Will Obama Go After Social Security? My Editor and I Have a Bet

By Joshua Holland, AlterNet. Posted February 26, 2009.

I have a bet with my editor, Jan Frel. He thinks that President Barack Obama is going to go after Social Security. It's a huge honeypot sitting in a country that's had an enormous amount of wealth shaken out of it, and if it were looted, it might produce enough in fat management fees alone to resuscitate Wall Street's ailing financial giants.

Jan's not alone. William Greider, writing in The Nation, noted that "Governing elites in Washington and Wall Street have devised a fiendishly clever 'grand bargain' they want President Obama to embrace in the name of 'fiscal responsibility.' "

The government, they argue, having spent billions on bailing out the banks, can recover its costs by looting the Social Security system. They are also targeting Medicare and Medicaid. The pitch sounds preposterous to millions of ordinary working people anxious about their economic security and worried about their retirement years. But an impressive armada is lined up to push the idea -- Washington's leading think tanks, the prestige media, tax-exempt foundations, skillful propagandists posing as economic experts and a self-righteous billionaire spending his fortune to save the nation from the elderly.

I think Obama may offer some lofty but vague rhetoric about reforming "entitlements" as part of a broader set of policies designed to stabilize Medicare, and I believe that it's entirely possible -- and perhaps quite wise, politically -- that he'd make the very small tweaks that most progressive analysts agree will be needed, eventually, to keep a system that's fundamentally sound today healthy and fully funded in the future.

My reasoning is simple. Obama is, above all else, a shrewd politician, and going after Social Security in any substantive way -- privatizing it in whole or in part, or significantly cutting future benefits -- is political suicide. In an instant, he would lose his entire base of support, alienate labor, the AARP and the "Democratic wing of the Democratic Party" -- as the late, great Minnesota Sen. Paul Wellstone called progressive lawmakers -- and the result would leave him incapable of getting anything else on his agenda passed. See Bush, George W. -- he got Congress to go along with his disastrous and unjustified wars, pass the Patriot Act, and sit idly by as he used the Constitution as toilet paper, but when he chose (partially) privatizing Social Security as his signature domestic policy, it went nowhere fast.

Anyway, during Obama's address to Congress on Tuesday night, he made a reference to Social Security that caused Frel to tell look at me and say, without joy, "I'm going to win this bet."

"Not so fast," I replied. Here's what the new president said:

Now, to preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive health care reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans.

I'm sure my editor wasn't alone in picking up on that last part. After all, it was Bush who touted the wonders of private savings accounts to harness the "magic" of the stock market -- yes, the same market that has lost half its value in the past 18 months -- to beef up Americans' retirement security.

But there is a huge difference between substituting private accounts for the Social Security system we have now and adding some form of "universal savings account" as a new program to strengthen working people's economic security. The former is essentially the Bush plan, pushed by Greider's "think tanks, prestige media, tax-exempt foundations [and] skillful propagandists posing as economic experts." The latter is quite different. It is, in fact, a very old and very progressive idea for creating a society in which everyone is guaranteed the same shot at getting ahead. It's a proposal that might lead to a more equal, just economy.

So, parsing Obama's words, it's important that he said that he'd tinker with Social Security "while creating tax-free accounts," not "by creating tax-free accounts." (Jan argues that the key point is that Obama's promise of "comprehensive" reform, however nebulous that phrase might have been in his address, opens the door to something decidedly regressive.)

Creating universal private accounts as a new program to tackle wealth inequality is not a new idea. Michael Sherraden, a professor at Washington University in St. Louis, first proposed using them to build assets among the poor in his seminal 1992 book, Assets and the Poor: A New American Welfare Policy.

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Joshua Holland is an editor and senior writer at AlterNet.

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