Joe Biden Led Budget Talks Where Social Security Cuts Were On The Table

Former vice president Joe Biden led a small team of lawmakers that considered a Social Security cut as part of a broader package of legislation designed to reduce the federal budget deficit.

The talks didn’t pan out, and represented just one of several attempts by Congress and the Obama administration to slow the growth of the national debt.

Biden’s participation exemplifies his desire to cut deals with Republicans and his political moderation, traits he’s highlighted on the presidential campaign trail.

Since President Donald Trump took office, “fiscal responsibility” has faded as a top concern, with Republicans larding the national debt with corporate tax cuts, and Democratic presidential candidates, including Biden, only pushing to make Social Security and Medicare more generous. (Progressives maintain that because Social Security and part of Medicare are self-funded, they cannot contribute to the debt.)

Biden was “a member of an administration whose theory of the case was that to get to where we essentially needed to go, we had to put everything on the table,” recalled Jared Bernstein, who served as Biden’s top economic adviser and has not endorsed in the presidential primary.

“I think that theory has been shown to be wrong,” Bernstein said. “And that since then, economists and policymakers have done a serious and critical rethink of fiscal policy.”

Larry Summers and Jason Furman, centrist former Obama economic advisers, wrote an op-ed in Jan. 2019 describing “how Washington should end its debt obsession.” Their analysis is part of a broader trend in recent years of economists associated with the Democratic establishment rethinking deficit hysteria amid a period of low inflation and interest rates.

Throughout the Obama years, Sen. Bernie Sanders (I-Vt.) railed against including Social Security in any sort of legislative deal aimed at deficit reduction. In his White House bid, Sanders has highlighted his stalwart support of social programs over the years, while noting the contrast with Biden.

The Biden-led group, which met during the spring and early summer of 2011, has received less attention than other ad-hoc committees that sought deficit deals. President Obama formally appointed a commission in 2010 to cobble together deficit-reducing proposals; the commission never reached an agreement after Republicans opposed proposals for higher taxes.

And later in 2011, Obama himself sought a “Grand Bargain” to reduce the national debt with then-Speaker of the House John Boehner (R-Ohio). Their handshake agreement collapsed after House Republicans balked at higher taxes.

Between those two attempts, there was the “Gang of Six” in the Senate, as well as the Biden group, which also had six members but no lasting nickname (though it was referred to as “The Biden Commission” at least once). Its internal deliberations have received little attention over the years, though it got some hype at the time because it included Biden and two high-ranking Republicans: Sen. Jon Kyl (R-Ariz.) and House Majority Leader Eric Cantor (R-Va.).

“There was definitely a sense that Biden wasn’t planning to run for anything again so he could make deals that other Democrats wouldn’t,” said Michael Steel, who was a spokesman for then-Speaker Boehner.

The talks ultimately collapsed. The reasons for their failure, like virtually any partisan fight during the Obama era, are subject to debate. Democrats argue that Cantor balked at higher taxes. Some Republicans involved blame Obama and Boehner for initiating their own talks where larger sums were discussed, undermining Cantor’s leverage.

Before it imploded, the working group did not formally agree to any policy proposals, though several sources said one idea on the table was to cut spending on Social Security retirement benefits by changing the way benefits are adjusted for inflation each year by implementing a stingier inflation measure that would reduce benefit growth over time.

It’s a technical tool called the “chained” consumer price index that accounts for the way consumers react to rising prices by substituting for cheaper alternatives when possible. It was an appealing idea for the various bipartisan deficit groups because it could simultaneously reduce spending on benefits and raise tax revenue, but because it’s so technical, it’s less obvious as a benefit cut or a tax hike.

The Biden group considered applying chained CPI to both Social Security benefits and tax brackets, one source said. Since tax brackets are adjusted for inflation each year, if they go up more slowly, then more wages — which grow faster — wind up subject to the higher-percentage brackets. Obama’s deficit commission and his Grand Bargain also considered the inflation measurement change; he went on to include it in his fiscal 2014 budget.

