Editore"s Note
Tilting at Windmills

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February 22, 2011

OMB CHIEF: 'SOCIAL SECURITY ISN'T THE PROBLEM'.... For all the talk about "entitlements" and the need to "reform" the various programs in the context of long-term fiscal challenges, the White House seems acutely aware of the fact that not all entitlements are created equal. Given that much of the political establishment has forgotten this, I'm glad the Obama team gets it.

Jacob Lew, director of the Office of Management and Budget, has a worthwhile piece in USA Today, for example, separating Social Security from the larger budget mess. Indeed, Lew, after noting the importance of understanding "the causes of the pressing fiscal problems," reminds readers that Social Security "does not cause our deficits."

Social Security benefits are entirely self-financing. They are paid for with payroll taxes collected from workers and their employers throughout their careers. These taxes are placed in a trust fund dedicated to paying benefits owed to current and future beneficiaries. [...] Blaming Social Security for our fiscal woes is like blaming you for not saving enough in your checking account because the bank lost all depositors' money. The problem is not Social Security; the problem is the mismatch between outlays and revenues in the rest of the budget. Closing that gap and paying down our debt will take tough choices, and the president's budget makes them. Strengthening Social Security is an important, but parallel, issue that needs to be addressed as quickly as possible. But let's not confuse it as either the cause of or a solution to our short-term fiscal problems.

I have no idea if arguments like these are connecting, but I'm glad officials are making them. Last week, at a White House press conference, the AP's Ben Feller noted in his question "the the long-term crushing costs of Social Security, Medicare, Medicaid -- the real drivers of long-term debt." President Obama took the time to emphasize the distinctions between them: "The truth is Social Security is not the huge contributor to the deficit that the other two entitlements are... Medicare and Medicaid are huge problems because health care costs are rising even as the population is getting older."

I suspect we're seeing this push because the White House realizes congressional Republicans want to cut Social Security, and the administration is laying the groundwork for the larger argument: Social Security just isn't in the same category as Medicare and Medicaid, so it's a mistake to treat them all as equivalent "entitlements."

Social Security is in pretty good shape. Its long-term finances could be improved even more with some minor tweaks that most folks probably wouldn't even notice, but there's no crisis, the system isn't going bankrupt, and if policymakers decided not to do anything for a while, that'd be fine, too. The more the White House reminds folks about this, the better.

Steve Benen 10:05 AM Permalink | Trackbacks | Comments (28)

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Remove the income cap....problem solved. Trouble is it is too effective a straw man for both parties to allow an easy solution.

Posted by: John R on February 22, 2011 at 10:16 AM | PERMALINK

I have it on pretty good authority that as long as Rupert Murdoch holds the megaphone where the sound coming out of the megaphone (that passes for our media) there is zilch that can gainsay the little darlings who speak at king Rupert's Beck and Limbaugh . I could be wrong .

Posted by: FRP on February 22, 2011 at 10:18 AM | PERMALINK

When Saint Ronald the Raygun and Mr. Andrea Mitchell saved social security forever in the 1980's, the retirement age was raised, the trust fund was started, and for decades since workers have overpaid payroll taxes. At that time, that represented a decrease in benefits of 17-22%, depending upon which actuary tables are reviewed.

When St. Ronald and Alan Greenspan made social security solvent forever in the 1980's, they capped payroll taxes on the amount that covered 90% of income. Since, the adjusted amount of income that was included in payroll taxes was changed from being the amount that would cover 90% of all income to being 'inflation' adjusted.

Due to the ever widening disparity of income received by the top end income recipients (note that I do not say 'earners') , the level of total income subject to social security payroll taxes is now only 84%.

If the 'cutoff' was adjusted to match the original intent of being collected on 90% of all income, the cutoff would be $180,000 +/- and social security would be more than fully funded for at least the next 36 years.

Posted by: AngryOldVet on February 22, 2011 at 10:20 AM | PERMALINK

"Entitlements" vs. benefits.

The right has created that "entitlement" meme. And, as usual, the Democrats fall right into it, and use the same term or language.
Stop calling them that - call them benefits.

Can't anybody on the Democratic side play this politics game?

Hey, Frank Luntz apparently has no concscience, maybe if we give him a really great offer, that turd can come and play for us.
But he is effective, you can't say he's not...

Posted by: c u n d gulag on February 22, 2011 at 10:20 AM | PERMALINK

Social Security is an enormous pile of cash that many parties- primarily the banksters- are eager to get their hands on. Because borrowing at zero percent from the fed, and then buying U.S. debt that earns one or two percent is not enough.

