Obama proposes cuts to social security and medicare

[Kuya]

Well, he already proposed cuts to medicare, but the cuts for social security is new.

President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.

At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.

As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.

“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”

Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

That would represent a major legislative achievement, but it would also put Obama and GOP leaders at odds with major factions of their own parties. While Democrats would be asked to cut social-safety-net programs, Republicans would be asked to raise taxes, perhaps by letting tax breaks for the nation’s wealthiest households expire on schedule at the end of next year.

http://www.washingtonpost.com/busine...O1H_story.html

So let me get this straight. When unemployment is nearly at 10% and the economy is still sluggish, Obama and the democrats have allowed themselves to get cowed into policies that will exacerbate the economic problem... and during all of this Obama intends to enthusiastically propose cuts for two of the most cherished welfare programs for the democratic party?

I guess i see the game here. You got those silly leftist and right-wing extremists who won't compromise because they are so extreme. One side does not want cuts on medicare and social security and the other does not want tax increases. Both sides are so very shrill, so then our great bipartisan hero-captain Obama will come along with promises of compromise and negotiation and give us the middle ground! A few tax increases and a lot of spendint cuts! During a recession! Hurray for Change!

[archibaldcrane]

Man there's gonna be a lot of pissed off old people.

Actually probably not.

I'll take 10:1 odds that these changes to SS don't affect anyone currently receiving it, and will just be rolled in as new recipients come into the retirement age.

tl;dr don't count on ever receiving a penny of that 6.2% in Social Security taxes you've been paying all your life. Get a retirement plan, because the people who spent the surpluses that should've been saved during their working years are never going to accept cuts now that they're old.

[solanis]

I usually hate him but some of this is great. social security has gone into the realm of insanity and has needed to be curtailed for a looooooooooong time, though as archi said I can't imagine them actually reducing benefits to the people receiving them at the moment, so it's likely just as shitty as ever. welfare needs a major overhaul too for different reasons. at least they're looking at it :/

[tyven]

Solanis, I would like to buy some annuities. PLX PM ME

[solanis]

if you're serious I can give you some advice, PM me what you're looking for and we can start a dialogue. not to suggest I'll give financial advice to anyone on bg but you mah nigga so

[Dimmauk]

I like this compromise. No matter what, someone isn't going to like it, but it seems like it will help the economy. Still need fix wall street too.

[Kuya]

I usually hate him but some of this is great. social security has gone into the realm of insanity and has needed to be curtailed for a looooooooooong time, though as archi said I can't imagine them actually reducing benefits to the people receiving them at the moment, so it's likely just as shitty as ever. welfare needs a major overhaul too for different reasons. at least they're looking at it :/

What do you mean social security has gone into the realm of insanity?

Also, this guy says Obama is not seriously going to cut social secuirty and medicare, but rather this is just a play to make himself look like the big compromisor since the republicans would presumably never agree to 1 trillion in tax hikes:

The answer is that it doesn't make sense. Here's why: the new plan, reports the Times, supposedly hinges on Republicans agreeing to $1 trillion in new revenue.

The president's renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security -- programs that had been off the table.

Excuse me? Let's step back here a second. Democrats are right to be alarmed at the prospect of big cuts to entitlements. But how do you suppose your average House Republican is reacting to the news of what would be, for all intents and purposes, a trillion dollar tax hike? I can't imagine they're very pleased, and I don't see how Boehner can possibly keep his caucus together on this issue. It's even more unrealistic to assume that ending the Bush tax cuts on the wealthy could be folded into this deal, as some reports are suggesting.

So where does that leave us? How about right where we were last week? The White House has decided that Republican intransigence on taxes makes any real long-term agreement impossible. The obvious step for Obama is to extract the maximum political advantage here by appearing willing to negotiate a "grand bargain" -- to be the guy mature enough to compromise. Ezra Klein makes the case:

http://www.salon.com/news/budget_sho...ocial_security

I'm on the side that think she's serious and that he wants this.

[tyven]

@ solanis i shall PM you when I get home from work sir

[solanis]

word tyven

kuya, it's a whole host of issues, primarily that we pay in far less that's been payed out for a long time, and there is absolutely no way to balance the program while still honoring the promises made to baby boomers. I can pull up some numbers for you if you like for analysis, but from my personal anecdotal experience it's pretty frightening as an economist to see. the way things are going, we can either pull the plug now, or honor those promises and simply not extend benefits to anyone currently under 45. a more moderate position is preferable but politicians. :/

[Kuya]

Yea i'd like it if you pulled up the numbers.

[Gryffes]

Could slash $500bn/year from the military budget and still spend more than china, while saving $5bn over 10 years.

ezgame. ( still wouldn't fix your deficit, lol america ).

