Obama’s Long Battle to Cut Social Security Benefits

Eric Zuesse

If, as expected, U.S. President Barack Obama will, for the first time in his Presidency, be given by the nation’s voters two Republican-controlled houses of Congress, he’ll finally be able to sign into law bills that are as conservative as he wants; and one of these new laws will transform Social Security.

Back in 2009, he came into office wanting to address the long-term financial issue of Social Security not by removing the annual earnings-cap of around $100,000 that pertained (and above which income was/is untaxed for Social Security, so that this change alone could solve the problem), but instead by reducing retirement benefits to seniors: cutting the benefits they receive. This man, Obama, who went along with George W. Bush’s taxpayer-bailouts for Wall Street rather than institute bailouts of Main Street (the public) and who thereby produced continuation of the economic crash for everyone other than the nation’s wealthiest 1% or 5%, was also aiming to serve the wealthiest Americans at the expense of everyone else when it comes to long-term changes of Social Security. Now that voters will likely produce a solidly Republican Congress in this November’s elections, and so President Obama will thereafter be signing into law bills that will have passed two Republican-controlled houses, one of those bills he’ll sign will probably be his longstanding dream one, of slowly decimating the Social Security program, a program that Democrat FDR had proudly started. Obama’s plan to do this is the “boiling frog” approach: slowly enough so that the public won’t much notice the change until it’s too late and the “frog” is “cooked.”


On 12 November 2007, the great blogger “Mike the Mad Biologist” headlined “Obama Has Lost My Vote” and gave as his reason Obama’s having used the phrase “the Social Security crisis” when there was no ‘crisis’ except in the rhetoric of Republican politicians and their aristocratic stooges who want to reduce government benefits for everyone but aristocrats.

President Obama’s plan to cut Social Security, Medicare, and Medicaid, predated his becoming President, though he didn’t talk about it when he campaigned for the job. (If he had talked about it, he wouldn’t have won the Democratic nomination; and he might not even have beaten the Republican candidate, John McCain, in 2008, since no Republican Presidential candidate has ever publicly campaigned to weaken what his Party nonetheless routinely contemptuously refers to as “entitlements.”) Everyone had simply assumed that no Democrat would want to weaken or reduce the crowning achievements of Democratic Presidents Franklin Delano Roosevelt and Lyndon Baines Johnson, not to mention of the Democratic Party itself. But Barack Obama wanted to do it; and he remains committed to doing it.

On 16 January 2009, four days before Obama became President, Michael D. Shear headlined in the Washington Post, “Obama Pledges Entitlement Reform,” and he reported about “a wide-ranging 70 minute interview with Washington Post reporters and editors,” in which Obama endorsed efforts by congressional Republicans, and “the Blue Dog Coalition of fiscally conservative Democrats,” to cut Social Security and Medicare. Progressives were already disturbed at what their friends in Congress were leaking to them about Obama’s strong commitment to doing this, and so a few blog posts were issued to ring alarm bells publicly about it. Paul Rosenberg at openleft.com headlined on January 17th (three days before Obama’s Inauguration), regarding “Obama’s ‘Mandate’ To Slash Medicare, Medicaid & Social Security,” and he presented polls showing that the public not only didn’t want to cut any of these programs, but that 74% wanted Medicare and Medicare spending increased, and 62% wanted SS spending increased. Even 65% of self-declared “conservative” Americans wanted the medical programs increased, and 62% of them wanted SS spending increased. To Obama, his plan to cut Social Security, Medicare, and Medicaid, so as to fund the Wall Street bailout, was an act of political courage. (In his interview with the Washington Post, he “pledged to expend political capital on the issue.”) It was his long-term plan, even though the polls showed widespread opposition to it by the public. This was a matter not of expediency, but of conscience, for him: he needed to find some way to fund both the ongoing Wall Street bailouts, and the massive federal debt that would be caused by the 2008 Wall Street crash and its resulting plunge in federal tax-collections; and this “balanced approach,” of tax hikes and spending cuts, would be his solution to both problems.

Steve Benen at the liberal washingtonmonthly.com headlined about the matter on the same day, January 16th, “Entitlements,” and he said “Obama’s comments on the subject weren’t troubling at all.” Benen ignored the messages that were then flying around Capitol Hill saying that Obama was evidently determined to cut back on these programs, and that he was working behind the scenes with conservative Democrats and with Republicans in order to achieve this before 2012. Obviously, he didn’t meet this goal.

Conspicuously missing from the list of names that the incoming President mentioned to the Washington Post as being among the individuals with whom he was discussing his planned changes to Social Security and Medicare were the Democratic leader in the Senate, Harry Reid, and the Democratic leader in the House, Nancy Pelosi, both of whom were already strongly on the public record as opposing any cuts to Social Security, Medicare, or Medicaid, as being appropriate ways to address the nation’s fiscal problems that had been caused by the Wall Street crash. Often during the subsequent years, Obama drove both Pelosi and Reid to fits with his back-door efforts to cut “entitlements,” such as when, on 18 February 2010, he appointed the conservative Democrat Erskine Bowles to serve opposite the extremely conservative Republican Alan Simpson as being the two co-chairs on the White House’s “bi-partisan” federal debt commission concerning entitlement “reform.” (The Commission heads produced recommendations that congressional Democrats roundly repudiated for slashing entitlements, and that Republicans condemned for increasing taxes.) Obama set this Commission up to deal with the soaring federal deficits that had been caused by Bush’s 2008 economic collapse, so as to use those federal deficits as an excuse to slash entitlements despite producing thereby even more suffering for the poor, at the very same time while Wall Street was being bailed out. Bowles was supported by the Wall Street mega-banks that were being bailed out by taxpayers. Simpson was a born conservative who followed in his father’s footsteps as Wyoming’s Republican U.S. Senator. His father had been quite extreme: “one of six Republican senators who voted against the Civil Rights Act of 1964.” So, this commission was set up in order to be a wolf-in-charge-of-chicken-coop type of operation, and congressional Democrats thus opposed it. Republicans opposed the commission’s mandate because it would mean increasing taxes – the commission wasn’t conservative enough for them. Thus, on the very same day, 28 March 2012, when the Bowles-Simpson recommendations were finally dashed in the House, the House passed instead the Paul Ryan budget, which Mitt Romney ran on, against Obama. The 2012 Presidential “election” was, consequently, between two conservatives, one of whom pretended not to be.

