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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.

Originally posted to geordie on Thu Jan 08, 2009 at 06:14 AM PST.

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Comment Preferences

  •  If you're not worried....tip jar (11+ / 0-)

    If you're not worried about this, you're not paying enough attention.  Yes, what Obama said was vague - but any talk by a Democratic president of restraining spending on Social Security should worry every progressive.

  •  Your comment (6+ / 0-)

    "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"  is a good one.  
    I was struck when the big 3 testified, the guy from Ford commented that their retirement pension fund was 104% funded a year ago, but now only 66% funded, meaning that if they had gone bankrupt a year ago, everyone would have gotten their pensions, but not if they go bankrupt now.  This pension money is in the market, and they lost their ass like everyone else.  When the economy is in the pits and people are hurting is not the time to cut benefits, raise taxes etc.

  •  SSDI may take a hit (3+ / 0-)
    Recommended by:
    mimi9, bigchin, kyril

    I heard on cable TV yesterday that the GAO (I think) has a large deficit reduction proposal that involves removing many from the ranks of the disabled.  I hope, if such an audit and culling begins, it does not put a lot of people thru the mill unnecessarily.
    And that it is not too draconion at a time when it might be difficult for long termed  unemployed and at marginally employable people to find work or retraining.

    •  This too is what Reagan did (5+ / 0-)
      Recommended by:
      mimi9, sgary, bluebrain, bigchin, kyril

      Reagan's biggest disaster with respect to Social Security was his program to eliminate at least 20% of the SSDI beneficiary rolls - I was still in HHS when Reagan's goons came up with this plan and started to implement it, as they didn't need legislation to start reviewing cases and terminate benefits.  This caused a huge uproar - some here might remember Bill Moyers' special "People Like Us", which focused on a number of Reagan intiatives against the poor and helpless, and which highlighted the campaign to terminate disability benefits for people who'd been relying on them for years and who could not work.

  •  In the world of cheap labort economics (5+ / 0-)
    Recommended by:
    mimi9, sgary, bigchin, kyril, jarbyus

    beloved of neoliberals of the Geithner-Summers school, we mere peons should expect nothing but to work till we drop, and if we become incapacitated, well, that's our own lookout now, isn't it, and if we were worthy, like high-faluting Haaaaaahvuuuuhd men are, then we'd have vast fortunes to subside on, but if we're mere peons we deserve nothing better than being put on an ice floe in a globally warmed world.

    This sig line is in foreclosure. For details on acquiring a credit default swap on this sig line, contact H. Paulson, Dept of the Treasury, c/o Goldman, Sachs

    by ActivistGuy on Thu Jan 08, 2009 at 06:27:40 AM PST

  •  !!!!! (1+ / 0-)
    Recommended by:
    sgary

    my diary posted in the wee hours: Obama seeks overhaul of Social Security?

    Yours is better!

    Thanks!!!

    "History is a tragedy, not a melodrama." - I.F.Stone

    by bigchin on Thu Jan 08, 2009 at 06:45:24 AM PST

  •  The government is projecting over a $1 trillion (0+ / 0-)

    deficit and that is before the new spending Obama is proposing.  Since entitlement spending has balloned under Bush, it was time they got a massive hair cut.  Personally, Obama should couple massive entitlement spending cuts with military spending cuts.  It is time to start reducing these programs.  I am overjoyed that we finally have a president who is looking out for tax payers first and not entitlements.  Long overdue.

    •  "Taxpayers" are Social Security participants (1+ / 0-)
      Recommended by:
      sgary

      In case you haven't noticed, taxpayers and Social Security current and future recipients are one and the same.  Moreover, Social Security is currently running a surplus of payroll taxes collected over expenditures, and will continue to do so for at least another 5 year - the program is currently making the deficit look smaller.

      As I pointed out in the diary, where exactly do you think Social Security needs to be cut?  The benefits are extremely modest - the size of the program actually is evidence of how necessary it is to millions of people, not that it needs to be reduced.

      •  For starters, the age at which (1+ / 0-)
        Recommended by:
        Dretutz

        you start getting SS is way to early since people are living much longer.  I was love to see the minimum age increased to at least 70 years of age.  Furthermore, we need to make sure people are not receiving more SS then they put into SS over their life.  Those 2 changes alone would be very welcome.

        Furthermore, their are tons of entitlement programs right now.  SS and medicare are the biggest ones, but their are tons of others.

        Also, we should use true accounting principles and look at the true books the government keeps.  True accounting principles show the massive deficit social Security, medicare, and the new prescription drug entitlement have.  You can't simply brush off the fact that these programs are basically dead down the road.  Any private corporation would have to put these programs on their books as long term liabilities.  Doing that would basically bankrupt them as it basically has done to our government.

        Why not start out by giving these programs a serious hair cut?  Debt and deficits are basically tax increases.  Tax payers getting things like medicare are a farce.  It isn't a benefit when you are simply adding it to the deficit.  It is a tax.

