social Security…"

While Congress's most powerful existing deficit reduction tool can't reform Social Security, no such limitation exists on the bipartisan committee's untouchable product. Unlike any other legislation, the committee's product could reform Social Security with simple majority votes in both bodies.

That Social Security is in need of reform is without question. As the Congressional Budget Office points out, last year's Social Security spending equaled 4.9 percent of GDP and will grow to 6.1 percent in 2035. In 2037, its trust funds will be depleted. To make ends meet, it requires an immediate and continuing 1.6 percentage point increase in the payroll tax or a 19 percent reduction in benefits in 2038.

The bipartisan committee's short timeline for decision-making makes long debates difficult. However, unlike other programs, Social Security's inherent problems -- basically, pay-as-you-go dependency unmasked by deteriorating demographics -- are quite clear.

Earlier this year, CBO published a book of deficit reduction options containing six proposals that would save Social Security $652.3 billion over 2012-2021 -- roughly half of the committee's mandate. Nor did CBO leave out those who believe additional revenues are the route for deficit reduction: CBO also included two Social Security options for increasing revenues by $552.7 billion during 2012-2021.

The committee therefore could still have its debate over spending cuts versus revenue increases, but in a more meaningful context of serious and specific program reform.

Unquestionably Social Security needs reform. The bipartisan committee presents an unequalled opportunity for doing so and Social Security's long-known reform options meet the committee's time constraints for decision-making.

By tackling entitlements -- particularly the oldest program -- rather than the continued pursuit of annually-appropriated spending, it would immediately show Washington meant business.

Finally, it would also prove that deficit reduction is not just a temporary exercise, but a permanent policy change toward fiscal sustainability. Social Security reform's deficit reduction in the first decade, while sizeable, would be dwarfed over the long-term -- when Washington's deficit is projected to be even worse.

Congress's bipartisan deficit reduction committee has the means for reform and Social Security has the need. The only question is whether Washington has the will.

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About the Author

J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.