Can We Please Stop Pretending Obama is “Capitulating” on Social Security?

Firedoglake, Wednesday, December 19, 2010

By: Jane Hamsher

Everywhere you look, the media narrative is that President Obama is “capitulating” to Republicans by agreeing to cuts in Social Security benefits.

And I have to ask, where is this collective political amnesia coming from?

Obama has made a deliberate and concerted effort to cut Social Security benefits since the time he took office.  FDL reported on February 12, 2009 that the White House was meeting behind closed doors to consider ways to cut Social Security benefits, and that the framework they were using was the Diamond-Orszag plan, which was co-authored by OMB Director Peter Orszag when he was at the Brookings Institute.

The birth of the now-ubiquitous “catfood” meme came on February 18, 2009 with this FDL headline:

“Hedge Fund Billionaire Pete Peterson Key Speaker At Obama “Fiscal Responsibility Summit,” Will Tell Us All Why Little Old Ladies Must Eat Cat Food”

As I wrote in August of 2010, Peterson’s keynote spot was the worst kept secret in town; I knew about it because I had been on a conference call with about 40 representatives of various DC interest groups, many of whom had received written notice from the White House that Peterson was scheduled to headline the event. But nobody wanted to go on the record for fear of jeopardizing their relationship with the administration in its early days.

After FDL broke the news, Peterson was “disinvited” from the summit. Both he and the White House denied everything, but Robert Kuttner subsequently confirmed in the Washington Post that Peterson had, in fact, been scheduled as the keynote speaker that day.

The administration backed off its immediate plans for reforming Social Security. The New York Times reported that they were “running into opposition from his party’s left” who are “vehement in opposing any reductions in scheduled benefits for future retirees.” But NYT columnist David Brooks reported that shortly after the summit, “four senior members of the administration” called him to say that Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security.”

Undeterred, the White House began telling journalists off the record that they were interested in “establishing an independent commission (outside the congressional committee structure) to look at creating a specific reform plan.”

In January of 2010, a bill sponsored by committed Social Security slashers Judd Gregg and Kent Conrad which would have created an official commission to make recommendations about the nation’s deficit was defeated by the Senate on a bipartisan vote — 22 Democrats and 24 Republicans voted no.

After the Senate defeat, on February 18, President Obama issued an executive order creating what subsequently became known as the “Catfood Commission” anyway.

Unlike Bill Clinton’s Danforth Commission, which ended in deadlock, Obama set this commission up in such a way that it was stacked with deficit hawks who largely agreed on what needed to be done: 12 of the 18 members were to be appointed by Senate and House leaders in each party, and 6 would be appointed by the President. This virtually guaranteed that Social Security privatization fetishist Paul Ryan would be on the commission, as would Gregg and Conrad.

Among the President’s six appointments:

• Chairman Erskine Bowles, described by Business Week as “corporate America’s friend in the White House.” Bowles had negotiated the deal between Newt Gingrich and Bill Clinton to create “private social security accounts” where “taxpayers get some choice as to how to invest their contributions.” The deal fell through when the Monica Lewinsky episode jumped into the headlines

• As Bowles’ Republican Co-Chair, the President appointed loose cannon Alan Simpson, the former rich kid GOP Senator from Wyoming once famously said that those who were complaining that Social Security needed protection were “people who live in gated communities and drive their Lexus to the Perkins restaurant to get the AARP discount.”

• Alice Rivlin was appointed by Obama to be chief wonk of the Catfood Commission, a Brookings Institute fellow who had been funded by Pete Peterson and a strong supporter of raising the retirement age to 70 — resulting in a 20% benefit cut to Social Security recipients.

•  David M. Cote, the Republican CEO of defense contractor Honeywell

The composition of the Commission was conveniently stacked with 14 of the 18 members committed deficit hawks looking to start balancing the federal budget on the backs of old people.

And who supplied the staff to the commission? Why, Pete Peterson.

Are we to believe that the President was blissfully ignorant of the agendas of the people he appointed to this commission, created with the goal of bypassing Congressional process?