This “reform” of “entitlements,” along with tax-hikes on the rich, is what Obama has publicly referred to many times as his “balanced approach” and “shared sacrifice.” As this link shows, he announced at a press conference on 15 July 2011, that, “If you’re a senior citizen, and a modification potentially costs you a hundred or two hundred bucks a year or more,” then you should accept this cut, because “Congress has run up the credit card” paying the mega-banks in the Wall Street bail-out and to make up for the economic collapse from the 2008 Wall Street crash. So, “The least I can do is to say that people who are making a million dollars or more” (after their firms were rescued by the bail-out) will “have to do something as well. And that’s the kind of tradeoff, that’s the kind of balanced approach and shared sacrifice that I think most Americans agree need to happen.” However, in the nearly two years after Obama talked about cutting Social Security benefits by “a hundred or two hundred bucks a year or more,” the actual size of that proposed cut has become now, $100 a month: it has gone up by 600% to 1200%, in his 2013 proposal.

Obama has been trying hard: On 20 July 2011, Tyler Durden at zerohedge.com headlined “Bipartisan Plan Summary Charts Confirm Key Deficit ‘Cuts’ Come From Imminent Social Security Pillage,” and this conservative website expressed shock at how amazingly Republican this plan was, which Obama was trying to ram through. The “bipartisan” Obama had reached farther into Republican territory than Republican politicians had even dared. But Republicans stood firm in their demanding more tax-cuts for the super-rich. Congressional Democrats wouldn’t stand for that.

The following day, July 21st, Paul Kane bannered in the Washington Post“Debt Talks Bring Tensions Between Democrats, Obama to Surface,” and he reported that even top Democrats in the Senate – Reid, Kerry, Cantwell, Mikulsky, Lautenberg, and Feinstein – were shocked that the Democratic President was leaving them entirely out of the loop in his budget negotiations, and was negotiating only with leading Republicans. “Often kept in check out of loyalty for their president, congressional Democrats have grown increasingly suspicious of Obama’s motives over the past year. … They questioned whether Obama shared their core values. … The Democrats were winning, the senators said. The American people were with them on tax increases for the rich. … Why give up now? … Democrats lashed out, saying that deep cuts to federal agency budgets and entitlements were too steep a price to pay. … In the House, rank-and-file Democrats said the situation had grown dire. … [As one of them put it, he feared] ‘a deal that basically gives them [Republicans] everything they want but yet still takes away from those who are our most vulnerable.’”

Also on 21 July 2011, the Washington Post bannered “Debt-Limit Talks: As Obama, Boehner Rush to Strike Deal, Democrats Are Left Fuming,” and reported: “Democrats reacted with outrage as word filtered to Capitol Hill, saying the emerging agreement appeared to violate their pledge not to cut Social Security and Medicare benefits as well as Obama’s promise not to make deep cuts in programs for the poor without extracting some tax concessions from the rich. When ‘we heard these reports of these mega-trillion-dollar cuts with no revenues, it was like Mount Vesuvius. Many of us were volcanic,’ said Sen. Barbara A. Mikulski (D-MD).” The issue was no longer whether there would be drastic cuts to SS and Medicare, but whether there would also be tax-hikes on the rich. Furthermore, Grover “Norquist [whose statement reported earlier that day to the editors of this same newspaper, saying that termination of the Bush tax cuts wouldn’t count as a tax increase, had evidently alarmed his financial backers] backed away from the reported remarks Thursday. … Expiration of the cuts would amount to a tax increase” after all, Norquist announced. So, he was telling his Republican troops to stay in line in blocking Obama’s plan.

Businessinsider.com bannered the same day, “The Question Now: Can Obama Bully The Democrats Into a Debt Deal?” and Zeke Miller reported that Senate Republicans were euphoric, convinced that Obama would sign steep budget cuts with no significant tax increases, a deal which would decimate the Democratic vote-turnout in 2012. Huffingtonpost.com headlined “Tom Coburn [Obama’s conservative Republican friend]: President Obama Will Back Down On Budget Bill Veto Threat,” and reported that leading Republicans were confident that Obama would give them what they demanded. Washingtonsblog.com headlined “Debt Crisis Being Used as Shock Doctrine to Steal More Money from the American People to Give to the Richest 1%.” The world’s great newspaper, Britain’s Guardian, bannered “Barack Obama Is Gutting the Core Principles of the Democratic Party: The President’s Attacks on America’s Social Safety Net Are Destroying the Soul of the Democratic Party,” and the Guardian’s American reporter, Glenn Greenwald, said (and he documented) that “It is now beyond dispute that President Obama not only favours, but is the leading force in Washington pushing for, serious benefit cuts to both Social Security and Medicare.”

The next day, Patricia Murphy at The Daily Beast headlined “Democrats’ Debt-Deal Shutout: House Democrats are shocked and outraged that Obama is pursuing a debt deal with Boehner that sidelines them and won’t hike taxes – though some are resigned to it.” Also on the 22nd, “The Fix” blog at the Washington Post, headlined, “Democrats, Divided (on the Debt Ceiling),” and Chris Cilizza and Aaron Blake reported that Obama was out to hold onto the White House, regardless of the wishes, or political survival, of Democrats in Congress. Obama was, it appeared, willing to destroy the Democratic Party, if need be, in order to stay in the White house, even if this would mean his ruling as the titular “President” when both houses of Congress would be Republican in a second Obama term. Obama wouldn’t be able to achieve anything that way, but he still would retain the title of “President,” and he still would have the power to place the aristocracy even deeper into his debt, perhaps so that they’d finance yet-bigger memorials to him (etc.) during his retirement. And needless to say, a President retiring like that would have money poured at his feet, by lots of aristocrats who have money to pour.

