Strategic Positioning On Social Security

Obama took flack yesterday (Krugman, Johnson via Memeorandum) for telling Tim Russert on Sunday that he planned to salvage Social Security.   Here is krugman:

The great Social Security debate of 2005 was a seminal moment for American progressives. Conventional fiscal wisdom in the Beltway was that the aging population is THE big problem — when the truth is that grim long-run fiscal projections mainly reflect projected health care costs. And conventional political wisdom was that the Bush administration’s fear-mongering on the issue would work.

But a determined defense by progressives in the media, on the blogs, and in Congress beat back one spurious argument after another, while the American people made it clear that they really want a program that guarantees a basic retirement income that doesn’t depend on the Dow. And Social Security survived.

Hmm.  Was it only a few years ago that Bill Clinton was promoting a Social Security crisis and promising to "Save Social Security first?"  What happened?

Not much, actually - as Byron York detailed back in 2005, when Bill Clinton was promising to save Social Security in the late 90's and Al Gore was promising to put the surplus in a lockbox, it was an attempt by the Democrats to forestall Republican tax cuts.

But times have changed!  If a Dem wins the Presidency in 2008 he (or she - shiver...) will be greeted with an endless laundry list of "progressive" spending ideas and it is quite likely that Republicans will be waving the "Social Security First" banner.  Libs (other than Barack Hussein Il Jong Obama) will have no interest in fighting for tax increases if the only result will be to kick the money back into Social Security in order to solve a problem that is a glimmer on the horizon when there are new programs they could fund today.

So Barack needs to get on the program - new taxes will fund new programs, not save old ones.  Saving Social Security was only important when the alternative was evil Republican tax cuts.

Comments

[paul]

Didn't krugman say that he was going to provide reccommendations for fixing soc sec?

most interesting quote from above?

"But a determined defense by progressives in the media..."

no chance he would enlighten the reader on who these 'progressives in the media' are, it might blow their cover.

[Patrick R. Sullivan]

There will be quite a bit of justice if a Dem wins the White House in 08, because that new President will have to deal with the problems that will come as the first Baby Boomers retire. That will begin to reduce the surplus revenues available, that are now funding government spending.

Since the Dems denied Bush his 'fix', they will have to come up with one of their own. Every year the problem will get worse, as more Boomers retire and stop paying into SS.

[paul]

personally, I believe that we are heading towards a crisis, but what are the chances that some of these baby boomers retire-and then die?

IF they don't spend their accumulated wealth, won't the govt pick up 30% of the inheritance?

My gut feeling is that the fed govt will see a record boon in revenue-starting 2015, beyond wildest imagination, with a diminishing return that will peter out in 2022. There is no doubt in my mind that while the record revenue is rolling in, congress(either party in majority) will behave like an 18 year old in a strip bar, p*ssing away an opportunity to delay the tidal wave that is coming.

Yes, at 65, everybody starts drawing their ssi, but at 70 they have to start pulling it out of their 401k's. From personal experience with my dad, he has learned to maintain his life based upon pension and ssi, by the time he is 70, he isn't going to have a clue what to do with his 401k income, but he will be paying tax on it.

[michaelt]

Or will those boomers suddenly start opposing the "death tax?"

[Neo]

only result will be to kick the money back into Social Security in order to solve a problem that is a glimmer on the horizon

I couldn't disagree with this any more.

By the time the next President could possibly be finishing two terms, there will be less money coming into the SS trust fund than will be going out. Al's "lockbox" won't be needed because all the dollars that had been "borrowed" from the trust fund will have to be begun to be paid back (less those notes in the West Virginia filing cabinet be worthless).

In other words, the free lunch is over, in less than ten years from now.

[Rick Ballard]

"Or will those boomers suddenly start opposing the "death tax?""

Way less than 1% of tax deferred retirement accounts would come under current estate taxes. The 30% that Paul mentions is income tax - that "deferred" thingy. 'Course some of those stingy Boomers use self directed IRA's to do a little dodge and weave with the income tax portion too.

We must always remember - "Where there's a will, there damn well better be a good accountant and a tax attorney."

[Ralph L]

While it's obvious the Dems can't allow the have-nots to become haves through even partial SS privatization, I wish Bush and other Repubs had kept talking about it, and from the perspective of future retirees, not the government. When more of today's young people start voting as they age, I want them to remember who was actually looking out for their long term interests.

[fasdf]

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