Saturday, November 17, 2007

Obama's Social Security mistake

Paul Krugman explains why Obama is not suited for the Democratic nomination. He simply doesn't understand that Democrats cannot compromise with the Republican extremists who want to destroy America's middle class.

This started when Obama announced that as President he would deal with the "crisis" of Social Security. Yet there is no crisis! There are some accounting problems that will need to be dealt with sometime in the next decade or so, but that is all. No crisis. Social Security will not and cannot go broke. [*]

Here is Krugman's discussion: Mr. Obama’s Social Security mistake was, in fact, exactly what you’d expect from a candidate who promises to transcend partisanship in an age when that’s neither possible nor desirable.

To understand the nature of Mr. Obama’s mistake, you need to know something about the special role of Social Security in American political discourse.

Inside the Beltway, doomsaying about Social Security — declaring that the program as we know it can’t survive the onslaught of retiring baby boomers — is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are.
Obama has been played for a sucker by the conservatives, and he doesn't have enough experience to understand what he did.
the “everyone” who knows that Social Security is doomed doesn’t include anyone who actually understands the numbers. In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided.

As Peter Orszag, the director of the Congressional Budget Office, put it in a recent article co-authored with senior analyst Philip Ellis: “The long-term fiscal condition of the United States has been largely misdiagnosed. Despite all the attention paid to demographic challenges, such as the coming retirement of the baby-boom generation, our country’s financial health will in fact be determined primarily by the growth rate of per capita health care costs.”

How has conventional wisdom gotten this so wrong? Well, in large part it’s the result of decades of scare-mongering about Social Security’s future from conservative ideologues, whose ultimate goal is to undermine the program.

Thus, in 2005, the Bush administration tried to push through a combination of privatization and benefit cuts that would, over time, have reduced Social Security to nothing but a giant 401(k). The administration claimed that this was necessary to save the program, which officials insisted was “heading toward an iceberg.”

But the administration’s real motives were, in fact, ideological. The anti-tax activist Stephen Moore gave the game away when he described Social Security as “the soft underbelly of the welfare state,” and hailed the Bush plan as a way to put a “spear” through that soft underbelly.

Fortunately, the scare tactics failed. Democrats in Congress stood their ground; progressive analysts debunked, one after another, the phony arguments of the privatizers; and the public made it clear that it wants to preserve a basic safety net for retired Americans.

[Highlighting mine - Editor WTF-o]
How did Obama get suckered?
Why would he, in effect, play along with this new round of scare-mongering and devalue one of the great progressive victories of the Bush years?

I don’t believe Mr. Obama is a closet privatizer. He is, however, someone who keeps insisting that he can transcend the partisanship of our times — and in this case, that turned him into a sucker.

Mr. Obama wanted a way to distinguish himself from Hillary Clinton — and for Mr. Obama, who has said that the reason “we can’t tackle the big problems that demand solutions” is that “politics has become so bitter and partisan,” joining in the attack on Senator Clinton’s Social Security position must have seemed like a golden opportunity to sound forceful yet bipartisan.

But Social Security isn’t a big problem that demands a solution; it’s a small problem, way down the list of major issues facing America, that has nonetheless become an obsession of Beltway insiders. And on Social Security, as on many other issues, what Washington means by bipartisanship is mainly that everyone should come together to give conservatives what they want.

We all wish that American politics weren’t so bitter and partisan. But if you try to find common ground where none exists — which is the case for many issues today — you end up being played for a fool. And that’s what has just happened to Mr. Obama.
Obama just doesn't understand that it is impossible to compromise with people who are playing you for a sucker, and the conservatives have played the press and the Washington insiders for suckers on Social Security since they got FOX to spew their lies into the TV media.

I like Obama, but with his Kumbaya politics he s like a sheep who tries to negotiate with wolves regarding the menu for the evening meal. The wolves already know the menu, and if the sheep tries to negotiate, he has gotten too close to the wolves to avoid being on it.


[*] At the very worst, the annual income from the Social Security tax might drop to only 80% of projected benefits. In that case, the original Social Security Law stated that in the case projected benefits were expected to drop below expected income, then benefits would be reduced to a level so that the outgo did not exceed the income. Any deficit that extreme is so unlikely as to be considered impossible.

As it is, the FICA tax for Social Security is set higher than needed to pay current benefits and the excess is invested in the safest investment n the world - government bonds. If a government official says that the government will default on those bonds, he is committing malpractice. The cost in increased interest rates the government would have to pay to borrow money after that would far exceed the slight cost of just paying those bonds off when required.

This one you can take to the bank. There is no Social Security Crisis!

No comments: