ONE NATION UNDER AARP….a review
A book review by Dale Coberly
ONE NATION UNDER AARP The Fight Over Medicare, Social Security, and America’s Future
by Frederick R. Lynch
I was asked to write a review of this book, perhaps because I sometimes write about Social Security. But I had to completely rearrange my perspective in order to even understand what the book is about. I believe that I know that the “Social Security crisis” is essentially a lie. Lynch assumes that the crisis is real and writes about AARP’s efforts to make itself the spokesperson for the Boomers in the “generational war” that will follow from this “fact.”
Given that politics has nothing to do with facts, Lynch and AARP may be on the right track.
Lynch introduces his book by describing a conference hosted by AARP… “to demonstrate to…boomers that AARP… is no longer their parents’ AARP… A rebranded AARP is actively recruiting seventy eight million graying baby boomers. The mating dance of these organizational and generational giants has enormous implications for the nations’ political future. … half of the voters in the 2008 and 2010 elections were over fifty… and half of them were members of AARP… the nation’s fourth highest spending lobby…”
Okay, that’s why. But then Lynch just assumes “…an epic fight over…Medicare and Social Security is being forced by the ballooning national debt.”
In fact Social Security has nothing to do with the “ballooning national debt.” And Medicare so far has had nothing to do with that debt and need not do so in the future. The ballooning national debt has been caused by tax cuts, military spending, and a deep recession caused by unregulated banks “too big to fail” indulging in reckless if not criminal activity.
Social Security is paid for by the workers who will get the benefits. Medicare can and should be organized so workers pay directly and transparently for their own health insurance. The huge cost increases predicted for Medicare are driven by the huge cost increases predicted for medical care. Only a fool would decide that if we are expecting huge medical costs we need to cut our insurance. Even if we can’t control costs… and we can… we are still going to have to pay for them. The easiest way is to pay a little at a time each month while we are young and working. It doesn’t make much sense to “save” the cost of insurance now and be faced with unpayable costs when you are old and no longer working. Only Medicare allows people to pay in advance this way AND to finesse the problem of “medical inflation” with pay-as-you-go financing. But “only a fool” is what we have in Washington these days.
But IF Social Security is being blamed for the deficit, however falsely, THEN boomers will need leaders to defend it. The most likely candidate is AARP.
Lynch says his book examines three key issues:
1.) Are the boomers a sleeping political giant? Can they be organized to determine the policy that will shape the future of Social Security?
2.) Is AARP going to lead the boomers… or “stimulate boomers’ age awareness to entice them into becoming members and purchasing AARP products and services…?”
3) Will boomers and AARP “negotiate an increasingly competitive global super-capitalism… in which “working class Americans feel threatened” but “the nation’s elite — highly educated professional and managerial classes — embrace the new Post American Order?”
I may be the wrong person to be reviewing this book because I cannot get past the premise. Lynch ASSUMES “generational war,” ASSUMES that “Younger Americans will be asked to subsidize aging baby boomers’ entitlements.”
And this is simply not true. The boomers will have already paid for their Social Security and Medicare. “Younger workers” will be asked to pay, in advance, for their own Social Security and Medicare. That’s how insurance works. It is only the success of the Big LIe that has convinced them… and the Washington “elite”… that “pay as you go” means you are paying for someone else’s greedy grannies.
Apparently these people think that when you “invest” in a stock, or just put your money in the bank, it lies there breeding interest like bugs in a drawer. The fact is that ALL “saved” money has to be used… spent… by someone else to earn interest. What is important is that you get the money back when you need it. Social Security provides the best guarantee in the world that you will get your money back… and more, if you need it. That’s what makes it insurance.
It is worth noting that even the Big Liars are always promising that “if you are over fifty five, your Social Security will not be affected.” That pretty much eliminates “paying for the boomers.” It is the “young people’s” Social Security that they are trying to kill.
Perhaps the boomers, and the young people who may someday grow old in spite of themselves, will need AARP to represent them. But it is by no means clear that AARP understands Social Security or cares about the interests of old people. Instead, perhaps, it just wants a seat at the table, the power that that represents, and of course the business that comes their way as a result of being seen as the retirees representative in Washington.
I don’t know.
But if Lynch is right and AARP is the best hope we have in the game the “elite” are playing with our retirement security, then others more attuned to real politics than I am may want to start by reading his book.
And maybe they can see if there is a way to influence AARP’s influence on the phony “generational war.”
