Last week President Obama said that he will be "agnostic" as to any changes, including benefit cuts, to Social Security that his debt reduction commission will recommend. This is a far cry from his constant campaign rhetoric in which he constantly reiterated that his plan was to raise the payroll cap on contributions, even if he promised to "listen" to all voices.
This is a sad but necessary piece in which I lay out the evidence, which I believe is compelling, that Barack Obama's own words and deeds reveal his real agenda all along has been to use a commission or summit to cut Social Security benefits, and that the campaign rhetoric was just a sop to anesthetize opposition. This for a program that, at worst, faces a shortfall 30 years from now, and that Obama himself called the cornerstone of the American social compact.
(Apologies, this is really long. But to reveal the truth, a truth that has been hiding in plain sight right before our eyes all along, the full record must be laid out.)
Of his Social Security system, FDR bluntly called it:
politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren't a matter of economics, they're straight politics."
So you would think that a Democratic President would be an ardent supporter of ensuring that workers received the benefits under the system that they had worked for and contributed to their entire lives. Not so. Last week President Obama said that
a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.
"The whole point of it is to make sure that all ideas are on the table," the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. "So what I want to do is to be completely agnostic, in terms of solutions."
When Barack Obama does not actually support a plan, he offers vague platitudes - lip services - but nothing more. Such was his "support" for crucial, progressive, popular ideas about Health Care Reform, supposedly his Administration's signature piece of legislation. In contrast, when Barack Obama has wanted to, he has been relentless and decisive, as he was in September 2008 when he quickly and crucially supported the Wall Street bailout. And just last month, the White House was quick to whip a wavering Senate into line about reconfirming Fed Chair Ben Bernanke with a 50, not 60, vote threshold. More on the significance of that at then end of this article.
So we need to look past Obama's always-perfect rhetoric to see if he is only paying lip service to an idea or if his actions show firm resolution. When it comes to Social Security, a comparison of what Obama the candidate said and what Obama the President has done show that his pledges to simply increase payroll taxes fall into the category of platitudes, while changing the program, apparently in part by cutting benefits, is clearly a matter of firm resolve. In essence, Obama's reasurance that while he would "convene a meeting" to listen to all sides, what he actually would propose would be a small increase in taxes on those earning over $250,000 who could easily afford it, was all along just a sop or a stalking horse to induce voters to overlook what was hiding in plain sight, namely his desire for a "nonpartisan" or "bipartisan" comission that would recommend cuts in Social Security benefits.
The evidence comes right out of Obama's mouth, and when put together, in my opinion is compelling.
I. Obama the Candidate
Candidate Barack Obama created a small firestorm in November 2007 after he adopted a RW meme and said:
Senator Clinton says that she's concerned about Social Security but is not willing to say how she would solve the Social Security crisis
and followed that up with a campaign ad in Iowa (no longer online)
"that focused on Social Security[, i]n [which] he [told] a group of Iowans, "I don't want to just put my finger out to the wind and see what the polls say. I want to bring the country together to solve a problem."
This RW claim that Social Security was in "crisis" created quite a stir, with Prof. Paul Krugman saying that
Lately, Barack Obama has been saying that major action is needed to avert what he keeps calling a "crisis" in Social Security — most recently in an interview with The National Journal. Progressives who fought hard and successfully against the Bush administration’s attempt to panic America into privatizing the New Deal’s crown jewel are outraged, and rightly so.
That controversy erupted here as well, prompting me to write a diary explaining The Truth about Social Security, in which I pointed out that Social Security is not in "crisis", and is not a "real problem," manageable or not, needs no "fix," nor any intermeddling "Commission." As stated by the official projections by the Social Security trustees at that time, the program will be solvent without so much as lifting a little finger for decades to come. At worst, even after the "Great Recession", the problem is several decades away and is hardly an urgent priority. Even then, the core retirement program is not the issue; rather the deficits come from other programs such as Social Security disability.
Obama soon backtracked, and adopted a much more mainstream democratic position, that he maintained right up until he was elected President. Here is his actual speech in Iowa in which he first set forth his position on Social Security:
In this video (beginning at about 5:40), Obama point-blank states that:
- "Social Security is the cornerstone of the social compact in this country."
- "We also know that the system has problems." (later in the video, he says that the items listed below will make Social Security "solvent" indicating that it isn't now)
- "The underlying system is sound. The actual problem is a projected cash shortfall that can be readily solved. But the longer we wait to solve the problem, the bigger it grows," "The question is, how to solve this problem" (of the trust fund being depleted in 2040, after which SS turns into a pay as you go system..)
