President Obama said that Social Security is not an "entitlement," or a "driver of the deficit or debt," at a Minnesota Town Hall meeting on Monday. Then why is he allowing a Super Committee charged with deficit reduction to address the program?
"Not an Entitlement"
At the town hall meeting in Cannon Falls, Minnesota, President Obama gave perhaps the most spirited and articulate defense of Social Security -- or any other government program -- of his presidency. The president called Social Security "one of our most important social insurance programs," and for the first time, argued against calling it an "entitlement."
And by the way, you pay into Social Security. They call it an entitlement, but it's not an entitlement, you're paying for it. It's getting taken out of your paycheck.
There can be no underestimating the significance of this remark. It is a point that many Social Security advocates have been making for a long time without the benefit of the president's bully pulpit. Because Americans earn Social Security with deductions from their pay checks, it is not an "entitlement," but rather an earned benefit. This turns the entire austerity-budget frame of "entitlement reform" on its head.
(Click here to view the video clip and the read the complete transcript of the president's remarks.)
By effectively freeing Social Security of the "entitlement" moniker, which traditionally encompasses Social Security, Medicare and Medicaid, the President also made a crucial distinction between Social Security and the health care programs. The latter two programs, while equally important and vulnerable to attack, are not entirely self-financed like Social Security is, and have much larger long-term cost issues due to private health care costs. That is why Social Security has historically always been dealt with separately.
The president even corrected the misconception that Social Security is to blame for the deficit, because, as he has said in the past, "Social Security is not the cause of our debt and our deficit." He would be more accurate in saying it is not a cause of the deficit, rather than the cause, since it is entirely self-financed, with a revenue stream held in trust, and cannot borrow to pay benefits. But still, it is a very key distinction of Social Security from the deficit problem.
I'm betting that Jack Lew's arrival as budget director has had something to do with the White House's proactive use of positive rhetoric about Social Security. Lew is a veteran of the 1983 reforms and has strong ties to leading Social Security advocates in the progressive community. In an op-ed in USA Today, back in March, Lew explained that Social Security is "entirely self-financing." The problem he said, "is not Social Security. It is the mismatch between outlays and revenues in the rest of the budget."
Unfortunately, the president's prescriptions for dealing with Social Security as part of budget talks are at odds with his stated commitment to the program's independence from the general budget and deficit. He insists that Social Security is not an "entitlement," or "the cause of the deficit." Yet, in reality, he has empowered a Super Committee, operating outside the normal legislative process, to address Social Security in the context of a larger deficit reduction package.
(More here on the Super Committee and how it could affect Social Security.)
The president claimed at the town hall that he models his bipartisan approach on that of President Reagan and House Speaker Tip O'Neill, when they reformed Social Security together in 1983. But this parallel, which he has used several times now, is not apt. In 1983, Social Security was facing an immediate financial crisis, and Democrats knew they would eventually have to give ground on cuts. With Social Security able to pay full benefits for another 25 years, an entire generation's retirement security destroyed by the financial crisis and an evolving economy, and adequacy of current benefits already shrinking due to an increasing retirement age, the same imperative to compromise on cuts is just not there.
If President Obama truly wanted to channel Reagan and O'Neill, he would assign a separate committee to Social Security, rather than entrust it to the Super Committee. Reagan convened a genuinely balanced bipartisan committee dedicated to dealing with Social Security alone. As a result, unlike President Obama, they could justly claim to be working on Social Security for its own sake, and respecting its independence as a program.
(More here on why the Reagan-O'Neill analogy does not apply to the current situation.)
In addition, the president's payroll tax cut contradicts his praise of Social Security's self-financed nature. At the town hall, the president said Social Security was not an "entitlement" specifically because it was paid for with workers' contributions. He made a good point, showing awareness that the political power of a social insurance program is dependent upon a perception that it is earned, and immune from accusations of increasing the deficit. But can we still say that Social Security is "paid for" and therefore "not an entitlement," now that the president cut the payroll tax by one-third?
And substituting the lost revenue with money from the general budget, while preventing the measure from depleting the trust fund, is no less harmful to the program. Where before Social Security did not contribute to the deficit, now it does, subjecting it to attack as a driver of our deficit.
A Cheap Shot at the Left
Buried in the president's town hall remarks could be a veiled potshot at the Left for not being more "reasonable" on Social Security.
[Social Security] is an example of where everybody gets so dug in on their positions. And I have to say -- in fairness, because I've commented on the other side not always being flexible -- there have been times, when our side, when Democrats haven't always been as flexible as we need to be. Sometimes I do get frustrated when I hear folks who say, "You can't make any changes to any government programs." Well, that can't be right. Most companies are thinking, "What can we do better -- are there some changes we can make in order to have the operation go a little smoother?
He goes from saying that Social Security is a contentious, polarized issue in which both sides refuse to deal with one another, to indicting Democrats for not being more "flexible." Then he speaks of some vague straw man who doesn't want to see any changes made to government programs. If it wasn't meant as a criticism of the Left, it sure sounded like it.
As one of the progressives Obama appears to be chiding, I think the president is not judging our position accurately. We do not oppose Social Security cuts in the context of the current budget battles because we think you shouldn't make any changes to government programs. Rather, we believe that a conservative Republican Congress hell-bent on austerity policies during a terrible economy is not the "Ronald Reagan" we need to reach a bipartisan solution to Social Security's funding gap. There are few if any cuts to Social Security that would not either significantly harm adequacy of benefits for struggling families, or undermine Social Security's status as a universal social insurance program with earned benefits. It's better to block change for now, leverage Democrats' status as defenders of Social Security and Medicare to win back Congress, and shore up Social Security's finances when it can be done on more favorable terms.
Views expressed are those of the author, and do not reflect the views of Social Security Works or the Strengthen Social Security Campaign.
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