They would have this much going for them: Lynch quotes AARP CEO Bill Novelli,
“But when you get down to the level of needs, everyone needs health and healthcare and they need long-term financial security. Then, when you get down to the level of values, all generations are the same: they want a better world for their children and grandchildren; they want to leave the world a better place and to leave a legacy. These are common values, and that’s what we’ve built upon.”
And what they would have going against them is that unfortunately these values are not shared by the “elite” leaders of both parties and their sponsors, who want only what’s in it for them, here and now. And know how to lie to get it.
For the benefit of anyone who may not already have heard…
Today’s workers can pay for their own future Social Security benefits… just as workers have always done… without cuts, means testing, raising the retirement age, or turning it into welfare by taxing the rich..
simply by raising their own payroll tax an average of one half of one tenth of one percent per year while their wages are rising over one full percent per year at the same time. They will get their money back when it pays for their own retirement which will be richer and longer than their grandparents’.
For the average worker, one half of one tenth of one percent of his wages is about forty cents per week, and his boss will pay half of that.
AARP seems to be trying to play both sides of a coin at the same time. Kind of like a rich person giving to both parties. It’s all about AARP and it’s money machine.
AARP which is connected to UHC. How can you trust them to represent you when UHC is such a big part of them?
Becker
I think in politics the first rule is you can’t trust anyone. Everyone plays to “both” sides as long as they can. Then when they play to “one” side, they are still lying through their teeth.
Thing is, though, if you can play tough enough, you can force them to pay attention to you.
You and I are unlikely to ever be that tough. But it isn’t out of the question that a leader… or a consensus… could emerge that would tell AARP which side their bread is buttered on. Even some chance the Democrats would remember who brung them to the dance.
“Even if we can’t control costs… and we can… we are still going to have to pay for them”
Only 18000 of 40000 applicants get the privilege of getting into 138 insanely over-priced medical school thanks to the Association of Medical Colleges. And the American Medical Association wonders why there’s a physician shortage?
And this is simply not true. The boomers will have already paid for their Social Security and Medicare. “Younger workers” will be asked to pay, in advance, for their own Social Security and Medicare.
I think this is a bit of an illusion. Socially funded consumption is always paid for out of the production of those who are currently working. We have a pay-go system shrouded in rhetoric designed not to make it look that way.
Dan Kervick
no, pay as you go is the way that one generation pays for it’s own retirement while paying for the current needs of the already retired.
this is the way money works. i am sorry you can’t understand it.
but ALL retirement is pay as you go. you can’t eat the bread that was baked twenty years ago. you can disguise this fact by buying a stock, or putting your money in the bank, but when that “money” comes back to you, it comes from the currently working.. in the form of goods and services made “today.”
all that Social Security does is guarantee your savings will be there… not destroyed by inflation of market losses… when you need it most.
i am trying not to be mean here, but if you don’t understand this, you should stay away from banks… because you don’t understand how money works.
by the way
Social Security is not “socially funded”. You pay for it yourself.
If you don’t understand this, you don’t understand Social Security. It is NOT welfare.
You are of course free to repeat meaningless words to yourself. But you are not only fooling yourself, you are helping to destroy the best way workers have to protect a part of their own savings so that they will have at least enough to retire when they have to.
Or want to, seeing as they have paid for it themselves.
And please don’t fool yourself that when you “invest” in a stock, you are investing in “growth” or especially some material plant and equipment that generates wealth.
Any company whose primary business is “service” (retail store, bank, law firm, insurance company) “grows” by attracting new customers… exactly the way Social Security grows. In the case of SS, the “product” the new customers buy is the ability to put their money in a place that is safe from inflation and insured against certain losses. There will always be a demand for this product, if it is available.
Even a company whose primary business is a “product” like a car company.. essentially grows the same way… by attracting new customers . If the customers don’t come, all that plant and equipment becomes worthless… along with your stock
This is not to say that private investments are bad. Just that they are risky. The whole point of Social Security is insurance against the risks. It’s a good product. A business you can rely upon to “grow” as long as the economy at large grows, and at least never to fail below the same level that the economy at large.. fails.
