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Peter Orszag says ". . . the best thing to do is (cut/reform) Social Security." November 7, Bloomberg Video [06:23]

Alexa's picture

Enact Fiscal Austerity With A Delay, Orszag Says

Here's my own "partial" transcript of Orszag's words:

"To get a significant debt limit increase, I think there's going to have to be some entitlement reform, as part of that.

If I were in the Administration, I think the single best thing to do (cut/reform) at this point, is Social Security.

And the reason is several fold. First, that it, ah, from the Democrats' perspective, private accounts are definitely "off the table" for now. But that will not always be the case. So you might as well strike while you've got a win on that."

Quite a 'telling' few minutes, isn't it.

First, we learn that some Democratic policymakers/advisors would actually consider eviscerating Social Security as a trade off for something as mundane as a debt limit increase, which for years was never a negotiating tool.

And then he admits that he believes that Democrats will go along with private accounts--but just sometime in the future.

The challenges that this new Administration will present, could not be greater. Liberal bloggers and activists really have their work cut out for them in the coming months.

[Hat Tip to Mr. Alexa for recommending this video.]

“If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

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tom allen's picture
Submitted by tom allen on

With the Senate becoming somewhat more liberal next year, the best thing to do is cut Social Security right now, so that it won't be privatized then. Village logic at its best.

Looks like the fire's going to have to be huge, with all the feet that will need to be held to it.

jumpjet's picture
Submitted by jumpjet on

But seriously, I honestly think we can win this fight. Social Security has all the popularity in the world, and even Obama messes with it at his peril.

reslez's picture
Submitted by reslez on

Their strategy is divide and conquer. They've already laid it out.

No cuts for current retirees or people over 55.

Cuts for everyone else -- a huge regressive tax increase on those who can't afford it. And the reason they claim is to make bullshit budget estimates set 70 years in the future look a little better.

Today's workers aren't like today's retirees. They don't have pensions. They have a 401k, if they're lucky. A balance at the mercy of Wall Street's fee-finaglers and market crashes. They don't know how much they need SS.

And people who think of themselves as young, with retirement nowhere on the horizon, who have been repeatedly told since childhood that SS will not be there for them, repeatedly told that reducing the deficit is the "responsible thing to do" -- when in reality it will crater the economy -- repeatedly told the terrifying Deficit Ringwraiths demand their sacrifice -- how hard will they fight?

Are we about to witness the sad spectacle of Baby Boomers selling out their kids?

Alexa's picture
Submitted by Alexa on

considering that Obama agreed that he was on the same page with Romney during the first Presidential Debate. Remember that?

And if you've read Romney's position on Social Security reform, you'll notice that it's right out of the pages of Bowles-Simpson's "The Moment of Truth."

Certainly I agree with you that polls indicate strong support for the Social Security program. But to say that President Obama "messes with it at his peril," when he doesn't stand for election again, and has never given a hoot what liberal activists think about his policies in the first place, leaves me somewhat puzzled, if not bewildered.

Oh, here's a link to a Washington Post piece and audio clip entitled, "Obama Pledges Reform of Social Security, Medicare Programs." It is an account of his meeting with the WaPo Editorial Board. The piece is dated Friday, January 16, 2009, a day or so after the meeting, and BEFORE his inauguration.

And BTW, I'm curious (and this is not meant contentiously,at all)--what is it that you think that we can do to effectively fight this? I've wracked my brain, and still can't come up with anything that I believe will actually affect the outcome.

So your (and everyone's) input in this regard, would be much appreciated.

Alexa's picture
Submitted by Alexa on

minute that they plan to ram through the "framework" of Bowles-Simpson's proposal during the lame duck session, while there's still plenty of 'talk and hype' about the election outcome. That, taken with the fact that we're soon approaching Thanksgiving and Christmas with all the distractions that entails for most folks, what better time to pass B-S.

Actually, I think that it would be easier to get through the Senate now (than in January). I'd put everything I own 'on the line' that Elizabeth Warren is not going to stand in the way of austerity measures (she was recruited by Reid and Schumer).