Also on 22 July 2011, President Obama held a press conference, opening with “Remarks by the President.” He said: “Essentially, what we had offered Speaker Boehner was over a trillion dollars in cuts to discretionary spending [while unemployment already was high], both domestic and defense. We then offered an additional $650 billion in cuts to entitlement programs – Medicare, Medicaid, Social Security. … We were offering a deal that called for as much discretionary savings as the Gang of Six. We were calling for taxes that were less than what the Gang of Six had proposed. And we were calling for modifications to entitlement programs, [which] would have saved just as much over the 10-year window. … I spoke to Democratic leaders yesterday, and although they didn’t sign off on a plan, they were willing to engage in serious negotiations, despite a lot of heat from interest groups around the country. [NOTE: Like Ronald Reagan, he referred to traditional Democratic Party constituencies as ‘interest groups,’ but did not refer to traditional Republican Party constituencies that way. This phrase was psychological code for treating Democratic constituencies as being leaches or parasites upon the public, rather than being the public. He actually said this; and this type of language was frequent from him. It constituted a clear sign that he was a closet Republican.] … It is hard to understand why Speaker Boehner would walk away from this kind of deal. And frankly, if you look at commentary out there, there are a lot of Republicans that are puzzled as to why it couldn’t get done. In fact, there are a lot of Republican voters out there who are puzzled as to why it couldn’t get done.”

During the Q&A session after the speech, Scott Horsley asked, “Q: Mr. President, can you explain why you were offering a deal that was more generous [to the Republicans] than the Gang of Six [composed of three conservative Republicans, two conservative Democrats, and one liberal Democrat]?” Obama answered: “Because … there are a group of his caucus that actually think default would be okay. … And so I understand how they get themselves stirred up and the sharp ideological lines that they’ve drawn.” Norah O’Donnell asked, “But they were willing to move on some revenues, apparently?” And he answered: “Absolutely.” He went on to explain: “If I’m saying to future recipients of Social Security or Medicare that you’re going to have to make some adjustments, it’s important that we’re also willing to make some adjustments when it comes to corporate jet owners, or oil and gas producers, or people who are making millions or billions of dollars.”

On July 23rd, Mike Allen of Politico bannered “The Obama-Boehner Breakup,” about the collapse of the deal. However, already, Ezra Klein in the Washington Post, had explained in advance “Why Liberals Should Thank Eric Cantor [Boehner’s #2, and the Tea Party’s leader in the House].” Klein explained that whereas Obama wanted to make a deal that would satisfy Republican voters, few other Democrats were willing to go that far, and that therefore Cantor forced Obama to go into the coming 2012 electoral battle fighting to retain his base, instead of appealing to what was commonly referred to as the center-right: Republicans and independents. Obama didn’t have the stomach to fight for, and run on, a Democratic position; but now, because of the Tea Party’s intransigence, he would have to run on Democratic positions; this would now be the only way for him to compete in 2012.

Also on July 23rd of 2011, Jane Hamsher headlined at her firedoglake.com, “Obama: We Offered Cuts to ‘Medicare, Medicaid and Social Security,” and she quoted Obama’s admission that, “We [i.e., honestly: he, singular – this was his concession, not his and Boehner’s, but he used here the plural in order to fool Democrats] then offered an additional $650 billion in cuts to entitlement programs – Medicare, Medicaid, Social Security.” Hamsher’s comment was: “It’s been two and a half years since we first said Obama was trying to cut Social Security. Denial is no longer possible.” She was right. She had been right all along.

Two days later, on July 25th, Obama delivered an “Address by the President to the Nation,” in which he said: “While many in my own party aren’t happy with the painful cuts it makes, enough will be willing to accept them if the burden is fairly shared. … And to his credit, this is the kind of approach the Republican Speaker of the House, John Boehner, was working on with me. … This balanced approach isn’t on its way to becoming law … because a significant number of Republicans are insisting on a different approach – a cuts-only approach. … Many Republicans in the House refuse to consider this kind of balanced approach.” What he didn’t say but knew was that almost all Democrats in Congress would also vote against the deal, if it were to have been placed to a vote. While Obama’s vague reference there to “enough will be willing” suggested that plenty of congressional Democrats accepted his plan, and that only Republicans had killed it, all indications were that the only Democrats who would actually have supported it were some of the “Blue Dog” or conservative Democrats. In the House, there were 26 “Blue Dogs” in 2010, and 14 of them remained after the 2012 elections. In the Senate, there was only one in 2010: she was the anti-public-option, even anti-Obamacare, “Democrat” Blanche Lincoln from Arkansas, but Lincoln lost her seat to the Republican. Though she had won re-nomination in 2010 because Obama fund-raised for her against her broadly popular (and pro-public-option) Democratic primary opponent, Bill Halter, Senator Lincoln was defeated by the Republican candidate, John Boozman, in the general election. Perhaps Obama was especially sad to lose there a “Democrat” who voted in the way that he actually felt but could not say. But Boozman would be quite similar to her.

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Before going any further here, it might be worth noting that one of the reasons why congressional Democrats were shocked at Obama’s commitment to cutting Social Security, Medicare, and Medicaid, is that prior to his being elected as President in 2008, he had (even if only intermittently) championed the progressive proposal on Social Security, which was to eliminate the approximately $100,000 earnings-cap on income that’s taxed by the “FICA” or Social Security tax, so that all income, no matter how large, would get taxed into Social Security.

For example, the even-more conservative Democrat Hillary Clinton attacked Obama during the 2007 and 2008 Presidential primary debates, precisely for this progressive proposal of his.

