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RETIREE AND PENSION NEWS: Obama's neoliberal attacks on Social Security are generating anger across the USA while pleasing Beltway elites

As President Barack Obama continues to follow his neoliberal course to the far right, one of the places he has indicated his willingness to repeat right wing falsehoods has been in his critique of Social Security. Recently, PORTSIDE LABOR provided its readers with two very good stories debunking the Obama positions and clarifying the record.

Obama's Social Security Talk Is Turning Voters Off, Pollsters Say, by Dan Froomkin, Huffington Post, January 19, 2011

WASHINGTON -- President Barack Obama's apparent willingness to consider cuts in Social Security benefits may be winning him points with Washington elites, but it's killing him with voters, who see the program as inviolate and may start to wonder what the Democratic Party stands for, if not for Social Security.

That's the conclusion of three top progressive pollsters who spoke to reporters Wednesday at a briefing sponsored by the Economic Policy Institute, the Century Foundation and Demos.

"For the public, cutting benefits is the problem, not the solution," said Guy Molyneux, a partner at Hart Research Associates.

As a result, the pollsters said that any Democrat seeking elected office in 2012 should be begging Obama not to say anything about Social Security cuts in his State of the Union address later this month.

A post-election poll by Celinda Lake's Lake Research Partners found that, by a margin of 3 percentage points, Americans now trust Republicans in Congress more than Democrats when it comes to Social Security — surely the first time since the program became a signature issue for

the Democratic Party in the 1930s.

The poll found confidence in Democrats on the issue dropping 14 points just since January 2007, accompanied by a 13-point increase for Republicans.

The public favors congressional Republicans over Obama on Social Security by an even larger 6-point margin. Obama's 26-percent rating is not only less than half Bill Clinton's (53 percent), it's even lower than that of George W. Bush (37 percent), whose proposal to privatize the program went down in flames.

It's hard to overstate how shocking this new dynamic is. In the two previous low points for Democrats — June 1995 and April 2002 — Democrats still had a 10-point advantage on Social Security.

That the public would trust Republicans more on this issue was, until recently, inconceivable.

The pollsters had no doubt that the turnaround stems from statements by Obama and other Democratic leaders expressing their openness to cuts in Social Security. "It's the rhetoric that says things like, 'Everything is on the table,'" said Lake. "That's not how the public feels. This isn't a policy debate in the public's mind, this is a core value."

When Democrats say they're open to cuts in Social Security, some voters are less drawn to the party, said Stan Greenberg of Democracy Corps.

"This is central to what Democrats do," he said. "Once you pull back on that, what is it that Democrats believe in, that you want them in office at a time like this?"

And it takes away one of the most potent Democratic arguments against Republicans. Historical GOP hostility to Social Security, Greenberg said, "is a critical part of their vulnerability."

Greenberg said his surveys show that even in the context of deficit reduction, cutting Social Security benefits is hugely unpopular. "There is no stomach for bringing Social Security in any way into this debate, and it fundamentally damages progressives and Democrats if they bring Social Security into it," he said.

"It's a great way to really solidify our losses," Lake said.

The pollsters also noted a huge disconnect between the inside-the-Beltway conventional wisdom that the deficit must be addressed through entitlement cuts and what voters think.

"Usually, Beltway conventional wisdom is about 95 percent wrong, plus or minus 5 percent," Lake said. "On Social Security, it's about 105 percent wrong."

"When it comes to Social Security," said Molyneux , "opinion elites are from Mars. Voters are from Venus."

Heather McGee, the director of Demos' Washington office, said that when Democrats talk of cutting Social Security, it only serves to support the narrative that the government is to blame for the nation's economic problems. "Bashing government is a way to shift attention from the decline of the middle class and widening inequality," she said.

And while increasing the Social Security retirement age is considered a fairly benign change inside the Beltway, 7 in 10 voters oppose the idea, most of them very intensely, said Lake. Opposition is particularly strong among such groups as young voters, women under 55, non-college graduates, independent women and rural voters -- in other words, those much sought-after swing voters.

"That reflects the different life experiences of those who have this debate versus those who will be affected by the policy outcomes," Molyneux said.

Raising the retirement age means workers would either have to work longer to receive their full benefits, or see those benefits cut.

"Raising the retirement age is a great thing for wealthy professionals, and a terrible thing for low-income women and working men," said EPI's Ross Eisenberry.

It's easy for professionals to imagine working a few extra years; much harder for people whose jobs are physically demanding or highly unpleasant.

Young voters are traditionally considered the most likely to support changes in Social Security due to fears that it won't be there when they retire. "But nobody told them they're supposed to relish working a couple more years in this economy," Lake said. They also don't want older workers

hoard the good jobs for even longer, she said.

Molyneux recalled how poorly George W. Bush's 2005 push to privatize Social Security fared. The public will be even less receptive to the new proposed changes, he said, because at least Bush's plan had a theoretical upside: a private account one could invest in the stock market.

"What Democrats appear to be talking about here is a pure pain plan," Molyneux said. "So while the benefit cuts are less severe, there are also less offsetting goodies."

The pollsters did not agree on the value of proposing a progressive solution to Social Security's long-term budget shortfall, independent of the deficit debate. Such a solution could include raising the cap that currently excludes income over $106,800 from the payroll tax, reducing

benefits for the wealthy and increasing benefits for the poor.

"I do think that progressives would benefit by addressing the question," said Greenberg. Despite the facts to the contrary, he said, "people do think it's in trouble."

But Lake said any proposal to change the fundamental deal is risky. "I think that once you open it up, you could be more easily perceived as violating the promise," she said.

And anyway, the point is moot for now. "What I cannot imagine is doing that sort of a deal with the current Republican Congress," said Molyneux. "Maybe in another universe."

