initiatives and proposals made by each side on the Commission suggest the outlines of the first-
choice solutions. As they had in 1977, labor groups and liberals in Congress proposed their
favored distributive solution of temporary revenue transfers from outside the program, with
modest payroll tax increases scheduled as needed in future years. Such a solution, shifting added
resources from taxpayers to beneficiaries, would have entailed no new accumulation of resources
in the trust fund, and no new intertemporal transfer.
In contrast, Reagan and his business allies demonstrated, through legislative and
Commission proposals, a strong preference for dealing with Social Security’s problems solely
through restraints on outlays.
in office had dramatically demonstrated the electoral dangers of short-term distributive moves.
As Pierson argues, however, the trust fund crisis changed the calculation, providing new political
cover for imposing immediate costs. Given the capacity to justify near-term cuts to voters and
concentrated policy authority, Reagan would have likely pursued them, satisfying the business
groups at the core of his political base. However, it is unlikely that he would have been happy to
see these reductions in outlays result in the accumulation of massive surpluses within the Social
Security program once the immediate economic crisis had passed. Since Social Security’s
creation, conservatives had long opposed the accumulation of large reserves within the program
as an invitation to dangerous program expansion. Had he been able to legislate the program’s
long-term trajectory, it is likely that he would have followed quick benefit cuts with a freeze in
payroll tax rates in the medium term, just as he had proposed in 1981.
term, he would have programmed a series of delayed cuts in benefits – like the increase in the
retirement age that he advocated – to keep costs under control as the baby boomers retired. The
57
Business groups made this very clear through their activities on the National Commission on Social
Security Reform – the bipartisan and quasi-corporatist body that ultimately designed most of the 1983
reform package. Light, Still Artful Work.
58
Ibid.
42
Convention