Monday, December 13, 2010

Kuttner on the Coming Social Security Cave-In

Over at the Huffington Post, Robert Kuttner writes that the Obama administration is on the verge of giving in to Republican demands to gut Social Security:

If you think the Democratic base is mad at Obama now for making a craven deal with Republicans that continues tax breaks for the richest Americans and adds new ones for their heirs through a big cut in the estate tax, just wait a few weeks until Obama caves on Social Security.

How will this occur? The deficit commission appointed by the President has called for an increase in the retirement age, as well as other cuts in benefits over time. And the deal that Obama made with the Republicans just gave deficit hawks new ammunition by increasing the projected deficit by nearly $900 billion over a decade. Social Security will be in the cross-hairs.

Read it all to get the full flavor.

If by gut you mean agree to any sort of benefit reductions or increases in the retirement age, my guess is that the Obama administration – which should and does want a deal on Social Security – might agree.

But current proposals seem to fall well short of that: the deficit commission's plans wouldn't include personal accounts, which by itself can be considered a victory for the left; would increase payroll taxes on high earners, another thing the right won't be happy about; would focus benefit cuts on high earners; and would provide exemptions for low earners from the retirement age increase. In the context of the overall federal budget shortfall, which can't realistically be resolved on the revenue side, this isn't a terrible deal for the left. But I wouldn't expect the squawking to stop anytime soon.

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