- "On issues as fundamental as how to protect Social Security, a candidate for president owes it to the American people to tell us where they stand," because you're not ready to lead if you can't tell us where you're going."
- "I do not believe that we need to cut benefits or raise the retirement age."
- "The best option, in my view, is to ask the highest income Americans to contribute a little bit more by raising the ceiling on what is currently paid on the amount of earnings subject to the social security tax."
- "We need to stop borrowing millions from the Social Security trust fund" in the federal budget.
A campaign site that is still up goes into great detail about candidate Obama's position with regard to Social Security. He emphasized three things:
(1) the belief that in the long run, Social Security was not solvent.
(2) While he would "convene a meeting" to discuss any and all options, forming a commission is exactly the wrong way to deal with the issue, but opposed forming a "binding" commission.
(3) Rising the limit on payroll contributions into the trust fund, beginning with incomre in excess of $250,000 was the best way to rectify the problem.
Here are Candidate Barack Obama's constant refrains on each of the above three items from that campaign site:
- Social Security has a "problem"
Good health care and tax reform will save entitlements
Q: How should we fix Social Security and other entitlement programs?
OBAMA: If we get our tax policies right so that they’re good for the middle class, if we reverse the policies of the last eight years that got us into this fix in the first place and that Sen. McCain supported, then we are going to be in a position to deal with Social Security and deal with Medicare....
Source: 2008 second presidential debate against John McCain Oct 7, 2008
Q: We all know that Social Security is running out of money....
A: .... we’ve got to make sure that we preserve Social Security is to do the same thing that Ronald Reagan and Tip O’Neill were able to do back in 1983, which is come up with a bipartisan solution that puts Social Security on a firm footing for a long time.
Source: 2007 YouTube Democratic Primary debate, Charleston SC Jul 23, 2007
- Obama supported a bipartisan solution to this "problem" including holding a meeting to explore all optionsL
Q: Would you raise the cap for Social Security tax above the current level of the first $97,500 worth of income?
A: I think that lifting the cap is probably going to be the best option. Now we’ve got to have a process [like the one] back in 1983. We need another one. And I think I’ve said before everything should be on the table. My personal view is that lifting the cap is much preferable to the other options that are available. But ...we should reject things that will weaken the system, including privatization, which essentially is going to put people’s retirement at the whim of the stock market.
Source: 2007 Democratic primary debate at Dartmouth College Sep 6, 2007
Cutting benefits & raising retirement age are wrong answers
Q: You said earlier this year that everything should be on the table for Social Security, including looking at raising retirement age, indexing benefits, and then suddenly you said, "I’m taking them off the table."
A: That’s not what I said. I said I will convene a meeting as president where we discuss all of the options that are available. I believe that cutting benefits is not the right answer; and that raising the retirement age is not the best option, particularly when we’ve got people who are still in manufacturing.
Q: But in May you said they would be on the table.
A: Well, I am going to be listening to any ideas that are presented, but I think that the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more and the people who are in need are protected. That is the option that I will be pushing forward.
Q: But the other options would be on the table?
A: Well, I will listen to all arguments and the best options.
Source: Meet the Press: 2007 "Meet the Candidates" series Nov 11, 2007
Commitment...Protect Social Security: Obama will preserve Social Security by stopping any efforts to privatize it and working in a bipartisan way to preserve it for future generations.
Source: Campaign booklet, "Blueprint for Change", p. 16-19 Feb 2, 2008
(emphasis within paragraphs mine)
But he was against delegating the issue to any appointed commission:
Must capture new revenue; no new Social Security Comission
OBAMA: We’re going to have to capture some revenue in order to stabilize the Social Security system. You can’t get something for nothing. And if we care about Social Security, which I do, and if we are firm in our commitment to make sure that it’s going to be there for the next generation, and not just for our generation, then we have an obligation to figure out how to stabilize the system. I think we should be honest in presenting our ideas in terms of how we’re going to do that and not just say that we’re going to form a commission and try to solve the problem some other way.
Source: 2008 Philadelphia primary debate, on eve of PA primary Apr 16, 2008
- Obama supported making up the shortfall by raising the cap on payroll taxes.
Raise cap on payroll tax for 3% of earners over $102,000
Q: The Republicans ... say for all your promises not to raise taxes on the middle class, that, in fact, you want to raise the cap on the Social Security payroll tax, and you also want to increase capital gains.
A: In terms of raising the cap on the payroll tax, right now everybody who’s making $102,000 or less pays 100% of payroll tax on 100% of their income. There are about 3% to 4% of Americans who are above $102,000 in income every year....
