Sunday, March 10, 2013

We Voted for a President Who'll Cut Social Security and Medicare (and Liberals Love Him for It)

I'm pretty sure that what passes for "liberals" today would have fit in pretty well with the leaders of the Young Americans for Freedom (not a liberal group, folks) who supported Barry Goldwater back in 1964.

Or at least they sound exactly* like them to me (who was there).

I've also included a Comments section that almost perfectly shows the difficulty of explaining what's happening in our political/financial kabuki world to people who are actually trying to understand it.

Bush's loss in 2005 was mitigated by his covert win in 2001 which ended up shaping the discussion ever since.

A President Who'll Cut Social Security - And Liberals Who Love Him Too Much

Posted by Dan Crawford (Rdan) | 3/08/2013

Richard Eskow  points us to a trend with liberals media types and Social Security:

The spectacle of a supposedly liberal president repeatedly and needlessly trying to cut Social Security is enough to bring a reasonable, economically literate person to the point of existential despair. To see leading liberal lights like Rachel Maddow and Ezra Klein chuckle indulgently at those foolish Republicans in Congress over the subject -- Don't they know he's already giving them what they want? -- is to risk plunging into the depths of that despair.

This week the president hosted a dinner for Republicans leaders where he worked to sell his budget proposal, including his harmful plan to cut benefits through the "chained CPI." National Security was the main course and Social Security was the dessert. And guess who wasn't coming to dinner: The elderly, the disabled, or any policy experts who understand the disastrous implications of the chained CPI.

The Maddow/Klein exchange (which we'll bring to you as soon as a transcript is available) is the crest of a building wave in pro-Democratic Party commentary which says, as Klein puts it, that "what we have here is a failure to communicate." Klein says that at least "some of the gridlock (in Washington) is due to poor information." Jonathan Chait bemoans the fact that Republicans "won't acknowledge [Obama's] actual offer, which includes large cuts to retirement programs."
But Democrats like Maddow, Klein, and Chait know better. They know exactly what Obama's been trying to do. And their only complaint seems to be that he's not doing effectively enough.
We're not hearing much from the 'left' side of the debate about the profound flaws, biases, and inherent cynicism behind both the President's policy and his rhetoric.

Here are the facts:
1.Research suggests that Social Security cost-of-living increases are already inadequate. (See studies on "CPI-E" for more details on the best ways to increase them.)

2.Obama's proposed chained-CPI cut would typically reduce benefits for 3 percent, and by as much as 6 percent for some recipients.

3.The White House's decision to label this cut the "superlative CPI" is grotesque. It suggests that elderly women who receive an average of $950 or so per month are receiving "superlative" benefit increases each year.

4.The administration's insistence on speaking of "entitlement reform," mixing Medicare (which has a real cost problem because of our for-profit health system) with Social Security, is a cheap trick first devised by Republican consultants.
(hat tip Nancy Ortiz)
  1. Chad Brick Mar 8, 2013, 10:35:00 PM
    Regardless of whether we should cut SS or not, chained CPI is a poor cut. It leaves benefits of new retirees unchanged from current law, but gradually slows their COLA. Thus, our oldest, most vulnerable retirees get hit the hardest, and the younger ones with more cash in the bank and options to earn money face no cuts at all. If anything, this is the reverse of how we should spread out any pain, if necessary.

    That being said, I would be perfectly happy with a balanced deal (50% OASDI revenue increase, 50% spending cuts) that took SS off the table forever. In fact I think this would be a big win for Democrats as a lot of non-wing-nut young people mistakenly believe they will never benefit from SS.
  1. Soccer Dad Mar 8, 2013, 10:51:00 PM
    Lets not forget democrat "Liberals" in the Senate, like E Warren, D-MA, who just voted to confirm the anti abortion extremist C Hagel as Sec Def, and the bush torture guy Brennan as DCIA (only Leahy and Merkely had the balls to say no to brennan)
    and liberal like warren will probably vote to confirm Lew as Sec of Treasury
  1. Arne Mar 9, 2013, 1:07:00 AM
    It is not possible to take SS off the table forever unless you are willing to put tax increases on automatic. The program must be able to adjust to changes in lifespan and productivity and ...
  1. Chad Brick Mar 9, 2013, 2:45:00 AM
    "It is not possible to take SS off the table forever unless you are willing to put tax increases on automatic"

