Republicans may not have succeeded in defunding the nations’ newest social insurance program, Obamacare, but they now are aiming at the foundational programs, Social Security and Medicare. And this time, they’ll have the President on their side. It would be a mistake for progressives to assume that a grand budget bargain will fall apart once again, even if that remains likely. Instead, we need to turn the debate from cutting social insurance to strengthening both the finances and benefits of both big retiree programs. The best way to do that is by championing simple, bold solutions.
In his post shutdown press conference, President Obama repeated his call for changes in Social Security and Medicare. His 2014 budget included cuts to benefits for both. That aligns him with House Speaker John Boehner, who called for savings in Social Security and Medicare during the shutdown battle. Senators from both parties have shown their willingness to support benefit cuts as part of a big budget deal.
(Note: George Zornick’s post was originally published by The Nation and is republished with permission.)
We’ve seen this movie before: Republicans force a showdown in Congress over funding the government, the debt ceiling or, in the present case, both. Then a “grand bargain” is proposed to solve the impasse—one that includes serious reductions to social insurance programs.
That’s just how the GOP would like the current drama to play out. Wednesday, National Review’s Robert Costa reported that House Speaker John Boehner and Representative Paul Ryan are rallying nervous Republicans by telling them that while Obamacare may not end up getting defunded, GOP leadership is cooking up another big budget deal that includes cuts to the safety net so cherished by many conservative members. “It’s the return of the grand bargain,” one member told Costa. “Ryan is selling this to everybody;
The reason President Obama’s proposal to cut Social Security benefits is tragic is that it is simply not necessary. His plan is to use a different method to compute how much benefits are raised to offset inflation. But Social Security will add very little to federal spending over the next 30 to 40 years. As a proportion of national income (GDP), It will rise from five percent to six percent. At the same time, retirees are set to get much less money from their pensions because so many were forced to depend on 401(k)s and defined contribution plans rather than traditional pensions with defined benefits.
But a new report from Goldman Sachs economists puts the Obama decision in an even harsher light. The federal deficit is coming down rapidly on its own. In a piece entitled, “The Rapidly Shrinking Federal Deficit,” Goldman notes that the deficit averaged 4.5 percent of GDP in the first calendar quarter,
To the let’s-cut-entitlements crowd, what’s wrong with America is that seniors are living too high off the hog. With the cost of medical care still rising (though not as fast as it used to), the government is shelling out many more dollars per geezer (DPG) than it is per youngster (DPY). The solution, we’re told, is to bring down DPG so we can boost DPY.
We do indeed need to boost DPY. And we need to rein in medical costs by shifting away from the fee-for-service model of billing and paying. But as for changing the way we calculate cost-of-living adjustments for seniors to keep us from overpaying them — an idea beloved of Bowles, Simpson, Republicans and, apparently, the White House — this may not be such a hot idea, for one simple reason: An increasing number of seniors can’t afford to retire.
Nearly one in five Americans age 65 and over — 18.5 percent — were working in 2012,
In societies across the globe, men demonstrate their manhood in different ways. There are many wonderful tracts on the topic. However, in the culture of Washington DC, the best way to demonstrate your manhood is to express your willingness to cut Medicare and Social Security. There is no better way to be admitted into the club of the Very Serious People.
This is the reason that we saw White House spokesman Jay Carney tell a press conference. He told the reporters that President Obama is still willing to cut Social Security benefits by using the chained Consumer Price Index as the basis for the annual cost of living adjustment (COLA). This willingness to cut the benefits of retirees establishes President Obama as a serious person in elite Washington circles.
While most of the DC insiders probably don’t understand the chained CPI, everyone else should recognize that this technical fix amounts to a serious cut in benefits.