Source: 2008 Fox News interview: presidential series Apr 27, 2008
Raise $97K cap on payroll tax exempting earnings under $250K
OBAMA: What I have proposed is that we raise the cap on the payroll tax, because right now millionaires and billionaires don’t have to pay beyond $97,000 a year....
Q: But that’s a tax on people under $250,000.
OBAMA: That’s why I would look at potentially exempting those who are in between. This is an option that I would strongly consider, because the alternatives, like raising the retirement age, or cutting benefits, or raising the payroll tax on everybody, including people making less than $97,000 a year--those are not good policy options
Source: 2008 Philadelphia primary debate, on eve of PA primary Apr 16, 2008
The wealthy should pay a bit more on the payroll tax
Social Security is not in crisis; it is a fundamentally sound system, but it does have a problem, long-term. We’ve got 78 million baby boomers, who are going to be retiring over the next couple of decades. That means more retirees, fewer workers to support those retirees. We are going to have to do something about it. The best idea is to lift the cap on the payroll tax, potentially exempting middle-class folks, but making sure that the wealthy are paying more of their fair share, a little bit more.
Source: 2007 Democratic debate at Drexel University Oct 30, 2007
What we need to do is to raise the cap on the payroll tax so that wealthy individuals are paying a little bit more into the system, if we are going to deal with this problem specifically.
Source: 2008 Facebook/WMUR-NH Democratic primary debate Jan 6, 2006
In short, Candidate Obama articulated a problem, and a process to review it, he also was clear on his stand, raising the cap on payroll contributions, and rejecting benefit cuts. His campaign reiterated all of those in a closing campaign video in October 2008 that is still posted online:
Then Candidate Obama was elected President. As we will see, while his commitment to "pushing forward" an increase in payroll taxes disappeared, as did his vow not to cut benefits and his denunciation of any "binding commisssion," his determination that Social Security had a "problem" that was defined as reining in "rising costs," while the commitment to convene a meeting to push forward "all" (in actual practice just GOP and Blue Dog) options to change Social Security was resolute.
II. Obama the President
If his campaign positions were soothing, his words and actions as President, beginning with his very Inauguration Speech, were not:
That we are in the midst of crisis is now well understood.... Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many; and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.
We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions - that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.
Those were jarring words in an otherwise uplifting speech. If Obama was opposed to raising taxes on the middle/working classes, then what could "hard choices" and "unpleasant decisions" for average Americans possibly mean besides cutting back further on their safety net? News accounts of Obama's felicitations to conservatives who wanted to destroy Social Security that very same week strongly suggest that is exactly what he meant.
President-elect Barack Obama said overhauling entitlement programs such as Medicare and Social Security will be "a central part" of his administration's efforts to curb federal spending, the New York Times reports. Obama said, "We are beginning consultations with members of Congress around how we expect to approach the deficit," adding, "We expect that discussion around entitlements will be a part, a central part, of those plans." Obama said, "If we do nothing, then we will continue to see red ink as far as the eye can see."
Four days before his Inauguration, he reiterated this theme in a private meeting with the editorial board of the Washington Post during which he
pledged ... to shape a new Social Security and Medicare "bargain" with the American people, saying that the nation's long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.
That discussion will begin next month, Obama said, when he convenes a "fiscal responsibility summit" before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.
Mr. Obama unexpectedly approached [South Carolina Republican Senator Lindsey] Graham when he was at the White House to meet with Rahm Emanuel, Mr. Obama’s chief of staff. Mr. Graham ... said in an interview: "I know he’s sincere about wanting to do something about entitlements generally, health care and Social Security. And I want to help him."
Despite Mr. Obama’s interest, his political and policy advisers are divided ... Within the administration, John D. Podesta ... is among those arguing for action sooner rather than later. "What this crisis has proven," he said, "is that we need to have a basic benefit that keeps people out of poverty, and that we need to work at both ends — toward fiscal sustainability and toward ensuring that people, particularly at the bottom, have an adequate benefit."
The February 2009 "Fiscal Responsibility Summit"
The above January 15 Washington Post article crowed that
President-elect Barack Obama will convene a "fiscal responsibility summit" in February designed to bring together a variety of voices on solving the long term problems with the economy and with a special focus on entitlements....
Those invited to attend will include Senate Budget Chairman Kent Conrad (N.D.), ranking minority member Judd Gregg (N.H.), the conservative Democratic Blue Dog coalition and a host of outside groups with ideas on the matter, said the president-elect.