The difference there is that an economy at large can lose ten percent, say, of it’s “value” over a moderate length of time… which you can live with. But a private stock can lose 30, 50, a hundred percent of its value… which you can’t live with if you were depending on the money for retirement.
and, for my liberal friends
the difference between Social Security and welfare is that Social Security is your money… you paid for it.
welfare is you counting on there being some rich people you can tax to provide you with their money.
this may be “fair” in some perfectly just world. but it is hard for the rich to see it that way. and it turns out that most working people don’t see it that way either.
and, i was going to point out in the context of Medicare, or “single payer” medical insurance…
this can be paid for directly and transparently in the way that Social Security and Medicare proper are paid for.
if, of course, liberals can be made to understand that a “flat” tax that is capped at the level where it stops making sense as an insurance premium… is not a “regressive tax.”
it provides a huge benefit to the poor, whose “same percent” tax is not enough to pay for the benefit they get, but is supplemented by the “same percent” tax on the less poor, who pay a little more for the benefit they get with the understanding that the excess is “insurance” against the possibility that they could one day become poor themselves.
but i have yet to see anyone, right or left, actually think through any of this. they find themselves a five or ten word jingle they can say over to themselves and imagine they are wise…. because they keep coming up with the same answer, proving that they were right all along.
“Only a fool would decide that if we are expecting huge medical costs we need to cut our insurance.”
So why are there so many fools? To answer, I suggest we follow the money.
The moneyed group can expect to inherit a lot of money from parents. Having the government involved in “honor your father and mother” is not a clear benefit. More typical workers will run into hard choices when their parents can no longer take care of themselves, so the safety net provided by Medicare and SS is obvious.
AARP may want to represent the latter, but it has a pocketbook, so it also will follow the money.
Arne
actually fools grow on trees.
the moneyed group can always give the poor some plausible lie that will keep them from recognizing their own interests.
and we can count on the “liberals” to shut their eyes and put their fingers in their ears and “demand” that the rich pay for the poor..
when the poor would be better off paying for themselves, pay as you go, with protections against inflation and other losses.
i don’t know if the rich would allow the poor to pay for themselves if they thought they could trust the liberals not to keep raising the ante. My guess is that they wouldn’t. They like the idea of the poor being desperate and dependent. And they don’t really care if a lot of them have to die to keep the rest of them sufficiently docile.
That seems to matter more to them than the obvious fact that since the New Deal, the rich have gotten richer BECAUSE the poor have not gotten poorer.
Not that many of them actually think about this. Most of them have the foresight of a farmyard bull.
Get what you want NOW. Tomorrow will take care of itself.
coberly, your account seems inconsistent. You say, “pay as you go is the way that one generation pays for it’s own retirement while paying for the current needs of the already retired,” and that “you pay for your retirement yourself” and that “you can’t eat the bread that was baked twenty years ago.”
These statements don’t hang well together. Since you can’t eat the bread that was baked 20 years ago, you can’t pay for your own retirement. Money that the current cohort of workers contribute to the public treasury is transferred directly to retirees, who use it to purchase bread that is also produced by the current cohort of workers. The retired are always directly supported by those who are working. Hopefully our social contract will remain intact, and the current cohort of workers, when they retire, will receive the same support from the new workers who replace them in the workforce.
You don’t pay for your retirement yourself. The money you contribute to the nation’s social retirement program is not locked in some safe and then withdrawn for you when you retire. Social Security is not a savings plan.
If we raise the payroll tax, that will put more money in the public treasury now, but it does not alter the fact that when we retire, our lives will be supported by some share of the real resources produced by those younger than us.
If the money that is put in the public treasury right now is used to buy bonds from the government with redemption dates for years when you and I are retired, that only means that we are creating a situation where the treasury’s general account owes money to the social security account: one part of the government owes money to the other. As with all government debts, when they are redeemed, they will be redeemed by the generation of taxpayers who are around at the time of the redemption date.
I hate to break it to you, but we have a socialized national retirement system. It’s a great thing.
kervick
i’ll read the rest of your letter after i explain money to you.
you give money to someone so that he will give you something you want. lets say you are going to want a loaf of bread 20 years from now. some guy says he can guarantee he can deliver that bread… for essentially the same price you would pay for a loaf today. but you have to give him the money now.
assuming the guy is honest, and immortal, and can delivre (hint, uncle sam), you are set. you have paid for that loaf of bread twenty years from now.
in the meanwhile uncle sam uses your money to buy bread for… the people who gave him their money twenty years ago.
this is really a basic fact about money. if you can’t understand it, you don’t understand money.
this is not socialism because you pay for the bread. you don’t count on the government paying for it while you flit around like a butterfly with nothing on your mind but sex. you pay for it yourself.
even if the person you buy it from does something else with the money until you need it back.
hate to break it to you, but your bank does the same thing. so does the company you buy stock from. or the guy you bought the stock from, hoping someone else will buy it from you twenty years from now.
i do not advocate raising the tax now to put more money into the Trust Fund.
