Is Obama Opting to the Lose the Election?

by DEAN BAKER

There are few issues that matter more to the public than Social Security. It is a hugely popular and hugely successful program.

Social Security was set up to provide retirees and disabled workers with a core income either in retirement or in the event a disability made them unable to work. This is exactly what the program does. In its seven decades of existence it has lifted tens of millions of retirees out of poverty and allowed millions of disabled workers to maintain a modest standard of living.

It accomplishes these goals with a minimal amount of fraud and in a highly efficient manner. Its administrative costs are less one-tenth as a high as those of private sector insurers.

This is the reason that the program enjoys enormous popularity across the political and ideological spectrum. Not only Democrats, but the overwhelming majority of independent and Republicans consistently tell pollsters that they support Social Security and do not want to see benefits cut. Conservatives and even self-identified supporters of the Tea Party also oppose cuts to the program.

This is why it is striking that Governor Romney has explicitly called for large cuts to the program. It is perhaps even more striking that President Obama indicated in his first debate that he agrees with these cuts.

Romney has outlined a proposal on his website that calls for further increases in the retirement age to 69 or 70. It also calls for cuts in benefits for middle-income retirees. Under the Romney proposal, middle-income workers just entering the labor force can expect to see benefits that will be reduced by more than 40 percent compared with currently scheduled levels.

This might be reasonable policy if we had some cause to believe that workers in the future will be better prepared for retirement than current retirees; however there is no evidence to support this view. The median wealth for those near retirement (ages 55-64), is just $170,000.

This calculation includes everything they own, the equity in their home, their retirement accounts, even the value of their car. To give a basis of comparison, the median house price is $180,000. This means that if the typical person in this age group used all their wealth, they would have almost enough money to pay off their mortgage. They would then be entirely dependent on Social Security in their retirement.

If we look at the group 10 years younger, ages 45-54, median wealth is just over $70,000. And remember, half of households will have less.

The basic story is that our systems of retirement savings outside of Social Security have collapsed. Traditional defined benefit pensions are quickly disappearing outside of the public sector. The 401(k)s that have replaced them have been a bonanza for the financial industry, but have done little to help most workers accumulate enough for a secure retirement.

The amount put into these accounts is generally far too small to provide for a decent retirement. Furthermore, the fees charged by the financial industry can easily eat up one-third of the earnings on these accounts, sharply reducing accumulations over time.

The result is the situation we now see. For most middle-income workers their home equity is by far their greatest source of wealth. Money held in a retirement account is a distant second.

Given this reality, it would be sound policy for President Obama to insist, in contrast to Governor Romney, that Social Security cuts are off the table until we have fixed the larger retirement savings system. If anything, it would be reasonable to suggest increasing Social Security benefits, especially for low and moderate income workers.

While this would be good policy, the polls indicate it would be great politics. In a close election it could easily make up the margin of victory, especially in a state like Florida with a large elderly population. Yet President Obama told the country that there is not much difference between his position on Social Security and Romney’s position.

There is a simple explanation for Obama’s refusal to defend Social Security. In elite Washington circles the willingness to cut Social Security is taken as evidence of courage. These people do not depend on Social Security. In fact, as Governor Romney demonstrated at his famous fundraiser speech, they actually have contempt for the people who do depend on Social Security.

If Obama were to take a strong stand defending Social Security he could expect to be attacked harshly by these elites. In news stories and editorial columns, outlets like the Washington Post and National Public Radio would denounce President Obama in harsh terms. Needless to say, his wealthy funders might also have second thoughts.

This fear is likely the reason that President Obama will not defend Social Security. If he loses the election, this fear of the wrath of the elite will clearly be the villain.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy and False Profits: Recoverying From the Bubble Economy.

This essay originally appeared in Yahoo Finance.