Posted by: DAY on February 22, 2011 at 10:22 AM | PERMALINK

If Social Security isn't a mess, why do all the respected economists keep saying it is on Fox News?

For a supposed reality based community you guys are pretty good at shutting your eyes to the truth.

The only way to solve this mess is to eliminate all benefits to people under age 73. Sorry, but facts are inconvenient things, as you libs like to say.

Posted by: Mlke K on February 22, 2011 at 10:24 AM | PERMALINK

Social Security does NOT need to be "addressed as quickly as possible", and certainly not in this political climate. There will plenty of time in which to make appropriate adjustments- basically, just raising the income cap on the payroll tax- when the political climate becomes more favorable for doing this without damaging and unjustifiable benefit cuts. Lew's words would be a lot more welcome if he had just STFU about that nonsense.

Posted by: Steve LaBonne on February 22, 2011 at 10:25 AM | PERMALINK

The sad truth is that it is not entitlements that are the problem. It is health care costs. Regardlesss of how people are provided coverage or otherwise pay for health care, the costs will bankrupt. Health cares costs must be contained. The health care reform was a start, now the effort needs to continue.

Posted by: George on February 22, 2011 at 10:30 AM | PERMALINK

Two things:
1-the GOP wants to cut anything that keeps a semblance of a middle class intact. SocSec is part of that.
2-The solution to the SocSec "problem" is hardly a secret, and has been aluded to in comments above. RAISE the freakin' cap. Doesn't have to be an immediate rise to $150k (which should be the goal), but rather a bill that takes it to $110k now, $115k in 3 years, $120 in five years, $125 in 10 years....moderate, sensible, effective. But of course the GOP doesn't do moderate,sensible and effective. Neither, apparently in this case, does the president or the Dems.

Posted by: T2 on February 22, 2011 at 10:45 AM | PERMALINK

Mike K--
You gotta be a troll. Anyone with one eye and fifty percent mental capacity has to realize that Faux News is not a credible unbiased source of information. Really, who are you going to believe, the Congressional Budget Office or a bunch of corporate shills working for Fox.

Posted by: sparky on February 22, 2011 at 10:48 AM | PERMALINK

It seems like there is Myke K and Mike K and Al and fake Al and one or two are really wingnuts or maybe all are subltle parodies. Who knows?

Please everyone, make the snark clear and stop confusing everyone. It's not worth it. I blame it all on Andy Kaufmann.

Posted by: emjayay on February 22, 2011 at 10:56 AM | PERMALINK

The evidence is clear; target, plunder, reap, go.

Social Security. Why not privatize this sh*tload of cash, I mean how can you refudiate the need to attack this issue?

Since it's social, it's an ism, so it has to get f**ked by the Greedy Ol' Party.

Posted by: Tom Nicholson on February 22, 2011 at 11:06 AM | PERMALINK

the problem is the mismatch between outlays and revenues in the rest of the budget

Shhhh! He can't bring up revenues! Doing so might imply that part of the solution to the Republican deficit is repealing Republican tax cuts. The Republicans haven't worked so hard to co-opt media elites to have a good faith debate on budgetary realities!

Speaking of good faith, "Mlke K" is a parody -- and a spot-on one at that -- of well-known movement crank "Mike K," who's been known to do some drive-by trolling in these forums. "Mlke K"'s posts are more reasonable.

Posted by: Gregory on February 22, 2011 at 11:18 AM | PERMALINK

I'd like to see everyone, including you Steve, get a little more forceful defending Social Security.

By law Social Security can't contribute to the deficit.

And it never has contributed one dime to the deficit.

Posted by: jharp on February 22, 2011 at 11:23 AM | PERMALINK

I did broaden my original position, which was that SS benefits should be eliminated for everyone who is not currently exactly 73 years old. On further thought I believe that everyone who is currently 73 and older should get them.

Looks like I'm the only one doing any compromising here. Typical.

Posted by: Mlke K on February 22, 2011 at 11:28 AM | PERMALINK

"The only way to solve this mess is to eliminate all benefits to people under age 73. Sorry, but facts are inconvenient things, as you libs like to say. Posted by: Mlke K"

With an aging population you will find that more people will apply for disability payments because of early onset Alzheimers, heart attacks, pacemakers and a whole variety of medical ailments.

It is hard enough for a 55 year old person find work when they are laid off. Can you imagine how hard it would be for someone 70 years old, going blind with a pacemaker and diabetes to find work? WalMart can use only so many greeters.

Posted by: wbn on February 22, 2011 at 11:28 AM | PERMALINK

The GOP begrudges every single dollar that is not in their pockets or under their control.

