President Obama comments on Social Security privatization in the last week sound like something that he stole from the playbook of the last Democrat in the White House. Just as President Clinton tried to tell us that the veracity of one of his statements on the Lewinski affair depended on “what your definition of ‘is’ is,” President Obama is telling us that he will stand up against Republican plans to privatize Social Security.
That is nice to hear, but it really is beside the point. President Bush did try to privatize Social Security in 2005 and, no doubt, many Republicans would still like to do so today, but privatization is not currently on the agenda of their leadership. The immediate threat to Social Security is plans to cut benefits by either changing the benefit formula and/or raising the retirement age.
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This threat comes not just from the Republican Party, but from the top levels of the Democratic Party as well. Rep. Steny Hoyer, the majority leader in the House, explicitly called for raising the retirement age to 70 in a speech earlier this summer. Erskine Bowles, the co-chairman of the deficit commission appointed by President Obama, also explicitly said that cuts to Social Security would be on the agenda of the deficit commission. Of course, former Wyoming Sen. Alan Simpson, the Republican that President Obama appointed as the other co-chair of the commission, never misses an opportunity to say that he wants to cut Social Security.
It has become quite fashionable in elite policy circles to call for Social Security cuts like raising the retirement age. In fact, support for cutting Social Security is almost a requirement for being accepted as a serious person in places like The Washington Post opinion pages and other centers of elite opinion.
This is really bad policy. Thanks to the incompetent economic management of these same elites, the huge cohort of baby boomers at the edge of retirement will have little other than their Social Security to support them in retirement. The typical older baby boomer (ages 55 to 64) has about $180,000 in accumulated wealth, counting equity in their home. This would be roughly enough to pay off the mortgage on the median house, leaving them nothing other than their Social Security to live on in retirement.
The typical younger baby boomer (ages 45-54) has accumulated about $80,000 counting the equity in their home. This is roughly enough to pay off half of the mortgage on the median house.
There is no evidence that the elite Social Security cutters have any idea of the financial situation of those approaching retirement. They continually tout the idea of cutting benefits for the “affluent elderly.” Unless we redefine the concept of “affluent” down by quite a bit (maybe to $50,000 a year), there are not enough affluent elderly for cuts to their Social Security benefits to make any difference either for Social Security’s solvency or the unified government budget, which includes Social Security’s finances.
The elite Social Security cutters also seem to have little clue about the sort of jobs most workers hold when they suggest raising the retirement age. While the Washington crew can probably hold their breakfast meetings and power lunches well into their 70s, nearly half of workers over age 58 work at jobs that are either physically demanding or involve difficult work conditions. To these people, the idea of working into their 70s isn’t quite so cute.
It should also bother workers that plans to cut Social Security would take away benefits for which they have already paid. The Social Security trust fund has accumulated a surplus of more than $2.5 trillion. According to the report issued just last week by the Social Security trustees, the program can pay all future benefits through the year 2037 with no changes whatsoever. The workers who will be retiring in the next 15-20 years have paid for their benefits. They have every right to be furious if President Obama or anyone else suggests taking these benefits away from them.
So, the real question is where does President Obama stand on the plans being put forward to cut Social Security? This should be on the table for all to see. We have an election in two and a half months. If Social Security cuts are on the table, then voters should have the right to know where their representatives in Congress stand. This would be one of the most important issues addressed by Congress. It would be an offense against democracy if it were not discussed in the election and voters given a chance to express their views.
The Republicans are right to attack President Obama for creating a false crusade against Social Security privatization. It’s good to know that he’s against it, but we don’t need to know what his definition of “is” is. If he wants to defend Social Security, then he should speak up clearly against the real threats facing the program today.