Obama, Summers and the "Third Rail"

In a recent article, Time magazine describes the abilities and experience of Obama economic advisor Larry Summers. Summers is brilliant and tends to be a relatively mainstream economist who favors intervention where there is merit, but prefers to let markets forces work their "invisible hand" magic. The article also mentioned that the Obama administration is planning to take on Social Security and Medicare reform.

And then, perhaps as early as March, they'll launch their biggest lift with the beginnings of a plan to reform Social Security and Medicare, the two entitlement programs that, even before the economy collapsed, were threatening the Treasury with bankruptcy. By any standard, it is a massive three-month agenda fraught with political risk. The key to getting it all done, Summers says, is entering into a "compact" with the country "that this isn't just government as usual throwing money at things." When Obama unveils his annual budget in late February or March, Summers promises that the President "is going to describe the kinds of approaches he wants to take to the entitlement problems that have been ignored for a long time." Some options might include delaying retirement, stretching benefits and lifting the cap on taxable earnings. Could one of these prevail? "Remains to be seen," Summers says.