Obama: Entitlement Reform May Begin With Social Security

President Obama suggested today that, when health care reform is behind him, he may set his sights on Social Security:

“I think we’re in a position to be able to, either at the end of this year or early next year, start laying out a broader picture about how we are going to handle entitlements in a serious way,” Obama said. “It may start with Social Security because that’s, frankly, the easier one.”

In a long and technical interview with the Washington Post, Obama addressed several of the challenges health reform faces, including the question of financing. Though he’s all but ruled out the possibility of covering the cost of legislation by capping the tax exclusion on current employer provided health care benefits, Obama said he’s open to the possibility of taxing part of the additional, future cost of those benefits as the price of health insurance inflates.

But for the most part, editorial page editor Fred Hiatt stuck to the famous Hiatt hobby horse of entitlement reform.

CBO and other economists say that, as you say, you can’t solve the fiscal problem if you don’t solve the health problem. But they also say that solving the health cost problem is not sufficient, that a big part of the issue is demographics and aging. And so — and as you know, the 10-year budget shows the government raising 18 or 19 percent of revenue in 2019, and spending 24 or 25 percent…. So can I ask you how you think about the timing and politics of closing that structural gap?

Aging is crucial, but mainly because providing health care to the elderly is expensive, and right now a huge percentage of elderly people in the country are on Medicare–a single payer, government-guaranteed risk-pool. And it’s a very risky pool. Critics say that‘s the key to entitlement reform, which can’t happen in absence of broader, systemic health care reform. And Obama’s suggestion that Social Security should be on the block for the sake of political expediency could set off a storm among progressives.