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Obama’s call to expand Social Security shows Sanders’ clout

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(Bloomberg) — President Barack Obama’s surprise call to expand Social Security highlights a populist shift in the U.S. political landscape that has been propelled by the campaign of Vermont Senator Bernie Sanders.

Just five years ago, Obama called for reducing future Social Security benefits — an idea that at the time was in vogue for many Republicans and some Democrats, who treated it as a badge of fiscal responsibility.

No more. Donald Trump, the presumptive Republican presidential nominee, says Social Security benefits shouldn’t be cut — a departure from other Republican leaders such as House Speaker Paul Ryan of Wisconsin. Sanders, as part of his Democratic presidential campaign, has been calling for an expansion of benefits, and the party’s likely nominee, Hillary Clinton, took a similar position earlier this year. Obama joined the chorus on Wednesday.

“It is a much different universe today,” said Warren Gunnels, policy director for the Sanders campaign. “Go back to 2011, when the debate was not whether Social Security would be cut, but how much it would be cut. Now the debate is not whether we’re going to expand Social Security but how much we’ll expand it.”

Five years ago, Obama offered to change the way Social Security benefits are calculated to make them less generous as part of a “grand bargain” on taxes and spending with then-House Speaker John Boehner, an Ohio Republican. He officially abandoned the policy in his fiscal 2015 budget, then went further in a speech in Indiana on Wednesday in which he excoriated Republican economic policies and called for Social Security benefits to be expanded.

Obama never supported Social Security cuts and would only agree as part of a larger deal with Republicans, Josh Earnest, the White House press secretary, said on Thursday. It was included in Obama’s budget “to illustrate what impact that could have on our fiscal situation, but only as a larger part of a so-called grand bargain,” Earnest said.

Sanders’ ‘Snowball’

Obama’s change of heart reflects changes in both the economy and politics. Budget deficits have plunged since 2012, reducing pressure to cut entitlement spending. A 2014 Federal Reserve survey published last year found that 42 percent of American workers earning under $40,000 a year, and a quarter earning between $40,000 and $100,000, have no retirement savings. Years of partisan warfare have meanwhile killed appetite in both parties for painful political compromises.

Though Sanders is unlikely to win the Democratic presidential nomination, the emerging orthodoxy of his party calling for an expansion of Social Security owes as much to him as anyone.

In March 2015, as the top Democrat on the Senate Budget Committee, Sanders pushed for a vote on an amendment by Massachusetts Senator Elizabeth Warren proposing expanded Social Security benefits. Forty-two Democrats voted for the amendment and only two were opposed.

“That certainly was a very significant moment,” Gunnels said of the budget vote. “It really has been a drumbeat and a snowball that’s gotten much larger through the Sanders campaign and through these many years of grassroots efforts.”

Two months later, when Sanders announced his presidential bid, he put the policy front and center. “Instead of cutting Social Security,” he said, “we’re going to expand Social Security benefits.”

In February, after months of pressure from Sanders and liberals in her party, Clinton followed his lead. “I won’t cut Social Security,” she said on Twitter. “As always, I’ll defend it, & I’ll expand it.”

Obama jumped aboard, unifying the party’s leadership behind the policy.

“It is time we finally made Social Security more generous and increase the benefits,” he said, “so that today’s retirees and future generations get the dignified retirement that they have earned.”

‘Political Calculation’

Conservatives still wedded to the idea of cutting the program also credit Sanders.

“The Bernie Sanders campaign, from the free love generation to the free everything generation, has pushed everybody left. And the president’s gone right along with him,” said Doug Holtz-Eakin, a former director of the Congressional Budget Office who now leads the American Action Forum, a conservative advocacy group.

Endorsing expansion represents a “crass political calculation” by Obama, he said. Liberals were indeed overjoyed by Obama’s remarks, and his endorsement of a policy championed by Sanders may help unify his party after a divisive primary campaign.

“The program is not sustainable in its current form,” Holtz-Eakin said. “Adding more benefits doesn’t do anything to help that.”

While the baby boomer generation is expected to strain Social Security, the program is running a surplus and will have enough reserves in its current form to dole out full benefits until 2034, according to the 2015 report from its trustees.

Leftward Shift

Norm Ornstein, a scholar at the American Enterprise Institute in Washington, attributes the political shift leftward to two developments. First, the federal budget deficit has been nearly halved since 2011, from $1.3 trillion to a projected $544 billion in 2016, according to the Congressional Budget Office, reflecting improvements in the economy.

“As soon as the short-term deficits came down, interest in dealing with the long-term problem sort of evaporated,” said William Gale, director of the Brookings Institution’s Retirement Security Project and a former staff economist for Republican President George H.W. Bush’s Council of Economic Advisers.

Second, Obama’s overtures to strike a deficit-reduction deal mlwith Republicans were rebuffed in 2011 and again in 2013, leading him to be “more adventuresome” with his policies, Ornstein said.

The deal Republicans could have struck in 2011 “was an unbelievable deal politically for them,” Ornstein said. But because they would not consent to tax increases, the talks went nowhere, he said.

In the months after Obama’s re-election, he extended Republicans an olive branch by including in his budget a proposal to reduce the growth of Social Security benefits by indexing them to a lower rate of inflation. After Republicans again spurned his overtures in 2013, Obama abandoned the proposal.

“It was time to go on offense,” said Mike Darner, the executive director of the Congressional Progressive Caucus, which proposed a Social Security expansion ahead of the 2012 election. “It’s an issue that was ripe for this moment in time.”

See also:

Social Security disability could be broke by 2016 elections

Why Social Security planning is the new requirement for retirement advisors

How might ‘Berniecare’ work?

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