    True. But some intelligent tweaks now could balance it for a couple of generations, which is as far forward as we really should worry about. Both the economy and human lifespans are so unpredictable any further out as to make today's projections pretty much guesses. SS is an issue that we will have to revisit every 30-40 years in order to make a choice between cutting benefits, raising the retirement age, or raising taxes that is a necessary result of lengthening lifespans. This is true of any retirement system, public or private.
  1. Bill Haka run75441 Mar 9, 2013, 3:51:00
    Meanwhile, the deficit is retreating at a good pace. The overall issue is getting people back to work.
  1. coberly Mar 9, 2013, 9:38:00 AM
    Chad Brick

    i wish I could penetrate your ... ah, set in concrete preconceptions.

    a tax increase of one tenth of one percent... eighty cents per week... would "fix" Social Security forever... if repeated as needed. since wages are going up over one full percent... eight dollars per week... this would be no hardship to the workers.

    when you talk about cuts... you are NOT talking "balance" you are talking about cutting your own benefits below the near survival level at which they have been set in the first place.

    and when you talk about raising the retirement age, you are talking about murdering old people. sorry, that's what it amounts to.

    stop being so damned willing to "compromise" with the rapist and murderers.

    and really, try to understand what you are talking about.

    the "flexibility" we need is not "every couple of generations or so" it is "as we go."

    tiny changes in time. changes in the amount we pay for something we are going to need as a matter of life and death.
  1. Bruce Webb Mar 9, 2013, 10:15:00 AM
    Chad while not going so rhetorically far as my friend Dale it would seem you have internalized the idea of "shared sacrifice" and "balance" as if it really came about after some examination of the true costs tradeoffs for "fixing" Social Security rather than before.

    In 2001 Bush established his CSSS, the Commission To Strengthen Social Security with the claim that "all options had to be on the table". Except that he issued six Guidelines that among other things:

    1) forbade any inclusion of increases in FICA and 2) mandated personal/private accounts. Now if this had come with some detailed case as to why FICA increases were arithmetically more burdensome for ordinary workers than the set of benefit cuts that were in fact left on the table and/or some analysis showing that personal/private accounts could actually be financed during the transition at a lower cost than a simple permanent fix on the payroll side then we could be said to have had an honest debate.

    But they weren't. Mainly because the Plans actually advanced which included the very similar Posen Plan (Posen was a Dem member of CSSS and had his plan used as a 'bi-partisan' stalking horse), the Commission's ultimate preferred 'Bush Option 2' and the somewhat later LMS Plan all failed on both counts.

    That is the game was rigged from the git-go and the Bush 2005 Social Security Tour was fundamentally fraudulent. If you remember the focus of the Tour was to get all parties concerned to concede 'Crisis' while claiming that there was no actual Bush Plan (as said Posen being a stalking horse) and that "all options were on the table" once we had consensus on Crisis.

    But the real plan was clear. 

    Get Dems to admit 'crisis', then introduce Plans strictly bound by the six guidelines of CSSS, while forbidding consideration of any plans that would violate them, and then if Dems balked to blame them for being not only in denial but having actively lied when they conceded 'crisis'. Which is why the pushback didn't take the form of proposing plans like Northwest but instead came in the form of "There is No Crisis".

    But an unfortunate by-product of this was that even progressives who admitted there was, if not a 'crisis', certainly a gap to be 'fixed', implicitly internalized the CSSS guidelines relating to "no payroll tax increase".

    Apparently under the illusion that someone had actually examined that alternative and ruled it out as too burdensome and dare I say it "regressive", leading to the current situation where even on the good guys side the discussion is mostly limited to increases in tax on the "wealthy" vs "tweaks" to benefits.

