This should be widely understood (which means it isn't), but it bears repeating nonetheless. Josh Patashnik writes:
the projected growth rate of health care costs is unsustainable, and
finding ways to change that ought to be, far and away, the country's
top fiscal priority. But it's not as though the chunk of money going to
Social Security and "other spending" is simply an afterthought; this is
15 percent of GDP we're talking about.
The fact that, over some time horizon, Social Security nearly "pays for itself" is irrelevant when the goverment's fiscal position is viewed in a properly consolidated manner. There is further commentary from Andrew Sullivan. I am dismayed that some left-wing bloggers are breathing a sigh of relief that the supposed "fiscal responsibility showdown," scheduled for this past Monday, turned out to be a non-event.
Obama mentioned "universal accounts" in his coverage of social security last night and I am surprised the blogosphere has not picked up on this more. This is probably Gene Sperling's idea and the key question is how much is "carve out" from existing benefits and how much is "add on." In any case doing this reform at Dow = 7,000 makes more sense than doing it at Dow = 11,000. It's even a way to boost stock prices (and possibly confidence?) though presumably it involves borrowing yet more money.
When you consider the speech as a whole, Obama is promising the largest and most ambitious attempt at rate of return arbitrage in the history of the human race.
Obama's speech was very effective but it is mostly about borrowing more money. It is odd that in a time when capital markets and attempted arbitrage have so failed us the solution is to resort to…capital markets and attempted arbitrage.
The more events progress (what's the implicit A.I.G. liability for the
government these days? near one trillion?), the more I believe that the tax cuts in Obama's stimulus plan were a mistake.
If I were Taiwan I'd feel a wee bit more worried these days.