Obama offers Social Security cut in $4 trillion package
“President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.
At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.
As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending….
Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.”
That has all the earmarks of a game-changer. At the very least, it ratchets up the pressure on Republicans to negotiate more seriously.
In fact, according to The New York Times, “The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts.”
The Post story, however, quotes a Boehner spokesman as saying only that “there are no tax increases on the table.”
As that confusion suggests, few if any details are available. However, the proposal to cut Social Security is probably based on the plan offered by the Bowles-Simpson deficit-reduction commission. If so, I have no argument with it. Among other things, that proposal changes the way that annual Social Security benefit increases are calculated, making them more reflective of what retirees experience. The changes would have the greatest effect on the most affluent 20 percent of retirees, with low-income workers actually seeing an increase in their benefits.
Most important, the Bowles-Simpson approach treats Social Security on its own terms. It does not cut the program as a way to balance the overall budget, and it gives the program full credit for the many billions of dollars that have been borrowed from it over the last quarter century to fund general government. The changes are intended to make the program actuarially sound on its own terms, and that’s a good thing. Even the AARP last month embraced reform proposals that cut future benefits as long as it’s part of a package to make the system fiscally sound.
But again, we’ll have to see what exactly the president is proposing, and in turn what the Republican reaction will be. In recent days, we’ve seen signs that the GOP’s united front against revenue increases was beginning to crack. Message discipline had broken down as Boehner, Majority Whip Eric Cantor, Senate Minority Leader Mitch McConnell and a variety of GOP backbenchers began to sing different tunes.
This proposal by the president may break that wide open.
– Jay Bookman
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468 comments Add your comment
stands for decibels
July 7th, 2011
7:52 am
the proposal to cut Social Security is probably based on the plan offered by the Bowles-Simpson deficit-reduction commission. If so, I have no argument with it. Among other things, that proposal changes the way that annual Social Security benefit increases are calculated, making them more reflective of what retirees experience.
oh goodie. Obama’s starting bid, once again, is a friggin’ compromise.
Hey, how’d that “let’s start from maybe-kinda-sorta pushing for a public option?” thingie work for you guys?
what a-holes.
stands for decibels
July 7th, 2011
7:53 am
Even the AARP last month embraced reform proposals that cut future benefits as long as it’s part of a package to make the system fiscally sound.
yeah, and eff them too.
Lord Help Us
July 7th, 2011
7:55 am
Rigid ideology in the way of practical policy…the tail wagging the dog.
Hopefully, Simpons-Bowles will be the backbone of the agreement…
Jay
July 7th, 2011
7:58 am
SFD, what’s your objection to a plan that makes SSI actuarially sound, on its own terms, as it must be?
Granny Godzilla
July 7th, 2011
8:01 am
Note that there is no description of what the cuts to Social Security
might be….
Kevin Drum at Mother Jones writes:
“I continue to think, as I have for a long time, that (a) Social Security ought to be put on a firmer financial footing, (b) this can be done with a very modest package of tax increases and benefit cuts, and (c) this would satisfy centrist critics like the Peterson foundation and the Washington Post, and without their help the ideologues who want to destroy Social Security would have no ground to stand on. They’d keep yelping, but no one would pay any attention to them.
A deal that increased revenue by about 1% of GDP and cut benefits by 0.5% of GDP, phased in from 2020 through 2040, could be done without adopting terrible ideas like an increase in the retirement age and would be practically painless for everyone involved. It would take Social Security off the table for a long, long time, and that’s well worth doing. Right now I don’t think you can get Republican support for a plan like this, and it’s not as if there’s any big crisis here that has to be solved immediately. But if a deal like this does become possible someday, liberals would be smart to take it.”
stands for decibels
July 7th, 2011
8:02 am
Jay, my primary objection is “strategeric.” It’s having this discussion in the first place. You tell the Goopers that SS gets handled after we look after ACTUAL FUNDING PROBLEMS THAT WE HAVE.
Jimmy62
July 7th, 2011
8:03 am
Obama has offered to do a lot of things, like close Guantanamo. Until he actually does something, his words are worth less than the paper they are written on or the teleprompter they are read off of.
Cuts have been offered. Cuts have NOT been made. Not a single real, significant, useful cut has been made, and until one has been made, I won’t accept a tax increase, and nor should the GOP. Cut first. Actually cut. Don’t just agree to cut, actually truly cut spending. It doesn’t count till it’s actually happened.
This smacks of a political move, a statement designed to put the GOP on the defensive and fool people like Bookman into thinking he has any intention of cutting spending on anything. This way he can pressure the GOP to agree to tax increases, and then conveniently not make any cuts.