With the exception of a few public dog and pony shows, the Commission conducted its deliberations in secret.  But on June 16 of 2010, Alex Lawson of Social Security Works blew a hole in that secrecy on the front page of FDL when he caught Alan Simpson on live streaming video as he was exiting a meeting of the Catfood Commission.   In real time, Alex got Alan Simpson to say what everyone in the room was thinking but wouldn’t say publicly. Simpson told Alex that the commission was “really working on solvency”:

“We’re trying to take care of the lesser people in society and do that in a way without getting into all the flash words you love dig up, like cutting Social Security, which is bullshit. We’re not cutting anything, we’re trying to make it solvent.”

The Catfood Commission ultimately failed it is mission, due in no small part to the work of people like Alex, Nancy Altman and Eric Kingson of Social Security Works who have consistently been out there informing and uniting interest groups and educating the public to the fact that, yes, the White House has an agenda of cutting Social Security benefits.

I don’t know why Obama wants to cut Social Security benefits. I do know that Obama has been honest about it from the start. In January of 2009, even before he took office, he told the Washington Post that he believed Social Security was a broken system and that “entitlement reform” was something he wanted to achieve during his tenure in office:

“Obama said that he has made clear to his advisers that some of the difficult choices–particularly in regards to entitlement programs like Social Security and Medicare – should be made on his watch. “We’ve kicked this can down the road and now we are at the end of the road,” he said.”

Perhaps Obama wants to do what Bill Clinton couldn’t do.  It’s clear the oligarch class has decided that this is what must happen, and that in order to be considered a “serious” person, this is what a President must do.  Perhaps Obama simply wants to be considered a “serious person” by those in the ruling class.

But it’s clear that he did not arrive at the decision to “reform” Social Security and cut benefits because he is a poor negotiator, or because of Republican arm twisting.  It defies all logic and reason to look at his actions over the years and think that the President is now “capitulating” on Social Security.

The President has been very forthcoming about the fact that cutting Social Security benefits is something he wants to do.  When he said during the debate that he didn’t differ from Mitt Romney on entitlement reform, he meant it.   It’s time for people to remove the rose-colored glasses and stop projecting their own feelings on to the man.  It’s time to take him at his word.

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Social Security Chained CPI explained

Under pressure from seniors, people with disabilities, anti-racists, women, and unions, Obama had finally conceded that Social Security did not contribute to the debt and should not be part of a discussion on the debt.  He is now prepared to ditch that position and embrace cost-of-living cuts to Social Security benefits in exchange for (weakened) restoration of higher taxes on the rich.  This NT Times article explains the “chained CPI,”  the cut in Social Security inflation adjustments.

New York Times, Dec. 18, 2012

Social Security Checks Enter the Debate

Annie Lowrey

WASHINGTON — As part of a deal being negotiated by President Obama and Speaker John A. Boehner to avert the worst of the year-end tax increases and spending cuts, Social Security payments might be lower in the future for millions of Americans.

On Tuesday, Democrats and Republicans were examining a multitrillion-dollar deficit reduction package put forward by the president, though the two sides were trading barbed remarks and aides were emphasizing that nothing was final until the whole deal was done.

But the White House seemed willing to make a concession to Republicans with a switch in the formula that ensures that Social Security payments keep up with the pace of inflation — an idea that immediately proved unpopular with its liberal base.

“Any talk of shrinking the program to save money is flawed from the start because Social Security is not part of the national budget in the same way as military spending,” Representative Raúl M. Grijalva of Arizona said in a statement. “It’s paid for through a dedicated payroll tax separate from general budgeting.”

Representative Charles B. Rangel of New York was among many on the left who echoed that sentiment. “Everyone has a grandparent, a friend or a neighbor who relies on the Social Security benefits they earned to pay for medical care, food and housing,” he said in a statement. “A move towards chained Consumer Price Index would be a long-term benefit cut for every single person who receives a Social Security check.”

Democrats and Republicans are considering switching Social Security payment adjustments to a “chained” Consumer Price Index. The Consumer Price Index tracks the price of a basket of commonly purchased household goods. A chained index accounts for consumers’ tendency to substitute similar items for one another as prices fluctuate. A consumer might buy more apples when the price of oranges increases, for instance.

