02/16/2011 12:32 pm ET Updated May 25, 2011

Obama Hints At Priorities On Entitlement Reform

WASHINGTON -- During his presser yesterday, President Barack Obama mainly characterized entitlement reform as something that wouldn't come in the form of an "Obama plan," but rather, through a process where all parties come together and have a difficult debate in the hopes that the ol' can do spirit of the lame duck session might manifest itself in a compromise where everyone gives a little bit of ground. This, naturally, opens the door to speculation that the president is setting some kind of trap for Congressional Republicans -- by getting them to make "the first move," they're set up to absorb the lion's share of the criticism.

In that way, the stage is set for further budget kabuki. But elsewhere in his presser, Obama was pretty plainspoken about how the world of entitlements is ordered:

The truth is Social Security is not the huge contributor to the deficit that the other two entitlements are. I'm confident we can get Social Security done in the same way that Ronald Reagan and Tip O'Neill were able to get it done, by parties coming together, making some modest adjustments. I think we can avoid slashing benefits, and I think we can make it stable and stronger for not only this generation but for the next generation.

Medicare and Medicaid are huge problems because health care costs are rising even as the population is getting older. And so what I've said is that I'm prepared to work with Democrats and Republicans to start dealing with that in a serious way.

The famous exchange from Butch Cassidy and the Sundance Kid applies. Sundance is worried that he'll drown when he lands in the river at the bottom of the canyon. Cassidy reminds him that the fall is probably what's going to kill him. In the entitlement universe, Social Security is some deep water, but Medicare and Medicaid are the plummet.

Let me pass the mike to Kevin Drum:

Medicare is a problem. But unless you believe that the United States is literally going to collapse in the near future, Social Security isn't. Period.

The weird thing about this is that Social Security isn't even hard to understand. Taxes go in, benefits go out. Unlike healthcare, which involves extremely difficult questions of technological advancement and the specter of rationing, Social Security is just arithmetic...Right now, Social Security costs about 4.5% of GDP. That's going to increase as the baby boomer generation retires, and then in 2030 it steadies out forever at around 6% of GDP.

That's it. That's the story. Our choices are equally simple. If, about ten years from now, we slowly increase payroll taxes by 1.5% of GDP, Social Security will be able to pay out its current promised benefits for the rest of the century. Conversely, if we keep payroll taxes where they are today, benefits will have to be cut to 75% of their promised level by around 2040 or so. And if we do something in the middle, then taxes will go up, say, 1% of GDP and benefits will drop to about 92% of their promised level. But one way or another, at some level between 75% and 100% of what we've promised, Social Security benefits will always be there.

And this is something that rarely gets said. As Steve Benen remarked, "I'm glad he reminded reporters about this, because I get the sense it's a point the media often forgets." Not just forgets, actually: the media hypes Social Security as a terrifying, high-stakes issue that makes or breaks political careers. Not surprisingly, few that value their political careers dare to touch the "third rail of American politics." (And the most lasting and most cherished entitlement program in Washington is "incumbency.")

Perhaps they can be retrained, but I have my doubts: after all, this is the same media that wondered why Obama spent all that time on health care reform instead of improving the economy, because it was completely lost on them that they were interrelated.

Obama: Social Security isn't the problem [The Plum Line @ WaPo]
Not All Entitlements Are Created Equal [Washington Monthly]
Understanding Social Security in One Easy Lesson [Mother Jones]
Village on the rocks [Digby]

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