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Home Publications Blogs Beat the Press The One Percent Want Your Social Security and Medicare and Steven Pearlstein Is Trying to Help

The One Percent Want Your Social Security and Medicare and Steven Pearlstein Is Trying to Help

Sunday, 22 July 2012 07:34

Steven Pearlstein, the Washington Post business columnist, often writes insightful pieces on the economy, not today. The thrust of his piece is that we all should be hopeful that a group of incredibly rich CEOs can engineer a coup.

While the rest of us are wasting our time worrying about whether Barack Obama or Mitt Romney are sitting in the White House the next four years, Pearlstein tells us (approvingly) that these honchos are scurrying through back rooms in Washington trying to carve out a deficit deal.

The plan is that we will get the rich folks' deal regardless of who wins the election. It is difficult to imagine a more contemptuous attitude toward democracy.

The deal that this gang (led by Morgan Stanley director Erskine Bowles) is hatching will inevitably include some amount of tax increases and also large budget cuts. At the top of the list, as Pearlstein proudly tells us, are cuts to Social Security and Medicare. At a time when we have seen an unprecedented transfer of income to the top one percent, these deficit warriors are placing a top priority on snatching away a portion of Social Security checks that average $1,200 a month. Yes, the country needs this.

The most likely cut to Social Security is a reduction in the annual cost of living adjustment of 0.3 percentage points. While that might sound trivial, the effect accumulates through time. After ten years, a typical check will be about 3 percent lower, after 20 years it will be 6 percent lower, and after 30 years it will be about 9 percent lower.

Social Security amounts to 90 percent or more of the income for one-third of seniors. For this group, the proposed cut in benefits would be a considerably larger share of their income that the higher taxes faced by someone earning $300,000 a year as a result of the repeal of the Bush tax cuts on high income earners. The latter is supposed to be a big deal, therefore the proposed cuts to Social Security are also a big deal.

The most likely Medicare cut is an increase in the qualifying age from 65 to 67. Those who pay attention to policy issues know that the health insurance market for people in their sixties is a disaster. And, if they could be bothered to look at the Congressional Budget Office's analysis, they would know that this change would hugely increase the cost of care for the country as a whole, even if it saved the federal government money. In other words, it is exactly the sort of budget cut we would expect from a group of cynical rich people.

Just about everything in Pearlstein's piece is upside down. Of course the major problem facing the country at present is massive unemployment. If the economy was near full employment we wouldn't have a big deficit. The long-term story behind the deficit projections is of course projections of exploding private sector health care costs, as every budget analyst knows. That should lead to a discussion about fixing the health care system, not a discussion of the budget.

Pearlstein even bizarrely brags that his deficit fighting crew has been warning about the problem for the last decade. Well, we haven't had a deficit problem for the last decade. We had a housing bubble problem. And because the Washington Post and other elite media outlets obsessed in reporting about the deficit non-problem, the housing bubble continued to grow unchecked.

Eventually the housing bubble blew up and wrecked the economy and also gave us large deficits. So now who does the Post turn to as authorities on the economy? Naturally the people who ignored the housing bubble. And they wonder why the country has contempt for the Washington elite.

Comments (8)Add Comment
Suspect Device
written by Jeffrey Stewart, July 22, 2012 9:20
Give Mr. Pearlstein credit for audacity and honesty. It appears the fix is in. There is one agenda of class war regardless of the nominally different parties in power.

There will be Social Security and Medicare cuts regardless of who wins the presidential elections. Does anyone truly believe that President Obama will stand up and fight for the working class against cuts in Social Security and Medicare? He's the one who repeatedly put them on the table in the "Grand Bargain" talks with Speaker John Boehner.

The fact is there's a electoral choice between fascistic crazies and bought and paid for capitalist shills with somewhat of a conscience. That's not nearly good enough for the working class who are going to be flogged regardless.

An old rock 'n' roll band, Stiff Little Fingers, had a great song called "Suspect Device." The lyrics offer an apposite description of the working class's situation:

They play their games of power
They try to mark the pack
They deal us to the bottom
But what do they put back?