Chief among those Blue Dogs was representative Jim Coooper of Tennessee, the only democrat who voted in favor of Bush's plan to privatize Social Security.
Progressives? Not on the list. At least, not until the last minute. As of February 19:
Yesterday numerous sources in the health care policy world confirmed that the administration told them (again off the record) that Pete Peterson and Laura Tyson would be keynote speakers....
On a conference call today arranged by Campaign for America’s Future that included Roger Hickey, Jamie Galbraith, Nancy Altman and Dean Baker, Roger said that several of them had been told they might be invited to the summit, but no formal invitation had been issued yet (though Pete Peterson has his invitation).
If you didn't already know, Pete Peterson is the billionaire whose crusade to destroy Social Security and Medicare knows no bounds, and has been well-documented.
While progressives were shut out until the last moment, prior to the "summit,"
Obama met with 44 fiscally conservative "Blue Dog" Democrats this week and gave a nod to legislation that would set up commissions to deal with long-term deficit strains. The commissions would then present plans to Congress for an up-or-down vote.
"We feel like we've found a partner in the White House," said Rep. Charlie Melancon (D., La.), a Blue Dog co-chairman.
So much for "listening to all voices."
In short, only a month into his Administration, Candidate Obama's insistence on tax hikes as the method of long term Social Security budget balancing was replaced by President Obama's embrace of the Diamond-Orszag plan, and a willingness to enforce it by way of a binding commission. That name should be familiar too, because David Orszag is Obama's budget director, whose
long-running project ... has been replacing talk of an "entitlement crisis" with his argument that Social Security requires only modest tax hikes and benefit cuts.
(emphasis mine) Here is a quick partial summary of the "Diamond-Orszag plan":
Our plan makes the painful choices that are necessary—selecting a combination of benefit and revenue changes to restore long-term balance. In doing so, it focuses on three areas which contribute to the actuarial imbalance: improvements in life expectancy, increases in earnings inequality, and the burden of the legacy debt from Social Security’s early history.
.... For younger workers with average earnings, our proposal involves a gradual reduction in benefits from those scheduled under current law. For example, the reduction in benefits for a 45-year old average earner is less than 1 percent; for a 35-year-old, less than 5 percent; and for a 25-year-old, less than 9 percent. Reductions are smaller for lower earners, and larger for higher ones.
Because of the alarm that reports of the nature of the summit created, it was shrunk to a three hour forum, but the Administrtion let it be known that it was not wavering in its goals:
[T]he administration has tried to tamp down expectations, saying only that the gathering is an opening gambit in a long process toward financial solvency.
Expectations were "tamped down" only because, as the New York Times reported:
Mr. Obama considered announcing the formation of a Social Security task force at a White House "fiscal responsibility summit".... But several Democrats said that idea had been shelved, partly because of objections from House and Senate leaders....
Liberal Democrats are already serving notice that they will be equally vehement in opposing any reductions in scheduled benefits for future retirees.
The Obama Administration's continuing targeting of Social Security
If, because of the opposition of Liberal Democrats, particularly in the House, the "summit" went nowhere, the fervor for cutting Social Security benefits never died. Four days later, in a speech before a Joint Session of Congress Obama stated:
"To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security,"
Even more ominously, conservative NY Time columnist David Brooks reported that in early March, "four senior Administration officials" paid him a visit and assured him that
the long-range debt is what matters, and on this subject President Obama is hawkish.
He is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security as well as health spending.
But it turns out that it wasn't just "senior officials." We found out later via a column in Newsweek that
after Krugman's fellow Times op-ed columnist David Brooks wrote a critical column accusing Obama of overreaching, Brooks, a moderate Republican, was cajoled by three different aides and by the president himself, who just happened to drop by.
In other words, one of those four "officials" who assured him that the Administration was looking at ways to "reduce Social Security" was none other than President Barack Obama himself.
Given the relentless and extensive background briefings by Obama himself to the likes of Brooks and the WaPo's editorial board, the latter's constant bashing of Social Security denounced by economists Dean Baker and Berkeley Prof. Brad DeLong, among others, does not come out of nowhere. Simply put, the WaPo knows, because he has told them, that despite Candidate Obama's reassurances, President Obama very much wants to cut Social Security.
For example, Obama had yet another meeting with the WaPo editiorial board in July 2009, as reported by Reuters:
President Barack Obama, under pressure over the ballooning U.S. budget deficit, said on Wednesday he is preparing to launch an effort to rein in the escalating costs of the Social Security retirement fund and other popular government programs.
