RSS Feed MenuThe New York Times and other outlets report on increasing pressure on the Obama administration from Congressional Democrats and liberal pressure groups not to make moves to reform Social Security. And it looks like that pressure may be taking effect. The New York Times puts it this way:
President Obama is eager to seek a bipartisan solution to ensure the long-term solvency of Social Security, people who have spoken with him say, but he is running into opposition from his party’s left and from Democratic Congressional leaders who contend that his political capital would be better spent on health care and other priorities.
However, the pressure isn’t simply to focus Obama’s political capital where its returns may be highest. It is pressure against taking any action on Social Security, in particular any action that might imply any reduction in future benefit growth. This article from Dean Baker is pretty typical of the reaction from the left. (Also see this piece from Barbara Kennelly and this summary post from Jane Hamsher.) What I’m hearing, for what it’s worth, is that the administration is putting Social Security on the back burner for now.
Here’s my two cents: the fiscal gap is almost entirely caused by rising spending, not by lower tax receipts, and so within the reams of the politically feasible it seems that a good chunk of that gap will have to be solved by restraining spending growth. While Medicare is the 800 pound gorilla of the entitlement mess – I guess making Social Security the 200 pound chimpanzee who nevertheless carries a mean bite – Obama’s health plans don’t include any reasonable reductions in Medicare spending growth (or, for that matter, any health care spending growth) in the near future. Obama had to know that solving the long-term budget mess must include restraints on Social Security cost growth. And he also had to know that many in his own party would resist necessary steps to keep Social Security costs under control. The only question is whether Obama’s new style of politics would involve standing up to his own party. So far, it hasn’t.
JJWFromME // Feb 23, 2009 at 1:52 pm
“Medicare is the 800 pound gorilla of the entitlement mess I guess making Social Security the 200 pound chimpanzee who nevertheless carries a mean bite” Not terribly mean: “Social Security Trustees’ Report puts the date of insolvency at 2042. But even after 2042, Social Security will be able to pay an average benefit that is actually higher than what workers receive today — indefinitely. That’s in 2004 dollars — adjusted for inflation.”
http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/social-security-reform-:-a-solution-in-search-of-a-problem/
Medicare, however, is of the 800 lb variety: http://www.prospect.org/csnc/blogs/ezraklein_archive?month=05&year=2007&base_name=social_security_as_signifier
Obama would be smart to spend political capital on fixing Medicare first, even if fixing the healthcare system scares Bill Kristol.
agbiggs // Feb 23, 2009 at 3:34 pm
JJWFromME: a) You could say the same thing about Medicare, which everyone says is “in crisis”; b) under President Bush’s proposed reforms in 2005, every future retiree would have received higher real benefits than today’s retirees do. This was depicted as “slashing” benefits and, in Paul Krugman’s words, “a gut punch to the middle class.” It’s hard to square the two positions, in my view.
coleman // Feb 23, 2009 at 3:44 pm
Now here’s an issue the GOP can work with Obama on: Social Security reform. This will greatly embarrass the Democrats and show that the GOP is willing to collaborate and compromise on a serious issue.
JJWFromME // Feb 23, 2009 at 5:13 pm
“under President Bush’s proposed reforms in 2005, every future retiree would have received higher real benefits than today’s retirees do.” Sure, with some think tank’s cooked numbers. Here’s the argument why it would slash benefits: http://www.washingtonmonthly.com/archives/individual/2008_09/014810.php
Medicare is in crisis sooner than 2042, which good basis for it to be addressed first.
sinz54 // Feb 23, 2009 at 5:31 pm
I think that the explosion in Medicare entitlements is a more serious and more urgent problem than Social Security.
sinz54 // Feb 23, 2009 at 5:36 pm
Agbiggs: Bush’s proposed reforms involved carving out a portion of the SS tax “contributions” into private accounts, which would be invested in the stock market. But the performance of the stock market since mid-2007 has shown what can go wrong with that idea. On the average, investing in the stock market for the long term has been a winner. But for those just approaching retirement this year or entering retirement this year, it’s been a catastrophe. As of today, the stock market is down some 52% from its previous peak. This means that Americans have lost more than half their nest eggs. SS was never intended to be an investment program like IRA or 401(k). It was intended to be a guaranteed pension program.
agbiggs // Feb 24, 2009 at 9:59 am
sinz54: Understood, and it’s a valid point. But you also want to run the numbers. When I did (see http://www.aei.org/publications/filter.all,pubID.29347/pub_detail.asp) they weren’t nearly as scary as you’d think.