Tuesday, April 12, 2011
While it’s been unclear what President Obama will say Wednesday that could turn him into a long-term deficit warrior. We now know. Obama will throw his support behind the controversial Simpson-Bowles plan which slashes Medicare, Social Security and Medicaid.
Back on April 5, Ezra Klein asked: Will Ryan’s budget revive Simpson-Bowles? It turns out Klein was correct.
Today, Klein writes:
But if the president was actually interested in passing Simpson-Bowles, this was a bit of an odd way to go about it. Leaving it out of his budget and State of the Union speeches meant it didn’t become the central issue on the table. That gave Ryan room to make his proposal, and the early signs that his proposal has turned many Republicans against Simpson-Bowles, as they’d prefer Ryan’s plan and don’t want to weaken their negotiation position. If the process then becomes a compromise between a centrist plan like Simpson-Bowles and a hardline conservative plan like Ryan’s, that’s not going to produce something Democrats are happy with, and Obama will be blamed for not taking the imitative and forcing everyone to simply consider Simpson-Bowles when he had a chance.
One of the most insidious parts of the Simpson-Bowles plan is to cut Social Security benefits by changing the cost-of-living adjustment formula. This will start in 2012, so it would hit current as well as future beneficiaries.
Seniors currently retired and the disabled receiving Social Security benefits would see their benefits slashed by about 3 percent and after 10 years, and by another 6 percent.
Keep in mind that currently, the average retiree’s annual Social Security benefit is $14,000, which is lower than the minimum wage, the Economic Policy Institute reports. Three and a half million seniors are living below the poverty level, even with Social Security.
But it gets worse. Today’s 20-year-old workers who retire at age 65 would see their benefits cut by 17 percent if their wages average $43,000 over their working lives, a clear attack on the middle class.
So there you have it. President Obama is expected to support Simpson-Bowles and will even frame it as a responsible alternative to the 2012 plan unveiled last week by Rep. Paul Ryan. Still think the president isn’t controlled by the Tea Party?