For many Americans, a proposal to tamper with Social Security is about as inviting as a come-on in a public rest room. Almost alone among government programs, the Social Security administration has a clean reputation, having accomplished its goal of providing for older citizens with no history of special interests looting the pot, or friends of congressmen getting extra large checks out of it. So far.
Social Security’s stellar reputation almost justifies the original whopping white lie that Franklin Delano Roosevelt told about the system when he set it up: that it is a separate fund. Many Americans seem to think that there’s an ingot in Fort Knox with their name on it, waiting for their retirement. Luckily for them, with gold at its lowest ever price, this isn’t so.
The government borrows the money and spends it on all the usual pork barrel stuff, just as if it were tax revenues. In return it leaves IOUs, promising to pay up when you grab your walker to shuffle toward the great beyond. However, the polite fiction of a national pensioners’ piggy bank has stopped Congress from looting the fund totally, which is one of the reasons why Social Security has such low overhead and high regard from its customers.
But that has done little to deter Josi Piqera. The suave Chilean is the epicenter of the actuarial earthquake which will make your your Social Security funds disappear into a gaping crevasse of broker commissions and management fees. The head of the Social Security reform project of the Cato Institute, the right-wing think tank, he is also the self-appointed head of the International Pension Reform Society. This month he was awarded a medal by the International Insurance Society for his efforts at privatizing the world’s pension schemes.
Piqera, the former Minister of Labor for General Augusto Pinochet, was dropping big names with heavy thuds as he immodestly recounted all the world leaders with whom he had discussed his crusade to privatize Social Security in the United States. (Pinochet’s was one of the few big names he didn’t drop.) Here in the United States he is optimistic: He has had dinner with George W. Bush, he finds Sens. Bob Kerrey and Daniel Patrick Moynihan in favor of partial privatization and the White House invited him to chat. Now, he is trying to seduce the average American voter.
One thing is for sure: A specter is haunting the presidential race — and its name is Social Security privatization. All the GOP likelies espouse it in some form, and President Clinton triangulated it into his own proposals. The president’s own proposal is fairly low key — but it is a foot in the door for the private-pension-plan salespeople, who would soon be looting the ruins of the Social Security system if it were adopted.
Many of this year’s presidential hopefuls will be getting big campaign checks from the finance industry. There may well be a mismatch between candidates’ statements at the fund-raisers and what they care to say in public about Social Security privatization, however, because tampering with the old folks’ retirement money has never proven to be a winning political strategy. But since check writers usually trump voters in the final analysis, don’t be too surprised when the stealth attack on your retirement patrimony begins.
Piqera will be in the front lines when it does. But when he touts the Chilean miracle, what he neglects to describe is the way Pinochet’s bloody military coup provided the conditions for the much-hailed Chilean pension privatization. Piqera had left Harvard to return to Pinochet’s Chile to join the so-called “Chicago Boys” — University of Chicago trained free-marketeers — in their economic experiment. “I would have preferred to work under a democratic government, but we cannot choose our historic times,” he said of his decision to work for the indicted torturer and murderer.
Under Pinochet and Piqera, the country’s workers were given a choice between entrusting their future to a government that shot them if they protested, or taking the hint and going private. Significantly, the two occupational groups allowed to keep their government-financed pension schemes were the Chilean military and security forces.
In the U.S., his public speeches play upon Generation X angst. Piqera declares that the current system is “extremely unfair to your younger generation.” What he does not explain is that if he has his way, they will be paying twice: First, they will have to pay to support the present retirees, while themselves giving up any hope that the next generation will pay them. Then they have to devote the same resources to build up their own “fully-funded” pensions. But Piqera is hoping the U.S. will use its newfound budget surplus to cushion the transition to privatization.
Economists who are attached to the real world know that the surplus is not simply free money. It could be used to backfill a tax cut. Most Western countries might think it could go for a health-care program, since most nations have a far better subsidized system than does the United States. The least sensible use of it would be to divert it towards an already highly inflated bull market that at some point has to reconnect heavily with gravity.
American Social Security recipients, present and future, have so far not proved receptive to Piqera’s worldwide crusade. In Latin America, which Piqera holds up as a paragon of privatization, people have serious historical reasons to distrust their governments. Too many Latin American countries have been run by dictators like Pinochet, and countless other leaders have looted their national treasuries to pay pensions to their supporters and cheat their opponents.
