Obama’s Social Security Cuts Are Our Wake-Up Call

Published on
by
Campaign for America's Future

Obama’s Social Security Cuts Are Our Wake-Up Call

No jobs. No growth. Falling income. Unaffordable colleges. A dying middle class. Young people without hope.  The greatest economic inequality in modern history.

And yet, in the midst of the Long Depression, we’re told that the President intends to cuts Social Security.

According to reports, the new Presidential budget proposal will also include job-killing spending cuts and a Medicare cost hike that will increasingly affect the middle class with every passing year.

The President says this isn’t his “ideal plan,” but he doesn’t say what his ideal plan would look like – and he certainly isn’t fighting for a better one.  He also claims his budget offers “tough reforms,” which rings of self-satisfaction rather than sorrow.

He’s decided on his next move. What’s yours?

This budget represents a moral challenge for everyone, especially those of us who voted for him. I’ve already gone here to let my elected officials know that I unconditionally oppose these budget cuts.

Death of a Thousand Cuts

Call it ‘the unkindest cut of all.’ What makes the chained CPI particularly unkind is the fact that millions of Americans have already had their Social Security benefits cut.  Benefits are determined based on a person’s lifetime earnings, so any significant loss in income now results in a benefit cut later. (More details here.)

Long-term unemployment is a benefit cut. A stagnating wage is a benefit cut. Wealth inequity is a benefit cut.

How many more cuts can the American people stand?

A Deep Cut

How big is the President’s chained-CPI cut? For someone who retires at 65, it would be:

a 3.7 percent cut at age 75;
a 6.5 percent cut at age 85;
and a 9.2 percent cut at 95.

What about the dollar cost of the President’s cut? For the average earner, cumulative benefits would be cut by:

$4,631 – more than three months of benefits – by age 75;
$13,910 – nearly a year of benefits – by age 85;
and $28,004 – more than a year and a half of benefits – by age 95.

Unless the President’s budget excludes the chained CPI from IRS calculation, it would also lead to tax increases for all income except that in the highest tax bracket. So his Social Security cut would also be a middle-class tax hike.

All the President’s Cuts

Despite its severity, reports tell us that the chained CPI isn’t this budget’s only harsh austerity measure.  The President will also propose increasing Medicare premiums for higher earners. The figure that’s been reported is $47,000 per year. That targets comfortable seniors, not just the wealthy.

In less than 25 years, that more than one retired person in four would be paying an increased Medicare premium.  (See the Kaiser Family Foundation’s analysis for more.) This cost hike wouldn’t do anything to reduce runaway health care costs. It’s just cost-shifting.

The President’s budget also includes some plain, old-fashioned austerity. According to reports, the new Obama budget calls for $400 billion in cuts to health programs, along with cuts to Federal employees’ retirement programs, the Post Office, and farm programs.

That follows the European model of cutting budgets during a Long Depression. Hey, what could go wrong?

Off-Balance

The White House is defending these cuts by saying they’re only acceptable as part of a ‘balanced package.’

But their current budget is already unbalanced. Dean Baker‘s calculations show that the President’s asking the typical financially-strapped senior to sacrifice more than three times as great a share off income as the average wealthy American.  Disabled veterans could be hit even harder, since they tend to spend more years collecting the benefit.

What’s more, Social Security shouldn’t be included in deficit discussions at all. It doesn’t contribute to the deficit. Suggesting that they be part of these negotiations is reinforcing a false sense of ‘balance.’

The President’s budget is also out of balance because it includes much more in cuts than it does in revenue hikes, and the increases being proposed – ‘closing loopholes’ – skirts around this country’s real tax inequity. While it’s important to close loopholes, their preferred approach also has the potential for being directed against the middle class as well as the wealthy.

Austerity, Democratic-Style

No matter what the spin doctors say, the President isn’t ‘negotiating.’  Negotiation is a process in which one party proposes X and the other counters with less than X.  But the chained CPI isn’t in the Republican budget.  It is only in the President’s.

And remember: The President’s budget is just the starting point for negotiations.

Sure, the Republicans like this cut too, and they’ve raised it on other occasions. But it’s in Obama’s budget, not theirs. Their fingerprints aren’t on it. Obama owns this.

That means his party owns it – unless other Democrats oppose it, fiercely and publicly.

