The sad fact is there will always be lowbrow idiots, often in academic disguise, who chirp in assorted op-eds that they have a way to "fix" Social Security, or they are doing so to "save the young". In nearly all cases - like a recent one from Johan Norberg in the WSJ, i.e.
Why The Swedish Social Security System Would Not Be Practical In The U.S.
recommending a switch to the Swedish system, this is bare bollocks. As I pointed out, if in the U.S. "pensions corresponded to what the beneficiary pays in" as Norberg suggests, most of the elderly population - likely over 75% - would be in poverty and have to rely on 'Go Fund Me' pages or on charity from family to survive.
Enter now the latest iteration, in a NY Times op-ed essay entitled: “The U.S. Needs Older Americans to Work More and Take Less,” by C. Eugene Steuerle and Glenn Kramon (Oct. 28).
These two nattering nabobs of negativity argue for a higher Social Security retirement age in order to relieve younger working people of some of the burden of paying for the retirements of the elderly. They argue:
"If people took the same number of retirement years as the average person retiring in 1940, they would stop working at around 77. As such, Social Security is increasingly losing its purpose as old-age insurance, as benefits stretch well into what is becoming late middle age for many.
The young have been losing out for some time: 80 percent of federal spending growth since 1980 has gone to Social Security and health care (much of it for Medicare)"
And to make sure readers understand that the authors are really part of the 'culprit" elders, writing:
"We older Americans are not only controlling national politics; we are consuming an ever larger share of our economy’s resources through programs like Social Security and Medicare."
Two things here: First, it's easy for these two clowns to write "we older Americans" to try to blend in with the rest of us when they really don't. After all, they both have cushy jobs in academic settings (Steuerle co-founded the Urban-Brookings Tax Policy Center. Kramon is a lecturer at Stanford Business School) and likely in perpetuity. So they are assured plush economic cushions in retirement even minus Social Security. So yeah, they can afford to wait until 77 in the current fiscal era to stop working. But nurses, many high school teachers (assailed by violent students, crackpot parents about CRT and sex education, 'Moms for liberty'), as well as those in laboring capacities - like janitors, truck drivers, BK burger flippers, sanitation workers etc. ...hardly.
As for the young "losing out", the fundamental reason for that is that too many don't bother to vote! National politics are "controlled" by elderly citizens precisely because they are the ones who resolutely - come hell or high water- vote, irrespective of the election mode (midterm, general etc.) of doing so, or the form (whether actually standing in line to cast ballots, or being in a state which uses mail ballots.) While oldsters vote in typically a 60-65% proportion, the young barely make 30% - like in 2020. And many are likely to sit out the most critical election of all, next year, because they are not energized by President Biden who turned 81 last Saturday. They'd rather play the fool, let Trump and the Reeps probably get in, and make Social Security a yearly budget item.
Back to Steuerle and Kramon, they depict the typical U.S. Social Security recipient as carefree, golf-playing, medically fit scammers living off struggling young wage earners. The truth is the elderly are increasingly among the nation’s lowest-income citizens. Social Security earnings are based on wages earned in a lifetime. Wages have been stagnant for decades while the richest 1 percent have become richer by the minute.
Not mentioned by the two fiscal hawks, Social Security benefits are subject to taxation- and it's not adjusted for inflation. (In 1983 Congress voted to start taxing Social Security benefits, again reinforcing the 'reservation of power' concept). This means that an ever increasing share of benefits is being snatched away - or one might say, "clawed back" by the government. And even when recipients do get a COLA (cost of living allowance boost) it is often cancelled out by the increase in Medicare deduction for Part A.
The solution, as I have posted on before, is not to raise the age limit for retirement but to eliminate the payroll tax cap. That is, the maximum taxable income for Social Security, currently $160,200. The "payroll cap" actually prevents billions of additional dollars from flowing into the Social Security Trust Fund. That cap is currently set at $160,200 which means anyone earning at least $1 million a year automatically stops paying into Social Security once that tax threshold is reached. That threshold was attained this year at barely 7 weeks into the year (near end of February) according to the National Committee to Protect Social Security and Medicare (NCPSSM).
By the simple, straightforward expedient of
applying the payroll tax to all wages (instead of only
the first $118,500) then 66 percent of the current shortfall would be
wiped out overnight. The rest could easily be wiped out by ceasing to raid
Social Security monies and instead doing what Al Gore always suggested back in
2000 - put it into an effective "lockbox". The idiot media mocked it
at the time, but by implementing the sequestration of S.S. monies from all
other - no shortfall would emerge - assuming all wages are also subject to the
payroll tax.