In an interview with the Washington Post, Obama said a new commission may be needed to examine reforms for addressing the deficit and the huge programs that contribute to the flow of red ink.
"I think we're in a position to be able to, either at the end of this year or early next year, start laying out a broader picture about how we are going to handle entitlements in a serious way," Obama said.
...."The debt and the deficit are deep concerns of mine," With public opinion polls showing people are nervous about the size of the deficit, Obama added, "I am very worried about federal spending."
...."Probably what you end up having to do in terms of structural reforms realistically is you probably have to set up some sort of commission or mechanism that reports back with the prospect of maybe locking in a pledge for action, post-election," he told The Washington Post. "Everything is going to have to be on the table."
....Obama said the reform effort "may start with Social Security because that's, frankly, the easier one." He also said tax reform should be considered.
Once again, note the about face on binding commissions. And instead of focusing on payroll tax increases for those earning over $100,000, Obama says that tax reform should "also" be considered, meaning that the primary "reform" is to be benefit cuts to "rein in costs."
Obama was true to his word that the matter would be placed on the front burner again at the end of 2009 or beginning of 2010. In November, Politico reported:
President Barack Obama plans to announce in next year's State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning.
White House budget director Peter Orszag said in a statement to POLITICO: "The President strongly believes that as the recovery strengthens and job growth returns, we will have to take the tough steps necessary to return our nation to a fiscally disciplined and sustainable path."
Remember I told you that we would return to the reappointment of Fed Chair Ben Bernanke? If Barack Obama couldn't be bothered to expend any political capital to ensure that all Americans got reasonable health care, he certainly was able to whip a wavering Senate in line over something he considered important, like Bernanke's reappointment. Bernanke's Senate reconfirmation testimony was surely cleared or at least known in advance by the White House and included the following:
Ben Bernanke ... arget[ed] nothing less than Social Security:
.... "I think you can’t tackle the problem in the medium term without doing something about getting entitlements under control and reducing the costs, particularly of health care."
Bernanke reminded Congress that it has the power to repeal Social Security and Medicare. "It’s only mandatory until Congress says it’s not mandatory. And we have no option but to address those costs at some point or else we will have an unsustainable situation," said Bernanke [...]
Sen. Jack Reed (D-R.I.) followed Bennett and pointed out that "there’s only really two ways you can deflect this deficit, and that’s either by cutting expenditures or raising income taxes or other forms of taxes."
Reed asked him if he could think of other ways, but Bernanke returned to entitlement money as the way to balance the budget.
"Willie Sutton robbed banks because that’s where the money is, as he put it," Bernanke said. "The money in this case is in entitlements."
On January 24, 2010, Obama explicitly endorsed the Conrad-Gregg deficit commision, the recommendations of which would be binding. When that failed, he used his State of the Union address to announce that he would appoint a deficit commission of his own via Executive Order.
I ask you: if you are looking for a "neutral, nonpartisan" figure to cite as support for imposing benefit cuts (or perhaps to even spearhead the Commission), then who better than the Chairman of the Federal Reserve?
Two final notes:
(1) Remember how Candidate Obama constantly proclaimed that an increase in the ceiling for payment of payroll taxes was the only change that Social Security needed? I searched and searched for any statement by President Barack Obama that that was still his position. After December 2008 there are no such statements to be found anywhere.
(2) Even if Obama's assumptions are correct and his plan restores "solvency" to Social Security, the GOP will not cease their campaign to destroy it. They will loot it again the next time they are in power. And Barack Obama will have set the precedent for the "solution" of further benefit cuts.
In Conclusion, I submit to you that after this long litany of Obama's own words and actions, there can no longer any doubt that Candidate Obama's soothing words were a ruse, a sop, but that President Obama is relentlessly pushing forward what he said all along he would do: create a commission to examine changes in Social Security, and then enact them, mainly in the form of cuts in benefits. It is not on process but on substance that Candidate Obama lied. Oh, sure, payroll tax increases might "also" be considered -- tax increases that surely he will 'push forward' with all of the vigor he 'pushed forward' critical elements of Health Care Reform.
No real Democrat is "agnostic" about Social Security. As Obama himself solemnly swore, "On issues as fundamental as how to protect Social Security, a candidate for president" does indeed "owe it to the American people to tell us where they stand," and on the ultimate substance of his stand Candidate Obama lied. So nobody should be surprised if millions of democratic voters become "agnostic" about the re-election of "democrats" who do what no Republican has been able to do -- to take a jackhammer to "the cornerstone of the [American] social compact."