Treasury Secretary Tim Geithner
Unnamed sources tell The Hill that the White House political and economic teams are divided over cuts to Social Security. On the one hand, apparently, the huge brains at Treasury (the folks who brought us HAMP) think that benefits have to be cut in order to secure the program's future. The political team, according to these sources, recognizes the electoral dangers of doing so.
Treasury Secretary Timothy Geithner, National Economic Council Director Gene Sperling and Sperling’s deputy, Jason Furman—leading figures in the president’s economic team—are pressing Obama to cut Social Security benefits if necessary, say sources familiar with their positions.
But Obama’s political team, led by David Axelrod, David Plouffe and Jim Messina, are urging the president to understand that backing benefit cuts could prove disastrous to his 2012 reelection hopes, sources say.
The political team is winning the argument so far, but internal debate rages at the White House as Republicans in Congress insist sweeping efforts to restore government finances must include Social Security reform....
“There are two camps,” the source added. “One camp wants to be able to throw a bone to Republicans and some [centrist] Democrats.
“The political people would prefer not to be accused of being the party that cuts Social Security in those ways. Some political people would like to see the president out there defending the program and making the case that it has nothing to do with the deficit.”
A second Democratic source, who has pushed to reform Social Security by increasing the flow of revenues to the trust fund and reducing benefits, said, “Geithner’s been the most forward-leaning.”
Obama’s economics team is telling the president that benefit cuts would be less draconian with Democrats controlling the White House. Cutting costs for the safety net would help bond markets and restrain future interest rates, they add.
Figures that this economic team would be more worried about keeping the bond market strong right now than beefing up revenues to the program by coming up with a jobs program that put people back to work and paying payroll taxes. As always, markets first.
This is Social Security as political football, or "a bone to Republicans and moderate Democrats," rather than as a vital program that has kept generations of Americans out of abject poverty. Yeah, that sounds about right for our political culture. Unfortunately, it's a trap Obama walked into with eyes wide open, having ceded to the deficit hysteria and creating the catfood commission. Hopefully he'll start listening to some economists outside his team, say Paul Krugman, who has a better grasp of the realities of Social Security.
After all, his team are the guys who still say HAMP is successful. Can their judgment really be trusted?