And anyway, they're several Senators leaving who won't mind at all voting for austerity. (What can anyone do to them? It will only help them with their corporatist lobbyist jobs.)

I've noticed that you also follow Social Security reform closely. Thanks for your interest in the topic, and your comment.

Submitted by Hugh on

Obama has always been out to cut Social Security. A month into his first term, on February 23, 2009 to be precise, the White House under then OMB Director Peter Orszag set up a one day conference on "fiscal responsibility". Pete Peterson was supposed to give the key note, but this fact got out, created a fire storm, and so his invitation was pulled. Instead the conference highlighted the Diamond-Orszag plan to cut Social Security.

Here's a link. It's from back in the day when Jane Hamsher was still making some pretense to being progressive:

Alexa's picture
Submitted by Alexa on


Here's a link to Obama pledging to cut entitlements to Social Security and Medicare BEFORE he took office. LOL!

I'm still trying to figure out how he got elected the first time, let alone a second time. :)

Like I said to another blogger, reslez, all the generations need to stand in solidarity. It's much easier for the PtB to "sc**w us over" if we're engaged in infighting. The Pete Peterson Foundation has deliberately attempted to make this a generational war, by going to campuses for the past 8-10 years to "blame" Boomers for all the country's fiscal woes.

Well, last time I checked, nobody asked my opinion before getting us in a decade worth of chaos, death and destruction in the Middle East.

I just hope that the PtB's divisive plan doesn't work.

Stephanie's picture
Submitted by Stephanie on

"even tho Social Security is by no means not even close to the key to our long term fiscal driver*, people -- in peoples' imagination it looms larger** -- and so you get outsize fiscal credibility for doing it -- something about the numbers? ...Then he says, referring to raising the retirement age in 1983, not in effect til 2000 -- That's exactly what we want today -- No immediate fiscal austerity, do it with a delay***.

Blah blah,.... something about a barbell (which should be used to clobber these doofuses over the head).

More quote -- We can at least avoid doing too much harm by making sure that any fiscal austerity we enact does not really take place immediately.****
* Right off he admits that Soc Sec is not key to our fiscal problems -- whatever those problems may be, they're not related to Soc. Sec. So what is key to "our long term fiscal driver"?

And what is this "credibility" he speaks of? Credibility of what, with who?

** I wonder why it looms larger in peoples imagination (imagination could be fiction, no?) -- maybe because jerks like Orsag have been promoting the destruction of Soc Sec forever?

*** Why delay this austerity action if it's so necessary? If it's so good and so needed, make it go into effect immediately, so "someone" can start reaping the benefits. Why can't I, at the age of 60, reap these fiscal benefits in a few years?

**** Admits right out that they will be doing harm -- but he doesn't say to who -- by enacting cuts/slashes to Soc. Sec. Apparently, referring to ***, that there are no rewards for the likes of me, but only harm to my/your children and our grandchildren. (thanks, grandma, NOT)

Alexa's picture
Submitted by Alexa on

pathetic rant.

Is he for real? But this is just the beginning of the onslaught.

Heard on XM about an hour ago, that the rating agency, "Fitch Ratings" is threatening that the US will lose its AAA rating if Obama doesn't strike a Grand Bargain by the end of the year.

Which, BTW, both Reid and Boehner have come out for this afternoon--couldn't even wait 24 hrs!!! :D

Thanks for taking the time to comment (and transcribe).

Alexa's picture
Submitted by Alexa on


But don't fall into that trap.

Look, Social Security does not need to be cut in the first place, for anybody.

Do I think that if it is cut, that someone who's put into it for 30 to 40 years should get the same treatment as someone who's contributed to Social Security for two, five or ten years? No, I don't.

And the reason is simple: a twenty-eight year old individual has time to adjust to any reform and make reasonable contingency plans. BTW, according to a congressional hearing which I posted here a couple of weeks ago, Americans will probably be working into their "eighth decade" of life. That is if Edward Gresser of the Democratic Leadership Council (DLC)--a Democrat, of course, has his way about it.

