WASHINGTON -- While arguing at Tuesday's press conference that his progressive critics are being sanctimonious and overly pure, President Obama flatly misstated the history of the Social Security program and disregarded the central intent of the public health insurance option.
Both concerns were raised Wednesday by economics blogger and former Clinton Treasury official Brad DeLong.
At the press conference (see the transcript), Obama defended his controversial decision to give in to Republican demands for a massive tax cut for the rich on the grounds that "in order to get stuff done, we're going to compromise."
His prime example: "This is why FDR, when he started Social Security, it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people."
As it happens, Obama said the same thing in October, in an interview with Comedy Central's Jon Stewart: "When Social Security was passed, it applied to widows and orphans and it was a very restricted program, and over time that structure that was built ended up developing into the most important social safety net that we have in our country." That did not go unnoticed in the blogosphere, either.
Obama's overall point -- that Social Security wasn't born fully grown -- was exactly right. But his facts were exactly wrong. The Social Security Act, as first signed into law by Franklin Delano Roosevelt in 1935, paid retirement benefits to the primary worker -- and not to their widows and orphans. It wasn't until a 1939 change that the law added benefits for survivors and for the retiree's spouse and children.
It's possible that Obama was confusing FDR's law with what some consider a precursor of sorts, the Civil War Pension program. That program, which dates back to 1862, provided benefits linked to disabilities incurred in the war and pensions for widows and orphans.
The White House press office chose not to address the issue.
Less objectively false, and yet more offensive to progressives, was Obama's dismissive remark about the hard-fought battle to establish a government-run insurance program as an option in case the private market failed to provide consumers with adequate and reasonably priced policies. Here's what Obama said about that:
[T]his notion that somehow we are willing to compromise too much reminds me of the debate that we had during health care. This is the public option debate all over again. So I pass a signature piece of legislation where we finally get health care for all Americans, something that Democrats had been fighting for for a hundred years, but because there was a provision in there that they didn't get that would have affected maybe a couple of million people, even though we got health insurance for 30 million people and the potential for lower premiums for 100 million people, that somehow that was a sign of weakness and compromise.
To support Obama's statement, an administration official pointed the Huffington Post toward a November 2009 Congressional Budget Office memo's conclusion that "Roughly one out of eight people purchasing coverage through the exchanges would enroll in the public plan, CBO estimates, meaning that total enrollment in that plan would be 3 million to 4 million."
But, Obama's fairly large rounding error aside, the public option was not simply a matter of enrollees. What the president conspicuously disregarded was that the central point of the public option was that its existence would exert enormous competitive pressure on the private insurance system. The goal was not to serve a particularly large number of people directly -- that would only happen if the private offerings were terribly inadequate. The goal was to keep the private sector honest. So no matter how many people it enrolled, "the provision," as Obama put it "would have affected" tens of millions.
There were also a few problems with the rhetorical structure of Obama's comments. If he truly believes that good things start small, like Social Security did, then criticizing the public option for starting small isn't logically consistent. And the tax cut he agreed to is hardly a half measure in the right direction; it's a colossal collapse in the wrong direction.