Piqera is desperate to get an industrialized country to buy into his scheme, and so are his backers. He is currently selling hard in Britain, where Margaret Thatcher paid big cash incentives to persuade employees to opt out of company and government supplementary pension schemes. He brushes aside the little detail that the British pension sellers are now having to repay billions of dollars, because in their eagerness to earn the commissions, many of the scams — sorry, schemes — that they sold left the bearers worse off than if they’d stayed with their original plans.
Nor does he mention New Zealand, a country where almost everything has been privatized, but where voters last year overwhelmingly rejected a Piqera-inspired proposal.
The British experience gets to the root of the pressure to privatize. The
finance industry looks at the trillions of dollars in the government system
and sees countless commissions foregone, penny stocks unscammed and
innumerable dot.com IPOs undersold. It sees a torrent of cash that could
maintain a raging-bull equities market for the foreseeable future if it
could be diverted its way. Which is why these unlikely paladins of the
pensioner are deeply concerned that the Social Security system will run
into severe financial problems in 40 years.
When financiers who usually have difficulty seeing past the next quarter’s
earnings release start worrying about your long-term future, only those who
believe in Santa Claus think that they have the public welfare at heart.
Piqera’s backers, from State Street Bank to Salomon Bros. and Prudential,
are not people who you normally see scouring the streets with alms for the
indigent. To overcome public skepticism, they resort to scare tactics,
incessantly talking about the impending collapse of the Social Security
system.
But the privatizers’ predictions about Social Security’s “bankruptcy”
presume zero population growth and sluggish economic growth. They then
compare the results with the rosiest estimates of stock-market growth,
based on recent boom years, and assume this will continue indefinitely. To
the extent there are concerns about Social Security’s long-term viability,
there are some simple fixes, like lifting the present $72,000 earnings cap
on contributions, so that some of the fastest growing and most inflated
incomes pay a bigger share. Funny how the doomsday reformers never mention
that fact, even though that’s the reform that voters back in opinion polls.
In pursuit of sending shivers down the spines of aging baby boomers, they
home in on FDR’s white lie. They draw a distinction between Social
Security, which they choose to describe as a “pay-as-you-go system,” and
“fully funded” privatized pension portfolios with — for example — State
Street. And they say, with some accuracy, that the Social Security system
depends on people working now paying the pensions of current retirees. Your
payroll taxes are paying the pensions of your parents and grandparents.
But in real terms, the difference between the existing system and a
privatized one is negligible on that score. By the time you come to retire,
it will be the hard work of your offspring making corporate dividends or
paying taxes to fund the interest on T-bonds, that will keep you tripping
the light fantastic on your Teflon hip joints. In neither case do you get
some mythical stash of gold.
So Piqera’s prescription ignores reality: If you want a fully funded
pension, then you need to go survivalist and make for the hills with a few
container loads of your favorite hooch and canned goods. If you stay part
of society, then you will share its economic vicissitudes — including, if
you have a private pension portfolio, a growling bear market, a slump or a
depression.
Now and then, George W. Bush told the unvarnished truth—most often in jest. Consider the GOP presidential nominee’s Oct. 20, 2000, speech at a high-society $800-a-plate fundraiser at New York’s Waldorf-Astoria. Resplendent in a black tailcoat, waistcoat and white bow tie, Bush greeted the swells with evident satisfaction.
“This is an impressive crowd,” he said. “The haves and the have-mores. Some people call you the elites; I call you my base.”
Any questions?
Eight months later, President Bush delivered sweeping tax cuts to that patrician base. Given current hysteria over what a recent Washington Post article called “the runaway national debt,” it requires an act of historical memory to recall that the Bush administration rationalized reducing taxes on inherited wealth because paying down the debt too soon might roil financial markets.
Eleven years later, the Post warns in a ballyhooed article, reading like something out of Joseph Heller’s “Catch-22,” that Social Security—the 75-year-old bedrock of millions of Americans’ retirement hopes—has “passed a treacherous milestone,” gone “cash negative,” and “is sucking money out of the Treasury.”
Anybody who discerns a relationship between these events, that is, between a decade of keeping the “have-mores’” yachts and Lear jets running smoothly and a manufactured crisis supposedly threatening grandma’s monthly Social Security check must be some kind of radical leftist.