Lake said her research shows that the messages that resonate most with voters reflect the attitude that Social Security belongs to the people and represents a promise that must be protected. Those messages include the following:

-- Social Security moneys belong to the people who have worked hard all their lives and contributed to the program, not to the government. We must protect Social Security from cuts that will hurt beneficiaries, we cannot let Congress try to use Social Security as a piggy bank.

-- Social Security has a funding gap in the future and that gap needs to be closed. The disagreement in Washington is what to do about it. The answer is pretty clear: The federal government has to pay back the $2.6 trillion it took from the Social Security trust fund. Before Congress even thinks about cutting Social Security benefits, the government must pay back the money it owes the trust fund. We cannot accept that the government has the money to bail out Wall Street banks, but not to pay back Social Security.

-- Social Security is a promise made to all generations to provide a basic and reliable income for when they retire, become widowed or disabled, or leave loved ones behind. Americans need to know the promise of Social Security will continue to be met for them. This is one promise we cannot allow Congress to break. We need to make sure we continue to support Social Security without making cuts that will harm current and future generations

-- Washington should be thinking about getting Americans back to work, protecting Americans from predatory lenders and changing unscrupulous business practices on Wall Street. We shouldn't expect middle and low income Americans, in the middle of the largest recession since the 1930's, to have their Social Security cut. We should ask Wall Street bankers to give back their bonuses and we should put a tax on 39 Wall Street, not cut Social Security benefits.

[Dan Froomkin is senior Washington correspondent for the Huffington Post.]

Making Social Security More Progressive: The Games They Play in Washington By Dean Baker

Co-Director of the Center for Economic and Policy Research Huffington Post January 18, 2011

http://www.huffingtonpost.com/dean-baker/making-social-security-mo_b_810612.html

The insiders in Washington really really want to cut Social Security, and they are prepared to say or do anything to do it. Among the latest lines is that they want to make Social Security more "progressive." This sort of rhetoric appeared in a report from the liberal Center for American Progress (CAP) in a plan that proposes substantial cuts in benefits.

To understand what CAP and other proponents of increasing

the progressivity of Social Security mean, consider the idea

of raising a marginal tax rate paid by many middle-income

people from 25 percent to 35 percent. The current 25 percent

bracket begins at an income of $34,500 for singles, and

$69,000 for couples.

Raising this tax rate by 10 percentage points would be a

substantial hit to tens of millions of families who are

certainly middle class by anyone's definition. However, this

tax increase would also be progressive. The bottom 60

percent of the income distribution would not be touched at

all, and those just over the cutoffs would only see a small

increase in their tax burden.

Nonetheless a couple earning $100,000 a year would see their

taxes rise by $3,100, which is not a trivial matter for a

middle-class couple. This is the way in the CAP plan for

cutting Social Security benefits is progressive. It would

lead to substantial reductions in Social Security benefits

for people who earned an average of $60,000 or $70,000

during their working lifetimes. While such people earned

more than most workers, such salaries don't quite put them

on par with Bill Gates.

The reason why CAP wants to cut the benefits of factory

workers and school teachers is because this is where you

have to go if you want to have any substantial reductions in

Social Security payments. Peter Peterson, the billionaire

investment banker, is fond of telling audiences that he

doesn't need his Social Security check.

However true this might be, Mr. Peterson's Social Security

check, along with those received by all the other

millionaires and billionaires in the country, really doesn't

make any difference for the program's finances. There are

not many rich people, and because Social Security is a

progressive program, the billionaires' Social Security

checks are not much bigger than the checks received by

ordinary workers.

This means it doesn't matter for the program whether or not

Mr. Peterson and his wealthy friends get their Social

Security checks. When they talk about cutting benefits for

"affluent retirees" or making the program more

"progressive," they are talking about cutting benefits for

schoolteachers, firefighters and other middle-income

workers.

This is not the only trick that the Social Security cutters

are playing these days. One proposal from both Bowles-

Simpson and CAP is to change the annual cost of living

adjustment (COLA) for retirees. They propose using an

alternative index for the COLA that they claim is more

"accurate."

The reality is that these people have no clue whether their

preferred index is more accurate in measuring the rate of

inflation experienced by retirees. Their index was not

designed for this purpose. What they do know is that their

index provides a lower COLA leading to lower benefits. After

10 years the COLA provided by their index will have reduced

the benefits for a retiree by roughly 3.0 percent. After 20

years, the decline would be 6.0 percent. This would be a

substantial cut in income for many people who are entirely

dependent on their Social Security and just getting by now.

If accuracy is the issue, rather than cutting benefits, we

could ask the Bureau of Labor Statistics to design a price

index that specifically measures the rate of inflation

experienced by the elderly. There is little interest in

Washington in this exercise because the evidence we have now

indicates an elderly index would lead to a higher COLA, not

a lower one. So, in the interest of accuracy, let's be

clear: The Social Security cutters want to see a lower COLA

for Social Security beneficiaries. They do not give a damn

about having an accurate one.

The Washington insiders may not be very honest in their

efforts to cut Social Security, but they deserve some

sympathy. After all, on policy grounds they have no case.

Social Security is an incredibly effective program. It

provides a core retirement income to tens of millions of

people, while insuring almost the entire workforce against

disability or early death. And, it does this at an

administrative cost that is about one-tenth as high as

private insurers charge. In addition, it is fully solvent

long into the future.

They have an even harder time with the politics. Social

Security is enormously popular across the political spectrum

from the left-wing of the Democratic Party to the devout Tea

Party faithful.

In short, those who want to cut Social Security must

overcome the fact that they have no argument on policy

grounds and their scheme faces enormous political

opposition. As a result, the Washington insiders have no

choice. If they want to cut Social Security they will have

to lie, cheat and steal. And the Washington insiders are

very good at these tactics.

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