Why Liberals Should Want Obama to Take On Social Security Now

[babylonsister]

Why Liberals Should Want Obama to Take On Social Security Now
Scott Bittle and Jean Johnson


Nearly everyone who doesn't have blinders on agrees that the country simply has to make some changes in Social Security and Medicare, and President-elect Obama has already put the issue front and center. Budget analysts often use the same word to describe the programs' financial condition: "unsustainable." Unless there are reforms in Social Security and Medicare, by 2040 or so, every tax dollar collected will be needed to pay for entitlement programs and interest on the debt. By the way, the 2040 estimate in that nifty little factoid was made before the current budgetary unpleasantness introduced the concept of a trillion-dollar-plus deficit.

Most liberals are eager to have the government take on health care reform, and believe that it will help with the costs of Medicare. But why not put Social Security on the back burner? Why should liberals who have fought so passionately to preserve Social Security as it is now be eager to take this on as soon as possible? Let's leave the substantive arguments aside for now. In terms of sheer politics, the best answer is that Social Security's strongest supporters have the upper hand right now. We're not saying that people on the left necessarily have the right answers on Social Security, but we are saying to liberals that if we were you, we'd see this as a "seize the moment" moment. Things may not get much better, for several reasons:

Reason No. 1: The public's appetite for private accounts is probably in the basement. In the Bush Administration, efforts to reform Social Security stalled because the president and fellow conservatives pushed hard for private accounts. Conservatives are uncomfortable with large government entitlement programs and see private accounts as a better long-term solution, one that lets people build their own nest eggs and bequeath leftover money to their families. For liberals, private accounts are an anathema. They see private accounts as the thin edge of a wedge that will undermine one of the most successful and popular government programs in history. Most Americans don't focus that much on the ideological battles in the debate, but the allure of putting most or all of your retirement savings in stocks took a body blow when the Dow lost a third of its value in 2008. For liberals who want to make their case that you can't depend on the stock market, and that middle class Americans need Social Security too, the timing has never been better.

Reason No. 2: We might be able to avoid a generation war. Some people who quite reasonably want to reform Social Security seem to take a lot of unnecessary glee in casting baby boomers as greedy geezers dumping unconscionable debt on the defenseless young. They often play up the intergenerational conflict angle in Social Security and fan fears among the younger generation that their Social Security taxes are going into a program that won't even be there by the time they retire.

The downside is that this old versus young rhetoric inevitably conveys the idea that someone will win and someone will lose. That scares older people who are terrified at the thought of having the financial rug pulled out from under them when they're no longer able to work. It makes younger people cynical and angry. The truth is that if we don't fix Social Security, everyone will lose, and frankly, most Americans don't see other generations as the enemy. We're talking about grandparents and grandkids here. Generally, they love each other. Soon-to-be President Obama seems to like consensus politics, so he's well positioned to tamp down the generation wars. Given his popularity and credibility with younger Americans, he can reassure them they aren't getting screwed in the deal.

more...

http://www.huffingtonpost.com/scott-bittle-and-jean-johnson/why-liberals-should-want_b_157490.html

[alarimer]

1. It is a myth that Social Security is unsustainable.

If they would stop raiding the trust fund, it would be fine forever. But, okay, say there needs to be some reform. The biggest fix that will solve it is simply to raise the level at which SS taxes stop. Simply raise it from 90,000 or whatever it is to 150,000 or something like that and there will be plenty of money.

Medicare is another issue. The biggest problem is the Medicare Part D, the subscription drug plan. And I think Obama mentioned he wants to do something about that. What he should do is change the rules to allow the vast buying power of the federal government to negotiate better rates for prescription drug. I am sure it has other problems but they are not insurmountable.

The biggest money loser is IRAQ and all these unnecessary wars. Stop spending all that money in IRAQ and start trimming the bloated military budget. Not that Obama has the guts to do that yet but maybe in a couple of years.

[yurbud]

2. yeah, it's weird that SS is a regressive tax--make a million and pay less than someone making $13K

Unfortunately, I think that is why the program has succeeded for so long: since the tax doesn't touch the wealthy, they have left it alone.

Then with Reagan, they realized they could relieve their income tax burden by using the accounting trick of borrowing from SS for the regular budget, giving Reagan an excuse to lower taxes.

Then the rich realized that SS was a nice chunk of change that belonged in their off shore accounts, so they pushed to privatize it, and thankfully, it was the one time Harry Reid stood firm for a Democratic priority.

[Igel]

3. A question.

Doesn't the approach assume that the 'trust fund' is usable?

I.e., that the problem is mostly the difference between what would be collected under the current tax structure and trust fund assets, on the one hand, and what's expected to be paid out under the current benefits structure over the next 60-70 years?