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Social Security Cuts Are Not Big News at the Washington Post

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Sunday, 04 July 2010 07:41

In an interview with the Pittsburgh Tribune-Review laat week, House Minority Leader John Boehner called for cutting Social Security benefits to pay for the war in Afghanistan. Somehow, this comment passed largely unnoticed in the media, including a Washington Post column that discussed the interview.

The column complained that Boehner, "offered few concrete thoughts about the GOP agenda." It later went on to say:

"Nor did he seem eager to tip his hand on the terms of entitlement reform. In his interview with the Tribune-Review, Boehner volunteered that the Social Security retirement age might need to be raised to 70 for younger workers but he would go no further."

Boehner's suggested increase in the retirement age would be roughly equivalent to a 15 percent cut in benefits when it is fully phased in. Since most retirees are primarily dependent on their Social Security benefits for income, this would be comparable in many cases to a 15 percentage point increase in their income taxes. Furthermore, this cut will begin to hit near retirees soon, since it is a phased increase of three years in the retirement age that will be completed in 22 years. 

One might think that this sort of cut to the nation's most important social program would be big news, but apparently it did not go far enough for the Washington Post. Of course Boehner actually did suggest further cuts in his interview. He also proposed (in a somewhat mangled form) to have initial benefits indexed to prices rather than wages. This implies reducing scheduled benefits by approximately 1.0 percent a year. Under this formula, after 10 years retirees will get 10 percent less than is provided under current law and after 20 years they would get approximately 20 percent less. (Compounding reduces the impact slightly.) While the full cut would only apply to workers at the maximum wage (@$106,000 at present), workers earning $70,000 a year would see cuts that are close to half this size.

In short, Mr. Boehner has proposed very large cuts to the country's most important social program, to pay for an unpopular war (the Congressional Budget Office projects that the trust fund will be fully solvent until 2043, so the cuts are not needed to keep SS itself solvent), and the Post dismisses his comments by saying that "he offered few concrete thoughts on the GOP agenda." It is difficult to imagine what Mr. Boehner would have to say to get the Post to take his proposals seriously.

Comments (7)Add Comment
...
written by diesel, July 04, 2010 10:16
I must confess, when I read the Boehner thing a few days ago, my heart sank. There's no bottom to their relentless, remorseless attack on the security of the American middle-class-working person. If his party were to ever attain a filibuster-proof majority, we'd be sunk.

We have such a pitiable shred of security compared to the citizens of other manufacturing nations (I won't call us first-world since by many measures we're not)and they (Boehner and co.) simply cannot leave even that alone. For some reason, it really aggravates them that we have a successful self-insurance program. Evidently it flies in the face of their model of the alleged superiority and efficiency of the private sector.

But I suspect that they are just plain cruel and have a strong need to punish. The view that Americans must suffer because they have sinned (in spending beyond their resources, accruing excessive debt, what-have-you) has a long honorable history in this country and appeals to a masochistic streak in the American character (which also explains why they continue to vote against their own self interest). Meting out punishment in response to these alleged iniquities allows the Boehner types to express their cruel side with impunity. It provides a cloak or cover. "It's for the good of the economy." Tough love (and touch luck for those on the receiving end of their tough love).

Some of you will think that this is not Economics, but you could not be more wrong. I urge you to read current research from cognitive science which is undergoing a revolution due to the use of brain imaging. Political and economic views originate in deeper, emotional structures of the brain. Reasoning comes later, providing the rationale for those emotionally grounded beliefs. You cannot "refute" a Boehner type with reasoned debate.
...
written by izzatzo, July 04, 2010 10:28
From the Washington Post column on the interview:

If ... Boehner were elected as speaker ... Boehner listed three priorities. ... Second, he said, was to engage in "an adult conversation with the American people" about the need to rein in entitlement spending.


Uh huh. There's over a hundred private contractors and related private entities of one kind or another receiving "entitlements" from the two wars. Each soldier deployed requires a million dollars in support spending. Monthly spending in Afghanistan at $3.6B recently exceeded that in Iraq, for a total of $7.0B/month.

So when the military employs soldiers under voluntary enlistment rather than a draft, they're "serving" the country rather than choosing one kind of work over the other through government spending, including avoiding unemployment.

But when those not in the military do the same thing, such as working on jobs funded under government stimulus spending, they're not "serving" the country at all are they. They're like the same free riding scabs who expect to collect the SS benefits they paid for.

Adult conversation indeed.
The Tribune retracts..., will Mr Baker ?
written by AndrewDover, July 04, 2010 11:38
The Tribune says:

"Editor's note: This story has been edited from its original version. During a wide-ranging interview with the Tribune-Review, House Minority Leader John Boehner said the federal government must continue funding the war in Afghanistan to protect the nation. He also said Congress must curb spending on federal entitlements, such as Social Security to reduce the federal deficit. He did not link those issues directly."

They also have video.

Mr Baker says:
Cut Social Security to Fund the War?
By DEAN BAKER

In a remarkable interview with the Pittsburgh Tribune-Review, House Republican Leader John Boehner explicitly called for cutting Social Security in order to pay for the war in Afghanistan. The article reports:

"Ensuring there's enough money to pay for the war will require reforming the country's entitlement system, Boehner said. He said he'd favor increasing the Social Security retirement age to 70 for people who have at least 20 years until retirement, tying cost-of-living increases to the consumer price index rather than wage inflation and limiting payments to those who need them."
...
written by diesel, July 04, 2010 2:32
I've opened this can of worms, so let me drink it to the dregs.

