Category Archives: Econ: Social Security

The Red Lionfish of Politics

How can this be?

Most people are now familiar with President’s Obama’s proposal to cut Social Security by reducing the annual cost of living adjustment. While the final formula is somewhat convoluted, the net effect is to reduce benefits by an average of roughly 3.0 percent.

Since Social Security benefits account for more than 70 percent of the income of a typical retiree, this cut is more than a 2.0 percent reduction in income. By comparison, a wealthy couple earning $500,000 a year would see a hit to their after-tax income of just 0.6 percent from the tax increase that President Obama put in place last year.

While President Obama is willing to make seniors pay a price for the economic crisis, his administration his unwilling to impose any burdens on Wall Street. Specifically, it has consistently opposed a Wall Street speculation tax: effectively a sales tax on trades of stock and derivatives. The Obama administration has even used its power to try to block efforts by European countries to impose their own taxes on financial speculation.

If the idea of taxing stock trades sounds strange, it shouldn’t. The United States used to impose a tax of 0.04 percent until Wall Street lobbied to eliminate it in the mid-1960s. Many countries, including the United Kingdom, Switzerland, China, and India already impose taxes on stock trades.

Oh, wait, it’s simple:

Wall Street bankers have a lot more political power than old and disabled people who depend on Social Security. That is why President Obama is working to protect the former and cut benefits for the latter.

At the risk of sounding like a broken record, let me repeat two things I’ve said often before:

1. We need a Tobin Tax too.

2. Consider this administration the flowering of the Nelson Rockefeller wing of the GOP. Obama governs like the moderate-liberal Republicans of my youth — a species now all but extinct in its original habitat, but thriving like red lionfish in their new home.

Posted in Econ: Social Security, Politics: US | 4 Comments

DeLong’s Great Social Security Policy Brief

Brad DeLong has written a great little Statement on Social Security Reform.

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Social Security: ‘The Numbers Are Ugly’

Brad DeLong, Why Oh Why Are We Ruled by These Fools? (Yet Another Social Security Edition):

Ah. It becomes clearer and clearer why nobody in the administration who knew anything about Social Security substance was trotted out the week before last to provide details on Bush's endorsement of Pozen's “progressive price indexing.” The numbers are ugly.

Jason Furman has the details. And they are indeed ugly.

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Give Krugman That Pulitzer Already

Today's Krugman column on social security, The Final Insult, is a gem. A small taste:

But Mr. Bush isn't calling for small sacrifices now. Instead, he's calling for zero sacrifice now, but big benefit cuts decades from now – which is exactly what he says will happen if we do nothing. Let me repeat that: to avert the danger of future cuts in benefits, Mr. Bush wants us to commit now to, um, future cuts in benefits.

What columnist is more deserving of a Pulitzer?

Posted in Econ: Social Security | 26 Comments

A Pithy Summary of Bush Press Conference Remarks on Social Security

Via Dan's Not Exactly Must-See TV, this perfect quote from Michael Tackett in the Chicago Tribune:

President Bush on Thursday used a format he does not like to discuss issues he cannot resolve in hopes that he can sell the American people on policies most say they don't want.

Posted in Econ: Social Security | 1 Comment

Firing Back on Social Security

One of the oddest things about the Bush Social Security campaign — after the fact that they started it at all — is the constant repletion of the mantra that today's elderly won't have their benefits cut. That clangs every time I hear it.

Given the highly effective Democratic scare-mongering on this issue in past elections, one can see why the Bush crowd might think it needed to preempt this criticism. But to trumpet it in a manner which to my ear screams 'everyone else gets the shaft'?

Needlenose noticed this too, but he has a good comeback which neatly ties the two elements together:

From the Department of Accidentally Opened Doors: The' message to seniors should be: “Look how far George Bush and his party are from your values. They think you can be bought — that you'll sell out your kids and grandkids as long as they don't personally cut your benefits.”

Posted in Econ: Social Security | 2 Comments