Obama on Social Security

As promised earlier, Obama on MTP:

SEN. OBAMA: . . . [O]n Social Security, for example, she has maintained, it appears, that if we just get our fiscal house in order that we can solve the problem of Social Security. Now, we’ve got 78 million baby boomers that are going to be retiring, and every expert that looks at this problem says “There’s going to be a gap, and we’re going to have more money going out than we have coming in unless we make some adjustments now.” . . .

Ah, the Social Security "crisis." More.

. . . Now, I think that Social Security is the single most important social program that we have in this country, and I want to make sure that it’s there not just for this generation, but for next generations. So that means that we’re going to have to make some decisions, and it’s not sufficient for us to just finesse the issue because we’re worried that, well, we might be attacked for the various options we present.

MR. RUSSERT: But, Senator, you said last year—earlier this year that everything should be on the table for Social Security, including looking at raising retirement age, indexing benefits, and then suddenly you said, “No, no. Those aren’t off—on the table; I’m taking them off the table.”

SEN. OBAMA: Tim, that’s not—that’s not what I said. What I said was that I will convene a meeting as president where we discuss all of the options that are available. [Now where have I heard that one before? Hmm. Did Hillary say the same thing? Yep.] That doesn’t mean that as president I will not have strong opinions on how we should move forward. And when you look at how we should approach Social Security, I believe that cutting retire—cutting benefits is not the right answer. I meet too many seniors all across the country who are struggling with the limited Social Security benefits that they have. That raising the retirement age is not the best option, particularly when we’ve got people who ware still in manufacturing. By the time they’re 67, their bodies, oftentimes...

MR. RUSSERT: But in May you said they would be on the table.

SEN. OBAMA: Well, when I—I am going to be listening to any ideas that are presented, but I think that the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more and the people who are in need are protected. That is the option that I will be pushing forward. But, look, even as president I’m not going to be able to get this done by myself, and that means that I’m going to be listening to any other ideas out there. It doesn’t mean, though, that I’m not going to have a strong position on it.

MR. RUSSERT: But they would be on the table?

SEN. OBAMA: Well, I will listen to all arguments and the best options, finding out what is it going to take to close that gap. But what I’m going to continue to insist on is that the reason we need to fix it now is precisely to protect our senior citizens and maintain not only Social Security as a social insurance program, but also make sure that the benefits are sufficient so that we don’t have seniors in need.

MR. RUSSERT: When you say “raise the cap,” right now you pay payroll tax on the first $97,500. If you increase that for people to pay Social Security tax on their full income, about 10 million people, some could pay as much as $5,000 a year more. How is that going to play in November?

SEN. OBAMA: Well, it—you know, I have not specified exactly how we would structure it. Conceivably, you might have the equivalent of a doughnut hole, although this one would be a good one, as opposed to the bad doughnut hole that Bush set up for, for prescription drugs where you have a gap between people who are of middle income and very wealthy people. But, look, I’ve, I’ve got a friend, Warren Buffett, you may know, the guy made $46 million last year. This is public information because he’s concerned that he is paying a lower tax rate than anybody else in his office. And, you know, he has said, and I think a lot of us who have been fortunate are willing to pay a little bit more to make sure that a senior citizen who is struggling to deal with rising property taxes or rising heating bills, that they’ve got the coverage that they need.

MR. RUSSERT: So you would not be afraid to say, “We have a problem with Social Security, and I’m willing to raise taxes on some to help address the?to fix it.”

SEN. OBAMA: I, I, I believe that it is important for us to look at all the options, but I think that the best option would be to make sure that those who are in the best position to help solve this problem are willing to do so.

(Emphasis supplied.) No options off the table? Uh oh. The funny thing is that the reality of Obama's position is that it is equivalent to Hillary's position. 'Cept she is handling the issue much more shrewdly politically.

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    Krugman again: (5.00 / 2) (#3)
    by andgarden on Sun Nov 11, 2007 at 03:58:47 PM EST
    Why, Barack, why?:
    [I]t['s] just incredible that Barack Obama would make obeisance to fashionable but misguided Social Security crisis-mongering a centerpiece of his campaign. It's a bad omen; it suggests that he is still, despite all that has happened, desperately seeking approval from Beltway insiders.

    Substantively, this is wrong -- and the tone-deafness is hard to understand. Tim Russert doesn't vote in Iowa.

    Great minds . . . (5.00 / 1) (#12)
    by Big Tent Democrat on Sun Nov 11, 2007 at 08:42:38 PM EST
    digby calls them the village, or (none / 0) (#7)
    by seabos84 on Sun Nov 11, 2007 at 06:10:32 PM EST
    something like that

    ( maybe she got the term elsewhere, I don't know / care )

    and I like the term better than the 'beltway' - these rovign village of synchophants float from georgetown to the k-school in boston, with LOTs of cool stops in between.

    whether it is 'the beltway' or 'the village', these people need us to wash and clean and fix their cars, their food, their houses, their security, their kids, ...

    they need us to make their lives comfortable, and, that is it.