Steuerle and Kramon incredibly blab:
"Nearly everyone in Washington, Democrat and Republican, socialist or MAGA, is aware that withdrawals from these programs exceed the money being put in"
Yet seniors who depend on the system they paid into still find their benefits failing to keep up with their real expenses. Indeed, a valid economic argument can be made that given the persistent specter of too low aggregate demand, Social Security benefits should be increased - not cut. Those benefits, after all, pay for billions of dollars in goods and services that otherwise might never be transacted - with the result that the GDP would contract even more.
But that is because Social Security funds have been used for general revenues. Had Al Gore's "lockbox" been instituted from the time he suggested it (2000 election campaign) there would not be any deficit in the Trust Fund now. Then there is the problem of Social Security Disability heading toward insolvency. As I noted earlier, e.g. http://brane-space.blogspot.com/2015/07/with-social-security-disabiiliy-nearly.html
Both parties are to blame for this, having cut in half the payroll taxes collected for almost two years. Now the solutions are few, either redirect revenue from the much larger S.S. retirement fund to S.S. disability or ...let the disability fund empty in which case an immediate 19 percent benefits cut goes into effect.
All this is why smart people need to do themselves a favor and inform themselves on the facts. No better book can be found right now than 'Social Security Works' by Nancy J. Altman and Eric R. Kingson, which in their Chapters 8, 10 totally demolishes this "IOU" nonsense, showing these bonds carry the same weight as those dispensed to other countries, including China. In other words, they carry "the full faith and credit of the U.S. government" and - if ever betrayed - will show this nation can't be trusted to pay its just debts.
As to the staying power and importance of Social Security, we read (p.
23):
"Social Security
transformed the nation. It eradicated what was once a primary anxiety for the
majority of Americans: the terror of growing old penniless, dependent and
vulnerable. It provided basic economic protection previously not available to
most households."
This basic economic security provided to non-wealthy elder citizens is exactly what drives Social Security's opponents
nuts. They hate to see anyone collecting a check just for breathing. At the
very least, they insist, the money ought to be "privatized" - put
into special investment accounts (with the costs of administration vastly
greater than the 1 penny per dollar rate for S.S.) and subject to the vagaries
of the stock market. Well, we saw how that worked out with 401ks back in 2008
with the financial meltdown didn't we?
Again, the optimal solution now is to remove the payroll tax cap and let the millionaires and billionaires pay more!
See Also:
Column: An exhaustive debunking of the dumbest myths about Social Security
Excerpt:
Slate paired Eric Boehm, a writer for the conservative magazine Reason, with a writer named Celeste Headlee for a dialogue titled “Social Security Doesn’t Make Sense Anymore.” The roughly 2,000-word piece contained so many misconceptions, inaccuracies, misrepresentations, and flat-out lies about the program that I almost gave up counting.
And:
by Nancy Altman | November 21, 2023 - 7:01am | permalink
Excerpt:
For over 80 years, Social Security has given American families a reason to be thankful each and every month. Over 66 million Americans currently receive Social Security’s earned monthly benefits.
Our Social Security system represents the best of American values, including reward for hard work, sturdy self-reliance, and shared risks and responsibilities. It is efficient, virtually universal, fair, portable, and secure. Nearly every American is either a current Social Security beneficiary or is likely to be one in the future. And every single one of us benefits from living in a country in which all of us join together, through our Social Security system, to provide ourselves and each other with, in the words of President Franklin D. Roosevelt, “sound and adequate protection against the vicissitudes of modern life.”
This Thanksgiving, families across the country are united in our appreciation of Social Security. If we don't give express thanks, it is because it may not come to mind, for good reason. Social Security is always there, quietly in the background, doing what it was created to do. It protects us if the unfortunate strikes in the form of disability or death of a family breadwinner. It is there if the fortunate occurs in the form of long life. We can outlive our savings, but not our Social Security!
And:
by Thom Hartmann | November 29, 2023 - 6:46am | permalink
Democratic President Franklin D. Roosevelt pushed Social Security through Congress, signing it into law on August 14th 1935, and Republicans opposed it then and have hated it ever since.
And:
by Frederic H. Decker | March 6, 2023 - 7:29am | permalink
And:
And:
Revisiting Pareto Efficiency & How It Favors Inbuilt Economic Inequality
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