        I would love Obama to turn this all around.  Luckily Obama is coming out in support of tax payers by reducing my burden with a tax cut.  Him coming out publicly to back spending cuts to wasteful things like entitlements is just music to the ear of tax payers.

        I personally wish I didn't have to pay for SS.  If I could stop paying and in return not get SS I would be overjoyed.  Stealing my money from me to basically give "some" of it back to me in retirement is mind numbing.

    •  Yes, by all means... (0+ / 0-)

      cut all that spending and balance the budget as quickly as possible. That will have the added advantage of slashing taxes for millions of Americans as they find themselves out of work. Yup, cut that spending and balance the budget - that's the ticket. After all, it worked so well for Herbert Hoover!

      •  It worked very well for Clinton and America (0+ / 0-)

        Why not do it again?  All we are doing with this massive deficit spending is punting our problem down the road.  This type of spending can easily lead to hyper inflation, devaluation of the dollar, and a massive depression for our children.  We should take our medicine now instead of punting it to our children to deal with.

        •  Clinton did not have a looming (0+ / 0-)

          depression; we do. You really need to study a bit about the Great Depression. Today's economists are in agreement: deficit spending is the only way to ward of a depression that could devastate this country's economy for many years.

          •  You may be correct (0+ / 0-)

            Deficit spending my be the answer.  That doesn't mean we have to make no cuts to entitlement spending.  Shifting money away from wasteful entitlements to projects that build roads and bridges just makes sense.  It is a win/win.  We get to reduce entitlement spending which is long overdue and we get to build infrustrucure projects that will enhance our economy and provide real jobs.  Adding additional spending on top of shifting money away from wasteful entitlements may also be a good idea today.

            We must never forget that all this deficit spending will need to be paid for down the road however.  I hope in a few years we are past this recession.  At that time, I hope Obama has our future in mind.  He will need to drastically reduce the size of government so he can get a surplus to start paying down the national debt.  It will be painful but it is critical to the future of America obviously.  

            We are punting the problem down the road hoping that the massive cuts to government in a few years won't hurt as much as a potenial massive recession, maybe even a depression.  Either way, there will be pain.

            To pay for all this new spending won't be easy.  In a few years, we may be faced with across the board cuts in federal spending to the tune of 40% or more.  Most entitlement will have to be cut in half or more.  The size of our military will have to drastically be cut since that type of spending is nuts.  Again, it will be painful, but hopefully less so then the possible pain we could feel today.

  •  Bootstraps (2+ / 0-)
    Recommended by:
    geordie, JuliaAnn

    More and more I worry that Obama is of the "just pull yourself up by your bootstraps" advocate.  His reaching across the partisan divide in order to get larger votes to pass some of his agenda strikes me as a willingness to compromise on too many issues.  Perhaps I am wrong, and I certainly hope that I am, but that need for larger votes, and the train ride from Philly to D.C., and his use of the Lincoln Bible, all smack of ego-image building.  In a different way, he wants to "save" the union, just as Lincoln did.  I only hope he doesn't wear a Lincoln-style top hat at the inauguration.  The wind from Rick Warren would knock it right off his head.

    I am really trying hard to stay with him on most issues, but with his latest choice of Gupta for SG, I am seriously discouraged.  The Social Security comment adds to my dilemma.

  •  When millionaires continue to draw SS there is (0+ / 0-)

    something very wrong with the system.  Let's hear what Obama has to say.  Maybe he's thinking the unthinkable: means tests for Medicare and Soc security.  Those who net worth exceed the median income by 10X get no benefits.  Let's see.
    There is definitely waste in Medicare that can be cut without hurting disabled and elderly folks.

    •  You apparently didn't read the diary (0+ / 0-)

      I repeat - means testing Social Security, in addition to be contrary to the fundamental principle of social insurance, would require ENORMOUS administrative expenses and would likely result in very little if any savings, if you truly want to  take benefits away only from the "wealthy".  Do you have any idea what it takes to means test?  Requiring 40 million people to prove they're not wealthy is simply a ridiculous notion.

      •  Social security was intended as insurance. (0+ / 0-)

        I agree.  Do you get 100% return on any insurance?  Health?  Auto?  Life?  No.  It was intended to provide support for those in need.  Many workers were not covered (domestics, agriculture workers, teachers); many who never worked got benefits: widows and children.  We need to see it for what it is: a re-distribution of money.  And, I respectfully disagree that means testing is ridiculous.  We already have an IRS system which, although inept, does provide a gauge on income and to a lessor degree on wealth.

        •  That's what taxation of SS benefits does (0+ / 0-)

          When Social Security benefits were first subject to income tax in the 1983 Amendments, they were imposed only on higher income beneficiaries, and since the revenue from that income tax is credited to the Social Security trust funds, you could argue the system already does what you want.

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