Now That's What I'm Talking About!

I Actually Agree With A Small Part Of This

     From Lawrence Hunter writing at Forbes:

 ...[T]he larger problem for Republicans is that they are preparing to play Charlie Brown to Barack Obama’s Lucy on Social Security, again.  The congressional Republican leadership is all charged up to cut Social Security in a Grand Bargain with President Obama ... They better beware though; Lucy is just about to jerk the football out from under them, again, and they are going to fall flat on their keisters, again, if they don’t wise up. ...

Mr. Obama has been tempting Republicans with a Grand Bargain on the deficit in which Republicans would concede tax increases on people earning more than $250,000 a year in exchange for the president’s delivering congressional Democrats on Social Security cuts through so-called “reforms” that would cut inflation adjustments (COLAs), means test (cut) the program on the benefits side and transform the flat-rate payroll-tax pension contribution into a progressive income tax by raising or eliminating the annual cap on the amount of earnings on which the payroll tax must be paid. ...

From Mr. Obama’s perspective it represents a great deal. With ObamaCare, the president already has demonstrated his callousness toward old people and a ruthless willingness to sacrifice senior citizens to achieve his political ends.  A substantial majority of old people didn’t vote for him, and now he won’t be running again, anyway.  The so-called Social Security “reforms” being dangled before Republicans are a redistributionist’s dream come true, which is just another demonstration—as if one is required—of why the Republican Party is the stupid party.  But now it’s worse; it makes the GOP the evil party as well. ...

Republicans have become so fixated on their mistaken notion that Social Security is largely responsible for the deficit, and they are so intent on cutting cost of living allowances for current retirees that they are willing to help the president transform Social Security into the world’s biggest welfare program, a major step toward the Democrats’ goal of putting everyone in America on welfare.

Republicans insist on treating Social Security like welfare, and now they want to turn it into welfare in fact. ... The Republican Party wants to stigmatize retirees by treating them like welfare queens ... Worse than the stupid party; worse even than the evil party; the Republican Party has become the brain-dead, zombie party.

And They'll Change Back Again In A Heartbeat If It Makes Business Sense

     From the Washington Post:

AARP, the lobbying powerhouse for older Americans, last year made a dramatic concession. Amid a national debate over whether to overhaul Social Security, the group said for the first time it was open to cuts in benefits.

The backlash from AARP members and liberal groups that oppose changes in the program was enormous — and this time around, as Washington debates how to tame the ballooning federal debt, AARP is flatly opposed to any benefit reductions for the nation's retirees.

Romer Says Disability Benefits Need Reform

     I missed this in a piece by Christina Romer in Sunday's New York Times Business section:

Another entitlement program needing attention is Social Security Disability Insurance. It provides essential support for people unable to work, and will be even more important if we raise the Medicare eligibility age. But the current system is expensive and inefficient. The rolls have surged in recent decades, and the system discourages part-time work and moves to less-demanding jobs. Economists have proposed innovations that could allow more workers to stay in the labor force — thus slowing spending growth and improving the security and well-being of disabled workers.

     Romer was at one time chairwoman of President Obama’s Council of Economic Advisers. The "innovations" touted by Romer are completely unworkable. Any "reform" of Social Security disability will almost certainly take the form of making it harder to qualify for benefits with some meaningless fig leaf of rehabilitation added on top to distract people about what is being done.

The Election Is Over -- We Can Now Talk Social Security

     With the election over, Social Security is starting to come up more frequently in public discussions. Ironic, isn't it, that Social Security is discussed more after the election than before. Here are some items I've noticed:

• Harry Reid, the Senate Democratic leader, has said emphatically since the election that "We are not going to mess with Social Security." 
• There was a rally featuring Democratic politicans and labor leaders yesterday in Philadelphia opposing Social Security cuts. 
• The AARP has sent a post-election letter to members of Congress and the President opposing the chained CPI concept. The chained CPI method is a sneaky way of cutting Social Security benefits by using a different less favorable method of computing the inflation adjustment in Social Security. Over time, this would amount to a significant reduction in Social Security benefits. 
• Peter Orszag, who was President Obama's first Director of the Office of Management and Budget (OMB) is talking up raising the normal retirement age even further and also cutting Social Securtiy benefits fairly dramatically -- but only years into the future. Easy for Orszag to propose. He's making millions of dollars a year on Wall Street.

Sanders Warns Of Post-Election "Grand Deal" To Switch To Chained CPI

     From Sam Stein writing at Huffington Post:

Concern is mounting among some Senate Democrats that President Barack Obama will make a deal with Senate Republicans during the lame-duck session that would result in changes to the benefit structure of Social Security....

