Thursday, December 30, 2010

Oncoming Malarkey

It's not like we haven't been warned.

When in February President Obama issued an Executive Order establishing the National Commission on Fiscal Responsibility and Reform, he set out as part of its mission to

propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.

It was there in code- "entitlement spending"- so as to please the media and not alarm the people, but it refers to Social Security as well as Medicare and Medicaid.

Committee co-chairmen Erskine Bowles and Alan Simpson in November released, ahead of the report of the full committee, their personal recommendations. No matter: when the committee issued its report in December, it included roughly the same recommendations as did its co-chairmen: change the formula for calculating cost-of-living adjustments, which would cut benefits; gradually increase the retirement age, which would effectively cut benefits; and in the case of the commission, "begin a broad dialogue on the importance of personal retirement savings." (For those of you with little patience for euphemism, that would be privatization.) Plus a couple of minor modifications.

Oh, and somewhat raising the cap on Social Security contributions. However, Robert Kuttner notes the plan "gets 92% of proposed Social Security savings from cutting benefits, and just 8 percent from increasing the income ceiling on payroll taxes."

Then Peter Orszag, on his way to CitiGroup as a vice-president, penned an op-ed in The New York Times acknowledging "Social Security is not a major contributor to our long-term deficits." Somehow, though, he managed to praise its recommendation in an ostensibly deficit-reduction commission because "the plan would not create private accounts within Social Security — the most controversial issue that came up when reform was last debated in 2005. Why not lock in a reform when private accounts are off the table?"

Orszag, we recall, served a stint as President Obama's director of the Office of Management and Budget and his willingness to sacrifice Social Security and his defensive reasoning ("oh, why not harm it so others don't harm it even more?) seem to echo the style of his ex-boss.

On December 16, Kuttner revealed "a scheme for the president to embrace much of the Bowles-Simpson plan — including cuts in Social Security. This is to be unveiled, according to well-placed sources, in the president’s State of the Union address."

Ed Rendell, far more happily, agrees. On The Ed (Schultz) Show Tuesday, the former Philadelphia mayor and outgoing Pennsylvania governor told guest host Cenk Uygur (video, below, from The Young Turks, Uygur's outfit) to consider "what the President is going to propose, I think, in his State of The Union," then went on to say

But if you tell me by 2050 we're going to raise the age of Social Security to 69, I don't have a problem with that because we'll all be living to 94, 95 years in life expectancy....

Barack Obama won't claim within a few decades "we'll all be living to 94, 95 years in age"- he's far too careful with details to come up with that whopper. But the myth that a life like Methuselah is just around the corner has been a necessary precursor to get people to accept a cut in benefits for the elderly (also keeping them in their jobs longer, a swell gift to the nation's young people.) And raising the retirement age has been where this Administration has been heading since before the deficit commission was formed.

Kuttner notes that Social Security is in surplus for the next 27 years and "what pushed" it "(very slightly) into the red is the fact that all the income gains have gone to the top." Few, however, on the right or among the moguls of bipartisanship will note the fiscal soundness of Social Security- which, understandably, from their perspective is "entitlement." And there will not be even a hint that any "crisis" (however contrived) is due to the widening gap between the wealthy and the rest of us. But you knew that.

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