That, or somebody skeptical of the decades-long propaganda war against America’s most efficient, successful and popular social insurance program. It’s an effort that’s falsely persuaded millions of younger Americans that Social Security is in its last days and made crying wolf a test of “seriousness” among Beltway courtier-pundits like the Post’s Lori Montgomery, who concocted an imaginary front page emergency out of a relatively meaningless actuarial event.
All in service, alas, of a single unstated premise: The “have-mores” have made off with grandma’s money fair and square. They have no intention of paying it back. That’s the only possible interpretation of the Post’s admonition that “the $2.6 trillion Social Security trust fund will provide little relief. The government has borrowed every cent and now must raise taxes, cut spending or borrow more heavily from outside investors to keep benefit checks flowing.”
Little relief? In fact, the law’s working precisely as intended. After 28 years of generating huge payroll tax surpluses to cover the baby boomers’ retirement benefits, the system must now begin to draw upon those funds to help pay current benefits—the vast majority still covered by current payroll tax receipts.
“Rather than posing any sort of crisis,” explains Dean Baker of the Center for Economic and Policy Research, “this is exactly what had been planned when Congress last made major changes to the program in 1983 based on the recommendations of the Greenspan commission.”
Again, this is the beneficiaries’ money, invested by the Social Security trustees in U.S. Treasury bonds drawn upon “the full faith and credit of the United States.” Far from being “meaningless IOUs” as right-wing cant has it, they represent the same legally binding promise between the U.S. government and its people that it makes with Wall Street banks and the Chinese government, which also hold Treasury Bonds.
A promise not very different, the Daily Howler’s Bob Somerby points out, from the one implicit in your bank statement or 401K (if you’re lucky enough to have one). Did you think the money was buried in earthen jars filled with gold bullion and precious stones?
Raise taxes, cut spending or borrow? What other options does the U.S. government, or any government, have?
On his New York Times blog, Paul Krugman dissects the Catch-22 logic behind the Post’s bogus crisis. You can’t simultaneously argue “that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program.” For practical purposes, it’s got to be one or the other.
So is Social Security a “Ponzi scheme”? No, it’s group insurance, not an investment. You die young, somebody else benefits. Its finances have been open public record since 1936. Do fewer workers support each beneficiary? Sure, but who cares? It’s denominated in dollars, not a head count. The boomers were nearing 40 when the Reagan administration fixed the actuarial tables. No surprises there.
Are longer life expectancies screwing up the numbers? Not really. Most of the rise is explained by lower infant and child mortality, not by old-timers overstaying their welcome. Kevin Drum points out that gradually raising the payroll tax 1 percent and doubling the earnings cap over 20 years would make Social Security solvent forever.
But that’s not good enough for the more hidebound members of the $800-a-plate set. See, over 75 years Social Security has provided a measure of dignity, security and freedom to working Americans that just annoys the hell out of their betters.
This originally appeared at New Deal 2.0
This morning the Washington Post reported that the White House is offering to cut Social Security as part of a broader budget deal with the Republicans. At last we have the answer to the question everyone has been asking about the Democrats: How far can they go?
The financial collapse of 2008 has taught us to be skeptical of economic forecasts that simply spin trends out into an indefinite future. Most central bankers, economists and business leaders failed not only to foresee, but even to imagine, the colossal dimensions of that catastrophe.
Now, however, the very people who said that there was no way for regulators to recognize financial bubbles in advance predict budget gloom and doom. Scary charts of the time path of U.S. debt-to-GDP ratios — many originating from the Peterson Foundation — fill the media, along with specious arguments about how budgets affect national income.
The strangest of these debates involve Social Security. The “arguments” here sort mostly into two groups: One rails on about how “runaway entitlements” are leading to a deficit explosion. The other advises that Social Security can be “saved” in the long run by timely changes, typically involving a mix of taxes and benefit cuts, including, notably, yet another rise in the age of eligibility for the program.
Neither point of view makes much sense. The simple fact is that the deficit did not swell tidally until the financial crisis hit. While George W. Bush’s tax cuts destroyed the Clinton budget surpluses, enough tax revenues trickled in to keep the deficit from blowing out until the economic equivalent of Hurricane Katrina hit in the fall of 2008. It was the one-two punch of the bank bailouts and the Great Recession that led to today’s giant gap between general revenues and expenditures.
