When it comes to Social Security, the best defense is a good offense. A new study by the National Academy of Social Insurance, arguing for restoration of survivor benefits for college students, creates an opportunity for the program’s defenders to get out of their defensive crouch.
Reagan budget director David Stockman dismissed it as “dogs and cats”: just another relatively small, miscellaneous expenditure that could easily be chopped to pay for the new president’s upper-income tax cuts. And so it was in 1981, when the Senate voted to eliminate Social Security survivor benefits for young adults who remained in college until age 22.
It was the first time since Congress passed the Social Security Act of 1935 that lawmakers voted to cut back or eliminate any part of the program (it wouldn’t be the last). Nearly 775,000 students lost their benefits – an average $259 a month – saving some $700 million a year the first year and more thereafter.
What kind of a tradeoff was this? According to a 2003 study, more than a third of children who would have been eligible for the additional survivor’s benefit didn’t go to college because of the lack of assistance. Given the widening earnings gap between college grads and those without a diploma, it’s quite possible that tax revenues from their extra earnings would have been greater than the savings from denying them the additional benefit.
A lot’s changed since 1981. A degree is more important than ever to one’s earning power and social status. A class/race gap has opened up between those who get in and graduate, and those who don’t. College costs, which were going down in the late 1970s, are now going up dizzyingly. Pell grants and other financial aid don’t keep up. And much of that aid is now geared to subsidize tuition for middle- and upper middle-income students, not those from working-class backgrounds.
The National Academy of Social Insurance recently asked the Social Security actuaries to project the cost of restoring college-age survivors’ benefits, and learned it was quite small: just 0.07% of taxable payroll over the actuaries’ 75-year cost horizon. That finding appears in a report the NASI published last month, “A New Deal for Young Adults: Social Security Benefits for Post-Secondary School Students,” by Alexander Hertel-Fernandez.
The study also included results of a poll commissioned by the NASI and the Rockefeller Foundation that showed 78% of respondents favored reinstating benefits for college-age survivors. It’s a popular idea, clearly. In 2008, 546,568 individuals would have continued to receive survivors’ benefits if the program hadn’t cut them off after high school, according to the study.
So why have Democratic lawmakers been so reluctant to take up proposals to improve and update Social Security? In 2000, Al Gore ran on a platform that included changing the rules to make benefits fairer for women – especially widows – and people who spent most of their working lives in near-minimum jobs. But he didn’t press the issue, and neither did any other Democratic candidate that year. They were quite happy to castigate candidate George W. Bush for proposing to privatize Social Security. But not to push aggressively in the opposite direction.
It’s worth remembering that the last time the program was significantly enhanced was in 1972, when, with the full support of a Republican president, cost-of-living adjustments were annualized and indexed to inflation. Since then, the debilitating debate over Social Security’s “solvency” has hamstrung efforts to make the program answer better to the needs of today’s workers – even though the cost would be modest.
The NASI has tended to play a studiously bipartisan, noncontroversial role in the Social Security debate, so it’s good to see them take something close to an advocacy position on the issue of college-age survivors’ benefits. One factor may be the Obama administration’s successful push to revamp the federal student loan program by eliminating fees paid to private banks as intermediaries and expand Pell grants. Reviving Social Security’s role in subsidizing college education makes sense as a way to bolster this effort, since survivors’ benefits are skewed more toward lower-income households than other programs.
I’ve yet to hear of a candidate this year making college-age survivors’ benefits part of his or her pitch to voters, however. Perhaps the mainstream media’s insistence that voters favor austerity and deficit-cutting over economic recovery has something to do with this. But workers and their children today live in a world that’s different from the one Reagan presided over when he canceled the benefit almost 30 years ago. Social Security’s defenders need to take charge of the discussion about how to help them keep up.