Barack Obama Once Proposed Cutting Social Security. Heres What Changed His Mind.

WASHINGTON -- When President Barack Obama announced his support  this week for expanding Social Security benefits, it was nothing less than a sea change. Progressive activists claimed credit for the move as both a clear nod to their power in the age of Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), and the fruits of ambitious activism that slowly but surely moved the bounds of the mainstream political discussion.

Whether Obama’s remarks mark a shift in his policy views, a politically expedient concession to an ascendant progressive wing or something in between, it is an unmistakable indicator of the Democratic Party ’s return to its New Deal roots. 

But getting there required a slog through the political aftermath of the worst economic calamity since the Great Depression.

Fighting Popular Wisdom

Obama entered the White House at a time of economic crisis and rapidly increasing national debt. Virtually from the start of his presidency, Washington was seized with hysteria over the latter phenomenon.

Although a diverse array of economists believe Obama’s $800-billion stimulus package played a key role in helping the economy recover, it elicited howls from the right for contributing to the already rising debt. Much of the growth in annual budget deficits for which Obama was blamed, however, was due to the Great Recession and the Bush tax cuts -- things he had no control over.

Stopping “out-of-control spending,”  in the form of the president’s stimulus package and other policies, became one of the nascent tea party’s rallying cries.

Even as the country struggled to beat back double-digit unemployment, addressing the debt became among the most pressing issues in Washington. Think tanks and pundits on all sides of the spectrum lined up to warn of the dire consequences of avoiding an “adult” conversation about the unsustainable costs of Social Security and Medicare.

And the Obama administration -- rather than fight the narrative of out-of-control debt tooth and nail -- chose to accommodate it.

Just a year into Obama's presidency, the White House began to pivot away from fiscal stimulus and toward austerity. The president convened a bipartisan debt reduction commission in February 2010, co-chaired by Morgan Stanley director Erskine Bowles, a Democrat, and former Sen. Alan Simpson (R-Wy.), and charged it with forging a fiscal “grand bargain.” That became the catchphrase of choice on the Bowles-Simpson commission -- and in budget talks in subsequent years -- for a compromise agreement to reduce the long-term debt, through a combination of Social Security and Medicare cuts historically anathema to Democrats and revenue increases and defense cuts hard for Republicans to swallow.

A small group of organizations on the progressive end of the Democratic Party arose to mobilize against the commission’s efforts with a focus on protecting Social Security.

Activists say they were emboldened by the knowledge that the Beltway elite was out of touch with how Americans felt about Social Security.

Perhaps thanks to its universal nature, even Republicans support it by wide margins. Opposition to Social Security cuts was the only policy position that supporters of all the presidential candidates agreed with in a March 31 Pew poll. 

Social Security experts Nancy Altman and Eric Kingson, both veterans of the 1982 commission that orchestrated the last round of major reforms to the program, secured foundation funding for the creation of the advocacy organization Social Security Works.

Social Security Works led the Strengthen Social Security coalition , an alliance of progressive organizations, labor unions and think tanks in what was then a fight to stop cuts expected to be recommended by Obama’s fiscal commission.

The coalition members, which ranged from the National Organization for Women to MoveOn.org, rejected the policy arguments for the cuts on several grounds.

Social Security is a self-funded program that faces a modest financial shortfall and should not be cut to reduce a deficit it did not cause, they argued. And besides, the activists maintained, Social Security has only become more important as other traditional sources of retirement income declined and newer ones have failed to close the gap.

But in a political environment where austerity was all the rage, advocates like Alex Lawson, Social Security Works’ executive director, were initially at pains to find members of Congress willing to pledge not to cut the program, let alone expand its benefits.

“It was very lonely to be on the side that said: ‘Absolutely no cuts, under any circumstances,’” Lawson recalled. “There weren’t many allies.”

Deprived of access to the closed-door commission, Lawson began live-streaming the closed door on days when the commission met. 

The gimmick resulted in a bombshell conversation with commission co-chair Alan Simpson in June 2010. Simpson went on a profanity-laden rant, tearing into progressives who questioned the commission’s concern for “the lesser people” and repeating alarmist myths about Social Security’s finances.

A couple months later, Simpson wrote to the head of the Older Women’s League mocking Social Security as a “cow with 310 million tits.” The comments prompted a high-profile -- albeit unsuccessful -- campaign for his ouster.

“Alan Simpson was the gift that kept on giving,” Lawson said.

Thanks in no small part to Simpson, a letter started by Reps. John Conyers (D-Mich.) and Raul Grijalva (D-Ariz.) asking the commission to hold Social Security harmless gathered signatures rapidly, with 137 House Democrats eventually putting their names on it.  

Their efforts did not shape the substance of the commission’s proposals, but they laid the political groundwork for a broader movement that would ultimately succeed.

Gene Sperling, who served as a White House economist during negotiations over the grand bargain that would have led to Social Security cuts, said that organized labor and Altman deserve significant credit for reshaping the conversation.

"You can argue over details and payfors, but the change in conversation from how to reduce Social Security for solvency to how to strengthen Social Security and overall retirement security for tens of millions of seniors is a very positive one," Sperling told HuffPost. (He is now an adviser to the Hillary Clinton campaign.) "And beyond the politicians, you have to give some credit to the AFL-CIO, Nancy Altman and the Strengthen Social Security coalition for helping to change the terms of the debate."

Obama Makes An Offer

The Bowles-Simpson commission’s final report in December of that year proposed major cuts to Social Security , including an increase in the retirement age, a lower benefit formula for above-median earners and a stingier cost-of-living adjustment. Although it maintained the pretense of bipartisan balance, 69 percent of the commission’s proposed budget savings came from spending cuts.

The proposal itself went nowhere. It became the blueprint, however, of subsequent plans to cut Social Security -- especially after Republicans took control of the House of Representatives in 2011.

With Republicans hell-bent on holding hostage every debt ceiling increase and extension of government funding to extract major policy concessions, Obama decided to put one of the commission’s proposals -- the chained Consumer Price Index -- on the table.

The chained CPI would change the formula used to adjust Social Security and other benefits for inflation. Although scholars debate whether it represents a more accurate price index than the one currently used, one way or another, it lowers the value of benefits over time relative to what they would be otherwise.

Obama appears to have come closest to striking a deal with the benefit cut during last-minute budget negotiations with Republicans at the end of 2012, in the lame-duck session of Congress after he won re-election. The country faced what was dubbed a “fiscal cliff” at the start of the new year as a slew of Bush-era income tax cuts were due to expire and automatic spending cuts were set to take effect.

Obama offered Republicans chained CPI in exchange for providing more tax increases. But under pressure from hardline anti-tax legislators, Republican leaders in Congress refused to compromise more. 

At one point, the White House reportedly suggested putting chained CPI back on the table after Republicans had not presented a counteroffer on taxes with the budget deadline less than 36 hours away.

Then-Senate Majority Leader Harry Reid (D-Nev.) was apparently so peeved at the idea that he threw a note with the proposal into a blazing fire in his office fireplace.

Reid ruled out reconsidering chained CPI because it seemed to him that Republicans weren't serious about giving ground on the Bush tax cuts, according to Jim Manley, a longtime spokesman for Reid who by then had stopped working for the senator. And that was the last time Reid ever entertained the idea of messing with Social Security.

“Since then it's been, ‘Hell no,’” Manley said.

Progressives recognize that they benefitted from hard-line conservatives’ delusion that by holding out, they could win even larger cuts.

“One of the ironies is that the tea party was more useful than Democratic leadership when it came to killing a grand bargain that would have cut Social Security benefits,” said Adam Green, co-chair of the Progressive Change Campaign Committee, an online activism group at the forefront of the fight against cuts. “They were so crazy and unwilling to take ‘yes’ for an answer. That allowed us to live to fight another day.”

“Thank you, tea party!” Green added.

According to a former Obama administration official who was involved in the grand bargain negotiations, Obama and his team at the White House concluded that, in order to get tax hikes out of Republicans, they'd have to give ground on a major Democratic priority. One camp was pushing for a bump up in the Medicare eligibility age, reasoning that as long as the Affordable Care Act was in place, people between 65 and 67 would be in fine shape. In fact, they thought, low-income elderly, would do better under Obamacare than under Medicare.

But the faction pushing to put chained CPI on the table won out. Once that decision had been made, the official said, Obama rationalized his way toward believing that it was merely a modest statistical adjustment.

In his second term, Obama even appeared to embrace chained CPI as his own, including it in his annual budget proposal in April 2013, which came after a fierce internal debate, according to one participant.

The budget encountered stiff resistance from congressional Democrats and progressive activists, spurring a petition delivery and protest outside the White House where Bernie Sanders spoke .

The following year, the provision disappeared from the president’s budget.

Going On The Offensive

By the summer of 2013, already sensing that they had prevailed in the fight against the chained CPI, progressive groups decided it was time to make a concerted push for the expansion of benefits. Activists point to a meeting at Netroots Nation, an annual progressive gathering, that took place that year in San Jose, California, as a crucial turning point.

Lawson, Green and other senior movement leaders had long believed that embracing across-the-board benefit increases was smart policy and essential politics. Once the two sides of the debate became expansion or maintaining the status quo, cuts would no longer be considered a mainstream Democratic position.

“The push to expand Social Security was the perfect example of offense being the best defense,” Green recalled. “If we could get [Democrats] to that place it would become logically absurd to go back.”

Crucially, the strategists gathered in San Jose that day agreed that they would not settle on any one expansion proposal to the exclusion of all others. They did not want turf issues to interfere with their agenda.

The groups endorsed the bills of then-Sens. Tom Harkin (D-Iowa) and Mark Begich (D-Alaska) , which financed universal benefit increases by lifting the cap on earnings subject to Social Security taxes.

