Thursday, February 21, 2008

An Economy and Budget That Works - Part Two, Social Security

Robert Samuelson is the Washington Post's go-to guy on economic issues, which means that he has a major role in defining orthodoxy on budget and policy issues. Yes, there are elected and appointed officials--President Bush, congressional leaders, Federal Reserve chairman Ben Bernake and others--who occupy command positions in defining the limits of debate about the economy, but as media figures go, Samuelson swings a lot of weight.

Samuelson has occupancy rights on prime turf--a weekly op-ed column in the Post and another column in Newsweek magazine. The options for challenging Samuelson's pronouncements are limited. A letter to the editor might do, but such a letter, if it gets published, gets less space than Samuelson does and comes after the fact. Why does this matter?

Well, one case in point might be a column Samuelson wrote earlier this week about Barack Obama, who Samuelson says, is not telling Americans the truth. "A truth-telling Obama might say: 'Spending for retirees--mainly Social Security, Medicare and Medicaid--is already nearly half the federal budget. Unless we curb these rising costs, we will crush our children with higher taxes," Samuelson wrote.

Social Security is a hobby horse of Samuelson's; its vulnerability, combined with the rising federal deficit allegedly comprise a poison pill that future generations will be forced to swallow by the inaction (read selfishness) of baby boomers. Obama's disinformation, Samuelson claims, includes a pledge not to "raise the retirement age" or reduce benefits to retirees. Obama's further proposal to provide tax relief to retirees making less than $50,000 annually shifts even "more of the tax burden to younger workers," says Samuelson.

But, as Dean Baker of the Center for Economic and Policy Research (CEPR) has pointed out repeatedly, the non-partisan Congressional Budget Office has calculated that Social Security will be able to pay current and future retirees through 2052 without any changes to the current tax structure (excepting gradual increases in payments to reflect cost of living increases). and the national budget deficit, a genuine problem for all of us, is an entirely separate issue from Social Security.

In fact, if the Social Security tax, currently the most regressive tax in the country--it falls more heavily on lower-income workers than on the wealthy--is raised to include a larger portion of the income of those making over $102,000 per year, it could extend the solvency of the Social Security system into the 22nd Century. (You can read more about Social Security at CEPR's website:

Ultimately, it is Samuelson's misleading perspective on Social Security that is the larger problem. Obama is being criticized for standing outside a perspective that is actually disabling. If the notion that Social Security is in deep trouble and that addressing the deficit is the foremost priority carries the day, government as an investor in working people will be sidelined. But implementing Obama's simple proposal will end the scaremongering about Social Security and create the political space for dealing with more immediate issues, like employment and fair trade agreements, climate change and the high human, political and financial cost of the US occupation in Iraq.

And the deficit? More than manageable if we reduce the annual rate of American military spending, which already exceeds spending by the rest of the world combined.

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