Time Magazine's Mark Halperin writes on the dilemma facing President Obama: the economy stinks, the Democratic party's poll ratings are in the toilet and they face an election in less than three months. Desperate times demand desperate actions, in this case traditional scare tactics that voting Republican will mean the end of Social Security. The problem for Obama, of course, is that the budget is also in terrible shape and not looking to get much better on its own. He needs a big achievement on that end to restore faith in federal finances and he needs Republicans to get there. Even the left acknowledges that Obama seems to want a deal on Social Security reform after his fiscal commission reports at the end of the year. The question is whether Obama can cut that Social Security deal after the election if he demagogues the issue before the election. I doubt it. Republicans would like to do something on Social Security and the terms the commission seem to be discussing – mostly benefit reductions and increases in the retirement age, though tax increases loom as well – are better than you could generally expect. But Republicans aren't particularly invested in President Obama's success, to say the least, and at the personal level I can't see why GOP members of the commission would feel particularly compelled to strike a deal if they feel the President handled the issue poorly in the period leading up to November. The personal plays into the political, and the President should understand that he's going to need personal trust on both sides to make reform work.
Monday, August 23, 2010
Can Obama get Social Security reform after the election if he demagogues the issue today?
Saturday, August 21, 2010
Atlantic Magazine Interview on Social Security Reform
I'm interviewed by the Atlantic's Derek Thompson regarding what the fiscal commission might propose on Social Security reform. Check it out here.
Monday, August 16, 2010
The LA Times on Social Security reform
The editors say: "There are no pain-free approaches. But changing demographics mean that the longer Congress waits, the more difficult it will be to deal with the problem." I don't agree with everything they say, but it's a good article.
"Nobody has a clue how to fix Medicare," he said, but "Social Security is fixable."
That he is me, in an overall good story on Social Security reform by Andrea Stone at AOL News.
Wednesday, August 11, 2010
Washington Post: Take Social Security reform seriously
The release of the annual Social Security Trustees Report has coincided with a cross country drive – current location: Salt Lake City – so I've been a bit short on postings and comment. The short story is that not a lot has changed, except for the assumption that the health reform bill will bring some extra revenue into the program, enough to lower the long-term deficit from 2.00 percent of payroll to 1.92 percent. In the long term, I believe the health plan would raise Social Security taxes by around 8 percent. Here's the reason: the health legislation imposes an excise tax on so-called "Cadillac" health care plans. But both the CBO and Social Security 's actuaries assume that in most cases, employers offering such plans will reduce their generosity to avoid the tax. But since health coverage is part of people's total compensation, a competitive labor market means that less expensive health coverage will tend to result in higher wages. That will keep total compensation around the same as before. Higher wages means more payroll taxes, which means more money coming into the system. That's the long and short of it. I don't disagree with this analysis, but there's also some uncertainty about it. Today, the Washington Post responds to the Trustees Report, and in particular those who take it to mean there's no real problem or that we should solve that problem in only one way: raise taxes. We would prefer a more balanced solution, one that relies on a combination of revenue increases and benefit adjustments. On the revenue side, it's essential that the funding source come from within the Social Security system itself. The coalition is correct that Social Security should not be used to deal with deficit problems outside the program, but the converse is also true: Getting Social Security on a sustainable footing should not add to the deficit. Raising the payroll tax ceiling to cover the same share of wages that it did in 1983 would make sense, but that would only solve about one-third of the long-term problem. Some adjustments on the benefits side, particularly making benefits less generous for the highest-income recipients, would also make sense. To be continued…
Thursday, August 5, 2010
Graham: Galbraith Social Security plan would create “mother of all notches”
Investor's Business Daily's Jed Graham comments on a proposal by economist James Galbraith to temporarily allow workers below the full retirement age of 66 to claim Social Security benefits without any penalty for early retirement. As Graham points out, this would imply a massive increase in lifetime benefits for eligible individuals – and a bit discontinuity for people who retired afterwards. Check it out here.
Upcoming event: “What’s the News in the 2010 Social Security Trustees Report?”
The National Academy of Social Insurance will be himself an event discussing the release of the 2010 Social Security Trustees Report What's the News in the 2010 Social Security Trustees Report? Featuring: Click here to register for the briefing What's the News in the 2010 Social Security Trustees Report?
When: 10:00am-11:30am, Monday, August 9, 2010
Where: B 318 Rayburn House Office Building, Washington, DC
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