Bush's Snake Oil Plan

President Bush's staff signaled ahead of time that he would use his first prime-time news conference in ages to somehow give a shot in the arm to his floundering campaign for privatization.  Instead, by giving a few more details about how specifically he would cut Social Security benefits, he managed to shoot himself in the foot--again. 

With the president facing growing criticism over a troubled economy, increasing oil prices, continuing American deaths in Iraq, his embrace of Tom Delay's corporate corruption, and the sinking popularity of his Social Security plan, Bush's staff rolled out a proposal that only conservative Washington policy wonks could understand or love.  And ironically, they put the president before the press to pose as a champion of the poor--which, translated from Bush-speak, means the cuts to retirement benefits for the poor will merely be less than the cuts he wants to make for "people who are better off."  

Predictably, the instant pundits appearing on the big networks after the press conference bought the idea that Bush was just asking the rich to sacrifice a little in order to "save" Social Security for the poor. But over on the more populist MSNBC, former Republican congressman-turned-TV-host Joe Scarborough understood that President Bush was asking fellow Republicans to step out on a dangerous plank. Joe told Chris Matthews that the president was embracing the very unpopular idea of "means testing" Social Security benefits for the middle class.  MSNBC then cut to Sam Brownback, conservative senator from Kansas, saying he personally didn't think "means testing" Social Security was the way to go. 

Democrats got it a while ago, and that's why they are united against the president's privatization plan.  Now smart Republican politicians, like Scarborough and Brownback, are starting to realize that the heart of Bush's privatization plan is dramatic and broadly unpopular cuts in Social Security benefits.  Faced with strong public opposition, the Bush privatizers, behaving like the tired Republican stereotype of a Democrat, have decided to rearrange the pain in the name of fairness. The new Bush benefit cuts plan, authored by economist Robert Pozen, trades across-the-board benefit cuts for a system that maintains (for now) benefit increases--based on prices and wages--for the poor (those making less than $20,000).  But because Bush claims to have his eye on long-term solvency for Social Security, this means that the rest of us would see big cuts in retirement benefits. 

According to an analysis by House Democratic staff, when fully phased in, Bush's "progressive indexing" would be a disaster for the middle class:  A worker earning $37,000 per year before retirement would see a benefit cut of 28 percent. Someone earning $58,000 would suffer a 42 percent cut.  And someone earning $90,000 would face benefit cuts of 49 percent. 

Oddly, the president's remarks included the repeated assurance that "future generations receive benefits equal to or greater than the benefits today's seniors get."  This sounds like a pledge to cut no one's future benefits, echoing some in the Republican "free lunch" crowd.  But smart journalists will force the White House to acknowledge that this is an empty and misleading promise. What the president described last night is entirely compatible with dramatic cuts in future benefits--which, under current law, are promised to increase substantially as wages and inflation go up.  This is a bait and switch of the kind bloggers will be all over in their Friday postings. 

The new "soak the rich" posture of the Bush White House is improbable and tortured.  Karl Rove certainly understands that a family making $58,000 is not wealthy by any stretch of the imagination.  But, having cast their lot with benefit cuts for Social Security, Bush and his allies are desperately trying to pretend this sow's ear is a silk purse.  If they really wanted to call on wealthy Americans to sacrifice a little to make Social Security solvent for the poor and the middle class, Bush and his minions would embrace lifting the cap on incomes subject to the Social Security tax.  Currently, Bill Gates and other millionaires pay payroll taxes on only their first $90,000--and nothing after that.  But when Bush once hinted that he might consider lifting the cap, he was instantly smacked down by the anti-tax zealots in his own party, including Denny Hastert and Tom DeLay.