Paul Simon
2008-11-28 19:56:09 UTC
Obamas Budget Head Would Cut Social Security
By Matthew Rothschild, Posted November 28, 2008.
Peter Orszag, Barack Obamas choice to head the budget office, is on
record favoring a reduction in Social Security benefits.
Barack Obamas choice to head the budget office is on record favoring
a reduction in Social Security benefits.
On Tuesday, Obama picked Peter Orszag to direct the Office of
Management and Budget (OMB). Orszag believes that Social Security
benefits should be cut back to help balance the Social Security Trust
Fund over the next 75 years.
He spells out his views in a paper he wrote with Peter A. Diamond for
the Brookings Institute back in 2005, called Saving Social Security:
The Diamond-Orszag Plan.
In it, they call for a reduction in benefits, which would apply to
all workers age 59 and younger.
The younger you are, the more youll get hurt.
The reduction in benefits for a 45-year-old average earner is less
than 1 percent, the plan says. For a 35-year-old, less than 5
percent; and for a 25-year-old, less than 9 percent. Reductions are
smaller for lower earners, and larger for higher ones.
In the paper, Orszag and Diamond come out strongly against replacing
part of Social Security with individual accounts, which Republicans
have proposed. The authors call this a grave mistake.
But Orszag and Diamond say that there is no free lunch in making sure
Social Security remains solvent. So they propose cutting benefits and
raising Social Security taxes.
The Social Security Trust Funds reserves are projected to run out in
2041. At that point, the system will be bringing in less than it is
committed to paying out.
But the consequence of that may be exaggerated.
Its not exactly the end of the world, write Dean Baker and Mark
Weisbrot in Social Security: The Phony Crisis.
For one thing, the Social Security system would be far from broke.'
While it would indeed be short of revenue to maintain promised
benefits, it would still be able to pay retirees higher real benefits
than they are receiving today. And the nation has managed obligations
of this size in the past: the financing gap would be roughly equal to
the amount by which we increased military spending between 1976 and
1986 (a period in which we were not, incidentally, at war).
When Barack Obama announced his OMB choice, he said we have to be
willing to shed the spending we dont need.
Some of that spending may be on Social Security, if Peter Orszag has
any say over the matter. And hes in a position to have a big say.
By Matthew Rothschild, Posted November 28, 2008.
Peter Orszag, Barack Obamas choice to head the budget office, is on
record favoring a reduction in Social Security benefits.
Barack Obamas choice to head the budget office is on record favoring
a reduction in Social Security benefits.
On Tuesday, Obama picked Peter Orszag to direct the Office of
Management and Budget (OMB). Orszag believes that Social Security
benefits should be cut back to help balance the Social Security Trust
Fund over the next 75 years.
He spells out his views in a paper he wrote with Peter A. Diamond for
the Brookings Institute back in 2005, called Saving Social Security:
The Diamond-Orszag Plan.
In it, they call for a reduction in benefits, which would apply to
all workers age 59 and younger.
The younger you are, the more youll get hurt.
The reduction in benefits for a 45-year-old average earner is less
than 1 percent, the plan says. For a 35-year-old, less than 5
percent; and for a 25-year-old, less than 9 percent. Reductions are
smaller for lower earners, and larger for higher ones.
In the paper, Orszag and Diamond come out strongly against replacing
part of Social Security with individual accounts, which Republicans
have proposed. The authors call this a grave mistake.
But Orszag and Diamond say that there is no free lunch in making sure
Social Security remains solvent. So they propose cutting benefits and
raising Social Security taxes.
The Social Security Trust Funds reserves are projected to run out in
2041. At that point, the system will be bringing in less than it is
committed to paying out.
But the consequence of that may be exaggerated.
Its not exactly the end of the world, write Dean Baker and Mark
Weisbrot in Social Security: The Phony Crisis.
For one thing, the Social Security system would be far from broke.'
While it would indeed be short of revenue to maintain promised
benefits, it would still be able to pay retirees higher real benefits
than they are receiving today. And the nation has managed obligations
of this size in the past: the financing gap would be roughly equal to
the amount by which we increased military spending between 1976 and
1986 (a period in which we were not, incidentally, at war).
When Barack Obama announced his OMB choice, he said we have to be
willing to shed the spending we dont need.
Some of that spending may be on Social Security, if Peter Orszag has
any say over the matter. And hes in a position to have a big say.