    Iraq Sinkhole, Deficit Sinkhole, Education Decay (5.00 / 0) (#15)
    by seabos84 on Mon Nov 12, 2007 at 12:08:57 AM EST
    Immigration stupidity ...

    an unaccountable government run for the benefit of the few AND the oppression of all

    all of these issues = future social security problems / turmoil / collapse.

    why don't you fix the roots of the problem barack?

    what did your big money synchophants tell you to do ?


    Why didn't he just say (none / 0) (#1)
    by Alien Abductee on Sun Nov 11, 2007 at 03:20:24 PM EST
    that since Social Security revenues have been and are currently subsidizing other government programs, that if they're just restricted to Social Security it will stay solvent just fine?

    Isn't the problem that SS will start being dependent on general revenues once the Boomers start drawing benefits, just like other programs that SS revenues currently subsidize already are? The Bush tax cuts increasing the deficit are the problem, not SS itself.

    But it's all an awful mess to try to talk about in soundbites on teevee.

    Your last line is the point (none / 0) (#2)
    by Big Tent Democrat on Sun Nov 11, 2007 at 03:25:48 PM EST
    It's why good Dems know better than to play this game.

    This is going to bite Obama.


    Social Security isn't subsidizing anything (none / 0) (#4)
    by kovie on Sun Nov 11, 2007 at 04:00:56 PM EST
    Since revenues have exceeded payouts for many years now, a trust fund has accumulated and been "invested" in government bonds at a fixed rate of return, which the government has in turn used to finance various other programs (whether wisely and well or not).

    Eventually, as payouts begin to exceed revenues (which is expected to happen in around 10 years as the boomers begin to hit peak retirement numbers), Social Security will have to begin to tap into this trust fund to be able to pay out at 100%, which means that the government will have to start making good on its IOU's in the form of these bonds--including all of the accrued interest.

    Now, whether or not it will be able to do so then is a separate issue (although to my knowledge it has never been unable to do this in the past, and of course if it couldn't, China would be quite concerned about that). But there's no subsidizing going on here, which would imply a redirection and reallocation of funds, which Social Security doesn't allow (nor should it, ever).

    The real issue with respect to Social Security (well, aside from the government's having to come up with monies that it borrowed from Social Security, among others, that it currently does not have and is unlikely to have in 10 years unless some major steps are taken between now and then to cut down the deficit) is what happens in 35-45 years, when this trust fund is projected to be depleted and, barring changes made to the program, projected revenues will only be able to meet 70% of projected payouts.

    But, even if nothing is done to address this before them (which I would find massively hard to believe given that we have literally decades to do this), Social Security will not be "broke"--unless the US government and the country itself will be "broke", at which point Social Security will be the least of everyone's problem. There is no "crisis", and need never be one. It was entirely a fabrication of the right whose sole purpose was to create an opportunity to dismantle this program by privatizing it, as a false way to "fix" it.

    Not unlike, um, its exploitation of 9/11 to impose its neocon agenda.

    This need not be a stumbling issue for any Dem who's smart, experienced and disciplined enough to not make it one. There are all sorts of reasonable ways to "fix" that 30% gap nearly half a century out well before it becomes an actual problem, e.g. raising the salary cap, limiting benefits to very affluent retirees who clearly don't need it (it's insurance, dammit, not a pension!), gradually and modestly increasing the retirement age (either the early one or, more reasonably, the later, full payout one), modestly increasing the current withdrawal, or even investing some of the trust fund in non-government investments with higher yields but minimal risk, etc.

    This need not be a third rail for anyone who knows how not to step on one.


    You sound like you understand it (5.00 / 0) (#24)
    by Alien Abductee on Mon Nov 12, 2007 at 11:06:18 PM EST
    I only know what I read, and it certainly is conflicting. There's this for example from Josh Marshall:

    We need to remember that now and for at least a decade into the future Social Security is actually subsidizing the rest of the federal budget. The program brings in much more than it pays out. As we all remember from the voluble debates two years ago, the surplus is being used to buy US government bonds which go into the Trust Fund. And that socked away money will keep the program solvent through the middle of this century as the baby boomers retire, and revenues in no longer cover promised payments out.

    We've been doing that for about a quarter of a century.

    The problem on the political side of the equation is that the enemies of Social Security have spent a couple decades arguing that the Trust Fund doesn't exist or that it is simply a bookkeeping device with no true financial meaning. If that's true, it means that American workers have spent the last twenty-five years using their payroll taxes to subsidize general revenues and make it easier to float big tax cuts for upper-income earners without getting anything in return.

