A few folks e-mailed me about this item from Mike Allen's win-the-morning Playbook:
--ADMINISTRATION MINDMELD: The virtue of action on Social Security is that it demonstrates the ability to begin to affect the long-run deficits. Social Security isn't the biggest contributor to the problem -- that's still health-care costs. But ti could help a little bit, buy time, and strengthens the odds of a political consensus behind other spending cuts or tax increases. Most importantly, it would establish more CREDIBILITY with the MARKETS. The mood of the world at the moment (slightly excessive, from the administration's point of view) is that if you don't do anything with spending cuts, it doesn't get you credibility.
Sure makes it seem like the administration wants to cut Social Security, doesn't it? By chance, I was at the same deep-background briefing where Allen had his "mindmeld," and I have to say, I don't think he's got it right. After reviewing my notes and a recording of the conversation, here's my take. (The rules for this conversation were no direct quotes and no identifying the senior administration official in question.)
Allen references a part of the conversation that concerned the Deficit Commission and what the official might know about its agenda. The official believed that the largest consensus was forming around an undefined plan to support the long-term solvency of Social Security and was discussing why that hypothetical plan might help bolster political will for other deficit-reduction ideas. The official would note that Social Security is already solvent for decades.
The most important omission from Allen's item is that the official concluded the conversation by noting that Social Security is not a generous benefit compared to other public pensions around the world and that cutting benefits, even years in advance, would be difficult to justify. More symbolically, Allen doesn't mention that the official cited Paul Krugman when talking about Social Security's contributions to the deficit. Finally, the reason the administration official was interested in credibility before the markets is so the government could borrow more money for temporary fiscal stimulus.
There is some appropriate texture in Allen's report; when the Politico reporter writes "mood of the world," that suggests correctly that when discussing the expenditure cuts-focused strategy, the administration official was talking about groups outside of the administration, not the administration's own views; the official implied that this view was held by Republicans and the new British government, two institutions whose positions differ substantially from those of the Obama administration.
It's hard to dispute Allen's interpretation without being able to post direct quotes, but hopefully this adds some much-needed context. At least, let it be a lesson to take these unsourced items with a shakerful of salt.
-- Tim Fernholz
