Is Obama Echoing Bush on Social Security?
Andrew Biggs thinks the answer is ‘Yes’ Obama Echoes Bush on Social Security and Barkley Rosser suspects he may be right Obama Drinks Social Security Kool-Aid. Each drawing his particular hope and fear from this WaPo article Obama Pledges Entitlement Reform: President-Elect Says He’ll Reshape Social Security, Medicare Programs Well I am STILL not worried because the two (Bush and Obama) are coming at this from very different starting points.
Obama’s position is outlined pretty clearly on the Obama 2008 website
Obama and Biden are committed to ensuring Social Security is solvent and viable for the American people, now and in the future. Obama and Biden will be honest with the American people about the long-term solvency of Social Security and the ways we can address the shortfall. Obama and Biden will protect Social Security benefits for current and future beneficiaries alike. And they do not believe it is necessary or fair to hardworking seniors to raise the retirement age. Obama and Biden are strongly opposed to privatizing Social Security. As part of a bipartisan plan that would be phased in over many years, they will ask those making over $250,000 to contribute a bit more to Social Security to keep it sound.
Obama does not support uncapping the full payroll tax of 12.4 percent rate. Instead, he and Joe Biden are considering plans that would ask those making over $250,000 to pay in the range of 2 to 4 percent more in total (combined employer and employee).
No increase in retirement age, no privatization. I just don’t see enough in this from the WaPo to suggest he has fundamentally moved away from his previously stated position.
Five days before taking office, Obama was careful not to outline specific fixes for Social Security and Medicare, refusing to endorse either a new blue-ribbon commission or the concept of submitting an overhaul plan to Congress that would be subject only to an up-or-down vote, similar to the one used to reach agreement on the closure of military bases. But the president-elect exuded confidence that his economic team will succeed where others have not.
“Social Security, we can solve,” he said, waving his left hand. “The big problem is Medicare, which is unsustainable. . . . We can’t solve Medicare in isolation from the broader problems of the health-care system.”
Which translates to me as “(SS) small problem down the road” vs “(Medicare) big issue needing action now”. That is on Social Security Obama is by temperament a Fixer. In contrast Bush started as a Transformer. To see the difference we need to start with the mission statement of the 2001 Commission. Which is below the fold.
A link to their full (13 MB PDF) report can be found on the home page of President’s Commission to Strengthen Social Security but pretty much all you need to know is outlined in the ‘Guiding Principles’
Guiding Principles
The Commission was asked to make recommendations to modernize and restore fiscal soundness to Social Security, using six guiding principles:
•Modernization must not change Social Security benefits for retirees or near-retirees.
•The entire Social Security surplus must be dedicated only to Social Security.
•Social Security payroll taxes must not be increased.
•The government must not invest Social Security funds in the stock market.
•Modernization must preserve Social Security`s disability and survivors insurance programs.
•Modernization must include individually controlled, voluntary personal retirement accounts, which will augment Social Security.
That is the Commission was not tasked with studying Social Security in the larger financial context of Medicare and the General Fund deficit. It wasn’t even tasked with studying Social Security in isolation and coming back with recommendations on how to fix it. Instead certain categories of fix are ruled out right from the start. No direct investment by Social Security in the stock market (which would capture the much touted equity premium). No increase in payroll taxes (sorry Coberly, the Commission was not even allowed to discuss it). Nope the Commission was given perfect freedom to come up with a plan. As long as the plan included individually controlled, voluntary personal retirement accounts. Meaning that when Bush was claiming in 2004 that “all options are on the table” he was pretty much fibbing. He knew what he wanted and what he wanted was Transformation.
Andrew Biggs can hear all the echoes he wants, I just am not convinced Obama has drank any kind of Kool-Aid here.