President Obama must remember the message of election night and back away from cutting Social Security benefits.
That didn't last nearly as long as I had hoped. I put on my Obama baseball cap -- the one I picked up from a street vendor walking to the inauguration four years ago -- a few weeks before the November election. I've worn it every day since, to both celebrate his victory and cheer on the president for keeping to a progressive promise in the fiscal negotiations. Part of that promise was telling the Des Moines Register that Social Security benefits should not be cut. But it looks like my cap is going back on the shelf if reports that Obama is willing to cut Social Security benefits prove to be true.
There are three things to keep in mind about the president agreeing to cuts in Social Security benefits. The first is that Social Security's benefits are slim, while retirement savings for most Americans are even thinner. The second is that if we are going to address Social Security's eventual shortfall, there's a simple progressive alternative to cutting benefits. The third is that this concession is giving in to the corporate deficit hawks, each of whom has huge personal retirement accounts. Let's take them -- very briefly -- one at a time.
Social Security is what American seniors survive on. As Dean Baker reports, "The median income of people over age 65 is less than $20,000 a year. Nearly 70 percent of the elderly rely on Social Security benefits for more than half of their income and nearly 40 percent rely on Social Security for more than 90 percent of their income. These benefits average less than $15,000 a year."
And most people don't have savings to fall back on. Half of Americans have less than $10,000 in savings and nearly half of baby boomers are at risk of not having enough savings to pay for basic necessities and health care.
Point number two is if you are going to tackle the eventual Social Security shortfall -- which has nothing to do with the fiscal talks since Social Security doesn't contribute a dime to the deficit -- there is a simple, progressive alternative to cutting benefits. Lifting the cap on payments into Social Security for income of greater than $110,100 would only impact 6 percent of wage earners and would extend the life of the trust fund for almost 75 years.
Finally, let's look at the corporate CEOs who blithely talk cuts in Social Security, like Goldman Sachs CEO Lloyd Blankfein, who told CBS News, "You're going to have to do something, undoubtedly, to lower people's expectations of what they're going to get." It's easy for a guy who has $12 million in retirement assets to dismiss a cut in benefits of $1,000 and more as just lowered expectations. Other CEOs leading the campaign to cut benefits include Honeywell's David Cote, with $78 million in his retirement account, and GE's Jeffrey Immelt, with $55 million stashed away for his later years.
Hopefully the president will back away from cutting Social Security benefits. If not, we need Democratic leaders like Senate Majority Leader Harry Reid to keep to his pledge to keep Social Security out of the fiscal talks. And if a fiscal package with the cuts is presented, Democrats in both houses should offer an amendment, substituting lifting the cap on 6 percent of upper-income Americans for cutting benefits for all our retirees. That's the kind of choice we need Congress to face.
But Mr. President, let's not get to that choice: I really like wearing my Obama cap.
Cross-posted from Next New Deal.
Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.