Wednesday, November 05, 2008

Obama could want to index or "means test" social security benefits to pay for health care, debt

Futurist and economics writer Tom Barlow as an alarming prediction on AOL’s “walletpop” today for retirees.

He has a story called “Crystal Ball Time: Where Will You Be in Four Years,” with a black-and-white crystal ball that looks like it came from the Coen Brothers’ movie “The Man Who Wasn’t There.” Barack Obama (and Joe Biden) won’t be able to fix everything and will have to call for more sacrifice, from retirees, in order to deal with the scarcity. And Obama, because of personal left-wing beliefs, may be more inclined to do so openly than John McCain and Sarah Palin would have been.

He predicts that money to pay for minimal universal health care for the insured and to deal with the escalating national debt will come from retirees receiving both social security and other income. He predicts that social security benefits will be indexed down and reduced for retirees who have pensions or other income from annuities or various investments. This sounds like a reiteration of libertarian warnings that social security will not be there forever even for current retirees.

One trouble with this idea is that defined benefit pensions often are reduced by “social security offsets” already.

Social security benefits, at least for persons already retired, have always been a third rail; but maybe not forever.

But he thinks that the issue of spending v. need will become very pressing by 2012 and will force more socialistic “shared sacrifice” thinking. Remember, social security has changed to a partially self-funded annuity already, and proposals like Barlow’s will only lead to renewed “Cato Institute-like” calls for privatization.

He also thinks that stock portfolios will recover but that interest rates will rise.

The Walletpop article appears on AOL here. And the article will pop your wallet open.

The personal website for “doppelganger” Tom Barlow (himself a retiree) is this, and it indexes to other publications. Check also his "Blogging Stocks" column here.

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