Back in 2010, President Barack Obama agreed to a “temporary” 2 percent cut in the FICA payroll tax for 2011. That cut was renewed for this year and the loss to Social Security revenue is made up from the general revenue fund. This is a really bad idea for reasons we discussed here on this blog.
During the 2008 campaign, Obama promised to preserve Social Security as it is, a defined benefit pension/insurance fund. Then he famously said “everything is on the table” as he appointed two well-known Social Security antagonists, Erskine Bowles and Alan Simpson, to co-chair a fiscal commission and who – surprise! - recommended cutting Social Security.
At other times, the president has said he is in favor of “entitlement reform” (read Social Security and Medicare cuts) and during the days of the possible “grand bargain,” House Speaker John Boehner announced that Obama “responded positively” to making changes to the two programs.
So when I see or hear the president's name and the phrase “Social Security” in the same breath, I get nervous as I did when I noticed his annual AARP interview in the current issue of that organization's magazine.
In regard to Social Security, this interview takes on more importance than many others because the president knows he is speaking directly to the people to whom the program matters most – about 50 million aged 50 and older who receive the magazine and whatever number read it online.
It is a softball interview with only one question about Social Security and please note the subtle bias of the question – the assumption that Social Security is not “stable,” with “benefit adjustments” as the interviewer's suggested solution:
”Are there any benefit adjustments you would support to put it on a more stable footing into the future?”
I can remember early on in Obama's presidency when his statements would lead one to believe that he did not understand how Social Security works in regard to the Trust Fund and not contributing a penny to the country's deficit. So it was heartening to read:
”Social Security is not in an immediate crisis. It's not the driver of our deficits.”
And he has some related encouraging words:
”But it's going to require us not playing politics with Social Security. Understanding that millions of Americans have been lifted out of poverty because of Social Security. It is the linchpin of our social safety net.
“We can't privatize it. We don't want it to be subject to the winds of the stock market. We want it there for people over the long run.”
Those are his opening and closing statements on the subject and they sound good, don't they. But he is a politician and not one of them likes to say anything definitive that doesn't leave him or her some wiggle room. And the president certainly did that with the AARP interview. This is the middle section. I have italicized the words that send me into high alert:
”We can easily tweak the Social Security program while protecting current beneficiaries, ensuring that it's there for future generations.
“There are ways that involve, for example, slightly raising the [payroll] cap. I think it's a pretty sensible thing to do.
“What I've said to [Republicans] is, 'I am prepared to sit down with you, the way Ronald Reagan and Tip O'Neill sat down together. And make very modest adjustments that extend the life of Social Security for 75 years.' We can do that again.”
Like “Ronald Reagan and Tip O'Neill?” Oh, please, Mr. President. Those days are long gone. Today's Congressional Republicans openly and regularly repeat that their single goal for the United States of America, above all others, is to make you a one-term president. Get over bipartisanship. It doesn't exist.
Now, as to those two weasel-word phrases:
protecting current beneficiaries
very modest adjustments
These leave room for the president to support a remarkable number of changes to Social Security that would decrease current and future benefits that already do not keep up with inflation.
“Protecting current beneficiaries” always means lowering benefits through various means for future recipients and these cuts are always framed as affecting only those people younger than 55.
It amazes me that politicians apparently believe current beneficiaries are willing to sell out their children and grandchildren as long as no one touches their own benefits – an attitude that reveals a lot, I think, about the ethos of politicians in general.
One method of making “very modest adjustments” is to change the calculation of the Social Security cost-of-living adjustment (COLA) from the standard CPI to the chained CPI which would dramatically reduce COLA increases especially for those most in need.
This change, by the way, is supported by AARP as a method of “strengthening” Social Security, an idea that TGB reader Jim Newman shredded here in March in an open letter to AARP CEO A. Barry Rand. You should go read it .
At least the president seems to see the usefulness of raising the payroll cap, but he wimps out with the adverb, “slightly.” There is no reason low- and moderate-income workers should pay the tax on 100 percent of their income and high-income earners pay only a tiny fraction of their salaries.
So I give the president a D grade on this Social Security statement. He seems, at last, to understand how the program works, but he leaves way too much wiggle room for Republicans to slash benefits that are already lower than they should be.