    If we start pumping a lot more money into Social Security coffers now it will by definition go into more government bonds, which is another way of saying that it will go toward funding our current deficit spending. In fact it will enable more deficit spending and probably more upper-income tax cuts because it will make the consequences of both easier to hide...

    If there is any sense in which the 'Trust Fund' is not 'real' it is that it must be paid back from general revenues.

    And this CBO report seems to make similar points.

    It all seems unnecessarily obscure. Hundreds of billions of dollars of payroll taxes have been set aside in the Trust Fund and now the wingers want to argue that it isn't "real" because the money's been given away to the wealthy in the Bush tax cuts.


    There is no trust fund. (1.00 / 1) (#18)
    by jimakaPPJ on Mon Nov 12, 2007 at 01:09:09 PM EST
    There is no trust fund.

    What you have is the government taking your pretax money and spending it now. The same government who wants your money to pay for things now is promising you to pay you back in prepay tax dollars (amount means tested)at an uncertain date. And the so-called interest payments is laughable.

    You can't pass on the amount not paid back to your estate.

    If you ran a trust fund like that the government would, and deservedly so, put you in jail.

    There is no lock box. LBJ got rid of that about 43  years ago.

    This is a Ponzi scheme of historic size.

    And if you don't start fixing it now, it will soon be too late.


    Um (5.00 / 0) (#22)
    by kovie on Mon Nov 12, 2007 at 08:11:57 PM EST
    Whatever you choose to call it--lock box, trust fund, world's biggest piggie bank--and however the government arranges for the SSA to have the funds, Social Security has not missed a single payment in full since the first check was cut. I find that to be hugely impressive.

    Social Security it not the problem. Irresponsible government spending and tax cuts are the problem, forcing it to borrow heavily beyond its means. But don't blame that on Social Security, which is totally separate from this, and which in any case under existing law HAS to loan the funds that it accumulates to the government, in the form of bonds, which it in turn is obliged by law to pay back on time and with interest.

    You are confusing two entirely different matters. And while you might not like or believe in this program, none of this can be validly based on its alleged insolvency, which is a right-wing myth--not unlike the ability of Islamic Jihadis to destroy the west and creats a modern Caliphate.


    You have your head in the sand. (1.00 / 1) (#25)
    by jimakaPPJ on Tue Nov 13, 2007 at 06:55:35 AM EST
    Social Security has not missed a single payment in full since the first check was cut. I find that to be hugely impressive.

    Given that it is funded by mandatory contributions with the payouts controlled by the government and that the government has not collapsed, I see no way it could have failed.

    The issue is not the past, Ponzi schemes always look good at first, the issue is a declining payer group vs a huge bubble in the withdrawal group. That's just a fact that has nothing to do with politics.

    How do you stand all the sand in your ears??


    I think that 70 years of not missing (5.00 / 1) (#27)
    by kovie on Tue Nov 13, 2007 at 02:15:20 PM EST
    a single payment is a pretty good indication of a program's fundamental soundness and predictor of its likely future soundness.

    Although, of course, considering the damage that BushCo have done to the government's finances, you might have a point.

    Furthermore, I suppose that even though the earth has existed for around 4.5 billion years, that's no assurance that it won't explode in 12 seconds, so I guess that you're right and I'm wrong.

    What flawless logic, the kind that any 2 year old could come up with.

    I thank you for once again proving what a projector you are.

    I can only hope that you're being paid to be such a troll, because if you're doing this for your own satisfaction, you are truly to be pitied. Why anyone would do that is totally beyond me.


    well said kovie. (none / 0) (#5)
    by cpinva on Sun Nov 11, 2007 at 04:10:47 PM EST
    to answer your question andgarden, because he's a political naif. he proves this more and more as time goes by. rudy, et al prove they live in "wonderland", obama proves he hasn't a clue.

    this is a good thing, weed them out before the conventions and the election. of course, in the case of the republicans, there might not be anyone left, but that's their problem to deal with, not mine.

    I wouldn't say that he has no clue (none / 0) (#13)
    by kovie on Sun Nov 11, 2007 at 10:01:52 PM EST
    Just that he doesn't seem to have enough of a clue at this point to operate at this level. He's only been in the senate AND working in DC for just under 3 years. Hillary, whatever else one might think of her, has been a senator for just under 7 years, and before that she had the benefit of being first lady and being at the center of 2 presidential campaigns (and before THAT, being first lady of AK and closely connected to the DLC). There are some things that, no matter how smart and naturally talented you are, you simply cannot become masterful at without putting in the years. National-level politics is clearly one of them. Obama's plenty smart and talented, and has the makings of a great future president, majority leader, committee chair or perhaps governor. But it increasingly appears that he threw his hat into the ring an election or two prematurely, and is paying the price for it. Doesn't mean that he won't win this--nothing's out of the question at this point. But it's going to take a perfect alignment of lots of factors--most of all the Clinton campaign imploding--and that's a long shot.