Like What You’ve Read? Support CounterPunch
August 04, 2015
Vincent J. Roscigno
University Bureaucracy as Organized Crime
Paul Street
Bernie Sanders’ Top Five Race Problems: the Whiteness of Nominal Socialism
Herbert Dyer, Jr.
Is White Supremacy a Mental Disorder?
Ramzy Baroud
The Palestinian Bubble and the Burning of Toddler, Ali Dawabsha
Pepe Escobar
Reshuffling Eurasia’s Energy Deck — Iran, China and Pipelineistan
L. Michael Hager
The Battle Over BDS
Eric Draitser
Puerto Rico: Troubled Commonwealth or Debt Colony?
Colin Todhunter
Hypnotic Trance in Delhi: Monsanto, GMOs and the Looting of India’s Agriculture
Benjamin Willis
The New Cubanologos: What’s in a Word?
Matt Peppe
60 Minutes Provides Platform for US Military
Binoy Kampmark
The Turkish Mission: Reining in the Kurds
Eoin Higgins
Teaching Lessons of White Supremacy in Prime-Time: Blackrifice in the Post-Apocalyptic World of the CW’s The 100
Gary Corseri
Gaza: Our Child’s Shattered Face in the Mirror
Robert Dodge
The Nuclear World at 70
Paula Bach
Exit the Euro? Polemic with Greek Economist Costas Lapavitsas
August 03, 2015
Jack Dresser
The Case of Alison Weir: Two Palestinian Solidarity Organizations Borrow from Joe McCarthy’s Playbook
Joseph Mangano – Janette D. Sherman
The Atomic Era Turns 70, as Nuclear Hazards Endure
Nelson Valdes
An Internet Legend: the Pope, Fidel and the Black President
Robert Hunziker
The Perfectly Nasty Ocean Storm
Ahmad Moussa
Incinerating Palestinian Children
Greg Felton
Greece Succumbs to Imperialist Banksterism
Binoy Kampmark
Stalling the Trans-Pacific Partnership: the Failure of the Hawai’i Talks
Ted Rall
My Letter to Nick Goldberg of the LA Times
Mark Weisbrot
New Greek Bailout Increases the Possibility of Grexit
Jose Martinez
Black/Hispanic/Women: a Leadership Crisis
Victor Grossman
German Know-Nothings Today
Patrick Walker
We’re Not Sandernistas: Reinventing the Wheels of Bernie’s Bandwagon
Norman Pollack
Moral Consequences of War: America’s Hegemonic Thirst
Ralph Nader
Republicans Support Massive Tax Evasion by Starving IRS Budget
Alexander Reid Ross
Colonial Pride and the Killing of Cecil the Lion
Suhayb Ahmed
What’s Happening in Britain: Jeremy Corbyn and the Future of the Labour Party
Weekend Edition
July 31-33, 2015
Jeffrey St. Clair
Bernie and the Sandernistas: Into the Void
John Pilger
Julian Assange: the Untold Story of an Epic Struggle for Justice
Roberto J. González – David Price
Remaking the Human Terrain: The US Military’s Continuing Quest to Commandeer Culture
Lawrence Ware
Bernie Sanders’ Race Problem
Andrew Levine
The Logic of Illlogic: Narrow Self-Interest Keeps Israel’s “Existential Threats” Alive
ANDRE VLTCHEK
Kos, Bodrum, Desperate Refugees and a Dying Child
Paul Street
“That’s Politics”: the Sandernistas on the Master’s Schedule
Ted Rall
How the LAPD Conspired to Get Me Fired from the LA Times
Mike Whitney
Power-Mad Erdogan Launches War in Attempt to Become Turkey’s Supreme Leader
Ellen Brown
The Greek Coup: Liquidity as a Weapon of Coercion
Stephen Lendman
Russia Challenges America’s Orwellian NED
Will Parrish
The Politics of California’s Water System
John Wight
The Murder of Ali Saad Dawabsha, a Palestinian Infant Burned Alive by Israeli Terrorists
Jeffrey Blankfort
Leading Bibi’s Army in the War for Washington