During the debate on 16 April 2008, just before the crucial Pennsylvania primary, occurred this exchange:

CLINTON: I’m certainly against one of Senator Obama’s ideas, which is to lift the cap on the payroll tax, because that would impose additional taxes on people who are educators, police officers, firefighters and the like. [Here, she was using the same basic argument that Republicans do against taxes that are targeted at the rich: saying that ‘Small businessmen’ – here ‘firefighters’ etc. –  will get hit hard by this new tax.’ This is a standard conservative debating tactic that she was using, to deceive the audience against a progressive proposal.] …

OBAMA: That’s why I would look at potentially exempting [them].

Obama here didn’t point out to the audience that Clinton was using a standard conservative debating ploy, but he instead simply accepted her conservative and false framing of this issue, and then proceeded to weaken his own progressive proposal into confusing mush, so as to make it harder for her to attack, yet without actually defending it.

Even earlier, the two of them had debated this, such as on 15 November 2007 in Las Vegas; and, on that particular occasion, Obama had instead stuck by his progressive guns on this matter:

CLINTON: I do not want to fix the problems of Social Security on the backs of middle class families. … If you lift the cap completely, that is a $1 trillion tax increase. …

OBAMA: Understand that only 6% of Americans make more than $97,000 – so 6% is not on the middle class; it’s the upper class.

That time, he flat-out rejected her false (and conservative) framing of the issue. But, until he was elected as President, he didn’t actually have any fixed position on this important matter.

For example: In a 7 July 2004 press release (while he was still only a member of the Illinois state senate), Obama headlined “Increase Retirement Security,” and he said: “The best way for our government to help ensure that every American can retire with dignity is to provide incentives for middle class families to save for the future. My Working Families Savings Accounts plan gives working men and women earning up to $50,000 per year the opportunity to put money in a retirement plan, whether it’s an IRA or an employee based 401(k), and have that money matched with a 50 percent tax credit for contributions up to $2,000.” Basically, this proposal was in line with George W. Bush’s proposed privatization of Social Security – it was treating the government’s retirement insurance scheme, known as “Social Security,” as being instead a private investment scheme (which it is not and never was). At that time, he was signaling to Wall Street that he would be the type of “Democrat” they could do business with.

So: Until only shortly before Obama became President, he was actually just “winging it” on policy issues, and he didn’t really have any ideological commitment that was coherent or carefully thought-out. Until he became President, he wanted simply to become President; he didn’t have an ideology – or at least none that was thought-out, consistent, or aimed at any goal other than his gaining more power.

Once he was elected, however, he did think this issue through, and he decided that he would need to cut Social Security, Medicare, and Medicaid, in order to enable the Wall Street bailouts to continue, such as to fund the purchase of $40 billion each month of the Wall-Street-generated mortgage backed securities (MBS) – $480 billion per year – by the N.Y. Federal Reserve Bank that Timothy Geithner used to run.

This was when he decided he that his chief goal as President would be to shovel public money at Wall Street, and to get the resulting yawning fiscal gash salved by tax contributions from everybody else. That’s why he chose Timothy Geithner as Treasury Secretary, and Eric Holder as Attorney General – to shovel government money at Wall Street chieftains, and to block them from being prosecuted for any frauds that they might have committed. As soon as he was elected in 2008, he proceeded to assemble a solidly pro-Wall-Street cabinet and Administration. Perhaps he had been a closeted conservative all along, but, if so, he didn’t show it clearly until he was elected to be the President.

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We’ll now skip forward to 2013, after President Obama had refused, at the end of 2012, to employ the only effective weapon that was available to him to force congressional Republicans to drop their debt-ceiling threat, of driving the Federal Government into default as their means of getting their way at the “fiscal cliff”: this weapon against using the debt-ceiling that way was the 14th-Amendment option (which Bill Clinton, Nancy Pelosi, Harry Reid, and other Democrats, were urging him to use in his budget negotiations with the Republicans). Obama instead wanted John Boehner and other Republicans to retain their power of using this threat, so that they could then “force” him to agree to slash Democratic programs, as the “necessary” way to prevent a federal default. This refusal of Obama to use the 14th Amendment, in that way, brings us to the present stage of the budget negotiations:

On the morning of 1 March 2013, President Obama met with House Republican leaders to achieve, as the AP reported, “a big fiscal deal that would raise taxes and trim billions from expensive and ever growing entitlement programs” (the same list: Social Security, Medicare, and Medicaid).

Also that morning, Les Leopold headlined at huffingtonpost, “Sequester This! How Did We Get Here?” and he perspicaciously noted that, “When Wall Street imploded under the immense weight of its own greed, it tore a hole in the economy. … The combination of the economic collapse and the deficit spending needed to counter it increased the national debt. Before the crash in 2007, the yearly deficit was 1.17 percent of GDP. By 2009 it shot up to 10.13 percent. Even with a weak recovery, the deficit fell to 8.51 [percent] by 2012.”

However, what does that soaring deficit-spending really have to do with Obama’s aim to “trim billions from expensive and ever growing entitlement programs”? It provides him an excuse to cut, even at a time of greater need, and for him to say that Republicans have “forced” him to “concede” to doing it. Thus, for example, the liberal Mr. Leopold asserted that, “President Obama caved to the debt hysteria.”

Obama didn’t “cave.” Cutting “entitlements” had unquestionably been one of Obama’s top goals ever since at least four days prior to his becoming President. Liberals (outside Congress) simply refused to believe it.

Obama kept trying, and Republicans kept giving him more rope with which to hang his Presidency. On March 6th of this year, Rosalind S. Helderman of the Washington Post headlined major news, “House Votes to Fund Government Through End of Fiscal Year,” and she reported that, “President Obama is focusing on wooing rank-and-file Republicans in the Senate who might be interested in a deal that would pair tax reform that produces new revenues with cuts to entitlement programs.” Those “entitlement programs” are Social Security, Medicare, and Medicaid. There had just been a House vote, “passing a measure that funds the government through the end of the current fiscal year,” so as to give congressional Republicans added time for using their threat of blocking a debt-ceiling increase, and of their thus driving the U.S. Government into default. Dragging out these negotiations this way will give Republicans the added time they need to force the ultimate tax-and-spend “deal” to end up their way: with little or no tax-hike on the rich. “The measure was approved by a vote of 267 to 151, with most Republicans supporting it and [by nearly 3 to 1] most Democrats voting against it.” House Republicans wanted this measure to pass, and Obama wanted it to pass; but congressional Democrats overwhelmingly did not want it to pass. Then, “After a series of phone calls from Obama to Republican senators who have expressed their interest in that kind of ‘grand bargain,’ he will take a group of senators to dinner Wednesday evening at the Jefferson Hotel.” Obama was working with Republican leaders in both houses, in order to achieve goals that both they and he had been working toward for years.