[solanis]

okay, pulled up some numbers for you kuya. these are from the CBO (congressional budget office) in their 2009 report. projections in this report line up very well with what's progressed in the past two years, so it'll suffice for a layman's explanation of the situation. here's the link: http://www.cbo.gov/ftpdocs/102xx/doc...06-25-LTBO.pdf


http://www.econbrowser.com/archives/...bt2_jul_09.gif

I'll spare you the tinfoil hat bolding, so you'll have to read it. this is their chart showing what will happen to national debt if we continue with our current fiscal policy. medicare and medicaid will more than double as a percentage of GDP by 2035, from 3% to 8% adjusting for inflation (pg. 30). retirement-age population will grow 90 percent while youth population will grow by 12 percent (pg. 39). projected social security spending will increase from slightly above 4% of GDP to slightly above 6% by 2080, which is just one generation of course. this turns into, conservatively, a 15.7 cost ratio (in both extended baseline and alternative fiscal scenarios) and -1.3-.5 actuarial balance (pg. 41).


in layman's terms, this means at some point:
1. we will have to raise retirement age significantly (age at which one becomes eligible for benefits, rather)
2. reduce the amount paid out once that age is reached
3. reduce the cost-of-living adjustment calculated for current beneficiaries and later ones

have a look, the whole document is interesting but the meat and potatoes is in chapter 3.

[Demosthenes11]

instead of asking for a raise im going to ask for a retirement plan.

too young to be thinking about this shit..

[tyven]

Roth 401k, playa

[*Shinzon*]

I don't think it's any surprise we've been spending more money than we actually can afford on these programs. The issue is that people don't want to pay more in taxes, and virtually every politician harps on that issue. It's incredible how short sided people actually are. I mean most state governments are already running into issues providing for basic public services and in NYC for example it's costing us hospitals and fire houses. So the next time you have a heart attack and it takes 20 minutes instead of 10 for a bus to arrive you can thank all those people who think taxes are evil. Obviously what those taxes get spent on is probably the greatest contention but it still remains everyone is going to have to start to pay more. That's only a simple example of a city/state issue to, it's much worse federally.

[Demosthenes11]

I don't think it's any surprise we've been spending more money than we actually can afford on these programs. The issue is that people don't want to pay more in taxes, and virtually every politician harps on that issue. It's incredible how short sided people actually are. I mean most state governments are already running into issues providing for basic public services and in NYC for example it's costing us hospitals and fire houses. So the next time you have a heart attack and it takes 20 minutes instead of 10 for a bus to arrive you can thank all those people who think taxes are evil. Obviously what those taxes get spent on is probably the greatest contention but it still remains everyone is going to have to start to pay more. That's only a simple example of a city/state issue to, it's much worse federally.

it drives me crazy that people wouldn't be willing to spend ~$100 more in taxes in a YEAR for things like universal healthcare, fixing up social security, etc. If the top 80% paid an extra $100 a year in federal taxes, that is something like $32 billion in extra revenue per year.

[Izzy]

403b baby

[solanis]

it drives me crazy that people wouldn't be willing to spend ~$100 more in taxes in a YEAR for things like universal healthcare, fixing up social security, etc. If the top 80% paid an extra $100 a year in federal taxes, that is something like $32 billion in extra revenue per year.

we already pay over an aggregate 50%, often much higher. it is not our social obligation to bail out the government. this is much less of an issue of taxes anyway, and almost entirely about curbing spending to a ratinal and sustainable level.

the reason shit like this has happened is because politicians are fucking scum, and older folks vote a lot more than younger folks. honest to god, the best way to fix this is for the younger population to start voting in large numbers. even then, as the data a few posts up shows, the youth population is in significant decline, while the older generations will experience major growth. politicians will have to man up and do what's best for the country, not their constituents. aka, this will never get fixed.

[*Shinzon*]

we already pay over an aggregate 50%, often much higher. it is not our social obligation to bail out the government. this is much less of an issue of taxes anyway, and almost entirely about curbing spending to a ratinal and sustainable level.

the reason shit like this has happened is because politicians are fucking scum, and older folks vote a lot more than younger folks. honest to god, the best way to fix this is for the younger population to start voting in large numbers. even then, as the data a few posts up shows, the youth population is in significant decline, while the older generations will experience major growth. politicians will have to man up and do what's best for the country, not their constituents. aka, this will never get fixed.

You're right in saying that the underlying problem needs to be fixed, the problem is politicians arent ever going to get around to fixing that because it's not what gets them voted into office. As a 24 year old, I haven't started to vote yet, and I know many of my friends and some family that doesn't either. I don't do it because I for the most part think all politicians are full of shit and it isn't far from the truth. What would fix the problem is young politicians supported by the large group of young people that doesn't vote yet. People more in tune with what our, the youth's, world is really like. In the mean time if we want government to keep supporting us, we have to support it. That's the only way it works. Otherwise those old fucks will kill all the programs and such that the current elderly get to enjoy.

[Dantrag]

Roth IRA :D