But even now there is no near-term threat to Social Security’s solvency. In 1983, Congress enacted into law recommendations of the Greenspan Commission to raise Social Security taxes to cover the retirement bulge coming from baby boomers. Since then, the program has piled up enormous surpluses. These have been invested in government bonds, thus helping to finance the rest of the government.
The 2011 Report of the Trustees of the Social Security Trust Fund projects that the Trust Fund and interest earnings from it will suffice to cover all benefit payments until 2036. Even then, the fund would not be empty — the report projects that tax revenues will still cover approximately 75 percent of promised benefits until 2085. Talk of the bankruptcy of Social Security is hot air.
2036 is a long way off. The argument in 2011 is about whether there is any reason to do anything at all right now. The case pressed by self-proclaimed “rescuers” of Social Security such as Peter Orszag, the former head of the Obama administration’s Office of Management and Budget who has since accepted a position at Citigroup, is unpersuasive.
The first yellow flag is Orszag’s frank acknowledgment that Social Security features barely at all in any putative budget shortfall: “Social Security is not the key fiscal problem facing the nation. Payments to its beneficiaries amount to 5 percent of the economy now; by 2050, they’re projected to rise to about 6 percent.” A rise of 1 percent in four decades! Former Sen. Alan K. Simpson, co-chair of the president’s deficit commission, claimed that his group’s deficit report “harpooned all the whales in the ocean, and some of the minnows.” Lost in the blaze of publicity about the commission is the crucial fact that Social Security is plainly one of the minnows.
But the whole discussion is even fishier. If any shortfall ever materializes, it could easily be made up by transfers from general tax revenues, though that would breach the long-maintained fiction that Social Security is a contributory system on the model of most private insurance. (It is actually a pay-as-you-go system, where current taxes pay benefits to current beneficiaries, with the final guarantee of the whole system’s soundness being, in the last analysis, the success of the economy as a whole.) But if fears about 2036 are unbearable, plenty of ways exist that would fix the program without threatening anyone’s life support system.
Between 2002 and 2007, for example, the richest 1 percent of Americans garnered 62 percent of all income gains, while the bottom 90 percent of the population saw their incomes grow by 4 percent. At the same time, thanks to the Bush tax cuts, the rich were also paying proportionately fewer taxes. Considering that ordinary Americans fronted most of the money for the bank bailouts and have endured most of the recession’s “collateral damage,” it seems only simple justice that if the program needs fixing, the best way to do it would be to raise the ceilings on earnings subject to the Social Security tax, which is currently only $106,800. That would put the burden on people who cannot plausibly claim to be suffering.
But if, for example, productivity runs even slightly higher than in the forecasts, there may be no shortfall of any kind. Considering that the projected shortfall is still a quarter century away, there is no good reason to tinker with a program that, as the Washington Post editorialized in 2005, provides the majority of income “for nearly two-thirds of the elderly … [and] the only source of income for one-fifth of all elderly people, for 25 percent of non-married elderly women, and for 38 percent of elderly African Americans and Hispanics.”
But Orszag and others who agree that the program makes at most a minor dent in the budget, nevertheless argue for “fixing” it now. Their reason is remarkable: As Orszag frankly confesses, “even though Social Security is not a major contributor to our long-term deficits, reforming it could help the federal government establish much-needed credibility on solving out-year fiscal problems.” Cut benefits, in other words, simply to prove to financial markets that the government can do it. As Paul Krugman observes, this position is tantamount to claiming that we should cut Social Security now, because we might have to do it in the future. Polls show strong public opposition to cuts in Social Security. Considering the havoc that the financial crisis wreaked on the home values and pensions of ordinary Americans, proposals that Democrats should roll over and join Republicans and the Peterson Foundation in cutting Social Security is outlandish. As profits for the banks the American people rescued soar, it marks a new low in the Democratic Party’s long retreat from the New Deal’s glittering promise that ordinary Americans, too, deserved to share in prosperity.
This essay is adapted from Thomas Ferguson and Robert Johnson’s “A World Upside Down: Deficit Fantasies in the Great Recession,” which appears in the new issue of the International Journal of Political Economy (Vol. 40, No. 1, pp. 3-47). That essay is a revised and expanded version of their working paper for the Roosevelt Institute.