Jim Vandehei and Mike Allen headlined at Politico on March 12th, “Missed Chance: Obama’s Tax Problem,” and reported that when the President had spoken with Republican House Majority Whip Kevin McCarthy on March 9th, Obama had, according to McCarthy, told him, “I listen to Paul [Ryan, who wants to slash Social Security and Medicare],” and, that, “Obama then said that if Republicans are going to get entitlement reform, ‘You need me.’” This was his charm-offensive. Obama’s message to the Republican Whip was that he actually did want to slash those programs, but that he wouldn’t be able to do it unless Republicans would provide him the cover of raising taxes on the rich, as a supposed trade-off. He still couldn’t figure out their priorities. He could never take no for an answer. He still dreamt of getting to yes with them. But they turned him down.

To Obama, fighting for this is a matter of moral principle. It’s an essential part of his program not just to enable the routine, non-‘emergency’, $83 billion+ annual taxpayer subsidy, that the ten megabanks routinely receive, but also to fund the purchase of $40 billion each month of mega-bank-generated mortgage backed securities (MBS), $480 billion per year, in this ongoing N.Y. Federal Reserve Bank program to purchase these MBS that the megabanks had needed to get rid of when the music stopped playing in 2008. Ultimately (and very indirectly), the U.S. Treasury will be the dumping ground for all of these Wall-Street-owned “toxic assets” that had remained on the books (at their full nominal value, not their steeply discounted market value) of the Wall Street institutions, when global investors stopped buying their garbage. “Entitlements” must thus be slashed, so as to enable this transfer of aristocrats’ (insiders’) investment losses onto the American public to continue. As for non-aristocrats’ investment losses from buying MBS, the Obama Administration has been doing everything it can to block those Wall Street frauds from reaching our criminal courts. Those matters are being dealt with only by fines that are paid by the current stockholders in Wall Street banks. The Wall Street executives who had made billions from generating and selling the frauds were allowed to keep “their” money. And, of course, they don’t need any “entitlements.” (Only the public does.)

Numerous accounts of Obama’s first Presidential term have documented that on economic matters, this President saw the most eye-to-eye of all, with his chosen Treasury Secretary, Timothy Geithner – even more than he did with any of his strictly economic advisors. Geithner resigned in early 2013, to join the Council on Foreign Relations, which is headed by his long-time career-sponsor, Citibank’s Robert Rubin (who had formerly headed Goldman Sachs). On that occasion, Liaquat Ahmed at a blog of The New Republic, headlined on 24 January 2013, “Timothy Geithner on Populism, Paul Ryan, and His Legacy.” In this lengthy “exit interview,” Geithner described himself as a courageous person who overcame the urge to “go populist” (shades there of Obama’s having privately told the Wall Street elite inside the White House, “My administration … is the only thing between you and the pitchforks”), and who instead explicitly rejected “the understandable need people had for justice.” To Obama and company, any “justice” against the elite was merely “pitchforks” – it was like the KKK had used before lynching Blacks. Geithner implicitly said there that anyone who wanted any of the banksters to be prosecuted for MBS-fraud, etc., was an ignoramus who was endangering the USA by pushing for such “populism.” He praised Obama and other “political leaders who are willing to take the brutal political cost of doing what’s necessary” (such as cutting Social Security), and he contrasted him with political leaders who “let the populist fires burn, or decided they were going to try to teach people a lesson” (such as by prosecuting those banksters). To Geithner, prosecuting banksters would be mere revenge-seeking, just envy against the economic winners. He proudly proclaimed himself as one who “pushed earliest for a pivot [away from unemployment] to a focus on the debt situation.” He was proud of his anti-Keynesian stance. He even expressed agreement with Republican House Budget Committee Chairman, and ex-Republican VP nominee, Paul Ryan, rejecting “growth-killing revenue increases” (rejecting increased taxation upon the rich that would fund additional short-term stimulus-spending to restore a growth-economy so as to pay down the debt long-term, from this growth long-term in people’s incomes). When asked “If you said that to Paul Ryan, would he agree with you?” Geithner answered: “I think he would. We’ve had the chance to talk about this in public and in private. I think what he would say is that you also have to worry about the 50-year problem, not just the 10-year problem … because of the demographics of the nation,” with more people living longer. He wanted to target Social Security and Medicare for cuts, and so he redirected the interview to those, as being “the 50-year problem.”

In other words, Geithner was advising: Take the losses – from the Wall Street bailout, and from the Wall-Street-caused economic collapse that had produced it – out of the hides of future recipients of Social Security, Medicare, and Medicaid, not out of the hides of the banksters who had made billions from those Wall Street frauds.

This was the most extensive statement expressing the real Obama that has ever been published, and it came in the “exit interview” of Obama’s mouthpiece and top policy-maker: Timothy Geithner.  Of course, as a politician himself, Obama is too slick ever to speak publicly in the direct way that Geithner did there. But that was actually Obama speaking, in a sense, and not merely his chosen economic guru expressing his personal view.

