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UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of ten of America's presidencies and who has edited alternative journals since 1964. The Review, which has been on the web since 1995, is now published from Freeport, Maine. We get over 5 million article visits a year. See prorev.com for full contents of our site

February 23, 2010

OBAMA'S SOCIAL SECURITY AND MEDICARE HIT MEN

GLOBAL RESEARCH - Promising to "slash" the deficit, by shredding the already-tattered social safety net, disemboweling programs such as Medicare, Medicaid and Social Security, Obama named former Republican Senator Alan Simpson and former Clinton White House chief of staff Erskine Bowles to lead the National Commission on Fiscal Responsibility and Reform, BusinessWeek reported.

According to the World Socialist Web Site, Simpson, a troglodytic right-winger, told The Washington Post, "How did we get to a point in America where you get to a certain age in life, regardless of net worth or income, and you're 'entitled'?" he asked. "The word itself is killing us."

Bowles, a major fundraiser for the Clinton's, is "currently on the board of directors of Morgan Stanley, one of the big five Wall Street investment houses" as well as a director of General Motors, socialist critic Patrick Martin informs us. Tellingly, "Bowles served as chairman of the compensation committee at both companies, and still holds that position at Morgan Stanley, making him the point man for the awarding of eight-figure salaries and bonuses to the executives of both companies," Martin averred.

BUSINESS WEEK, 1998 - Another pet issue for the Chief of Staff is trade expansion. With Bowles at the helm, Clinton's free-trade instincts will find a strong supporter in internal debates. That means the White House is more likely to try to resurrect "fast-track" trade authorization. It also means that the Administration will push for further trade liberalization, a top business priority -- despite strong opposition from most Capitol Hill Democrats and the growing chorus of "America-First" Republicans. Bowles' views reflect the priorities of many in business.

JONATHAN SINGER - With Simpson's name in the in the mix, I thought it worth revisiting another interview I did about five years ago -- specifically the portion of my conversation with Simpson relating to his views on tackling long-term deficits:

Jonathan Singer: Looking at Social Security, the problem with Social Security - if you take the President's number the program's trust fund will be bankrupt in 2040 or so - at which point benefits will be cut by about a quarter. Medicare, on the other hand, the trust fund will run out within about the next decade. Is it time to focus on Medicare and Medicaid rather than Social Security?

Alan Simpson: No. That would be a real grave mistake. You'd better cure the lesser one before you go for the cancer. Go for the one that is lesser, because the figures are huge. Guys your age will be eaten alive in regard to money. So if they can't resolve Social Security, then don't even try to help Medicare if you haven't done anything on Social Security.

Here's Simpson on a Social Security Commission:

Alan Simpson: I said [to the House Financial Services Committee], "gentlemen and ladies, you'll never get that done on this end. You'd better appoint a commission and take the heat off yourselves, because you're never going to make it yourselves."

TPM CAFÉ - It is not good news that President Obama picked former Senator Alan Simpson as one of the co-chairs of his deficit commission. Simpson is not just your run of the mill Republican. He is an extreme foe of Social Security.

One anecdote from his days as a senator should give a flavor of his hatred for the program. Back then, the preferred method for cutting Social Security among the Washington elite was to claim that the consumer price index overstated the true rate of inflation. This matters for Social Security because the annual cost of living adjustment is based on the CPI. If the CPI was overstating the true rate of inflation, the DC elite argued that we were overcompensating Social Security beneficiaries.

The plan was to cut the size of the annual COLA to 1 percentage point less than the CPI. This may sound trivial, but it would add up over time. Someone who was retired 5 years would see their benefits cut by roughly 5 percent, 10 years by 10 percent, and 20 years by 20 percent. This is real money. . .

Simpson wasn't content to argue that the CPI overstated inflation by 1 percentage point. He told listeners that many economists tell him that the overstatement is at least 1.5 percentage points and that some tell him that the overstatement could even be as much as 2 percentage points. He then told listeners that soon our grandchildren will be living in chicken coops.

Of course the logic runs the other way. If Mr. Simpson's economists were correct and the CPI overstates the annual inflation rate by 2 percentage points then we are getting richer at a fantastic pace. (4 percent nominal wage growth would translate into 3 percent real wage growth in the story above.) This would mean that our grandchildren will be hugely wealthier than we are and that the current generation of Social Security beneficiaries grew up in extreme poverty. Why would anyone want to cut benefits for people who grew up in poverty to make our rich grandchildren even richer?

But, Senator Simpson didn't care about logic; his agenda was cutting Social Security. And that is who President Obama picked to co-chair his deficit commission.


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