Don't believe them
Don't believe them
Don't be bitten twice
You gotta sus-sus-suspect device

They take away our freedom
In the name of liberty

Why can't they all just clear off
Why can't they let us be

They make us feel indebted
For saving us from hell
And then they put us through it
It's time the bastards fell

Don't believe them
Don't believe them
Don't be bitten twice
You gotta sus-sus-suspect device

Don't believe them
Don't believe them

I try to question everything you're told
Just take a look around you At the bitterness and spite Why can't we take over And try to put it right

Please don't believe us
Don't believe us
Don't be bitten twice
You gotta sus-sus-suspect device

We're a suspect device if we do what we are told
But a suspect device can score an own goal
I'm a suspect device the Army can't defuse
You're a suspect device they know they can't refuse
We're gonna blow up in their face
Boiling Frogs, Rational Ignorance and Lazy Americans with Bumper Sticker Slogans
written by Last Mover, July 22, 2012 9:22
It's much easier and criminally rational to take small imperceptible amounts from each individual among millions in the 99%, rather than take much larger visible amounts from members of the one percent.

To paraphrase Mark Twain with a qualifier, among the 99% there's no difference between those who won't read compared to those who can't read. Just get the news on YouTube, no reading required, much less critical thought.
Reflecting Village truths rather than Truth
written by A Siegel, July 22, 2012 10:58
Pearlstein has become reasonably good in the past 5 years or so on a number of issues, such as decent discussions related to climate change.

However, too often, his columns/his opinions read like a thoughtful version of shallow Village (un)truths and reflecting of Village buzz rather than better policy.

Why not highlight how true single payer or having real negotiations re prescription pricing would drive down debt and make U.S. more competitive?

Why not discuss power of financial transaction fee?

Why not (going back to climate change) discuss how Energy Smart policies -- such as ending subsidies for fossil fuels, holding people to account (fiscally and otherwise) for pollution damage, etc -- could foster a stronger economic position and drive down debt?

Why not look to how using 'unemployment' to put people into worksharing could strengthen social security by putting more money back into the program?

And, so on ...

Thank for another thoughtful "Washington Post Watch" piece.
written by Jerry, July 22, 2012 11:58
"The plan is that we will get the rich folks' deal regardless of who wins the election."

You may not like it, but both candidates have a deficit deal at the top of their agenda (not really much choice I suppose considering the sequestration and Bush tax cuts). So, cynical or not, Pearlstein has made the correct conclusion. It is just incredible to see the news and politicians pushing this nonsense. How is this any different than the downward spiral of austerity that Greece et al are currently facing?

The real question is how do we raise enough public awareness of this fact to make a change in the political discourse over the coming months. There is no debt problem, there is a demand problem.
written by JohnH, July 23, 2012 10:55
Yes, the fix is in, which is part of the reason I won't be voting for BHO. He already tipped his hand, first by the composition of Simpson-Bowles, and second by offering to put SSI on the table during the deficit "crisis" last summer.

The difference between Romney and Obama is that Romney is a Harvard Business School graduate trained to promote the interests of the 1%. OBL is a Harvard Law School graduate trained to defend their interests.
Pointless Exercise
written by bob h, July 24, 2012 6:16
All that will happen is that Obama and Romney will make political hay by denouncing it, the latter for the tax increases, and the former for the SS and Medicare cuts.
The greedy rich.
written by Fiona, July 25, 2012 5:19
Take a lesson out of our book here in NZ. The right wingers in this country voted in a very wealthy businessman ex Merrill Lynch Derivatives Trader and he is making a hell of a mess of our country. All they do to save money is to attack those on social security and I believe by doing that they harm the economy even more. I look at the economy as if it were a fire and it needs fuel to keep going. If you start putting less and less fuel on the fire it will die and the same will happen to the economy. I look at the people on low incomes and social security as the fuel because the more you take from them the less they have to spend, but if you take it from someone who has millions he can still spend the same amount each week. Give more to the people at the bottom they start buying things they have needed for ages and the economy starts to grow because you need to start producing more to meet the demand. Whoever invented the economics of today need to be hung because the have caused so much misery. Our Prime Minister John Key is worth over $50 million and they just had to give themselves and their rich mates tax cuts last year because they really needed it now the government doesn't collect enough taxes to cover it's costs. Good thinking John. John thought it would create jobs but it didn't. People just reduced their debt while they had the opportunity. So now to save the government money they are cutting government services and jobs so the unemployment line has increased. Just means less money going into the economy once again. This is what has happened in our counrty in the past and no doubt still happening. It says quite a bit about Rupert Murdoch.
First Step
written by DHFabian, July 25, 2012 11:27
Curious: Is there anyone in the US who didn't know that Clinton's welfare "reform" was merely a necessary first step toward redistributing the money we've paid into Social Security as well? That's the real prize, something that the rich have wanted from the start. Will we give that away, the way we gave basic welfare aid away? Maybe. Haven't we already embraced the belief that those who are of no use to employers have no human worth?

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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.