At any rate, if the Social Security program is "reformed," today's youth in their twenties or thirties should have reasonable, or ample time to adjust and prepare for their retirement.

[Boomers were that age at the time of the 1983 Greenspan Commission, when the Social Security payroll tax rate was doubled, benefits cuts, and the Full Retirement Age (FRA) was raised by two years.]

Contrast that to someone who's 55 and older, who may have planned to (and/or needed to for health reasons) retire in just seven years, at the early retirement age of 62. Is it really reasonable to think that there's any way that an individual can compensate for a drastic loss in their Social Security monthly benefits, in that short period of time? I believe that a fair-minded person would agree that most individuals (except the very highest income) could not.

That said--it should not be cut, period. If anything, the benefit should be raised for everyone.

It is ridiculous that this issue is even "on the table," and we should let the PtB know that we feel this way. That would be much more constructive than generational infighting.

Let's all keep in mind that if Medicaid continues to be cut, it probably won't be available for a lot of seniors. Therefore, it is quite likely that many of today's young people will end up caring for their parents at home, in lieu of putting them in skilled nursing facilities (unless they are very well off financially).

Here's a link to my blog describing the effects of drastic cuts to Medicaid in my state. Actually, for some reason, I can't open this blog. If you can access it, it's entitled, "Coming To A State Near You, Reduced Medicaid-Funded Nursing Home Care."

But that is not to belittle your concern. Any young person today has a legitimate right to be concerned for their future. And I do appreciate your comment.

My hope is that we can all "pull together" on this issue, and fight to keep the benefits as they are today, for all generations. The PtB want us to be fighting each other, because the distraction weakens our resolve and ability to fight them. Hopefully, we'll not fall into that trap.

goldberry's picture
Submitted by goldberry on

I don't want another private account that can be cleaned out at the next crash. I want a stable, boring, plodding account that will be there when I need it.
Jeez, did these people learn nothing from the Great Depression?

Alexa's picture
Submitted by Alexa on

because it's not just Republicans, it's Democrats also, who are going in this direction (and Orszag knows this, obviously).

Here's an excerpt regarding Senator Harkin's plan to add "a new type of retirement plan:"

"Senator Tom Harkin understands this coming crisis better than most of his colleagues in Congress and, more importantly, has a plan for dealing with our broken retirement system. Harkin's plan is built around a supplementary pension system called USA Retirement Funds, which would give every working American a pension plan using "existing payroll withholding systems for those that do not already have access to a retirement plan."

The system Harkin proposes would be everything that 401(k)s are not: It would be universal, unlike 401(k)s which many workers don't have access to at all; it would be automatic, unlike voluntary 401(k) plans which many workers ignore; and the funds would be pooled and professionally managed, unlike inefficient and risky individual 401(k) accounts where workers are left to make often unwise investing choices and also see their funds chipped away by fees.

The USA Retirement Funds would also convert account holdings into annuities when workers retire, so they don't run out of money -- unlike with 401(k)s, where retirees spend down their accounts themselves and engage in a guessing game about how long they will live.

Finally, USA Retirement Funds are far more portable than 401(k)s, making it easier for workers who move around a lot -- as many low-wage workers do -- to keep contributing to the same account and building up savings.

In all, Harkin's plan closely resembles the Guaranteed Retirement Account plan that New School economist and Demos Senior Fellow Teresa Ghilarducci has been advocating for years.

Harkin's plan is fuzzy on a crucial detail: How much employers would have to contribute to USA Retirement Funds, and it's not surprising that the Senator might not want to get into those details right now, with the economy so weak."

What's basically happening here is that the Democrats are going to be doing the same thing, adding private retirement accounts, that George Bush and Republicans have pushed for years.

They're just doing it 'incrementally,' hoping that we don't put the two programs (Social Security and the USA Retirement Accounts) together.

Now, one could argue that considering the draconian cuts we're getting ready to take (to our Social Security benefits), that adding a supplemental personal/private account is wise. May be. But, the deceptive way that they are going about this, infuriates me.

Here's a link to the a left-leaning think tank's (Demos) piece about these proposed accounts.