Rob Johnson is a senior fellow and the director of the Project on Global Finance at the Roosevelt Institute.
Thomas Ferguson is a professor of political science at the University of Massachusetts, Boston and senior fellow at the Roosevelt Institute.
What could Obama possibly be thinking? The Washington Post and New York Times are both reporting that the president has decided to “go big” on the debt ceiling negotiations: Suddenly, big cuts to Medicare and Social Security are supposedly on the table, and instead of seeking $2 trillion in overall spending reductions over the next 10 years, the White House is now proposing $4 trillion in cuts over the same period.
Progressives are not amused, to put it mildly, at the prospect of a Democratic president unilaterally dismantling the social welfare state. Congressional Democrats are reportedly “anxious,” “worried” and caught “off guard.” Republican proposals to slash Medicare have proven to be a potent political weapon for Democrats — and now Obama has gone over to the dark side?
It’s all very confusing. Just a few days ago, the president was preaching a “balanced approach” to deficit reduction that included revenue increases as well as spending cuts. Republicans rejected his stance out of hand. So how does it make sense to seek even greater spending cuts?
The answer is that it doesn’t make sense. Here’s why: The new plan, reports the Times, supposedly hinges on Republicans agreeing to $1 trillion in new revenue.
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, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.
Excuse me? Let’s step back here a second. Democrats are right to be alarmed at the prospect of big cuts to entitlements. But how do you suppose your average House Republican is reacting to the news of what would be, for all intents and purposes, a trillion dollar tax hike? I can’t imagine they’re very pleased, and I don’t see how Boehner can possibly keep his caucus together on this issue. It’s even more unrealistic to assume that ending the Bush tax cuts on the wealthy could be folded into this deal, as some reports are suggesting.
There is nothing more important to the GOP than its stance on taxes.
And indeed, the only line that really rings true to me in the New York Times piece makes exactly that point:
Aides to Mr. Boehner said that no tax increases were on the table and that he had not agreed to the expiration of any tax cuts.
Combined with House Majority Leader Eric Cantor’s oft-repeated declaration that any closing of tax loopholes or tax breaks without equivalent tax cuts elsewhere is a non-starter, and assertions today from GOP sources that any “revenue increases” must be accompanied by lower tax rates overall, and it becomes very difficult to see where this magical $1 trillion comes from.
So where does that leave us? How about right where we were last week? The White House has decided that Republican intransigence on taxes makes any real long-term agreement impossible. The obvious step for Obama is to extract the maximum political advantage here by appearing willing to negotiate a “grand bargain” — to be the guy mature enough to compromise. Ezra Klein makes the case:
We’re likely seeing the White House make a show of their interest in a compromise even though there’s no compromise on the table. That fits with their general plan here: if the debt ceiling is going to cave in, they’re going to make sure it does so on the Republicans. And the best way to get Democrats out of the way is to show that they did everything possible to make a deal while Republicans elevated the repetition of the word “no” into something approaching performance art.
I will concede — it is scary to hear reports about the president bending over backward to offer entitlement cuts when the party on the other side of the negotiating table has proven themselves utterly unwilling to make any meaningful compromises. And it is completely insane that Washington has decided that deficit reduction is first priority of the day when unemployment is at 9 percent and the U.S. government is able to borrow money at historically low rates. But I think outraged progressives should try to imagine how the country as a whole might be perceiving these negotiations. One side, by every indicator, seems willing to make a deal. The other is threatening to trash the U.S. economy if it doesn’t get 100 percent of its demands met. That doesn’t strike me as a politically viable position.
But stay tuned. Even as I write these words, Obama is meeting with all key congressional players at the White House. The situation is very much in play.
UPDATE: Jon Chait makes a similar, even more convincing argument.
Wednesday night, the Washington Post reported that on top of the big cuts to Medicare he’s already proposed, President Obama is now considering endorsing cuts to Social Security. In making this announcement (which formally embraces the concept of Social Security cuts first proposed by Obama’s debt commission), the White House has lost all credibility in arguing that its 2012 political problems are the result of unfair expectations, particularly on the left. At the same time, the White House has finally exposed the strategy behind what so many of its apologists insisted was deft “three dimensional chess” on behalf of old-school liberalism — and as we see, these tactics have nothing to do with liberalism and everything to do with Orwell-ism.