Both pieces of legislation proposed a more generous cost-of-living adjustment based on a price index tailored to the expenses of seniors rather than the population at large. Harkin’s bill also included a change in the benefit formula that disproportionately increased benefits for lower-income retirees.

The movement for benefits expansion got a big boost when Sen. Elizabeth Warren (D-Mass.) took up the cause, delivering a passionate floor speech in favor of it in November 2013 that went viral.

Third Way, a centrist Democratic think tank strongly supportive of efforts to forge a grand bargain, slammed Warren in a Wall Street Journal op-ed , calling across-the-board Social Security expansion “exhibit A of [a] populist political and economic fantasy.”

But unlike in 2010, when austerity was in vogue and groups like Third Way enjoyed greater clout in Democratic circles, this time, buoyed by Warren’s national popularity, the liberal wing of the party had its way.

Several House Democrats with close ties to Third Way publicly criticized the column . At least one member -- then-Rep. Allyson Schwartz (D-Pa.) -- resigned her position as honorary co-chair.

From that point on, the political shift away from cuts and toward expansion accelerated more rapidly. When Warren sponsored a non-binding budget amendment in March 2015 calling for “sustainable expansion” of Social Security benefits, all but two of the Senate Democrats present voted in favor .

Now progressive groups estimate that some 95 percent of Senate Democrats and 75 percent of House Democrats are on the record as supporting expansion of Social Security benefits.

In January, the New York Times editorial board joined them , lending more mainstream credibility to an idea once relegated to the most progressive outside advocacy groups.

Timing Is Everything

Although the discourse on Social Security had been moving left for some time, it is impossible to ignore the role that the current presidential election cycle likely played in Obama’s timing.

The presidential race has been characterized by waves of economic populism in both major parties. Even presumptive Republican nominee Donald Trump  claims he will not cut Social Security benefits.

On the Democratic side, Sanders has made his career-long devotion to Social Security a centerpiece of his campaign. The Vermont progressive touts legislation he first introduced in March 2015 to enact an across-the-board expansion of benefits.

Hillary Clinton expressed support for targeted increases in Social Security benefits rather than across-the-board expansion. Sanders and progressive groups demanded she clarify that this included ruling out benefit cuts of any kind, since some bipartisan reform plans -- including that of the Bowles-Simpson commission -- couple major benefit cuts with modest increases for poor and vulnerable groups.

Responding to the pressure in February, Clinton pledged not to cut the program .

(Unlike Sanders, Clinton has not settled on a specific plan , but her website echoes Obama’s language, stating her intention to “expand Social Security for today’s beneficiaries and generations to come by asking the wealthiest to contribute more.”)

“Bernie has marshaled millions of people against cuts and for expansion and showed the power of those people in the Democratic Party,” said Neil Sroka, communications director of Democracy for America, another key progressive group in the Social Security fight.

Lately, talk has turned to ways the Democratic Party can ensure that Sanders’ supporters back the party nominee, who is almost certain to be Clinton. Obama’s move looks like a logical way to assuage progressive concerns about associating with the party.

“If it is [an attempt to cater to Sanders voters] I would say it is a smart move,” Sroka said. “I am not sure it is.”

“The timing is definitely interesting,” he added.

Manley, the former Reid advisor, said he hadn't expected Obama to come out for expanding benefits. But in the current context, it made sense.

"I was surprised when he made the comments he did, but the fact of the matter is that's where a great majority of the party is," Manley said.

Now that the grand bargain is firmly off the table, said the former administration official, Obama likely doesn't want his legacy on Social Security associated with an offer made under duress to Republicans -- and one that the GOP immediately and swiftly ran away from. Instead, Obama is aligning himself with the new movement to increase benefits.

Another former Obama administration official, Lawrence Summers, who served as a White House economist, said through a spokesperson that expanding Social Security could benefit the economy.

"As Keynes pointed out when he came to the USA in 1942, expanding pay-as-you-go social security promotes demand and thereby combats secular stagnation,” Summers said, referencing the legendary economist John Maynard Keynes. “There is a case now for paid for expansions in Social Security." 

It is a telling sign of how much the debate has shifted that Third Way declined to criticize Obama’s remarks, notwithstanding the praise they elicited from Sanders and his ideological allies.

Instead, Gabe Horwitz, the group’s vice president for the economic program, downplayed the significance of Obama’s announcement.

“I don’t think there is anything new here,” he said.

Obama’s remarks are vague enough to encompass Third Way’s preferred reform package, which would combine benefit increases for the most vulnerable groups, in addition to cuts for earners with higher incomes, according to Horwitz. 

“Everyone knows the dog whistle on this is ‘expanding benefits for all’ like Bernie Sanders says,” Horwitz said. “That means Donald Trump gets more money, too. Obama doesn’t say that.”

CORRECTION: A previous version of this article misstated that Warren introduced her resolution on Social Security in April; she introduced the resolution in March.