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Robert Kuttner

Robert Kuttner

Posted: January 9, 2011 04:51 PM

As I have previously warned--and I hope I'm wrong--President Obama seems on the verge of needlessly cutting America's most valued social program and the one that best differentiates Republicans from Democrats. This is part of a vain effort to appease deficit hawks in his own party and on Wall Street, as well as Republicans who are utter hypocrites when it comes to deficits--increasing them as long as the purpose is tax cuts but then turning around and demanding program cuts in order to reduce the deficits they created.

All the choreography is in place for the president to embrace Social Security cuts in his upcoming State of the Union address.

Cutting Social Security is financially needless--the program is in sound shape for the next 27 years. It has nothing to do with the current deficit. It will be solvent indefinitely if we can get some wage growth going again. Failing that, we should raise the lid on income taxed, so that millionaires pay the same rate as regular people. For more detail, see ourfiscalsecurity.org.

It's politically idiotic for democrats to join this parade. To have Republicans demand cuts in Social Security at a time when they are also demanding tax cuts for the rich is a cue for Democrats to make clear which side they're on. Obama got in big trouble with seniors in the health care bill because they were worried that it would mean Medicare cuts. In 2010, Democrats lost the senior vote, big time. Now, Obama has a splendid opportunity to point out that it's Republicans who want to cut Social Security.

But look at this exchange from CNN Friday evening. Wolf Blitzer, interviewing Obama economic adviser Austan Goolsbee plays a clip of Republican Senator Lindsey Graham demanding Social Security cuts as the price of extension of the debt ceiling. Goolsbee is resolute on the need to extend the debt ceiling, but strongly suggests that Obama is amenable to a deal on Social Security cuts:


[BEGIN EXTRACT]

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: I'd like to see a serious effort, bipartisan in nature, led by the White House where we look at extending the age of Social Security retirement. We all know we have to do that. And when it comes to means-testing benefits, that should be on the table.

(END VIDEO CLIP)

BLITZER: Extending the age of Social Security benefits and having means testing. Are you open to those two proposals?

GOOLSBEE: Well, Wolf, let me separate two things. And I really wish that Republicans in Congress could separate them.

The debt limit discussion is about the full faith and credit of the United States. We should not be -- nobody should be playing chicken with that or playing games with that.

We should have an honest discussion about the budget. The president is not against that. He knows we must deal with our long- run fiscal challenges. And when he releases his budget in the a few weeks, I think it is going to be clear that he takes that responsibility seriously, and he's not averse to making tough choices.

Let us have an honest and open discussion about the budget and what we should do, what cuts ought to be made, in what areas. Do not tie the discussion about the budget to a thing that is fundamentally about the trustworthiness of the U.S. fiscal system and the government, which is what the debate about the debt limit is.

BLITZER: And what about the issue of Social Security? Are you ready to discuss that?

GOOLSBEE: Well, the president formed the fiscal commission. He was the one who authorized it over the objections of some of the opponents, and that body put out a report which I think highlights how important the longer-run fiscal circumstances are. And the president has always said, let's not automatically rule everything out before we even begin.

Let's see what plans and various people put forward, and let's deal with that as adults. Let's not try to turn this into a game of chicken where we say, unless you agree to our own specific partisan policy moves, we're going to threaten to default the U.S. government. And I would say, I hope that everyone in Congress can avoid resorting to policies that make the deficit worse while, at the same time, discussing the need for responsibility.

BLITZER: Austan Goolsbee, thanks very much for joining us. Good luck.

[END EXTRACT]


Good luck indeed! The fiscal commission called for cutting Social Security. And when the president's economic adviser is asked directly about Social Security cuts and quotes his leader saying, "Let's not rule everything out," we're in big trouble.

What should a Democrat sound like on the subject of Social Security? It's not really hard. Here's Harry Reid, sparring with NBC's David Gregory on Meet the Press Sunday:


[BEGIN EXTRACT]

DAVID GREGORY: Social Security-- how does it have to change? What they put on the agenda is raising the retirement age, maybe means testing benefits. Is it time for Social Security to fundamentally change if you're gonna deal with the debt problem?

HARRY REID: One of the things that always troubles me is when we start talking about the debt, the first thing people do is run to Social Security. Social Security is a program that works. And it's going to be-- it's fully funded for the next forty years. Stop picking on Social Security. There're a lotta places--

DAVID GREGORY: Senator are you really saying --

HARRY REID: --where you can go to save money.

DAVID GREGORY:-- the arithmetic on Social Security works?

HARRY REID: I'm saying the arithmetic in Social Security works. I have no doubt it does.

DAVID GREGORY: It's not in crisis?

HARRY REID: No, it's not in crisis. This is-- this is-- this is something that's perpetuated by people who don't like government. Social Security is fine. Are there things we can do to improve Social Security? Of course.

DAVID GREGORY: Means testing. Raising the retirement age--do you agree with either of those?

HARRY REID: --I'm not going to go to with any of those backdoor methods- you know, to whack Social Security recipients. I'm not going to do that. We have a lot of things we can do with-- this debt. It's a problem. But one of the places where I'm not going to be part of picking on is Social Security.

[END EXTRACT]

What's so lovely about this exchange is that it demonstrates how the press is utterly marinated in the conventional wisdom of the deficit hawks, and how easily some straight talk cuts through it. I am not one of President Obama's economic or political advisers, but maybe he talks to Harry Reid.

Speaking of advisers, the latest two appointments do not exactly inspire confidence for progressives. Gene Sperling, who succeeds Larry Summers as head of the National Economic Council, is the better of the two. He has been an advocate of increased social investment and a defender of Social Security, though he was the aide who pushed through a temporary cut in the payroll tax as part of last month's tax cut deal. Sperling received nearly $900,000 for part time work with a Goldman Sachs foundation before returning to government.

The bigger disappointment is Bill Daley, who is touted as a business leader but is more accurately described as a Wall Street lobbyist. JP Morgan Chase hired Daley less for his banking acumen than for his political connection, and he has led Morgan's lobbying efforts during and after the TARP negotiations.

Daley criticized Obama--from the right--on the health reform bill and on the consumer financial protection bureau. When Daley's appointment was announced, among those who pronounced themselves pleased were Republican leader Sen. Mitch McConnell, Tom Donohue, who heads the US Chamber of Commerce, and the Wall Street Journal editorial page.

When your sworn enemies send you bouquets, something is very wrong. According to the Journal: "Bill Daley, we've come to praise you... Still, we've been wrong before. Whether we're wrong again rests less with the pragmatic Mr. Daley than with the man of the left who is now his boss."

The man of the left! But this propaganda game seems to get results. The more the right conjures up this mythical socialist Obama, the more he appoints conservatives. Let's see if Obama, this time, can live up to his billings and do as well as Harry Reid in standing up for Social Security.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is "A Presidency in Peril."