Obama Misrepresents the History of Social Security [View All]

In December, arguing on behalf of extending the Bush tax cuts for the wealthy, he (Obama) said that "it's a big, diverse country and people have a lot of complicated positions, it means that in order to get stuff done, we're going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans." Obama had made the same widows-and-orphans claim earlier to defend compromises in his health care reform law.

Obama has the details of his history wrong -- widows and orphans came later, not first -- but he also has it wrong in general.

In 1935 the House and Senate met to conference the two separate versions of the bill. Neither bill covered every worker... but the most critical difference was over a carve-out that private pension companies had demanded: If a company offered its own pension, they reasoned, they should be exempt from participating in Social Security.

FDR and the House argued that such a carve-out would undermine the universality of the program and encourage companies to offer lousy pensions to get around the law, plans that wouldn't be guaranteed to be around when the retiree needed them and would have little protection against the vicissitudes of the market, as Social Security would.

The Senate also made a straightforward argument that Obama would well recognize: We don't have the votes, the chamber's leaders told the president. It's our way or nothing.

For nearly a month in the summer of 1935, FDR stared the Senate down, refusing to accept its offer. He used every lever at his disposal. The president won; the Senate blinked.

It's a different story than Obama tells...

In the meantime, people are limping across the finish line.

Home values and the retirement security that came with them have plummeted, along with IRAs and 401(k)s. Pension plans are struggling and laid-off, middle-aged workers have pulled hundreds of millions of dollars from retirement savings to pay bills -- often taking brutal tax hits that come along with such withdrawals.

The number of people filing for reduced, early Social Security benefits jumped by 25 percent in 2009. That under such circumstances the political class is leaning toward cutting Social Security is evidence of where its power base resides.


http://www.huffingtonpost.com/2010/12/29/the-poorhouse-aunt-winnie_n_802338.html?page=5