To review: The Wall Street Journal reports that “across a wide range of measures — employment growth, unemployment levels, bank lending, economic output, income growth, home prices and household expectations for financial well-being — the economy’s improvement since the recession’s end in June 2009 has been the worst, or one of the worst, since the government started tracking these trends after World War II.” In light of this miserable situation, it’s no surprise that Gallup’s Frank Newport reports that the president’s job approval rating “has been hovering near the fault line between probable re-election and probable ‘one-term’ presidency.”
For most of the president’s tenure, he, his staffers and his devoted-but-dwindling army of sycophants have insisted that the political fallout from the crushing recession reflects unrealistic expectations of Obama in the wake of George W. Bush’s destructive reign. It is, dare I say, an audacious claim, especially coming from a candidate who asked us all to have the “audacity of hope” — and it’s more than a little insulting. After all, much of the complaints about the president have been about campaign promises that he didn’t just fail to fulfill — but that he refused to even try to fulfill.
Indeed, when a political candidate promises to try to pass a public option to compete with private insurers, attempt to crack down on Wall Street abuse, do what he can to stop unfair trade deals, oppose extending his predecessors tax cuts and avoid initiating initiate costly new wars sans congressional approval, and then once in office works to kill a public option, refuses to prosecute Wall Street crimes, presses the rigged trade deals he opposed, supports the extension of his predecessor’s tax cuts and starts a new war in Libya with no congressional authorization — whose fault is it that he ends up in reelection trouble?
I’d say the answer is obvious — I’d say that if such a politician wasn’t in reelection trouble, it would be a sign that our democracy is in a deeper crisis than it already is.
But, then, merely citing this record brings accusations of treason, at least from Democratic staffers, pundits and activists in Washington. In an age of politics that has melded politicians with celebrity and activism with starfucking, to be a rank-and-file progressive and honestly examine a candidate’s record during a reelection campaign is to risk being portrayed as a dangerous, seditious, ideologically zealous revolutionary.
After Wednesday night, though, the power of this kind of with-us-or-against-us partisanship will face it’s ultimate test. Because while the intricacies of health care, Wall Street regulations and trade pacts can be muddled with esoterica and while Democratic presidents have shown a deft ability to soothe their base by conflating militarism with humanitarianism (the same trick, of course, that Republicans use for their militarist adventures), this Democratic president is aiding a new war on Social Security, the single most popular social program in American history, a program that the Democratic Party has — both in principle and out of sheer self-interest — long based its brand on. Whether Obama ultimately champions specific cuts or just floats the general possibility of such cuts, the larger news is that he has now legitimized them as a negotiating chip — and importantly, he made such a move on his own, not because of circumstantial necessity.
To appreciate this reality, go back and read every Democratic Party press release during President Bush’s 2005 failed assault on Social Security. Those press releases reminded us that Social Security is one of the most fiscally sound programs in American history, projected to run surpluses for the foreseeable future. Additionally, what problems it does face can be easily solved — as just one example of a solution, the Center on Budget and Policy Priorities reports that had President Obama refused to extend the Bush tax cuts and instead worked to repeal them, that move alone would generate revenues equal to two and one-half times the entire Social Security shortfall over the next 75 years (yes, 75 years!).
And yet now, like that gruesome scene at the end of “Fargo,” Social Security — a pay-as-you-go embodiment of fiscal responsibility — is being rammed into the grisly woodchipper of cynical debt-reduction politics. Only instead of a glowering Peter Stormare (or Mitt Romney) doing the pushing, there’s a cheery President Obama insisting that cuts are really just progressive efforts to “strengthen” — the same Obama who chastised his 2008 Republican opponent for using the same pathetic spin to shroud cuts to the same program.
This is not real politik, it is not triangulation and it isn’t even Bush-ism (that is, taking unpopular positions and then just arrogantly pursuing them without regard for public will). No, we are watching a sort of Orwellian dystopia. Indeed, it is a sight to behold: a regime that believes it can say one set of things over and over and over again, and then do exactly the opposite.
Inherent in that ideology is the assumption that Americans — and particularly Democratic voters — are either too stupid to see the heist in process, or if they do see the heist, are too entranced by their president’s power/fame/celebrity/charisma to want to do anything about it, even if what’s being pilfered is Democrats’ Social Security crown jewel.
