Friday, January 16, 2009

Obama Drinks Social Security Kool-Aid

This morning's Washington Post has a front page story that not only says social security deficits start in 2011 (2017 according to the Trustees intermediate projection), but reports that Obama has now specifically included social security as an item to be dealt with in the broader analysis of longer term deficit reduction. The precise quote, " 'Social Security can be solved," he said with a wave of his left hand," with him then going on to accurately note medicare and the health system as the more important and more difficult problem. There is no word on what he intends to do or even what sort of mechanism he intends to set up for figuring out how to do it, whatever it is. The only real positive here is that, perhaps looking to the bright side of that piece on huffingtonpost, there will be no privatization scheme as part of any proposal from his administration.

I see two factors in this. The first is the noxious influence of Larry Summers being in the apparent catbird seat as "economics czar." He was part of the Clinton group that was pushing this kool-aid back in the late 1990s. The other may be a more short-term political motive. In particular, "blue dog" Democrats are reportedly unhappy about the scale of the deficits in the fiscal stimulus and want to see some moves to lowering longer term ones. The most important figure in this is Kent Conrad of ND, Chairman of the Senate Finance Committtee, who in late 2007 was part of an effort with Treasury Secretary Paulson to cook up a deal involving both fica tax increases and future benefit cuts for social security, Conrad having long been a deep drinker of the ss kool-aid baloney. That effort was killed from both the left ("no benefit cuts, leave social security alone") and the right, particularly Dick Cheney ("no new tax increases"). Again, Obama's platform called for a possible imposition of fica on higher income individuals, "if needed" in 2019, with no call for benefit cuts. But the Conrad gang wants that, and I have long pointed out that any change would involve benefit cuts, as Republicans will simply filibuster any tax increase that does not also involve benefit cuts. As it is, I hope that Obama's plan runs into complications, and that in the end, nothing is done with or to social security.


Anonymous said...

Read Nudge by Thaler and Sunstein. It contains an outline for privatizing social security. Obama is not a liberal. He is a "University of Chicago" democrat.

Barkley Rosser said...


Regarding Obama's background at Chicago, this is not such a simple matter. Neither Thaler nor Sunstein is a member of the economics department, which is where the "Chicago School" identity is based, even though back in the 1940s it had socialists like Oskar Lange. Thaler, who is a behaviorist, is in the Grad School of Business, and Sunstein is a former colleague of Obama's from the Law School.

Now, ironically, it is the Law School rather than the Business School that is probably closer to the "Chicago School" in identity, with the "law and economics movement" having come out of Chicago, with the Journal of that name based there, founded by Nobelist and joint econ and law school prof, Ronald Coase.

Bruce Webb said...

Barkley the threat of the filibuster is much over rated. The notion that McConnell can simply keep all 41 Senators in line on any issue the far Right wants to exaggerates the party discipline of the Republican Party, particularly in the Senate. Moreover it misses the way the threat of filibuster actually worked in the last Congress in two important ways.

First McConnell had a lot more ammunition, he could lose as many as 8 votes and still sustain the filibuster. And would be abstainers understood this, why buck leadership when it wasn't going to do any good? I suspect this ended up resulting in more votes against closure than would have happened if every single vote had been decisive, which of course it will be in this Congress.

But more importantly this misses the second aspect of the filibuster. The Republicans were able to use the threat of a Presidential veto to make the case that they were not actually being obstructionist in filibustering at all, just realistic. The argument ran as follows: "If you couldn't even get 60 votes or could only do so with great difficulty clearly you can't get 67 to override the subsequent veto and so forcing the issue NOW is just a political stunt on the part of Democrats." In effect the Republicans lost not only eight real seats, they also lost those seven phantom votes gained by having Bush in the White House.

As long as Congressional leadership and the Administration are pulling in the same direction the real margin of victory on important legislation after all the shouting is done has been reduced from 67 to 51. In terms of getting things done the difference is as night and day, a tactic that could be presented as being simply practical ("don't waste our time") is now unequivocally obstructive.

I simply don't see people like Lugar and Spector drinking the kool-aid and willfully stepping on the Third Rail on this one. It is worth noting that when push came to shove in 1983 Reagan made the wise decision to take credit for saving Social Security rather than going along with the Cato people and killing it. Not all Republican Senators are nutcase ideologues, not even some of the most Conservative ones.

Bruce Webb said...

AB post linking back to here and to post at Biggs (the title echoes his 'Echo') title Is Obama Echoing Bush on Social Security? My answer is 'No'. They are starting from two very different initial positions. That their rhetoric intersects is more or less an artifact, there being a big substantive difference between 'Fix Now' and 'Transform Now' even though they share a certain nowness.

Barkley Rosser said...

It is weird that Obama used some of Bush's terminology, such as the reference to "using political capital." I hope he does not use much on this, as it may prove harder than he apparently thinks, quite aside from being a waste of time (and political capital). There are much more important fish to fry.