The Ryan Roadmap and Social Security -- Laying the Groundwork for Future Benefit Cuts

On April 6, 2011, the House Budget Committee passed a Republican budget for fiscal year 2012 that proposes massive changes to health care benefits provided to America 's seniors, while making no direct changes to the Social Security program. The budget developed by Representative Paul Ryan (R., WI), Chairman of the House Budget Committee, would amend the Social Security Act to graft onto it a new trigger mechanism that, if adopted, would force the development of proposals to cut Social Security benefits and then expedite them through the Congress by using "fast track" legislative procedures. The Republican budget would use an existing method employed by the Social Security trustees to evaluate the financial condition of the Social Security program to initiate their fast track process.

Evaluating the Financial Status of the Trust Funds

Under current law, the Board of Trustees of the Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds report annually, usually in April, on the financial condition of the Social Security program. In doing so, the trustees employ a measure of solvency called "actuarial balance," which considers the financial performance of the program over the next 75 years.

Calculating the actuarial balance involves comparing the projected cost of benefits to the projected revenue coming into the program over the 75-year valuation period, although the balances in the trust funds are also considered. Generally, if anticipated revenue exceeds anticipated costs, the program is said to be in actuarial balance. But if anticipated benefits exceed anticipated revenue, then the program is said to be in actuarial deficit.

The Ryan Trigger

Under the Ryan trigger proposal, whenever the trustees determine in an annual report that the trust funds have an actuarial deficit, they would provide the President with their recommendations for restoring a positive actuarial balance. The report would be due to the President by September 30. The President, by December 1, would be required to submit "...implementing legislation to both houses of Congress, including recommendations necessary to achieve a positive 75-year actuarial balance..."¹

Fast Track Enactment in the Congress

The Congress would consider the President's recommendations for restoring solvency to the Social Security program using expedited procedures. Basically, that means that the Congress would be required to act quickly on the proposed legislation, providing little opportunity for the American people to be informed of its consequences. Upon receiving the President's recommendations, the Majority Leader of the Senate and the Speaker of the House of Representatives would introduce legislation reflecting those recommendations.

Within 60 days of the President submitting legislation, the committees of jurisdiction to which the legislation has been referred would be expected to report on the proposed legislation, which should then be considered by the full House or Senate under expedited procedures.

Discussion

• Using fast track procedures for Social Security is unprecedented in the history of budget resolutions. Procedural provisions in past budget resolutions protected Social Security by assuring that any changes made to the program would be supported by broad, bi-partisan majorities.

• Changing these rules sets the stage for enactment of major Social Security benefit cuts that would have little chance for enactment if broader majorities were required for their enactment.

• The Ryan fast track procedures will mire Social Security in endless partisan struggles to cut benefits. Ironically, if the Ryan trigger had been the law of the land during the past 25 years, it would have required the President to submit and the Congress to consider Social Security benefit cuts almost continuously, even while the Social Security trust funds were accumulating substantial reserves.

• Although the Ryan/Republican budget for FY 2012 proposes no direct reduction in benefits for Social Security beneficiaries, Chairman Ryan makes clear his expectation that only benefit cuts should be considered under his proposal, stating that raising taxes would cause "...profound economic damage." The fast track proposals included in this budget lay the ground work for these benefit cuts by streamlining the process employed by the Congress for enacting Social Security legislation.

¹ Page 61, H.Con.Res, Establishing the budget for the United States Government for fiscal year 2012.

Government Relations and Policy, April 2011