The assumption, in other words, is that ignorance and fealty will permit a president to serve as an accomplice to the very grand larceny he was explicitly elected to office to oppose. Should the assumption prove true — should Obama now be cheered on for doing to Social Security what no Republican president has ever been able to do — the date on the calendar may say 2011, but it will really be 1984.
(Updated below with AARP statement and reaction from senior advocacy groups.)
The Wall Street Journal made some waves Friday morning when it reported that AARP — the powerful lobbying group for seniors — “is dropping its longstanding opposition to cutting Social Security benefits.” According to the WSJ, the move could rock Washington’s debate over how to revamp the nation’s entitlement programs.
AARP has long been cast as the defender of entitlements for U.S. seniors, willingness to bend on the issue, according to AARP representatives, comes from a place of necessity as opposed to ideology (and was only decided after “wrenching” debate within the group).
“The ship was sailing. I wanted to be at the wheel when that happens,” John Rother, AARP’s longtime policy chief, told the paper.
According to the Journal:
“The group will accept cuts, but won’t champion them, and it is particularly leery of certain concepts such as eliminating benefits for wealthier recipients. It wants tax increases to fill most of the program’s financial hole, and it insists that a deal must be crafted apart from broader deficit-reduction negotiations.”
The importance of AARP’s position should not be underestimated: The group is a lobbying leviathan with a huge budget (last year its revenue was $1.4 billion) that can do a lot of work when it comes to shaping political discourse. AARP can well afford to make a decision that will anger its members; it is unlikely to alienate all 37 million of them.
However, not everyone sees AARP’s posture as the seismic shift described by the WSJ. TPM’s Josh Marshall writes:
The premise of the article is that AARP has always been a stalwart opponent of any cuts to Social Security or any efforts to transform it into a 401k style individual accounts system. And now they’ve changed that position. But that’s simply not true. As a general matter, yes, AARP has been a significant obstacle to efforts to gut these programs. But AARP has long been a headache for liberal political groups who do want to defend these programs’ basic structure and integrity.
Nonetheless, AARP has never before been actively open to accepting Social Security reform (even if it has not always been the ardent defender the WSJ depicts). As Business Insider notes, “cutting Social Security benefits is seen by most political analysts as especially difficult. The chief financial concern of aging Americans is that they don’t/won’t have enough money set aside for retirement … Older people vote in disproportionately high numbers. Everything aligns against any attempt to ‘reform’ the nation’s most important social welfare program.”
AARP’s shift in position, it seems, does at least have the potential to change this.
UPDATE: AARP Friday released a statement in response to the Wall Street Journal story:
“Contrary to the misleading characterization in a recent media story, AARP has not changed its position on Social Security,” reads a statement from the group’s CEO A. Barry Rand.
In the release, reproduced in full by TPM here, Rand asserts that AARP remain defenders of Social Security.
Nonetheless, the Wall Street Journal scoop has precipitated a furious response from other leading senior advocacy groups, which — regardless of Rand’s statement — blame AARP for delivering the possibility of Social Security cuts to the budget talks table.
Speaking on a phone conference with representatives from a coalition of Social Security advocacy organizations, Max Richtman of the National Committee to Preserve Social Security and Medicare said “the timing couldn’t be worse.” The advocates noted that it came as little surprise that AARP had decided upon a negotiating strategy that could involve softening on entitlement cuts to achieve tax increases. However, the revelation is out that the AARP is open to negotiate on Social Security, which is all self-described budget hawks ever wanted to hear.
(Credit: mountainpix via Shutterstock/AP) 
President Barack Obama meets with Congressional leadership in the Cabinet Room of the White House in Washington, Thursday, July 7, 2011, to discuss the debt. From left are, House Majority Leader Eric Cantor of Va., House Minority Leader Nancy Pelosi of Calif., House Speaker John Boehner of Ohio, the president and Senate Majority Leader Harry Reid of Nev. (AP Photo/Pablo Martinez Monsivais)(Credit: Pablo Martinez Monsivais) 
Blank American Social Security card isolated over white background - With clipping path(Credit: Gino Santa Maria) 
The lobby group for older citizens has 37 million members 
