Whacking the Old Folks

By William Greider for the Nation

In setting up his National Commission on Fiscal Responsibility and Reform, Barack Obama is again playing coy in public, but his intentions are widely understood among Washington insiders. The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.

Obama’s commission is the vehicle created to achieve this deal. He ducks questions about his preferences, saying only that “everything has to be on the table.” But White House lieutenants are privately talking up a bargain along those lines. They are telling anxious liberals to trust the president to make only moderate cuts. Better to have Democrats cut Social Security, Obama advisers say, than leave the task to bloodthirsty Republicans.

The president has stacked the deck to encourage this strategy. The eighteen-member commission is top-heavy with fiscal conservatives and hostile right-wingers who yearn to dismantle the retirement program. The Republican co-chair, former Senator Alan Simpson, is especially nasty; he likes to get laughs by ridiculing wheezy old folks. Democratic co-chair Erskine Bowles and staff director Bruce Reed secretly negotiated a partial privatization of Social Security with Newt Gingrich back when they served in the Clinton White House, but the deal blew up with Clinton’s sex scandal. Monica Lewinsky saved the system.

Any recommendations require fourteen votes, and Obama has at least five loyalists who will protect him—Senators Dick Durbin and Max Baucus, Representatives Jan Schakowsky and Xavier Becerra, and former SEIU president Andy Stern. On the other hand, if Obama really wants to make a deal, these commissioners will very likely support him.

The people, once again, are kept in the dark. The Obama commission will not report its recommendations until after this fall’s elections—too late for voters to express objections. Both parties assume they can evade blame by holding hands and jumping together.

What’s extraordinary about this assault on Social Security is that a Democratic president is leading it. Obama is arm in arm with GOP conservatives like Wall Street billionaire Pete Peterson, who for decades has demonized Social Security as a grave threat to the Republic and has spread some $12 million among economists, think tanks, foundations and assorted front groups to sell his case. If Obama pulls the deal off, this will be his version of “Nixon goes to China”—a leader proving his manhood by going against his party’s convictions. Even if he fails, the president will get some protective cover on the deficit issue. After all, he is targeting Big Government’s most beloved and trusted program—the New Deal’s most prominent pillar.

Obama’s initiative rests on two falsehoods spread by Peterson’s propaganda—the notion that Social Security somehow contributes to the swollen federal deficits and that cutting benefits will address this problem. Obama and his advisers do not say this in so many words, but their rhetoric implies that Social Security is a big source of the deficit problem. Major media promote the same falsehoods. Here is what the media don’t tell you: Social Security has accumulated a massive surplus—$2.5 trillion now, rising to $4.3 trillion by 2023. This vast wealth was collected over many years from workers under the Federal Insurance Contributions Act (FICA) to pay in advance for baby boom retirements. The money will cover all benefits until the 2040s—unless Congress double-crosses workers by changing the rules. This nest egg does not belong to the government; it belongs to the people who paid for it. FICA is not a tax but involuntary savings.

As a candidate, Obama assured voters that any shortfall was in the distant future and could be easily resolved with minor adjustments. As president, he has abandoned this accurate analysis and turned rightward without explaining why. He faces an awkward problem, however. Despite conservative propaganda, cutting Social Security will have no impact on the deficit problem that so stirs public anxiety. The White House knows this, and some advisers admit as much. So why is the president targeting Social Security?

Paul Volcker, former Federal Reserve chair and adviser to the president, declares, “In my view, we can deal with the Social Security problem fairly promptly.” Cutting benefits, Volcker adds, “is not going to deal with the deficit problem in the short run, but it’s confidence building.” John Podesta of the Center for American Progress, another adviser, agrees but says, “Reforms could starkly demonstrate to skeptical debt markets that the United States is willing to take on a politically difficult fiscal issue.”

In other words, targeting Social Security is a smokescreen designed to reassure foreign creditors and avoid confronting the true sources of US indebtedness. The politicians might instead address the cost of fighting two wars on borrowed money or the tax cuts for the rich and corporations or the deregulation that led to the recent financial catastrophe and destroyed vast wealth. But those and other sources of deficits involve very powerful interests. Instead of taking them on, the thinking in Washington goes, let’s whack the old folks while they’re not watching.

