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Looks Like Obama Is Considering Cuts in Social Security Benefits

08/21/2010 10:51 pm ET | Updated May 25, 2011


I have not yet celebrated the Diamond Jubilee -- the 75th anniversary -- last week of the adoption of Social Security. That's because I suspect President Obama may consider agreeing to a cut in benefits for future retirees, by raising the retirement age, which would be disastrous for them and for his presidency.

So far he has not said whether he's for or against the idea, advanced by Republicans and his fiscal commission. Once he was against it, but now, as you'll see, we cannot be sure.

In the days leading up to the August 14 anniversary, Obama said most of the right things. In his White House proclamation, Obama recalled that in the midst of the Great Depression,
'the Social Security Act brought hope to some of our most vulnerable citizens, giving elderly Americans income security and bringing us closer to President Roosevelt's vision of a nation free from want or fear."

He added, "My administration is committed to strengthening...and protecting Social Security as a reliable income source for seniors, workers who develop disabilities and dependents...Let us ensure we continue to preserve this program's original purpose in the 21st century." He didn't say how, but presidential proclamations are usually empty of substance.

Obama followed with his weekly Saturday radio address, in which he repeated his administration's "obligation to keep that promise (of Social Security) for our seniors, people with disabilities and all Americans-today, tomorrow and forever."

Then he vigorously promised to protect Social Security from "some Republican leaders in Congress who are pushing to make privatizing Social Security a key part of their legislative agenda if they win a majority in Congress this fall." Privatization, allowing workers to create personal retirement accounts, like 401(k)s, he said, is "an ill conceived idea that would add trillions of dollars to our budget deficit while tying your benefits to the whims of Wall Street traders and the ups and downs of the stock market."

That's true enough, but, to mix a metaphor, Obama was beating a dead straw man. George W. Bush's failed attempt to sell privatization in 2005, crippled his presidency. And as the Associated Press pointed out in reporting on the president's speech, "most Republicans, in fact, are wary of touching that idea because Social Security is virtually sacrosanct to voters, particularly seniors." Indeed, the most prominent Republican favoring privatization of Social Security and Medicare, Rep. Paul Ryan of Wisconsin, has gotten little support from his Republican colleagues.

What was missing from Obama's address was a single proposal to solve Social Security's long term shortfall, which the program's trustees estimate will come in 2037, when the program's $2.6 trillion trust fund, which is held in treasury bonds, may run out. According to the trustees, a one percent raise each in the payroll taxes split between employee and employer enacted now, would end the problem. Even now, the trust fund is continuing to grow with interest payments of more than $100 billion a year.

Durng his presidential campaign, Obama criticized Republican John McCain for favoring cuts in benefits. And Obama, who repeatedly has said that Social Security was not facing a
'crisis," offered a sensible, relatively painless proposal, which is now favored by most Social Security advocates. Obama proposed raising the amount of one's income that is subject to the payroll tax from the present, $106,800, to $250,000. And in a gesture to the middle class, he proposed exempting from the tax the first $20,000 of a worker's salary. (Some advocates would abolish the ceiling, which would go a long way towards putting Social Security in the black for the rest of this century.)

But Obama has not repeated that proposal, nor has he said what he would oppose. Instead he has created a commission to cut the deficit, which is populated with right-wingers who are hostile to Social Security and believe, wrongly that Social Security adds to the deficit. Even before the commission went to work, members made cutting Social Security benefits one of their targets. One proposal that is most prominently supported by deficit hawks and Republican congressional leaders is raising the retirement age from 66 to 70.

As I've said, Obama has taken no position on this, but he said in his radio speech, he's "committed to working with anyone, Democrat or Republican, who wants to strengthen Social Security." It would be easy for a Republican or the commission to claim that Social Security would be "strengthened" by raising the retirement age and saving the benefits which now go to those under 70. Besides, when have Republicans worked with Obama, except to cut spending? Today's extremist Republicans have never supported Social Security-probably because it's a government program that works.

That's why my alarm bells rang when a search in Google brought me a story in Slate, by Peter Bray, about the Obama campaign and Social Security, way back there on Sept 19, 2008. It said, "This week the Obama campaign modified his position on a sensitive issue, Social Security. Compare the current 'Seniors & Social Security' page with the previous version. Now, tell me, why, oh why, would the Obama campaign delete the following sentence: '[Obama] does not believe it is fair to hardworking seniors to raise the retirement age....The new page includes some reassuring language about 'work[ing] with members of Congress from both parties to strengthen Social Security and prevent privatization while protecting middle class families from tax increases and benefit cuts.' Still for those who pay attention to such things, what the new page leaves out is as important as what it puts in."

So far, Obama has not taken a position on raising the retirement age; and I don't know if he's been asked. Aides have indicated he's considering this. But such a proposal is anathema to most of Obama's supporters. Ruben Burke, an official of the labor-backed Alliance of Retired Americans said, "Can you imagine working until 70? In physically demanding jobs like construction, manufacturing and the service sector, I just don't see how you can. And in a tough job market who would hire someone in their late 60s? Raising the retirement age is a benefit cut-plain and simple. We cannot allow it to be done."

Social Security is keeping 20 million older and disabled Americans and over a million children out of poverty. Polls report that 77 percent of Americans an 68 percent of Republicans believe that Washington should find other ways, rather than Social Security, to reduce the deficit. And AARP's survey shows strong majorities would prefer that their payroll taxes are raised rather than see benefits cuts.

Because Obama has yet to make his views known on raising the retirement age, AARP-the nation's largest and most powerful organization of older Americans, has yet to take an official position on the issue, which is an ominous sign. But a high-ranking source told me, "in fact, we opposed raising the age to 70. The idea is tremendously unpopular and amounts to a serious across the board benefit cut and is based on the fantasy that employers would hire people that age. Most have forgotten that normal retirement age goes to 67 under current law. Half of all people turning 62 claim Social Security today. Accepting a 25 percent benefit cut is mostly shortsighted in view of needs later on."

The National Academy of Social Insurance says raising the retirement age would save about a third of the projected shortfall, but it suggests caution because low income and older workers in physically demanding jobs have shorter life spans than, say, white collar workers. I will repeat what I asked in my column some weeks ago, how many men and women in their sixties will die while waiting for their first Social Security check.

Liberal economist Dean Baker says that those who would slice benefits are saying, in effect, "In the future, Social Security might have to cut benefits. To prevent these possible future benefits cuts, we must cut future benefits." Economist and New York Times columnist Paul Krugman charges that Republicans and the deficit commission say "in order to avoid the possibility of future benefit cuts we must cut future benefits."

Tell us this isn't so, Mr. President.

Write to saulfriedman@comcast.net . Friedman also writes for www.timegoesbt.net

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