I'm appalled that Obama stated yesterday that reducing spending on Social Security and Medicare would be a feature of his budget and spending plan when it is unveiled next month. Another diarist has said he thinks this is "smart politics" - I think it's only smart if what Obama is trying to do is co-opt the most mouthy base out there - Republican and conservative Democratic pundits. If that's his goal, it will work. On the other hand, millions of baby boomers who have seen their retirement savings eviscerated by the stock market crash over the last few years, and who are realizing that Social Security is the only secure source of old income they will have, might start to have serious second thoughts about having voted for this guy. I know I am starting to. More below the fold.
First, from a political perspective, Obama cannot possibly be seriously thinking about "overhauling retiree spending" in the next four years, unless he's ONLY talking about Medicare and efforts to restrain medical costs. If that's what he means by that statement, then fine - but note, it's not the "retirees" making those spending decisions, it's their doctors, the insurance companies and the drug companies. If he's really talking about reducing Social Security benefits, he should go back and take a look at what happened during Reagan's first year in office when he tried to eliminate age-62 retirement - St. Ronnie got a 99-0 vote in a Republican-controlled Senate repudiating any dramatic reductions in Social Security benefits. I think this is more of Obama's obsession with appealing to Republicans in some sort of bi-partisan bullshit strategy - and he'll appeal to Republicans all right, but not to Democrats, particularly those running for office in 2010.
Second, Social Security is NOT the problem right now - and if we get the economy in order, it won't be the problem long term either. More importantly, just what does he think needs to be "overhauled" in retiree spending? Does Obama really think benefits are too high? Social Security provides more than half of old age income for almost 2/3 of elderly people - and the average benefit is less than $1000/month. The number of people receiving Social Security who "don't need it" is quite small in terms of total beneficiary population - and the whole point of social insurance is that it's there even if you don't think or expect you'll need it when you're working or even when you retire. Just ask those elderly people who've been wiped out by the market or crooks like Madoff, who now rely totally on Social Security, contrary to all their careful planning and saving. People who suggest means-testing don't really understand what that would entail - I am confident, as someone who has worked at SSA and who has written about Social Security my entire professional life, that the administrative costs involved in requiring 40 million retirees to prove they're poor enough to "need" Social Security would almost completely offset any benefit savings that would result.
Third, yes, the baby boom is now reaching retirement age - but one consequence of the gutting of traditional employer pensions accompanied by the stock market crash which gutted the retirement savings of millions, is that people cannot afford to retire even when they reach age 66 or 67. Retirement age patterns have been steadily creeping higher over the last decade - I expect that to accelerate as the recession deepens.
Social Security is the most successful and popular public program we have for good reason - it works, it is pretty cheap to administer precisely because it is not means tested, and it enables elderly people to survive independently. Obama's mandate did NOT include going after Social Security - and if he does, he will face dangerous erosion of the base that actually elected him, as opposed to the Village elder base who he seems determined to please.
I have always been suspicious of Obama's views on Social Security, as his primary advisor on Social Security is a long-time collaborator with Martin Feldstein, the pre-eminent Social Security privatizer among economists. This statement is proof to me that I was right to be worried - I can only hope the House Democrats, who resolutely opposed Bush on privatization and helped stop it, can be as stalwart against their new supposedly Democratic president.