Jimmy62
July 7th, 2011
8:07 am
Granny: SS was started to help out people who lived long past the expected age of death. Since life expectancy has increased significantly since then, what’s your reasoning on why raising the SS age is a terrible idea? Is that because raising the age would make SS more like what it was supposed to be (and was sold to voters as) instead of the welfare program it has become?
Realize this: SS was only able to come in to being because it was promised it would never be the welfare scheme it has turned in to. And thus a very good reason to never trust politicians when they come up with new programs that last more than the length of their term in office.
Doggone/GA
July 7th, 2011
8:09 am
“Obama has offered to do a lot of things, like close Guantanamo”
Obama signed the order to close Guantanamo. Congress refuses to fund closing it.
Finn McCool
July 7th, 2011
8:10 am
Cut all you want, but start by cutting the services Jimmy62 uses.
Peadawg
July 7th, 2011
8:10 am
That’s a good boy, Mr. President. Here’s a treat for ya.
SKH
July 7th, 2011
8:11 am
I don’t know how and to what extent the entitlement programs need to be reformed. But I will tell you that I have a good friend who rents scores of houses to Section 8 tenants and he has told me some unbelievable stories which indicate to me there is rampant fraud and abuse going on: women having children by multiple fathers, spending their income on big screen televisions and other luxuries, shacking up with different men who mooch of them and migrate from one house to another while constantly getting drug or high on drugs – all of this on our dime! I assure you this is NOT made up.
I’m curious, Jay and those of the liberal persuasion: do you see this as a problem and what would be your solution to it?
Granny Godzilla
July 7th, 2011
8:11 am
jimmy62
better review your data on life expectancy.
Jay
July 7th, 2011
8:11 am
“Granny: SS was started to help out people who lived long past the expected age of death.”
Absolutely, totally false. If you start from such a ludicrous position, it’s no surprise that you end up in a ludicrous position.
Peadawg
July 7th, 2011
8:11 am
Now raise the age to 67 and let’s move on.
Gordon
July 7th, 2011
8:11 am
This is great news and very encouraging. $4T over 10 years is $400B a year which is still well short of our deficit projections, but it is a huge step in the right direction. But so far it is just talk. Let’s hope both sides follow through.
stands for decibels
July 7th, 2011
8:11 am
of course, foolishly offering that payroll tax cut, effectively working to put SS in the red, wasn’t terribly bright stategery either…
That’s a good boy, Mr. President. Here’s a treat for ya.
my point exactly.
Granny Godzilla
July 7th, 2011
8:13 am
SKH
Treat all fraudsters the same – be it individual or corporate welfare.
Put them in jail.
That ok with you?
arnold
July 7th, 2011
8:13 am
Jimmy62 is correct that the age for SS was based on the life expectancy at that time of 65 years old. It was adopted from Germany where Bismark originally used the age of 65 for their system for the same reason. The age should be raised a bit.
Obama offers Social Security cut in $4 trillion package – Atlanta Journal Constitution (blog) | Conservatives for America
July 7th, 2011
8:16 am
[...] Obama offers Social Security cut in $ 4 trillion packageAtlanta Journal Constitution (blog)“President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue. …Obama, Republicans grudgingly grind to debt dealAFPRepublicans using Twitter town hall to take shots at ObamaWashington Post (blog)GOP: Some tax breaks may goWashington Timesmsnbc.com -Richmond Times Dispatch -LubbockOnline.com (blog)all 5,160 news articles » [...]
@@
July 7th, 2011
8:16 am
Whenever there’s agreement among the two, I become a bit suspicious. But….
Obama offers Social Security cut in $4 trillion package
I’m happy to read ^^^ that. Saw it yesterday…didn’t wanna get too excited.
Now, if the revenue comes thru elimination of some tax credits and subsidies for ALL taxpayers, they will have done the right thing.
Jay
July 7th, 2011
8:16 am
SFD, part of the agreement on that payroll tax cut was that the lost revenue would NOT count against the SSI trust fund.
In other words, you’re wrong.
Jay
July 7th, 2011
8:17 am
Arnold, you are correct, but that is not what Jimmy wrote.
Furthermore, the retirement age has already been raised.
kayaker 71
July 7th, 2011
8:18 am
The American SS system….. the biggest Ponzi scheme that Congress ever produced. The system is bankrupt and insolvent for a reason. Those crooks in Congress, both parties, have used these funds to contribute to runaway spending for government programs that we could not afford. They have not “borrowed” this money……. they have stolen it from SS contributors for the last 40 years. And you want to give them more tax revenue to do the same thing? Some never learn, Granny.
Granny Godzilla
July 7th, 2011
8:18 am
arnold….
and the balance of his data on life expectancy?
Granny Godzilla
July 7th, 2011
8:19 am
kayaker 71
SS is not bankrupt.
The Gipper
July 7th, 2011
8:19 am
This is a good shot across the Republican’s stern by Obama. I think he can also readily counter their next shot with some comparable changes to Medicare as well. Once again, the Republican’s true agenda will be forced front and center. They have no interest in reducing the deficit or debt. They only wish to eliminate all social safety nets and give the wealthiest more and more tax cuts.
Keep Up the Good Fight!
July 7th, 2011
8:20 am
Did you forget they were shopping at Whole Foods too?
You want us to assume as accurate or fact for every person on Section 8 that some undocumented story that you heard from a “friend” who claims to have information about his tenants about their very personal lives (talk about an invasion of privacy) means that somehow this is not already addressed by current rules. Its up to all the “liberal persuasion” to address your personal antedote as relayed? Has your friend reported this information to the appropriate authorities? Have you got the evidence or we just suppose to assume the “big screen TV and other luxuries”.
arnold
July 7th, 2011
8:20 am
Granny. Beats me.
My wife turns 66 next month and receives her first check. I hope she’s around a long time.
real john
July 7th, 2011
8:21 am
Jay, while I understand your an opinion writer, your just guessing as to what Obama is proposing. Its funny, I was just reading an article on CNN about this and it was title how Obama is proposing $4-$5 trillion in cuts…HMM, thats what the Republicans have been trying to do for months and getting blasted for it, but now that the Messiah is proposing it, the libs love it..
The Democratic party has become so hypocritical is just laughable. When Boehner and the Repubs talks about cuts, the Democrats speak of the “Draconian” cuts and how it will send people to the streets and destroy the economy. Now that the Dems see that cuts are what the majority of Americans want, the are all in favor of cuts and suddenly they aren’t so “Draconian.”
For Obama and the Dems to know act like they are the ones pushing for big cuts is hilarious. All they have been talking about is raising revenue (i.e. raising taxes) for months.
stands for decibels
July 7th, 2011
8:21 am
part of the agreement on that payroll tax cut was that the lost revenue would NOT count against the SSI trust fund.
Did they pinkie-promise never to say it counted? Did Lucy promise not to yank the football?
Negro, please.
SKH
July 7th, 2011
8:21 am
“That ok with you?”
Sure, if they’d actually do it. But I doubt a Democrat would have the “political will” to do that given the demographics of this group of “recipients.” And I’m not sure either a Democrat of a Republican would have the political will do incarcerate the corporate frauds. And, in reality, enforcement would be next to impossible. So I would suggest the government investigate such abuses and figure out how to reform the entitlement program so this sort of thing is impossible.
It’s because of such gross examples of abuse that people start to feel we have become a “nanny state.”
Jay
July 7th, 2011
8:25 am
It’s written into the law, sfd.
The Gipper
July 7th, 2011
8:26 am
If SKH knows of people cheating tax payers through improper use of funds, etc., he could always man up and turn them in instead of spreading unsubstantiated rumors.
carlosgvv
July 7th, 2011
8:26 am
Those 65 and over on SS constitute a considerable voting bloc. You may be certain that if their current benefits are cut a large number of politicians will be voted out of office. Also, the Republicans still say they won’t accept any tax increases even though their definition of “tax increases” is tax breaks for the rich. This is a bite the bullet lose lose proposition any way you look at it and I suspect all politicians will use the band-aid approach as much as they possibly can.
godless heathen
July 7th, 2011
8:26 am
Obama is throwing grandma out into the streets!!! Horror of horrors!!
Jay
July 7th, 2011
8:27 am
Real John, a lot of Democrats, from Obama on down, have been saying that cuts will be required. The argument has been over the necessity of pairing those cuts with revenue increases.
You may not like that reality — it may not conform with what you wish it to be — but it remains reality nonetheless.
Jimmy62
July 7th, 2011
8:27 am
Finn: I don’t use any government services these days. I tried to get my hands on some free money, but I’m not poor enough or lazy enough for any of those programs, and I’m the wrong color for others. All I do is give them money. I pay for public transportation I never use… In fact, the main government service I do use, roads, I pay plenty for. Police have been less then useless whenever I’ve needed them. I tried the 401k thing, but then when I needed money it wasn’t available unless I was willing to give the government a lot of it.
Jay
July 7th, 2011
8:28 am
Carlos, I am quite sure that no current benefit cuts are being proposed, for the very reasons you note.