Pennies from the millions make millions for the few.

Time to turn the tables on them.

Posted by: jjm on February 22, 2011 at 11:33 AM | PERMALINK

Social Security would be just fine if they take away that income cap (which I prefer to payment indexing, which sounds appealing to many but comparing different kinds and the differential effects of having lots of money v. "income" as rate of increase, etc - better to take more now from the uppers and just pay everyone out later IMHO.) Some say, FICA tax unearned income too but REM that is a shifting thing based on profit/loss - we give back as deduction for loss, I don't think we want to give back SS tax too! If Obama is for real to any remaining degree he will push lifting that cap entirely, and I'd be willing to use that as trade off to keep regular income rates down to low 30s, esp. or even less for the

Fine minds make fine distinctions.

Posted by: neil b. on February 22, 2011 at 11:37 AM | PERMALINK

Hey Mike K I've got an idea. Hows about we take 50% of all money from anyone who has more than 10million dollars and fix social security and and all budget problems to the great benefit of 97% of all americans. And we do it by act of congress and we'll call it the Free Markets act.

Posted by: Gandalf on February 22, 2011 at 11:39 AM | PERMALINK

I was thinking we ought to raise the cap, but I like Gandalf's idea much better.

Posted by: Gretchen on February 22, 2011 at 12:49 PM | PERMALINK

So where are the fear mongers of the left claiming that Obama was going to team up with Republicans and gut Social Security?

Posted by: Alli on February 22, 2011 at 12:52 PM | PERMALINK

The Goppers are also gunning for Social Security because it is a big government program that works. It blows a huge hole in their arguments that the Federal government is the problem, not the solution. They have to break it to prove their point.
The Teabuggers who demand that the feds keep their hands off SS are suffering from the cognitive dissonance in right-wing propaganda.

Posted by: oldswede on February 22, 2011 at 1:27 PM | PERMALINK

Social Security is in pretty good shape.

On paper, yes. However, the GOP wants to default on the special Treasury bonds that make up the trust fund. In short, every person who has drawn a paycheck at any time from 1983 until today has been loaning money to the government. The Republicans don't want to pay us back.

Posted by: Quaker in a Basement on February 22, 2011 at 1:31 PM | PERMALINK

@AngryOldVet--Thank you! I saw this point about SS tax now being levied on 84% of income, rather than the intended 90%, because of the increasing income disparity made last week by Robert Reich and was flabbergasted that I'd never heard it before.

Why this isn't front and center in all discussions about how to "fix" SS, I can't imagine. It isn't that complicated, not if I have no trouble understanding it.

Posted by: Swift Loris on February 22, 2011 at 1:38 PM | PERMALINK

Mike K thinks there are respected economists on Fox News? OK, I shouldn't laugh as I just read the attempted rebuttal by USA Today, which basically tries to say that $2.6 trillion in Trust Fund reserves and its associated interest income really doesn't count.

Posted by: pgl on February 22, 2011 at 2:09 PM | PERMALINK

Social Security should never have ben part of the budget debate. Only Republican right-wing ideologues, that want to either privative or eliminate the program, and our lazy corporate media, have made this a budget issue. The biggest problems are in Medicare (driven by the lack of effective cost controls in health care) and the bloated Department of Defense budget and Congressional hacks who keep ramming unwanted and uneeded weapons systems (owned by their campaign donors) down the Pentagon's throat.

Posted by: max on February 22, 2011 at 2:17 PM | PERMALINK

"Hey, Frank Luntz apparently has no concscience, maybe if we give him a really great offer, that turd can come and play for us. Yuck! But he is effective, you can't say he's not..." - c u n d gulag.

We already have someone, and his name is George Lakoff.

Too bad party leadership doesn't give him the time of day.

Check out his latest article speaking truth to power:


Posted by: bdop4 on February 22, 2011 at 2:24 PM | PERMALINK

let go a little deeper lets stop these long term disabilty insurance companies from forcing people to apply for ssdi and offsetn payments so they dont have to pay full benefits ss is paying more nd their paying less check it out its trueeeee,,,, asking for your lupsum of cash u get from ssdi then cuttn ur payment and these insurance companies are putting trillions in their pockets when they cut payments the company gives bonuses,,, i promise u if the gov do sumthing about this ss will be saved...you sign up for these policyies only to be told u need to apply for ssdi and if u dont they estimate ur payment they think u should get from ssdi therefore all the money you and your company has paid into these policies get reversed by the big insurance companies

Posted by: cmontan on February 26, 2011 at 3:00 PM | PERMALINK



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