Though it sounds like nothing more than a technical fix, adopting a chained index would squeeze benefits over time. The chained index ends up, in a given year, about 0.3 percentage points lower than the unchained index. That difference accumulates, so after five years, it might be 1.5 percentage points lower. Using a chained index would cut Social Security spending by about $112 billion over a decade, according to an estimate by the Congressional Budget Office.

AARP, the lobbying and research group for older Americans, immediately criticized the proposal. “We would rather see a broader discussion addressing retirement security,” said Debra Whitman, an executive vice president at AARP. “We object to the context in which it’s being discussed, which is a few weeks before Christmas, without people understanding what the change really means.”

Because the payment reductions would accumulate over time, AARP and other groups argue that they would hit the oldest Americans disproportionately hard. They might also unduly burden women, who tend to live longer than men, and the lowest-income older people, who are most dependent on Social Security checks, the groups warned.

Some economists and policy experts have also argued that both the current and the chained indexes underestimate the inflation that older Americans experience. The government produces an experimental “elderly index,” for instance, that tries to capture the consumption habits of people over 62 more accurately than other measures. For instance, older people buy more health care and less education than the average family, so the elderly index puts more weight on the former and less on the latter.

In no small part because of spiraling health care costs, inflation as measured by the elderly index has grown faster than inflation as calculated by the standard index that Social Security uses. That implies that the purchasing power of Social Security payments linked to a chained index would erode more over time, given what older Americans buy.

Andrew G. Biggs of the American Enterprise Institute.Jason Reed/Reuters Andrew G. Biggs of the American Enterprise Institute.

Still, other economists and policy experts from across the political spectrum have argued that a chained index is a more accurate measure of the inflation that households actually experience, and therefore is a better policy tool. They note that the elderly index is still experimental, and that not just older people receive or spend Social Security payments.

“We know that the current measure of inflation is not adequately measuring experienced inflation, and we should hence go with the better measure,” said Christian E. Weller, a senior fellow at the Center for American Progress, a liberal research group based in Washington, and the author of a plan to modernize Social Security.

Both liberals and conservatives have at times argued against making changes to Social Security outside the context of a broader overhaul. Many analysts — particularly Democrats — argue that Social Security does not contribute to long-term deficits because it has its own financing stream in payroll taxes. But it does have a long-term fiscal challenge, as payouts would eventually overwhelm its trust fund and revenues.

“Back when the system started, the demographics were really favorable,” said Andrew G. Biggs of the American Enterprise Institute, a right-leaning research group in Washington. “You could provide decent benefits for the rich and poor alike at low cost. You can’t do that anymore, mathematically. We could provide decent benefits for the rich and the poor by raising taxes a lot, but we need to raise taxes for other things.”

Mr. Biggs said Social Security changes that provided more ample benefits to vulnerable low-income older people and less to the well-off might prove to be a better path forward.

“We oppose chained C.P.I.,” Representative Peter Welch, Democrat of Vermont, said in an interview. “But I think all of us are waiting to see the details in the final package, and we’ll make our determination then.”

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CARA Flash Mob: Hands Off Social Security, Medicare, Medicaid! Tax the Top 2%!

The nation’s richest banks and corporations have rung up billions in deficits with wars, tax cuts for the richest, bank bailouts, and reckless speculation, and now they want us to pay by sacrificing Social Security, Medicare, Medicaid, and every other part of the Safety Net!

Democrats and Republicans alike are burning the midnight oil in search of a bi-partisan Grand Bargain to screw seniors, people with disabilities, kids, and low-income workers.

No Way! Join our Flash Mob for social justice: We demand:

* No cuts to Social Security, Medicare, Medicaid, or services to low-income people.

* End the tax cuts for the rich

* Create millions of jobs

Our goal is to video our flash mob and have it go VIRAL – so the whole country puts pressure on Congress to demand that we do not cut our essential programs in order to make the Grand Bargain on the deficit and avoid sequestration before the end of the year.

Sponsored by the California Alliance for Retired Americans (CARA) and Jobs With Justice (JwJ).

See the Resolution on Social Security, Medicare, and Medicaid written by SF Gray Panthers and passed by the SF Central Labor Council.

Shortlink to this posting:  http://wp.me/p3xLR-tg