The actual name of the Social Security System has always been “Old Age, Survivors’ and Disability Insurance,” and this government-run insurance policy is what Obama, Geithner, and congressional Republicans, want to reduce. (As was noted before, Social Security is not an investment plan, though Republicans always portray it as such in order to enable it to become privatized and thus managed by Wall Street firms. It’s only an insurance policy. Monies going into it are insurance premiums, not investments – and certainly not personal investments, no investments of any sort.) Obama and Geithner want to cut into this insurance policy so as to fund both the continuing Wall Street bailouts, and the regular ($83 billion+) annual taxpayer subsidy to the ten largest banks. Congressional Republicans want to reduce it not only to fund those, but also in order to reduce public pressure to increase taxes upon the rich (not just banksters, but all of the rich) – so as to reduce the debt wholly upon the backs of the non-rich. Obama is seeking to get congressional Republicans to increase taxes on the rich in order to win their support so that he can cut “entitlements” in order to fund the “Too Big To Fail” banks, whose heads he has shown that he greatly admires. The problem for Obama, however, is that the chief reason that Republicans want to cut “entitlements” is precisely in order to balance the federal budget without even needing to raise taxes on the rich. Obama, it seems, still hasn’t quite figured that out: Republicans want all of the top 1%, not merely the Wall Street insiders, to be protected, in all ways. They just want Wall Street to be protected the most. But if Republicans finally do change their priorities in this regard, perhaps congressional Democrats won’t be able to stop Obama and Republicans from passing their “Grand Bargain” into law, after all.

And what will happen if, as expected, Republicans win control of the Senate in this November’s elections, and retain control of the House? Neither Harry Reid nor Nancy Pelosi will be able then to stop Obama’s plan. John Boehner and Mitch McConnell will send him a bill he’ll be happy to sign. It will be consistent with what he’s been fighting for in back rooms since at least 16 January 2009.

President Obama has never had two Republican-controlled houses of Congress. Until now, he has never been able to ram anything down the throats of congressional Democrats. But he will be able to do that if all of the political prognosticators are correct that this November’s elections will for the first time give Obama two Republican-controlled houses of Congress instead of the present single Republican-controlled house, the House of Representatives. If those political projections are correct, then there won’t any longer be Harry Reid able in the U.S. Senate to block Obama’s TPP and TTIP international trade deals: Mitch McConnell or another Republican Senate leader will happily ram them through, and Obama will happily sign the ‘compromise’ bill, which then won’t really be any significant compromise at all. There also won’t be Harry Reid able to block Obama’s plan (discussed here) to gut Social Security. There also won’t be congressional Democrats able to stop Obama’s increasingly aggressive military policies (such as the present Republican bill, stalled now in the Senate, to arm the Ukrainian military). And global warming? Obama is already opening the floodgates to leases on federal lands, and pushing to increase oil, gas, and coal exports, and promoting the Koch brothers’ filthy tar-sands oil for sale in Europe. Democrats will no longer be able to restrain him there, either.

This Republican ‘Democrat’, Barack Obama, will finally have a free hand; he will finally be free to do what he has always hoped he’d be enabled to do. He might veto a few Republican bills, on issues such as school prayer, but his Wall Street and Big Oil and armaments-making beneficiaries will benefit even more then than they now do, from that new, full-fledged Republican, ‘Democrat’, Barack Obama, being in the White House. It’ll be basically a solid Republican Federal Government.

And within a generation or two, Social Security will be stripped so bare, people will hardly even know it’s there.

———-

Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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  • ClubToTheHead

    “The Pact: Bill Clinton, Newt Gingrich, and the rivalry that defined a generation” by Gillon, Steven M., says that it was only the impeachment of Bill that obstructed his efforts to end Social Security “as we know it.”

    • dchrist81

      It’s a shame Socialist Insecurity was not ended already. It is a despicably evil program that causes irreparable harm to America every day this corrupt pyramid scheme continues.

  • MCB

    Just refund everyone’s money ASAP and defund this de facto Ponzi Scheme before it implodes and no one gets any money back whatsoever…

  • Andrean Tantiono

    nice blog and nice info btw thankss
    Medionize

  • dchrist81

    The very existence of the immoral Ponzi scheme laughing referred to as “Social Security” IS in and of itself a crisis! The more accurate name for this disgusting abomination is Socialist Insecurity (or Socialist Stupidity). It is an appallingly evil program that only serves to STEAL from productive young Americans to subsidize unproductive seniors. Socialist Insecurity is nothing more than intergenerational THEFT! Any and all Americans with a functioning conscience will APPLAUD the demise of Socialist Insecurity! This abomination NEVER should have been imposed upon honest Americans at all! The sooner Socialist Insecurity can be consigned to the ash-heap of history, the better!

    • fleefink

      dchrist81, you couldn’t be more wrong.

      Social Security was not, and is not now, a Ponzi scheme. The system is financially sustainable and completely fair if our politicians would only quit raiding the contributions made by hard working Americans to fund their wars, foreign aid, pork barrel projects, and services for illegals aliens.

      Before blabbing on about the “ash-heap of history” you should take the time to study some of the history of Social Security and research how our government has mismanaged our tax dollars. Government mismanagement is the problem not the Social Security system itself.

      • dchrist81

        Completely wrong! Socialist INSECURITY has ALWAYS been an immoral pyramid scheme from the very beginning. Any system that STEainable and despicably evil. It depends on STEALING from current workers to paALS from the productive and funnels the stolen plunder into a collective account is entirely unsusty current beneficiaries. To say that Socialist Insecurity is not a pyramid scheme is to say that a rose is not a flower. Socialist Insecurity is the very model of a pyramid scheme writ large.

        Of course government mismanagement is a problem, but the very existence of Socialist Insecurity is both a result of past government mismanagement and an enabler of continuing mismanagement. Socialist Insecurity has always been unsustainable and will always be unsustainable. The despicable abomination should be ended as soon as possible. Any informed person with a functioning sense of morality knows that Socialist Insecurity deserves to be dismantled and publicly renounced as a miserable failure.

      • dchrist81

        Even the Supreme Court has admitted that Socialist Insecurity is a pyramid scheme.

        “The proceeds of both the employee and employer taxes are to be paid
        into the Treasury like any other internal revenue generally, and are not
        earmarked in any way.” Helvering v. Davis (1937) http://www.cato.org/publications/commentary/is-there-right-social-security

        For you to PRETEND that Socialist Insecurity is not a pyramid scheme is despicable. Are you DELIBERATELY lying to me? Or are just so pitifully ignorant that you don’t realize you are condoning a grave injustice?