    That is Bush's loss in 2005 was mitigated by his covert win in 2001 which ended up shaping the discussion ever since. And BTW making Coberly and his 80 cents a week sound like the ravings of a nutter, because if it was that easy surely an honest appraisal of the options back in 2001 would have revealed it. When in fact there very deliberately was no such honest appraisal, the Bushies having rigged the game.
  1. Andre Mar 9, 2013, 10:49:00 AM
    Or to put it more succinctly from this life-long and soon to be former Democrat "What kind of a person would screw old people out of their money? Simple answer for simple question: A SLIMEBALL!"
  1. PJR Mar 9, 2013, 11:48:00 AM
    Chad, my own "read" of the situation calls for a different ending to your sentence: "SS is an issue that we will have to revisit every 30-40 years in order to make a choice between cutting benefits, raising the retirement age, or raising taxes that is a necessary result of" politicians who want to keep the issue alive as a subject for their political campaign agendas, rather than legislate a permanent, automatic FICA adjustment mechanism. They believe that they can't promise to change things if they cede power to apolitical technocrats. In the 1980s, Greenspan knowingly and willfully recommended changes that would only postpone further argument until, he hoped, the GOP could better control the outcome. The 2004 election results suggested that the moment had arrived--but the GOP grossly overreached.

    The situation hasn't changed much in 30 years, politically. Obama and his advisers (like Lew) think the Greenspan Commission was a model. Dems in Congress generally want to "buy more time" by raising the earnings cap, so later they can seek more revenue enhancements--and perhaps higher benefits. The GOP wants further benefit cuts (favoring another raise in the normal retirement age) ostensibly to help balance the unified budget--hoping that this linkage opens the door to ever-more benefit cuts and the program's ultimate demise.

    I'd be pleasantly surprised if politicians agreed to a technical solution that would only make it more difficult for them in the future to campaign for their respective and opposing agendas. Such things can and do happen, so it's really important to keep the smart solution on the negotiating table in front of them. They might reluctantly choose it.
    Sorry, I got long-winded.
  1. Arne Mar 9, 2013, 11:57:00 AM
    "benefits below the near survival level at which they have been set"

    Where should benefits levels be set?

    The median worker gets a replecement rate of about 40 percent from SS. Fianancial planners encourage people to seek an 80 percent replacement rate. For the median worker, who we hope is successful, that means having a pension or personal savings for the other half.

    I frequently describe SS as insurance against outliving your life savings, but this is rather vague since living longer than expected has much the same impact on savings as never managing to save enough in the first place.

    This is not an idle question because the structure of initial benefits increases faster than inflation. The benefit that pays for an 1100 square foot house today will pay for a 1500 to 1600 square foot house 20 years from now (assuming Dean Baker is right that housing really increases with CPI over a long enough period).
  1. coberly Mar 9, 2013, 12:40:00 PM
    Bruce Webb
    thank you for translating my rhetoric into a clear argument.

    not sure I am following you. but setting benefit growth to "inflation" means privileging some particular year to be "The" standard of living for old people. Why pick 2013? 1933 would do as well. Old people don't need refrigerators, cars, telephones or indoor toilets. So why would they need whatever it is the people in 2033 or 2133 will take for granted... and actually need if they are going to be able to live in the society they retire in, after having contributed to the rise in standard of living.

    Can you really walk to the grocery store today? Can you really "live" without a computer?

    There is NO SS benefit that will pay for an 1100 square foot house. If you haven't paid for your house by the time you retire, and all you have to live on is SS.. you are not going to be able to buy a house.

    SS is "the minimum you can live on" because any more would require a higher "tax" and even the evil government prefers to let people make most decisions about how they spend their money to the people themselves. just as long as the rest of us don 't have to step over their starving bodies when they get too old to work.

    workers should of course seek the highest replacement rate they can get. the 40% is just the "minimum" they will need to survive. at a level not much in advance of the stone age, but with maybe a few modern conveniences that essentially fall off the junk wagon of our richer society.
*My fans should catch the movie Crime Spree if you want to know what I think about our current political situation. It's a (French-inspired) comedy of errors movie and its laugh-out-loud synchronicity with our US leadership is just too en pointe.

And don't miss the ending outtakes!

Danke schoen.

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