    Win or lose, he's going to emerge from this a far stronger and smarter politician, having learned the hard way how this is done at this level. One has to give him credit for merely having the cohones to consider running with so little national experience (then again, the same could have been said of John Edwards in '00 and '04, but Obama's smarter and more talented than him).

    As for Rudy, I just can't see him winning the presidency, or even the nomination. I know that the Hannity crowd absolutely loves him, and the bible thumpers will vote for whomever their cult leaders tell them to vote for. But they're not enough to win the general. He's going to need swing voters and indies, and with all these scandals coming out about him, I just don't see them voting for him in sufficient numbers to put him over the top.

    Unless, of course, stuff happens between now and then to change their minds. And with Pubs, stuff ALWAYS happens...


    heh (1.00 / 1) (#19)
    by jimakaPPJ on Mon Nov 12, 2007 at 01:12:56 PM EST
    One has to give him credit for merely having the cohones to consider running with so little national experience

    What other things would you lump in that category?

    Piloting a commercial jet?? Driving a big rig in heavy traffic? Practicing surgery???????


    Or perhaps being the first and last (5.00 / 0) (#23)
    by kovie on Mon Nov 12, 2007 at 08:20:32 PM EST
    Republican President? We're talking NATIONAL political experience, not political experience in general.

    And Lincoln actually had less of the latter than Bush, yet most people would say that he was a better president--by a factor of near infinity.

    While Obama has more of the former than either, and more of both than Lincoln.

    So I don't understand your question.


    Yes, I know you don't. (1.00 / 1) (#26)
    by jimakaPPJ on Tue Nov 13, 2007 at 07:05:34 AM EST
    So I don't understand your question.

    Maybe owning this issue is better? (none / 0) (#8)
    by lilybart on Sun Nov 11, 2007 at 06:12:46 PM EST
    I am guessing that Obama feels it is better to pre-empt the right before they scare people into private accounts again. AND with Wall Street in turmoil and people losing their homes, NOW might be a good time to deal with SS.

    All that is needed is to raise the cap on the amount of income subject to the tax. And then fix the rest of the economy!

    Have you ever heard of (1.00 / 0) (#20)
    by jimakaPPJ on Mon Nov 12, 2007 at 01:15:35 PM EST
    demographics? More people getting old and needing to be paid than those youngsters paying??

    At what point will the payee revolt? 50% tax rate??


    Taxes on more income (none / 0) (#9)
    by Coonsey on Sun Nov 11, 2007 at 07:01:19 PM EST
    I happen to think this is a good idea.  Why should a millionaire only have to pay taxes on anything below 100,000 dollars?  Compared to middle class that have to pay tax on all their income.

    Coonsey's View
    Political Blog and Forum

    Fairness (5.00 / 0) (#21)
    by Abdul Abulbul Amir on Mon Nov 12, 2007 at 07:16:11 PM EST

    Why should a millionaire only have to pay taxes on anything below 100,000 dollars?

    Out of simple fairness.  Benefits are capped, so the pay-in is capped.


    please (none / 0) (#11)
    by Jeralyn on Sun Nov 11, 2007 at 07:08:13 PM EST
    put links in html format. You don't need to retype your blog url in the comment, it's available in your user name. Thanks.

    Owning the issue? (none / 0) (#10)
    by RalphB on Sun Nov 11, 2007 at 07:07:58 PM EST
    He wants to own the issue?  What part of "trillion dollar tax increase" shouted by every republican in America don't you understand?

    It may not be accurate, though in fact it is close, but it will work well if used for months on end to hammer the democrat over the head and lots of people will run screaming from the tax and spend liberals.

    This is Politics 101, do not load your opponents weapon for him in a gun fight!

    waffling (none / 0) (#14)
    by diogenes on Sun Nov 11, 2007 at 10:40:41 PM EST
    Waffling is worse than speaking.  Many younger Americans already think that a big social security tax increase is inevitable or else the program will tank.  They think that politicians will lie and raise taxes or cut benefits no matter what they say in the campaign.  If Obama says this openly and runs against a Giuliani who waffles, who will win?  Isn't Hillary's main problem not her actual positions but the perception that she is a waffler?    

    'cept (none / 0) (#16)
    by Jgarza on Mon Nov 12, 2007 at 02:45:49 AM EST
    The funny thing is that the reality of Obama's position is that it is equivalent to Hillary's position. 'Cept she is handling the issue much more shrewdly politically.

    I love the lack of citation, writing is so much easier when you can just say what you want and don't worry about proving it.  The above statement maybe true. If it is it would be nice to have some Hillary quotes, links to her policy, something of "substance" to prove it.