        Socialist Insecurity is EVIL!!! Repent from your SIN and support its complete abolition!

        • dchrist81

          To “privatize” Socialist Insecurity simply does not go far enough.

          Socialist Insecurity is so completely immoral that it must be ended entirely!!

      • Steven Rosenberg

        Oh boy! you are not just a wishful thinker, but a delusional thinker as well. History of SS is a underfunded and over promised fact.

  • fleefink

    We Need to Pass the Social Security Fairness Act of 2014!!!

    Millions of seniors have had their earned Social Security benefits cut 66% due to the unfair WEP and GPO laws. Congress refuses to remedy this by acting on the Social Security Fairness Act because our government cares more about giving billions upon billions of dollars to law breaking illegals rather than being fair with its own law-abiding citizenry. Why is it that illegal aliens will be allowed to collect Social Security while citizens who paid into the Social Security system for decades are having their benefits slashed to poverty levels?

    Social Security contributions should never be used for pork-barrel projects, foreign aid, benefits for illegals and the like. The problem isn’t with a shortfall in the Social Security fund. The problem is with a general mismanagement of our tax monies by the federal government. So let’s quit blaming the hard working American citizens who have paid into the system and followed all the rules enacted by laws.

    The real entitlement pigs are sitting on their lard asses in Congress and in our Executive branch of government. When running for president, Obama said he supported passage of the Social Security Fairness Act. He obviously lied.

    Be fair to America’s Senior Citizens. Support passage of the Social Security Fairness Act!

    • dchrist81

      Be fair to working Americans.

      ABOLISH Socialist Insecurity and stop STEALING from our paychecks.

    • dchrist81

      You seem to be under the delusion that Socialist Insecurity is a benefits program. WRONG!

      Socialist Insecurity is a taxation scheme; it is nothing more than outright THEFT. The so-called “benefits” are nothing more than bribes to keep the immoral pyramid scheme running.

      Socialist Insecurity is far more evil than anything Bernie Madoff or Charles Ponzi ever did. At least their clients had the choice whether or not to opt in to their pyramid schemes. Socialist Insecurity is a COERCIVE pyramid scheme. The victims of Socialist Insecurity are not even given the choice to opt out of this utter depravity.

    • RCarlin

      I’m sure that’s part of the reason ours is decreasing, to pay for those who had never paid in.

    • NickFortune

      Obama lied??? NOOOOOOOOO! He wouldn’t lie would he? He is the president of the United States; presidents don’t lie. We can keep our doctors and our insurance companies; another lie. Said he was a citizen of the US STILL hasn’t been proven to be true. Said he was a Christian but he is obviously a Muslim. Barack Obama aka Barry Soetoro wouldn’t lie to us.

  • dchrist81

    “You’re legally entitled to Social Security benefits, right?
    Wrong. There is no legal right to Social Security….

    Many people believe that Social Security is an “earned right.” That is, they think that because they have paid Social Security taxes, they are entitled to receive Social Security benefits.The government encourages that belief by referring to Social Security taxes as “contributions,” as in the Federal Insurance Contribution Act. However, in the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time. ” http://www.cato.org/publications/commentary/is-there-right-social-security

    • Rebecca Carlin

      I didn’t know this. I am struggling to stay afloat. My husband didn’t like how much my medical expenses cost us…thousands a month. So I applied for social securit benefits and was approved. Now medical bills were down to just a thousand a month (he had cancer at the same time my heart problems became more severe).
      Now, divorced, only able to keep healthy if I stay within 25-30 hours a week at non physical jobs. Well, those are hard to find for those in the 50s. Also, insurance and raises and advancement is hard to come by then too.
      As soon as I signed a lease after a divorce, they cut the benefit. I didn’t have any choice but to work more hours, even tough it made me ill. The job was always just seasonal and they elected not to keep me on even after 3 seasons, because I was always ill. I also have a muscle disease so can’t sit for long periods, or stand.
      I became homeless, staying with a man I barely knew, because it was the only place I had to go.
      I appealed the action and after many months, it was determined that I did qualify. I lost nearly everything I had, I couldn’t take it with me. I world and still work and am working on getting another degree to, hopefully, allow the kind of income I need to be stable. Without the governments help, because you sure can’t count on them, except to make your life more troublesome. Even when you paid into it.
      I got another letter today, after I signed a new lease.for a year (do they have good timing?) Saying I have 10 days to gather documents and have them back to yhem. They say I don’t qualify because I worked at the employer who paid me a little more than past employers…it was seasonal and they never kept me for more. Now, do I quit school and try to earn more, making me more I’ll and never getting to a point where I can pay all of these expenses? I will have to forfeit the lease and move again (to where?) I have rent and deposit and a forfeiture fee?) . When I had just moved, my muscles gave out and I, literally couldn’t walk. After.a couple weeks of steroids my stomach is a wreck but I can walk. Still have pain, but I can walk.
      nobody cares..seriously, they don’t.
      I know I’m not the only person that thus happened to because while I worked for Nelnet (FACTS Management), where I helped people with applications for financial aid for school k-12, there was a woman who was 62 with a child at home. She had been getting disability payments but she got a letter like mine. She sent in a copy. Her husband had just passed so she no longer had his income. We’re these mass mailings? I seriously wonder if they sent out notices, hoping nobody would contest and everyone would follow suite.
      my disability happened when I didn’t get medical care as a child. We just couldn’t afford it. I decided I would do my best snyway and while disability was offered to me, I declined. I wanted to do it myself. Then, in the middle of raising a busy famy of three, I started having dizzy spells again. Doc ordered tests and I failed the tilt table test at the last moment. He set up a surgery room, insisting that tjis should be done asap. He put in a pacemaker, got the wires in backward and had to dig them out. We knew the surg tech is the only way we found that out. The pacer was set wrong and it put me into heart failure. The attorneys I contacted said I’d have to have proof that the doctor caused the heart failure and they didn’t see much of that. So…at the hands of others I get this horrible burden. It makes me so mad when people don’t take care of their health!
      Anyway, I think we need to have this investigated like we did with the Veterans Administration. I don’t know how to pursue that. Who does?