[According to Senator Bernie Sanders] "unless we stop it, what will happen is there will be a quote-unquote grand bargain after the election in which the White House, some Democrats will sit down with Republicans, they will move to a chained CPI."

Chained CPI, or consumer price index, is an alternative measure of calculating inflation that would lessen the cost of living increases for Social Security payments. When the president and Speaker John Boehner (R-Ohio) attempted to craft a deal on the debt ceiling last summer, Obama offered the chained CPI as a concession.

     Chained CPI sounds boringly technical but it would be a significant cut in Social Security benefits.

Means Testing With Romney

     From the 60 Minutes interview with Mitt Romney aired last night:

PELLEY:  How would you change Social Security? 

ROMNEY:  Well, again, no change in Social Security for -- for those that are in retirement or near retirement. What I'd do with Social Security is say this:  that again, people with higher incomes won't get the same high growth rate in their benefits as people of lower incomes. People who rely on Social Security should see the same kind of growth rate they've had in the past. But higher income folks would receive a little less.

PELLEY:  So that in the Romney administration, in the Romney plan, there would be means testing for Social Security and for Medicare? 

ROMNEY:  That's correct. Higher-income people won't get as much as lower-income people. And by virtue of doing that -- and again, that's for future retirees. For -- by virtue of doing that, you are able to save these programs on a permanent basis.

     I don't know what he means. If he is talking merely about reducing the cost of living adjustment for higher income recipients, this makes no sense. You can't possibly "save" Social Security that way. General means testing of Title II of the Social Security Act could do the trick but would be unpopular. The ambiguity suggests that he is talking about general means testing.

Paul Ryan On Social Security

     Paul Ryan, the Republican Vice-Presidental nominee, said in 2005 that Social Security in 2005 is "a collectivist system, it's a welfare transfer system." He talked jokingly about wanting to "personalize" the "socialist-based system" of Social Security.

     Ryan is now backing away from his 2005 comments on Social Security.

Meaning That The Other 25 Democratic Senators Are Open To Cutting Social Security?

From The Hill:

Senate Majority Leader Harry Reid (D-Nev.) and 28 other members of the 53-member Senate Democratic caucus have signed a letter opposing any cuts to Social Security as part of a deficit reduction package. 

The letter forms a significant marker as Congress looks toward a possible deficit bargain in the lame-duck session after the election. It says Social Security has problems down the road, but that they should be dealt with separately from any budget deal.

Putting It In Context

From Dean Baker, Co-Director of the Center for Economic and Policy Research, writing at the Huffington Post:

There was both good news and bad news in the Social Security trustees' report released last week. The bad news is that the program is projected to cost somewhat more in the latest report than in the 2010 report. ...

This bad news about the program is also the good news. The main reason that the program's finances deteriorated between the 2010 report and the 2011 report is that in the 2011 report the trustees assumed that we would enjoy substantially longer life expectancies than they did in the 2010 report.

They increased their projected life expectancy for men turning age 65 in 2010 from 18.1 years to 18.6 years, a gain of 0.5 years. The trustees increased their projected life expectancy for women turning age 65 by 0.3 years. ...

Even accepting the 2011 report at face value the picture is hardly as dire as many politicians in Washington are claiming. We have seen much worse before. For example in 1997, the trustees projected a shortfall that was equal to 2.23 percent of payroll. At that time, their projections showed the trust fund first being depleted in 2029. ...

It is also important to keep the Social Security numbers in context. Proponents of cuts to Social Security have spent fortunes on pollsters and focus groups trying to put the program's finances in the most dire possible light. They are fond of reporting things like the program's $17.9 trillion shortfall over the infinite horizon. ...

The vast majority of this $17.9 trillion shortfall comes in years after 2200. Social Security does have a long planning period, but if anyone thinks that we are actually making policy for the 24th century then we should keep this person far removed from the levers of power. ...

The best way to make the size of the projected Social Security shortfall understandable is to put it in context. Relative to the size of the economy, the projected Social Security shortfall is equal to 0.7 percent of GDP. By comparison, annual spending on the military increased by more than 1.6 percentage points of GDP between 2000 and 2011. So the burden imposed by the wars in Iraq and Afghanistan are almost 2.5 times larger than the money that would be needed to eliminate the Social Security shortfall. ...

To take another point of reference, the Congressional Budget Office's analysis of the Ryan Medicare privatization plan implied that it would increase the cost of buying Medicare-equivalent policies by more than $34 trillion, a sum that is almost five times as large as the projected Social Security shortfall.