The second part, now being teed up by the White House and key Senate Democrats, is 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.Obama is gonna get your social security and kill your granma!!! Everyone freak out!!!
Not only is no news outlet, including Politico, reporting this (this is an opinion piece by Kuttner), it also follows a familiar scare tactic designed to do more harm than good. The scare tactic works two ways: it makes the unsuspecting reader think that President Obama wants to destroy, rather than preserve, social security, and it creates the false impression that doing nothing will leave social security benefits intact for ever.
Neither of these is true, of course. First of all, as I have discussed on The People's View before, left untouched, the social security trust fund is depleted in 2037, at which point there is an automatic 25% benefit cut. This graph, released not by a partisan source but by the Social Security Administration shows the payable benefits and the different plans to address it, and how much of the long run deficit each plan would make up for. The Simpson-Bowles plan is the same as the "50% shield" plan (also sometimes called means testing):
As you can see, the payable benefits under current law, over the long run are 25% below the estimated benefits. There is even a 16% deficit between what would need to be paid and what would be available to be paid under the 50% shield (i.e. the benefits for the upper half are increased according to a price index rather than a wage index). This deficit is made up, in the Simpson-Bowles plan, by raising the threshold for which taxes on social security is collected. Currently, social security is collected on about 82% of the total wages; under the Simpson-Bowles plan, it is raised to 90% of total wages, ensuring long term solvency of social security.
Another important point to note is that under the Simpson-Bowles plan does a few things to ensure that the basic goal of social security, to keep seniors out of poverty, is met: first, it creates a new special benefit floor to do just that. Second, while it raises the retirement age to 69 in the year 2075, it creates a hardship exemption for those who cannot work beyond age 62 - meaning that they can collect full benefits at age 62.
I never quite understood the concept behind not means testing social security to some degree. Social Security is already means tested. The current formula, for 2011, for example, is the following (calculated based on indexing up to 35 years of earnings):
...the sum of:The lower your monthly average income is, the higher the portion of your income replaced by social security. In other words, social security already replaces a higher portion of income for low income workers (people of lesser means) than for high income ones (people of higher means). That is the very definition of means testing.
(a) 90 percent of the first $749 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $749 and through $4,517, plus
(c) 15 percent of his/her average indexed monthly earnings over $4,517 [up to the ceiling of $7,928]
So let's recap this really quickly: we have people sitting on the sidelines throwing dirt at President Obama, based on "sources" that no one else has heard from. Secondly, the people sitting on the sidelines throwing dirt are not engaging in a useful national debate about the future of social security, but are advocating for leaving it alone. Those who are advocating for leaving it alone are really advocating for a full one-quarter cut in benefits in 2037 across the board - from poorest recipient to the richest. What we have here, then, are people whose position is to essentially advocate for a 25% cut in actual benefits waxing poetic about using a different indexing mechanism for the upper 50% of Social Security recipients. If that's not sanctimonious hypocrisy, I don't know what is.
Furthermore, people who judge an increase in the retirement age as a cut in benefits should - should - intuitively understand the flip side, which is that people are on average living longer and collecting social security longer, thereby increasing their benefits. That is what is giving us the long term shortfall. The idea that because social security is not at the moment contributing to the deficit that it should not be addressed until it starts doing so (i.e. when the benefits get cut by a quarter) is also preposterous. The debate over the budget deficit is not a short term one. The President's tax and unemployment benefits deal should have made plenty clear to anyone paying attention that in the short term, stimulating the economy is more important than reducing the budget deficit.
The deficit, and more importantly the national debt, are a long term problem, as is the social security shortfall. The shortfall, if it needs to be financed without a specific plan, will add to the debt. This is not a prediction of a blogger. This is the forecast of the Congressional Budget Office. This is why it is absolutely absurd to argue that social security and other entitlements should not be addressed as part of a debt slowdown/reduction plan. In fact, if we plan to protect social security and protect this country from draconian austerity measures, the debt must be addressed.
I never imagined the movement on the Left as lily livered cowards. That's what's turning out to be the case for the ideologically pure pretend-defenders of social security, however. In the cover of pretending to protect benefits fully, they are advocating nothing should be done, which will result in a 25% cut. They are busy accusing the President of trying to undermine social security while they have no practical solutions. We liberals have to be willing to have a conversation about social security, and scaremongering about President Obama is not the way to go.