The Defense Should Rest

Some of the President’s supporters are still pretending the chained CPI is a “compromise.” They should stop. He’s spoken in favor of it a number of times.  It’s his preferred policy.

Others take the opposite tack. They say people “shouldn’t be surprised” at the President’s cuts given all the signals he’s given recently.  But wrong is wrong, and surprise has nothing to do with it.

And please stop saying that he hasn’t broken any promises. In 2007 he said that “cutting benefits is not the right answer.” In 2008 he berated John McCain for “suggesting that the best answer to the growing pressures on Social Security might be to cut cost-of-living adjustments or raise the retirement age.” Said candidate Obama: “I will not do either.”

As of this writing, the White House website still says that the President “believes that no current beneficiaries should see their basic benefits reduced” (which this budget would do).

Other Presidential defenders offer something Digby describes as a “Sophie’s Choice” for liberals. They’re “telling the progressives that a hostage is going to get shot no matter what: Head Start and food inspections today or the elderly, the sick and the veterans tomorrow and they have to choose which one.”

“Why,” asks Digby, “should progressives bear that responsibility?”  For that matter, why should anyone else?

Things fall apart. The center cannot hold.

The self-described “centrists” supporting this move are especially off-base, since the political center hates the chained CPI. A new AARP poll showed that 69 percent of voters “opposed” or “strongly opposed” the chained CPI, while only 16 percent supported it.   A December poll found that 54 percent of voters opposed the chained CPI, with 16 percent favoring it.

The President’s chained CPI proposal isn’t “centrist.” It’s far to the right of public opinion.

“Left, Right, and Center” host Matt Miller even mocked “liberal” outrage that the chained CPI is only a small reduction on a macroeconomic level. We called those who use this argument the “mohels of moderation“: It’s just a tiny cut! Why all the yelling?

Value Village

As Mike Lux says, “your budget represents your values.” What is valued in this budget: Compromise at any price? Good press coverage? The approval of Washington’s insular “Village,” whatever the cost to others?

This budget certainly reinforces false and destructive right-wing messaging: That Social Security should be cut as part of a deficit reduction plan. (It shouldn’t.) That government spending hurts the economy, even in hard times. (We know that it helps.) That we can’t solve our health care cost problem, so we should shift the burden back onto individuals. (We can solve it, the way other countries have.)

Whatever happens during budget negotiations, the President’s proposal is already a huge victory – for conservative ideology

The Dance

Obama’s defenders say the Republicans have insisted that he propose these cuts before they’ll consider them.  We’re told that this bowing gesture will lead to a beautiful pas de deux – or to a scornful rebuff which will benefit Democrats at the polls.

That makes no sense. When has one party demanded that the other present its ideas – especially its most unpopular ones – as if they were its own? What’s next: Will they ask the President to propose their Medicare voucher plan? Call for a flat tax? Join the Tea Party?

We liked the old system: One party proposed one set of ideas, the other party proposed another, and the voters decided which ones they preferred.

Democrats’ Dilemma

The President leads his party. Unless Democrats mount a concerted opposition to this budget, they’ll have gone on record as the party that wants to cut Social Security.

Hill Democrats face a real quandary. If they resist this misguided document they’ll find themselves under intense pressure from the White House and their own leadership. But this budget is wrong for the country, and Democrats who support it will help inflict a deep wound on their party’s electoral chances.

And they’ll feel the wound themselves.  That AARP poll showed that 87 percent of voters over the age of 50 consider it “very important” that politicians not cut Social Security benefits. Any Dem who votes for it will suffer at the polls.

Democrats already suffered a precipitous 25-point drop in confidence on this issue during Obama’s first two years in office – then lost the House as Republicans ran to their left with a “Seniors’ Bill of Rights.”

The Progressive Change Campaign Committee is tracking the elected officials who are standing up to oppose this cut. These leaders deserve our support. And liberals are threatening to mount primary challenges against Senators and Representatives who vote for a chained-CPI budget.

They can count me in.

Your Move

The President has made his decision. Now the rest of us must make ours. We have a moral obligation to future generations, and to ourselves, to actively oppose the cuts in this budget. This is the wake-up call: These programs can’t defend themselves, and we can’t depend on others to defend them for us.

The ball’s in our court now.

The first step is to make your voice heard. You can tell your elected representatives that you oppose these cuts by going here.

Richard Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.

Share This Article

More in: