Obama, Social Security and the Diamond-Orszag Plan
Ben Smith says today that the left is "silent on Social Security reform" even as the administration considers it, and quotes Blue Dog Jim Cooper who says Obama is "in a honeymoon phase, and many liberals are afraid to express concerns."
Atrios calls it trolling. Perhaps it is, but there have been signs that serious Social Security reform is in the works, and people who have been briefed on the administration’s plans indicate that things like raising the retirement age and cutting benefits are under consideration.
Consider — in December, Cooper said a report which showed "that the governments unfunded liabilities are roughly $56 trillion" was "shocking." He called for a commission to address it, which Hoyer endorsed but Pelosi opposed. The White House agreed to it in January:
Obama said that he has made clear to his advisers that some of the difficult choices–particularly in regards to entitlement programs like Social Security and Medicare – should be made on his watch. "We’ve kicked this can down the road and now we are at the end of the road," he said.
So who is going to be on this panel? Kent Conrad, Judd Gregg, the Blue Dogs and "a host of outside groups with ideas on the matter." Said Paul Rosenberg:
So, Blue Dogs in. Progressives? Not so much. Surprised? Didn’t think so. The agenda here "difficult choices–particularly in regards to entitlement programs like Social Security and Medicare" is straight out of the fiscal slasher movie on CNN last weekend, IOUSA, which Digby blogged about earlier in the week, and which was thoroughly debunked by economist Dean Baker and his associates at the Center for Economic and Policy Research (CEPR), which he co-directs, when it first came out in theatrical release last fall.
Whatever plan the task force comes up with, Cooper does not want Congress to be able to amend it.
Cooper was a health care spokesman for Obama during the campaign. Mike Lux sounded the alarm at the time, noting that Cooper had been critical to killing health care reform in 1993/94 and was a solid spokesman for the insurance industry position. Digby has more of his history.
Now as Ben rightly notes, during the campaign the only time Obama discussed revamping Social Security was raising the cap on Social Security taxes. But that’s hardly what Jim Cooper and the Blue Dogs are looking for. Nor, does it seem, that folks inside the Obama team think that this will be sufficient. The framework they are evidently looking at is outlined in a 2005 Brookings Institute paper called the Diamond-Orszag Plan, co-written by…yes, Obama’s budget director, Peter Orszag.
You can find the plan here, but this should give you a hint:
Since Painful Choices Must Be Made, a Key Question Is, Which Ones?
The Social Security deficit can be eliminated only through different combinations of politically painful choices: tax increases and benefit reductions. Unfortunately, too many analysts and politicians have ignored this reality, responding to the painful alternatives by embracing "free lunch" approaches.
Our plan makes the painful choices that are necessary—selecting a combination of benefit and revenue changes to restore long-term balance. In doing so, it focuses on three areas which contribute to the actuarial imbalance: improvements in life expectancy, increases in earnings inequality, and the burden of the legacy debt from Social Security’s early history.
Workers who are 55 or older will experience no change in their benefits from those scheduled under current law. For younger workers with average earnings, our proposal involves a gradual reduction in benefits from those scheduled under current law. For example, the reduction in benefits for a 45-year old average earner is less than 1 percent; for a 35-year-old, less than 5 percent; and for a 25-year-old, less than 9 percent. Reductions are smaller for lower earners, and larger for higher ones.
Obama met with the Blue Dogs Tuesday night. Before the House vote on the stimulus bill, Rahm Emanuel had promised them that they would soon see "signs of Obama’s commitment to fiscal reform," and according to one Blue Dog, "Tuesday night was a fulfillment of the commitment Emanuel made that day."
If Blue Dogs like Cooper have been emboldened by the idea that the left will quietly accept Social Security reforms that include reductions in benefits because of Obama’s popularity, they have sorely deluded themselves. As Atrios notes, it would create "an epic 360 degree shitstorm." If people on the left are being quiet, it’s not because they don’t care…it’s because they don’t think Obama will ever do it.