Although entitlement reform has fallen off the congressional agenda in past years and has been mostly ignored during the presidential campaign, the U.S. Chamber of Commerce hasn’t forgotten.
The Chamber, the biggest business lobby in Washington, is laying down a marker for future negotiations over Social Security reform by signaling interest in legislation to shore up the safety net program recently introduced by a bipartisan group of U.S. representatives.
The group’s tentative embrace of the measure, written by retiring Wisconsin Republican Rep. Reid Ribble, is particularly noteworthy because the bill would raise taxes. More than one-third of the reduction in Social Security’s 75-year funding gap would be closed by raising payroll taxes, with the rest coming from trimming benefits and raising the retirement age.
From the point of view of businesses, the payroll tax increase would be undesirable because it would make it more expensive to hire workers. Yet the Chamber is willing to contemplate the idea because of the urgent need to address the program’s funding problems and the federal debt, one of the group’s executives indicated Wednesday.
“This would be a perfect endpoint for a Congress debating and going back and forth” in negotiations, said Bruce Josten, the Chamber’s executive vice president for government affairs.
Josten, who for several years has been trying to convince Congress and the public that Social Security faces unavoidable fiscal problems, said he was was encouraged to see members of Congress taking the first step toward addressing the issue.
“He put something on the table,” Josten said of Ribble. “We think it’s interesting. We think it’s worthy of commending him.”
Josten expressed frustration with the “political wilderness” that has received his calls for entitlement reform, and he wants to see legislators get to a starting point on Social Security reform even if it’s unpalatable. “Reality is reality, we’re trying to force reality to take hold,” he said.
Raising revenue for Social Security would be a controversial step, especially for congressional Republicans. Most Republicans have signed a pledge, maintained by the conservative Americans for Tax Reform, not to raise taxes.
On Wednesday, analysts at the conservative Heritage Foundation criticized the payroll tax provision of Ribble’s legislation, writing for the Daily Signal that it would “cause significant harm to the economy.”
Josten, however, said that he has argued all along that it will take some combination of new revenues and benefit restructuring to secure Social Security’s finances.
“Somebody tell me how you do this without additional revenues,” given the demographic changes facing the U.S., he said. “You have to restructure and realign this program to today’s demographic realities.”
The Chamber and other business groups have backed entitlement reform partly because they see mandatory programs, including Social Security and healthcare programs and interest on the debt, taking up a greater share of the federal budget, crowding out business priorities such as infrastructure spending.
On the other side of the equation, Democrats in recent years have become less willing to consider changes to Social Security to reduce spending. Hillary Clinton, the presumptive presidential nominee, has suggested expanding certain benefits rather than cutting them and raising revenue to pay for the additional spending.
Although Ribble has said that he is retiring at the end of the year, five other lawmakers have co-sponsored the legislation, including conservative Republicans and Democrat Jim Cooper of Tennessee.