A certain kind of person, feeling personally impotent, allies himself with the strong party. This is done partly out of a feeling of exagerated respect for the achievements of the leaders of the party, (who have after all accomplished what the joiner himself could not) and partly to lose themselves. As members, they will enjoy increased prosperity, expanded influence and a sense of comraderly companionship (hopefully).

As a group, people allow themselves to behave in ways that they would not permit themselves to do individually. Either fear of reprisal or the conditioning and training imparted in their upbringing restrict their behavior. However in a group, they will behave cruelly towards those sanctioned by the group as appropriate targets for their anger and their need to inflict pain. This is the sadistic streak in America's (any nation's) character. With power and collective sanction goes permission to blame and torture the weaker, whose weakness itself is seen as sufficient provocation. Homosexuals, racial minorities, young single women who cannot deal with an unplanned child, writers, composers, painters et.al., the congenitally inept, the damaged, old and infirm, unemployed are all fair game.

While we didn't invent sadism, we are good at it and we spend a lot of money on it (Iraq et al). But sadism has a reverse side. A third of Americans (the same who chant loudest for war) want and feel the need to be punished. They feel shame and generalize that feeling to the entire nation, which also deserves to be chastised. They want their leaders to make us suffer as a people. Their religious and worldly beliefs reflect and mirror one another. Personally, they see themselves as sinners and want God to punish them accordingly. The only path to happiness is to submit to a higher power--a Godlike man who will take all your cares from your shoulders and choose the course of your life. Acknowledge your dependancy and you will be purified. Then you can wear the white robe of the cleansed and join your brethren in condemning the iniquitous. This is the source of the appeal of men like Boehner, who are the worldly incarnations of the Spirit of the Savior. American politics and economics make no sense unless you understand this need on the part of a significant portion of the population to be punished like an errant child by a stern father. Social Security is about as far from this as can be.

To those of you familiar only with the pseudo-science of psychology preached by the Ayn Rand/Milton Friedman/Alan Greenspan school, this may seem like so much speculative malarkey. Nevertheless, it is true and has been documented by an extensive body of empirical clinical and social research. What has been proven to be malarkey is the notion that humans act rationally in their own self-interest. In fact, it could be fairly said that humans rarely act rationally, if at all. Or, put another way, the burden of proof is on those who contend that we do. In general, in the rare moments when we do act rationally, it is only as a means to an a-rational end.
Changing CPI
written by grooft, July 04, 2010 3:32
Dean,
I think that the proposal is to change the calculation of the Average Indexed Monthly Earnings. This isn't clear from your description above. The hit to social security would be immediate upon retirement since the earnings upon which the benefit are based would be decreased (by one percent per year for the preceding 35 years). The rate of increase after retirement would be (mostly) unchanged since that is currently much closer to the "standard" CPI.


As the recently released CBP discussion piece on the "options for changing Social Security"
(http://www.cbo.gov/ftpdocs/115...forWeb.pdf)notes in its very good description of how Social Security currently operates "benefits are determined by earnings over a person’s lifetime, expressed as average indexed monthly earnings (AIME). For anyone who reaches age 62 after 1990, the total earnings amount is calculated based on earnings that are subject to Social Security taxes, using the highest 35 years of those earnings. For retirees, earnings before age 60 are indexed to compensate both for inflation and for economy-wide real growth in earnings; earnings at age 60 and later enter the computations at their actual amounts. For disabled workers, earnings in the two years before initial benefit computation enter at their actual amounts, and earlier earnings are indexed. For retirees, dividing the resulting value for total earnings by 420 (35 years multiplied by 12 months) yields the AIME."

Social Security as a Ponzi Scheme?
written by union member, July 04, 2010 3:58

In the Spring of '08 Chris Mathews declared to Tim Russert on MSNBC that Social Security was a "Ponzi Scheme."
Russert said nothing the first time, so Mathews repeated himself, " Social Security is a Ponzi Scheme, isn't it?" he said. "Yes," was Russert's reply.

This economic analysis by these two famous political pundits took place just months before America learned what a real Ponzi Scheme is when Bernie Madoff's fraud was exposed; and just month's before taxpayers were coerced into "rescuing" an insurance company (AIG) which nobody - at least not any ordinary taxpayers - ever heard of; or, had to foot the bill for credit default swaps and collateralized debt obligations, obscure esoteric money-market inventions taxpayers were told they could never understand.

Mathews has never been held accountable for this pernicious statement, which had to have been calculated to weaken faith and trust in Social Security among ordinary Americans.

More than just the country's most important social program, Social Security is - due to the mechanism through which it is funded - a vital institutional structure of our very democracy! It is for the people and it is funded by the people!


In constrast Boehner's wars have no real popular support, are funded by "supplemental bills" (i.e. debt) and are fought for....?

...
written by OJC, July 04, 2010 5:58
When are these soc sec reformers going to notice that we have a long-term surplus of labor? They hold an ideology that says jobs are always available to everyone who needs one, ignoring the observation that employers don't like to hold or hire old guys, and are under no real obligation to do so. If retirement age is raised to 70, those who are 62-70 and unemployed would be entirely on their own, and those who have jobs would live in the expectation that all would soon go to hell.

Joe

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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