Kyl said in an email that “even though we seemed to come to some tentative agreements on various cost savings (and even non-tax revenue raisers), because of the administration’s insistence on big tax increases, our talks broke down.” He said Biden has “plausible deniability” on Social Security because the group had a pact that until it agreed on everything, it agreed on nothing.

Social Security activists loathe chained CPI for the same reasons that fiscal wonks apparently like it: The way it uses sophisticated language to disguise a benefit cut. Indeed, during Obama’s first term, centrist budget hawks who supported the new formula claimed it was a technical change to make the cost of living adjustment more accurate, rather than a benefit cut.

“That was a particularly annoying one for them to circle around, which is why they chose it, because it took us so long to explain it,” said Alex Lawson, a supporter of Sanders’ presidential bid and executive director of the group Social Security Works, which fought the chained CPI.

Lawson, like many other left-leaning Social Security activists, supports a change to the COLA of a different sort ― one that more heavily weighs the health care and energy costs seniors experience and thus likely grows at a faster rate.

He regards the Obama administration’s political calculus as particularly ham-handed. Low growth in the official inflation index used by Social Security had deprived seniors of a COLA in 2009 and 2010. The Obama administration tried to make up for its absence by sending a flat $250 check to Social Security beneficiaries in 2009 as part of the stimulus package.

Chained CPI was “always going to be touted as a Democratic idea because it was pushed by the Obama administration and Biden was the lead negotiator,” Lawson said.

The 2011 talks in which Biden participated were unpopular enough within the progressive wing of the Democratic Party that they became fodder for a political attack against at least one other Democrat who was involved. Then-Rep. Donna Edwards (D-Md.) blasted then-Rep. Chris Van Hollen (D-Md.) for his role in the talks during their battle for the Democratic nomination for Maryland’s open Senate seat in 2016.

In a television ad, Edwards boasts that she said “‘no’ to Social Security cuts [Van Hollen] said he’d consider.” Van Hollen nonetheless clinched the nomination and cruised to victory in the general election. (Edwards declined a request to comment for this story.)

Whether or not the tradeoffs of a potential deal with “chained” CPI were worth the gains, Biden evidently endorsed the premise of the exercise: That the cost of so-called entitlement programs was out of control, and bipartisan compromise that included possible benefit cuts was part of the answer.

Speaking to an audience of Chinese government officials in August 2011, Biden expressed regret that recent efforts to tame “entitlements” had not succeeded. He specifically mentioned “changes” to Medicare and Medicaid, omitting Social Security.

“It’s easy to make those changes, and we had a tentative agreement to do that between the major political leaders of the Republican Party and the Democratic Party and the administration,” he said. “But there is a group within the Republican Party that is a very strong voice now that did ― wanted different changes, and so that deal fell through at the very end.”

Bernstein and Phil Schiliro, a top aide to Obama at the time, both portrayed the search for a “Grand Bargain” as an Obama project in which Biden was enlisted.

“I never heard the vice president advocate for cuts,” Schiliro said.

Just as Obama’s public views on Social Security have changed ― he embraced expansion of benefits in June 2016 ― so have Biden’s, according to Bernstein, who is in contact with top Biden campaign aides.

“I don’t care if you’re Biden or Obama or any of the members of our administration, the budget that we would write today would be very different than the budget that we wrote then,” he said. “My best proof of this is to look at Biden’s own Social Security plan.”

Biden’s Social Security plan would indeed lift the cap on income taxable for Social Security purposes and use the new revenue to shore up the program’s solvency and increase benefits for vulnerable seniors, such as widows and those enrolled in the program for 20 years or more. His campaign has since clarified that he has ruled out benefit cuts as well.

Asked about Biden’s participation in the 2011 discussions, Biden campaign spokesman Andrew Bates referred back to the campaign’s plan.

“As President, Joe Biden would expand Social Security benefits ― paid for with new taxes on the wealthiest Americans,” Biden campaign spokesman Andrew Bates said in a statement. “And as Senator Sanders himself said in 2015: ‘Joe Biden is a man who has devoted his entire life to public service and to the wellbeing of working families and the middle class.’”