Establishing these is one thing that lets the PtB "off the hook," in their minds, anyway, when it come to slashing Social Security benefits.

We all need to be very vocal in our opposition to this plan. It's clearly a bit more difficult to fight this, since the Dems are not forthright about what they're doing. But all one has to do is read the proposals from the Clinton and Bush administrations, and look at the piece that I've linked to, and it's apparent that they've decided that they can avoid the appearance of "privatizing" Social Security, if they add these accounts AFTER the major Social Security overhaul, or reform.

Alexa's picture
Submitted by Alexa on

video. I went back and copied the original code into the bottom of the post, in order to compare the two codes.

Is the key simply changing the numbers =640& to =500&, and, =360& to =320& ?

If so, can that usually be done in any video, if I should run across this situation again.

Submitted by lambert on

Isn't HTML wonderful ;-)

Alexa's picture
Submitted by Alexa on

a 401K or defined benefit plan?

Or does Senator Tom Harkin's new plan for USA Retirement Funds also make it "mandatory," like the ACA does for health insurance, that all workers participate in their employer sponsored 401K? Seems that it would have to.

That was one reason I was so concerned when the ACA passed. I think it's referred to as "the slippery slope."

I fear that the ACA has opened up a whole new can of worms, that we'll all come to regret. And possibly, sooner rather than later.

Several think tanks are suggesting that the US should replace Social Security disability, with mandatory disability insurance.

I'd say if mandatory USA Retirement Funds are implemented, there will be no end to what our government "privatizes" regarding the social safety net.

Submitted by lambert on

Got links to the think tank proposals?

It's been my view for awhile that ObamaCare would be a template for other "solutions." If a health care exchange, then why not a retirement exchange, with Social Security as a "public option"?

Alexa's picture
Submitted by Alexa on

discussed, along with the idea of having some sort of individual, private Unemployment Insurance (UI) type of account. But I've never seen a "formal, detailed policy proposal" on either. So I didn't bookmark the material. A quick search did bring up the topic and a paper, by none other than our libertarian friends at the Cato Institute. Here's an excerpt:

"3. Life and Disability Insurance. Part of the funds in the investment account would have to be used to purchase private life and disability insurance covering at least the same survivors (preretirement) and disability benefits as Social Security. Workers would consequently be covered for these contingencies through the private system as through Social Security."

Here's the link.

I'll 'keep my eyes peeled' while I'm out here poking around regarding Social Security reform and the Grand Bargain. I more likely would have seen it at the Urban Institute, Manhattan Institute, Hoover Institute, AEI, Brookings, etc., since I rarely bother reading much from Cato.

As this Cato 1997 brief outlines it, it would basically be 'a part privatizing Social Security.' And personally, I believe that the intention of the PtB is to eventually "get the government out of the safety net business, completely."

Submitted by Hugh on

The US has a fiat currency. This means that taxing and spending are separate operations whose function is to move resources around our society. This is where the MMT assertion that "taxing does not pay for spending" comes from. The money that people paid in the payroll tax ceased to exist. Using gold standard thinking, and accounting, the government maintained that the money that it created out of thin air and which it spent on benefits had to equal the sum of those taxes, and for any amount over and above that, it created the fiction of the surplus. This furnished gold standard thinking politicians with the rationale to spend an amount equivalent to the surplus and chalk all this up as a debt it owed itself.

People who paid the payroll tax were not investing their money. They were reducng their current wealth in order to create a moral commitment for a future return of that wealth. It has never been about the money. The government can create as much money and spend it as it wants or needs. It is really about the resources. The government never needed the payroll tax to pay for Social Security, the same for Medicare. It could have simply allocated the resources for these through spending. Or you can look at it as an intergenerational transfer of wealth/resources between the 99% with the surpluses and the income cap serving as a siphon of wealth from the 99% to the rich, either through acquisition (the surpluses) or retention (the income cap) of wealth/resources.

I would argue that any citizen who hits 65 is entitled to Social Security regardless of their work history, not as a fictive investment but as the underlying moral commitment which we have to each other.