This would put a real nice bow on US economic history: Social Security, the retirement program conceived of during the Great Depression, coming to its demise during the current one.
This morning The Economist raised the prospect of possible US default, and suggested instead that the government may “default” instead on its retirees — who expect a certain level of monthly support — in order to pay its other debtors.
Meanwhile, liberal mag The Nation says that such a scheme is already under way and that Obama is playing right along:
The president wants the corporate establishment’s support on many other important matters, and he recently promised to hold a “fiscal responsibility summit” to examine the long-term costs of entitlements. That forum could set the trap for a “bipartisan compromise” that may become difficult for Obama to resist, given the burgeoning deficit. If he resists, he will be denounced as an old-fashioned free-spending liberal. The advocates are urging both parties to hold hands and take the leap together, authorizing big benefits cuts in a circuitous way that allows them to dodge the public’s blame.
The author goes onto argue that Social Security is actually running a huge surplus $2 trillion and that the only “crisis” is that the government has raided this surplus to pay for general funds and is now threatening to reneg on this. But, this is the same kind of contorted logic the banks like to make “Oh, we didn’t pay bonuses out of TARP money, that was some other money we had.”
Hello, government money is government money. If the government hadn’t “raided” Social Security to pay for all that spending, it would’ve had to borrow it, putting increased debt on all those same people. The problem is not that we have a Social Security crisis — it’s that we have a general government spending and borrowing crisis. Social Security is just one major expense of the government, and asking everyone to take a haircut is not so unreasonable. Everyone thinks their particular pet program is the one thing that’s untouchable. Oh gosh, we can’t save the economy on the backs of seniors. Oh boy, we can’t cut military spending. Cut education, are you insane? Blah blah blah.
So rather than say ask seniors, many of whom have enjoyed decades and decades of prosperity to take a cut, we pass the cost onto future generations, who can’t stick up for themselves and claim to be untouchable.
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