This issue is a seminal fight with the potential to scramble party politics. If Democrats can no longer be trusted to defend Social Security, who can be? The people from left to right overwhelmingly support the program (88 percent), and a majority (66 percent) believe benefits should be increased now to cope with the loss of jobs and savings in the Great Recession.

Citizens can win this fight if they mobilize smartly. We can do this by arousing public alarm right now, while members of Congress face a treacherous election and before Obama can work out his deal. Some liberal groups are discussing a “take the pledge” campaign that demands senators and representatives sign commitments to keep Hands Off Social Security Benefits. If politicians refuse to sign, put them on the target list for November. Barack Obama is standing on the third rail of politics—let’s give him a warning jolt.


  1. Minnie Ruffin on June 4, 2010 at 5:20 pm

    I’m a retired educator who got burned the last time social security was “fixed”. People are still praising Ronald Reagan and Tip O’Neal for “fixing” social security. What that has meant for me is receiving only 40% of what I should be getting from social security, simply because I have a Teacher Retirement Pension.

    What people don’t realize is that after spending six or more years in college (10 in my case)and working 10 years on social-security jobs does not leave a lot of years to work in education. Therefore, the Teacher Pension is not what it could have been with just another 10 years, the ones spent in social-security jobs. Plus your social security benefits from your 40 quarters are severely diminished. I feel cheated!

    So everybody needs to pay attention NOW to what Obama’s Committee is planning to do to “fix” social security. They will make their “fix” to be effective years from now, in order to get it past the people who will be affected and may not be paying attention now. What Reagan & O’Neal did in the 80’s when I wasn’t paying attention came back to bite me in the butt in 2001 when I retired with much less than I expected. I was caught totally unprepared!

    Minnie Ruffin, Atlanta

    • Bob Sennhauser on June 9, 2010 at 2:28 pm

      I am in the same situation. I had many more than 40 quarters of Social Security earned, most at four years universities. But, then I took a position at a community College, that did not pay into S.S (over 90% do not), but their HR did not tell me about Social Securities WEP provision. Which, when it was too late, I learned would reduce my S.S payments over $3,800 per year. They were perposefully not informing new hires, as those with years with S.S. gained outside of teaching, would not apply, and new teachers, who realized that the Texas’s Teacher’s Pension was second lowest in the US, went to other states to teach. Now the Government wants to reduce my/our Medicare and Social Security, even though they have in no way caused the fiscal problems, but in fact their huge surpluses have been borrowed from yearly to make the defect look better than it is. Obama’s appointing Simpson to be one of the co-chairs of his “secret committee” is a like putting a knife blade to our stomachs. It is a nasty act and he deserved to be hounded by us, even forced from office, First for appointing a secret committee, and, second, for appointing members who have a history of being opposed philosophically to the programs they are evaluating. Obama will sell out anyone, if he can get closer to the conservatives, be they Democrats or Republicans. Let just say that I am very liberal, and in no way are connected to nuts like the Tea Party folks.

  2. Denise Black on June 8, 2010 at 3:03 pm

    It is really alarming that Obama is in effect a great Republican president. Just like Bill Clinton only super sized. If you can’t trust the Democrats with Social Security I don’t know what we can do. Sure as hell can’t trust the Republicans with it.

  3. Twyla Kolb on June 8, 2010 at 3:59 pm

    When social security was orginated, the money each perons put into the pot was set aside to pay for benefits when that person retired. Ten or fifteen years ago Congress began BORROWING money from the social security pot of money. Now, Congress is going to tell us there is no money to pay the benefits!!! I believe that is stealing…

  4. Rosemary Allen-Haggblad on June 8, 2010 at 5:35 pm

    My husband and I paid into the Social Security we depend on now in retirement. If we have to go back to work to make a living, who will hire us?

  5. Richard Heckler on June 9, 2010 at 2:07 am

    Frontline – PBS

    Obama’s Deal
    Jun. 15, 2010 (Check local listings)

    It wasn’t pretty, but it worked. Inside the backroom deals and hardball politics that finally got Obama his health care bill.