Thursday, January 08, 2009

Danger Lurking

The New York Times reports that at his press conference on Wednesday, President-elect Barack Obama said

that overhauling Social Security and Medicare would be “a central part” of his administration’s efforts to contain federal spending, signaling for the first time that he would wade into the thorny politics of entitlement programs....

Speaking at a news conference in Washington, he provided no details of his approach to rein in Social Security and Medicare.... But he said he would have more to say about the issue when he unveiled a budget next month.

As Tasini notes on dailykos, during his campaign for President, Senator Obama spoke of an alleged "crisis" in Social Security but also adamantly opposed privatization and supported requiring FICA payments on the portion of annual incomes above $200,000, a progressive and fairly bold position. It appears now, however, that Obama's worse angels have taken hold of him and he is mimicking the the spin of Establishment Washington and Establishment Media that extols "reform" of a system which brings in more than it pays out. (Some of the excess goes to sustain the deficit of the general budget.)

Dean Baker of The Center for Economic and Policy Research wrote in June, 2005 a Briefing Paper entitled "Things That Will Happen Before Social Security Faces a Shortfall." That, according to projections by the Congressional Budget Office, would be in 2052, when the Social Security trust fund will be able to pay only 80% of scheduled benefits. These intervening challenges include:

- health care, which would see a per capita increase in annual spending of almost $5,000;

- prescription drugs, on which per capita spending would increase $1000 annually;

- housing (which already has occurred);

- the falling dollar, which would add 2.0 percentage points to the annual rate of inflation;

- the criminal justice system, wherein a jump in the number of individuals incarcerated would result in expenditures of an additional 3.1% of GDP;

- relationship of the U.S.A. to mainland China, whose economy probably will have grown to twice that of the United States and whose defense spending is likely to be four to six times as great;

- relationship of the U.S.A. to India, whose economy will grow to one-and-a-half times that of the U.S. with defense spending three times greater;

- animal and plant extinctions (tens of thousands); and

- climate change, the world temperature rising 1.0 to 4.0 degrees.

Admittedly, there could be a crisis in Social Security eventually, a few decades into the future. (But then, in the long run, we're all dead.) Before then, not only do we have more severe crises to face, but any "crisis" of Social Security and Medicare can be solved in a more progressive, humane, and practical manner than sabotaging two of the most popular and successful governmental programs ever.

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