      • Marla Calandro

        My heart goes out to you. If anyone deserves SSDI, it’s you Rebecca. I admire your resiliency and truly hope you make out ok. 🙁 Sincerely, Marla

  • dchrist81

    “We pretend (or some of us do) that our Social Security taxes have been “saved” to provide for our retiree payments, when today’s Social Security checks are mainly financed by the payroll taxes of today’s workers, just as yesterday’s checks were financed by the taxes of yesterday’s workers.”

    http://www.realclearpolitics.com/articles/2014/11/26/americas_giant_welfare_state_124769.html

    Socialist Insecurity is an immoral pyramid scheme. The only moral choice is to abolish it entirely.

  • dchrist81

    “But we’re against those entrusted with this program when they practice
    deception regarding its fiscal shortcomings, when they charge that any
    criticism of the program means that we want to end payments to those people who
    depend on them for a livelihood. They’ve called it “insurance” to us
    in a hundred million pieces of literature. But then they appeared before the
    Supreme Court and they testified it was a welfare program. They only use the
    term “insurance” to sell it to the people. And they said Social
    Security dues are a tax for the general use of the government, and the
    government has used that tax. There is no fund, because Robert Byers, the
    actuarial head, appeared before a congressional committee and admitted that
    Social Security as of this moment is 298 billion dollars in the hole. But he
    said there should be no cause for worry because as long as they have the power
    to tax, they could always take away from the people whatever they needed to
    bail them out of trouble. And they’re doing just that.

    A young man, 21 years of age, working at an average salary—his Social Security
    contribution would, in the open market, buy him an insurance policy that would
    guarantee 220 dollars a month at age 65. The government promises 127. He could
    live it up until he’s 31 and then take out a policy that would pay more than
    Social Security. Now are we so lacking in business sense
    that we can’t put this program on a sound basis, so that people who do require
    those payments will find they can get them when they’re due—that the cupboard
    isn’t bare?

    Barry Goldwater thinks we can.

    At the same time, can’t we introduce voluntary features that would permit a
    citizen who can do better on his own to be excused upon presentation of
    evidence that he had made provision for the non-earning years? Should we not
    allow a widow with children to work, and not lose the benefits supposedly paid
    for by her deceased husband? Shouldn’t you and I be allowed to declare who our
    beneficiaries will be under this program, which we cannot do? I think we’re for
    telling our senior citizens that no one in this country should be denied
    medical care because of a lack of funds. But I think we’re against forcing all
    citizens, regardless of need, into a compulsory government program, especially
    when we have such examples, as was announced last week, when France admitted that their Medicare program is now
    bankrupt. They’ve come to the end of the road.

    In addition, was Barry Goldwater so irresponsible when he suggested that our
    government give up its program of deliberate, planned inflation, so that when
    you do get your Social Security pension, a dollar will buy a dollar’s worth,
    and not 45 cents worth?” http://www.reagan.utexas.edu/archives/reference/timechoosing.html https://www.youtube.com/watch?v=qXBswFfh6AY

    • Sandra

      Why make the poor suffer more.If I new what he was planing he would not have gotten my Vote. He’s not a man of his word. He have money so what’s the deal with SS, and medical. I will b glad when he’s out of office. We the people through you would fare . May God Bless your Soul u will need it.what you see it the dark will come to light.

  • Steven Rosenberg

    None of you numbskulls think the money we have put into this black hole will ever be coming back to us at retirement? Please tell me you don’t think SS is a reasonable program for the savers?

  • dchrist81

    The liberals who created the Social Security disability mess now don’t want to fix it.
    http://www.wsj.com/articles/disabling-a-budget-con-1421367558

    “All current Social Security payments are financed by current payroll taxes.
    Trust funds are an accounting fiction that Congress invented to give the
    appearance that payroll taxes are being saved and invested.”

    http://si.wsj.net/public/resources/images/ED-AT171_3ssdi_16U_20150115183007.jpg

  • dchrist81

    The Generational Injustice of Social (in)Security
    http://www.oftwominds.com/blognov13/generational-injustice11-13.html

    “Forcing young workers to pay into a Ponzi Scheme is generational injustice on a vast scale.

    Why should young workers pay into a retirement system that will give them nothing,
    a system that will dissolve in insolvency long before they’re old enough to retire?”

    Socialist Insecurity is pure evil and should be entirely abolished as soon as possible!!!

  • Rumon Mridha

    As the White House continues their debate on how best to resolve the Social Security problem, many Americans are unaware that there could be big changes on the way. These changes could threaten the way we receive benefits and could even leave many people ineligible for assistance. The fate of Medicare, Social Security Disability and Supplemental Security is on the line. Bu zhong Yi qi wan

  • farleyj1

    Are all our leaders from the POTUS on down liars? I put into social security all my working life and became entitiled after a certain point. And am on SSDI now.

  • Jeffrey Edmonds

    I have never seen so many misinformed people in my fucking life in one spot it’s absolutely horrifying reading your readers fucking comments and to assert that Obama wanted to cut Social Security Medicare and Medicaid when in reality he expanded it to 25 million people is logic that I will never understand perhaps my IQ is too high. You money there’s other reason why anything’s getting cut in the fucken first place Social Security was solvent Medicare was completely paying for itself and tell rules were set by the Republicans that made the program start losing its grip on the black tape such as medicare’s inability to negotiate drug prices any longer. every other fucking insurance company on the planet to negotiate drug prices it’s one of the things that they do they keep the cost of drugs lower in the country but the Republicans put in place a real thing that they can no longer do this. And what is what happens? Everyone’s drug prices go through the ceiling because there’s no fucking regulation valve left lift drive up the cost of everything so we can say look it don’t work