Granny Godzilla
July 7th, 2011
8:28 am
SKH
Are there any members of the GOP that would have the “political will”
to do that given the demographics of this group of “recipients.” ?
Who are they and why would you expect them to “do it”?
stands for decibels
July 7th, 2011
8:29 am
the biggest Ponzi scheme
yawn.
oh, and Mr. Preznit? That’s the drooling-baboon mentality you’re “negotiating” with. Brilliant!
Paul
July 7th, 2011
8:30 am
The four trillion is what the Pres offered in, what, April? It was over 12 years and Republicans derided it because ‘it is two years longer than our plan.’ But thank heavens for short memories, for this is now a new proposal at a critical time and puts Republicans on the PR defensive by doubling their offer.
This is a huge step, putting SS on the table. Reps will have a tough time objecting, as they’ve floated all sorts of reforms. But, this is a “I put this on the table, you put on the table something that’s sacred to you – revenue increases.”
IF Spkr Boehner met with the Pres on this, then good for him. He’s doing quite a sleight of hand, maintaining a public stance, meeting with the Pres, then slowly shifting the public stance. Still shows the fear of tax-cut ideologues, though.
Is the message mangled among the Rep leadership? Sure is. And they’ll have some big adjustments to make. Just this morning I heard Rep Cantor say (and I played it back three times to be sure) that if Pres Obama wants to cut the corporate jet loophole, then “we gotta have offsetting tax cuts.” In other words, gov’t revenue is to remain neutral. Not just no new taxes, but no increase in revenue after closing loopholes.
Either that’s a real position, or he’s so used to stringing sound bites together his mouth goes on autopilot.
But if it’s Obama and Boehner, there may be progress. Is Sen McConnell feeling left out? Good for us that he is.
Granny Godzilla
July 7th, 2011
8:30 am
jimmy62
“and I’m the wrong color for others”
Yes, yellow.
arnold
July 7th, 2011
8:30 am
For there to be a compromise, both sides have to give up something they don’t want to give up. Some changes in SS benefits by liberals and tax increases by conservatives. We need to increase revenues and decrease spending. Just like in your family budget.
SKH
July 7th, 2011
8:31 am
“They have no interest in reducing the deficit or debt.”
Really? Logical fallacies will fell you every time. I was watching This Week with Christiane Amanpour this past Sunday (fancy that, a conservative watching ABC News!) and she had two Republican governors (not including Chris Christie, along with a Democratic governor and the mayor of LA) on to discuss how they are handling the debt problems in their states. And guess what? From what I heard, your blanket statement doesn’t apply and is thus invalid. Try interjecting the qualifiers “some” or “most” or “few” into your statements and they will be more truthful
bob
July 7th, 2011
8:31 am
Granny, look at your last Social Security statement. The commisioner clearly states SS is broke, he would be a better source than you.
Mick
July 7th, 2011
8:32 am
At this point, it’s no surprise the way obama negotiates; why do the repubs revile him so much? He’s their best friend when it comes to negotiating. I give him very low marks in that area but he is a very clever politician; be prepared for obama/clinton in 2012 which will negate the possible romney/bachmann ticket…
Gordon
July 7th, 2011
8:34 am
If this gets pulled off, I’m beginning to think a Democratic President and a Republican Congress is the best combination out there. It worked well in the latter Clinton years. Either side controlling both is a disaster.
Doggone/GA
July 7th, 2011
8:34 am
“Either that’s a real position”
It’s a real position. The latest meme is that no REVENUE increases will be considered, because even revenue increases are “tax increases” – no matter how they come about.
real john
July 7th, 2011
8:35 am
Jay:
Yes, but the Democrats talk about cuts that are basically meaningless to the overall budget. Freezing discreationary spending, closing Big Oil and Corporate tax loop holes are a drop in the bucket. These are only to score political points.
I’ve written on this blog several times that Medicare, Medicaid, and Social Security HAVE to have major reform to stay solvent. Everyone knows this. Yet, when Paul Ryan or George W Bush made attempts to try and fix the long term solutions, the Democrats played scare tactics to score political points.
Social Security was a great idea, but it cannot continue to be a defined benefit type plan. With advances in medicine, people will simply continue to live much longer. Both of my grandmothers are in their 90’s. Think of how long they have been on Medicare and Social Security. People laughed at President Bush when he proposed more of a 401K type Social Security plan where the government would give some sort of match and when you retire, you get a lump sum. THIS WILL be the future of both Social Security and Medicare at some point. The sooner we move to more of a plan like that, the sooner the U.S. will get back on a path of financial solvency.