When Did Social Security Become the Third Rail of American Politics?
In 1980 Ronald Reagan had campaigned for the presidency on a pledge to preserve Social Security, repudiating a position he had taken in 1964 when he had argued in his famous speech in defense of Goldwater that the system should be made voluntary. In 1981 when he became president he told Congress that he would not agree to a bi-partisan proposal to limit future cost of living increases championed by Republican Budget Committee Chairman Senator Pete Domenici, which was backed by eleven Republicans and five Democrats. Reagan told the senators that he could not break his campaign promise.
At the same time administration officials, faced with the prospect of ballooning budget deficits and runaway Social Security costs, considered a variety of measures to save the system, which was facing immediate funding shortfalls in certain programs. David Stockman, the budget chief, generally opted for severe proposals while Health and Human Services Secretary Richard Schweiker favored more modest changes (some of which had been embraced by the Ford and Carter administrations). The goal was to cut costs by at least $75 billion over five years. At a meeting with the president in May 1981 officials settled on a mixed plan that netted some $80 billion in cuts by reducing aid to students of retired workers, cutting disability payments by tightening eligibility requirements (saving $21.9 billion over five years), and reducing early retirement benefits (saving 17.6 billion over five years).
President Reagan was led to believe that the proposal would sail through Congress. This proved to be a gross miscalculation. While Representative J.J. Pickle, chairman of the House Ways and Means Committee, had indicated he could produce a bi-partisan majority in the Democratic House for reform, the administration bill mandated almost immediate cuts in benefits to people taking early retirement. A low-income worker retiring at age 62 in 1982 would see his monthly benefits cut instantly from $248 to $164. As David Stockman was to admit later, "I just hadn't thought through the impact of making it effective immediately." Sensing the proposal was politically controversial, the White House let Schweiker take the lead in pushing the measure, which undermined it from the start. If Reagan wasn't willing to get out in front of the issue, members of Congress wondered, why should they?
Tip O'Neill seized the opportunity to blast the administration. After months of defeats, O'Neill finally had an issue he could rally Democrats around. At a news conference he declared: "For the first time since 1935 people would suffer because they trusted in the Social Security system." A reporter asked if Reagan had made a political mistake. O'Neill shot back: "I'm not talking about politics. I'm talking about decency. It is a rotten thing to do. It is a despicable thing." Republicans knew they were in trouble when the phones started ringing off the hook from workers who had planned to take early retirement in 1982. Representative Carroll Campbell of South Carolina complained: "I've got thousands of sixty-year old textile workers who think it's the end of the world. What the hell am I supposed to tell them?"
A quick vote in the Senate on a Republican resolution showed how badly Reagan had miscalculated. On May 20 the Senate voted 96 to 0 in favor of a resolution promising not to "precipitously and unfairly reduce early retirees' benefits." The House shortly thereafter voted down cuts in minimum benefits that were part of the package. President Reagan had a big speech drafted in favor of his plan. Senator Howard Baker talked him out of delivering it. "I think that's an awful good speech," Baker told the president. "But I don't think you'd better make it because we can't pass that thing."
The system was eventually overhauled successfully after President Reagan in December 1981 agreed to the formation of a bipartisan commission headed by economist Alan Greenspan. In 1983 the commission's proposals became law. The law provided for a mixture of cuts and tax increases. The retirement age in the future was extended to 67. Self-employed workers were required to pay a combined rate equal to 100 percent of what employers and employees paid (formerly they paid only 75 percent). Benefits of high-income workers would now be taxed. Cost of living increases would be temporarily delayed by changing the schedule used to establish benefits. And gradually over time early retirees would see their benefits reduced.
Does the history of what happened in the early 1980s prove that Republicans shouldn't attempt to tamper with Social Security? Political scientists Martha Derthick and Steven Teles, whose narrative* of the events provided the basis for this HNN article, conclude that "the history of 1981-1983 is inconclusive. So ill-conceived and inept was the administration's proposal of May 1981 that one cannot say with certainty that a Republican proposal more carefully framed and presented, after due consultation with Congress, would not have had more success." One Reagan administration official argued that "once we stopped being revolutionaries and started being system conservers" they achieved success.
Coda
In 1985 Republicans in the Senate proposed temporarily freezing the Social Security COLA to help stem the red ink in which the government now found itself drowning. The measure passed only with the vote of Vice President George H. W. Bush's tie-breaking vote. The House, Trent Lott leading the way ironically, voted it down. In 1986 the Republicans lost control of the Senate. "The message was unmistakable," a Republican Senate staff member observed, "and it was seared into the consciousness of the Republican Party: Social Security is the one area of spending that you must not touch, no matter what."
Twenty years later, what changed? The Republican strategy. "Rather than pushing for painful changes in the present," as David Stockman and others had in the early 1980s, say Derthick and Teles,
[Republicans now] opted for the promise of pleasurable benefits in the future. Rather than attacking the program head-on, they worked around the edges and cut away the foundations from below. In the aftermath of Reagan, conservatives searched for ways to turn the politics of Social Security from blame avoidance to credit claiming, and in the process open up room for the party to reenter the debate with the hope that it co9uld invert the closed, executive-centered politics of 1981 and gain politically from a public hearing of its ideas. The presidential campaign of George W. Bush in 2000, in which the candidate embraced "privatization" of Social Security, was a culmination of this strategy, with ironic roots in a conservative administration's twenty-year old miscalculation.
*Martha Derthick and Steven M. Teles, "Riding the Third Rail: Social Security Reform," in The Reagan Presidency: Pragmatic Conservatism and Its Legacies, ed. W. Elliot Brownlee and Hugh Davis Graham (University Press of Kansas, 2003).
Related Links