I advocate raising the the tax soon to keep up with the needs of a growing retired population. that population is growing because the retired folks aren’t dying off as fast as they used to.
by the time you get to retirement age you will have paid for your own longer retirement. if you insist upon thinking of it as you paying for granny, and granny’s grandkids paying for you, feel free. but if you bother to look at what you pay and what you get, you are paying for yourself.
in fact BOTH are true. it’s a candy mint AND a breath mint.
sorry to blow your mind.
Just a quick thought–do people know who all these financial experts are who say SS is broke? Until I started following posters here, I didn’t have a clue that Pete Peterson has a serious problem with truthfulness when it comes to Social Security. Same thing with all those financial experts who want to sell us bonds and would really like to see the end of a self-supporting retirement system in this country. As between Coberly, whom I know, and Peterson who’s a rich guy and a stranger, I think I’ll stick with Coberly and Bruce Webb, Dean Baker, Nancy Altman and people who actually know something about SS. NancyO.
Nancy
It goes well beyond “trusting” one person’s word over another’s. When you read the various arguments and pay attnetion to the data used to both explain and support the arguments, it becomes increasingly clear that the Petersons, Ryans, Bowles and Obamas of the world want to distort the Social Security issue.
Even the use of the word entitlement is a distortion if no explanation is offered noting that one is entitled to receive a benefit that has been pre-paid over many years. Of course most distorted is the concept of “just so many IOUs” as Bush applied it to the Trust Fund. The assets of the Fund are a legal obligation of the Treasury Dept. as much so as are any Treasury notes that may be held by any public or private entity.
The first step among the distortionists is to defame the most effective social program in the US over the past seven decades. They want those Trust Fund assets and all additions to the Fund to become yet another source of mangement fee based income. The Fund earns interest without any fees attached. Your best investment advisor or fund manager cannot make that statement.
The Northwest Plan for a Real Social Security Fix was based on an argument about the ‘fixability’ of SS put forth by Coberly and modified (mostly in its framing) by contributions by Arne and me.
For simplicity it is presented as a long term fix for FUTURE gaps between income and scheduled benefits, but this is actually only true for the NW Plan in relation to combined OASDI. In its more complex form the NW Plan addresses OAS (Old Age/Survivors) and DI (Disability) separately and recognizes that DI is by standard measures already broken (in SS terms out of ‘actuarial balance’). In fact under standard methodology it should have been fixed starting in 2006. On the other hand OAS in isolation still passes the ‘actuarial balance’ test. But there are very good practical and historical reasons for treating the two funds as combined OASDI and so designing a unified combined fix. The ultimate effect is that the NW Plan fixes DI retrospectively and OAS prospectively and puts combined OASDI on a nice steady line to ‘sustainable solvency’ with the least amount of disruption to take home pay and so living standards possible.
Dale has actually revised the spreadsheets for 2012 numbers and when I am not quite so dead ass lazy I will convert them to postable form. At which point careful observers will see that in real terms the NW Plan does not really ‘prefund’ much at all, instead it serves to install a self-adjusting autopilot to a plane that is already flying through the air under minimal control. The end result being permanent pay-go, i.e. Steve Goss’s ‘sustainable solvency’. (Though the nominal numbers do odd things.)
Nancy
I will never lie to you.
actually, i try very hard not to say anything that has to be taken on faith. you can check the arithmetic, and you can check the “logic.”
i shudder a little about that last bit. everyone thinks his logic is the only logic that makes sense. but in the case of my case about SS, i am reasonably confident that the logic is the ordinary logic that wouldn’t get you thrown out of, say, a physics seminar. that is you check the words for their “operational” meaning… what is going on in the world that the words point at… and you don’t waste a lot of time trying to attach emotionally laden “special words” to quite ordinary and simple relationaships.
and you don’t make up specious analogies.
the problem i have with explaining that a one tenth of one percent increase in the tax from time to time as called for under “short term actuarial insolvency” .. is that no one wants to listen to “just that.” “that” is unarguable. so they go off into flights of fancy and abstract nonsense about “regressive taxes” on the one hand, and “socialism” on the other.
just the facts ma’am.