I want to follow Dean Baker in dumping on the Robert J. Samuelson Monday, 9/11/19 WaPo column on “The Democrats’ fairy-tale campaigns.” He may be right that lots of proposals have been put forward with no clear accounting of how much all of them will cost, but RJS also fails to recognize some might save money, such as a properly structured universal health care program that might move us more towards the costs we see in other nations. Of course, RJS regularly uses this column to call for cuts in Social Security benefits, so that some of these candidates dare to call for increased such benefits has him really riled up. How dare they!?!?
Aside from reminding that RJS has regularly been misguided on Social Security projections, he goes after him for not noting the role of patents and other regs supporting monpoly power, especially in the health care sector, including supporting outrageously high doctor salaries.
As it is, RJS whines about the size of budget deficits and claims the next president will need to increase defense spending. This latter is not obvious. Trump has done a lot of increasing it, and restoring damaged US alliances does not obviously call for more spending. How about just behaving better and making outrageous demands of US allies, including a stupid trade war?
The additional item I see him not mentioning involves taxes. Implicitly no tax increase can play a role to pay for new programs, and this is how he almost always how he addresses Social Security, where what must happen is benefit cuts, no tax increases. But nearly all the candidates have called for at least undoing the large Trump tax cuts, which have been quite unpopular, and most also call for going further with increased taxes on the wealthy beyond what we had earlier.
I shall add here that today the NY Times in an article by Jeff Sommer is adding on to the standard hysteria over Social Security, although there is not really much new. The big news is that indeed in 2020 the long built up assets of the SSA will start to get drawn down, with a projection of those getting used up by 2035. This is not news. Sommer does go on and on in detail about how if nothing is done, SS recipients will face 20 percent or so cuts in SS benefits. I must differ with this. Of course, that will not happen, but as has long been the case the calculation does not account for the fact that benefits will rise. By my calculation, if such a cut were to happen, it would put real benefits back to about where they are now in real terms. This is an overblown story.
Back to Samuelson, I shall conclude by noting that he makes some outright incorrect comments. In particular he claims that “Government does more things for more people than ever in U.S. history.” No, sorry RJS, that is just false. Social spending as a percent of GDP peaked in 2010 as automatic stabilizers were kicking in big time. Yes, SS and Medicare and Medicaid have now gotten above 10 percent of GDP. But even with no changes, the much denounced SS increase will only amount to another one percent of GDP. This is the coast of the baby boomers retiring, not that big of a deal. Yes, there is a problem in health care, but this calls for more fundamental change, indeed, probably a universal health care coverage system that gets costs under control like other nations do.
Barkley Rosser
Rosser,
Since I mostly agree with you, I hate to begin by suggesting you are a little over impressed by the fact that a future benefit cut will merely bring future benefits down to the real value that they have today.
This might be fine if “real value” meant what it seems to mean. It might be fine anyway if there was any reason future retirees should forego participating in the general rise in real incomes.
I recently upgraded my computer services to keep up with current requirements to participate at all in what is becoming a computerized economy…including accessing Social Security services. The much higher costs of the upgraded system are clearly not a consequence of “inflation” as represented by those ho think the CPI is overstated. In fact it is a “real” cost of increased value.
Unfortunately it is a cost that is unavoidable if one is to live in the society we live in, just like owning cars, refrigerators, and indoor plumbing are real costs of living in the late twentieth and twenty-first century, not “mere” inflation.
Just to be hooked up to a high speed internet connection costs me 10% of my Social Security income, not to mention the cost of a new computer… also an improvement in my “standard” of living and not “inflation,” but still something i cannot live without in today’s economy.
So, okay, you don’t think cuts in benefits are that big a deal. So I am wondering if we should peg our expected standard of living … that is base the CPI on the standard of living of the stone age, the dark ages, the nineteenth century, 1936, 1952, 1980?
And are you aware you are agreeing with the people who want to cut Social Security… to a size they can drown it in the bathtub?
Or do you think the people ought to be allowed to pay an extra dollar per week per year so they can expect to retire at an income level where they are allowed to live more or less like their neighbors?
Honestly, does anyone take Robert Samuelson seriously? Maybe if everyone ignores him, he will go away.
SW
no, he won’t go away. the people who pay him know that repeating a lie enough times turns it into “everyone knows…”
Rosser,
regarding ” The big news is that indeed in 2020 the long built up assets of the SSA will start to get drawn down, with a projection of those getting used up by 2035. This is not news.”
indeed it is not. i wrote right here on AB a few weeks ago that the Trustees Report next year will contain for the first time since the shouting that “SS is broke” a finding of “short term actuarial insolvency.”
This is not as bad as it sounds, but it will be made to sound much worse.
strictly speaking the Trust Fund has been being drawn down for some years now… which is exactly what it was designed to do. but try to explain that to anyone.
my reply to Sommer:
All we have to do is pay an extra dollar per week per person per year. After next year It will be more like a dollar and ten cents. And if we wait another year it will be about a dollar and twenty cents for the first few years, then a great deal less than a dollar per week on average. This would keep Social Security solvent essentially forever. The Deputy Chief Actuary at Social Security agrees that this is true.
This would mean people are paying more, but not a lot more, for their Social Security. That is they would be setting aside enough money through Social Security to save enough to live on when they will no longer be able to work. Don’t fool yourself: working longer is not going to be possible for at least half the population. And since they will have paid for it themselves, there is no reason they should not be able to retire if they want to even if they “could” work longer.
The Social Security Trustees Report says that about a one and a half percent (about fifteen dollars per week) one time “immediate and permanent” increase would keep SS solvent for the next seventy five years.This would not be a real burden, or even noticeable once people got over their overreaction to the increase. Even the about twenty dollars per week that would come in 2035 or so if we wait to the last minute will not be a real burden. Wages will have risen by about two hundred dollars per week by then. Again, no no one would think twice about it if it weren’t for the Big Liars making it sound like some kind of tragedy: “You are going to have to put aside an extra twenty dollars per week, out of your two hundred dollar raise, in order to have enough to live on for the extra two to four years you will expect to live.” [Dollar amounts are in present terms. SS pay as you go financing automatically takes care of inflation and real interest.]
The thing is they keep talking about it as if “we” — that is “the government”– can’t afford it. But we — that is each of us — certainly can afford it.
But “they” want to talk about it as if “the government” was going to have to come up with trillions of dollars. And they call it “socialism.” Meanwhile the “progressives” want to make it socialism by “making the rich pay” for it.
Social Security was carefully designed to NOT be welfare. It’s just the worker saving enough of his own money to pay for his own food and shelter when he will be too old to work, and insuring himself against the possibility that otherwise he might not be able to save enough. The government does not pay for any of this. The “rich” do not pay for more than they will get back with reasonable interest, including its insurance value.
Since you have been lied to intensively for at least the last thirty years, you will not easily understand this or believe it. But it can be proven with attention to real math and real facts. There is no hope the people will understand it if no one tells them. The question is are you willing to do the work?
SW,
The problem with RJ Samuelson is that lots of people are not paying close enough attention. So when one of these people who does not already know walks in and picks up a Monday WaPo and sees RJS doing his anti-SS stuff, they take it seriously because he is supposedly a liberal, more or less, writing for a supposedly more or less liberal newspaper. So, wow! he must be taken seriously, and maybe go along with what the Very Serious People (VSPs) of both parties say and go for that magical deal in the sky that nobody is remotely talking about that involves raising taxes while cutting benefits, except as noted, RJS seems to have dropped the tax part of it, buying into GOP lines that taxes can only be cut, not raiksed (sorry about that, Coberly), soit is time for all those spoiled old farts to just turn over their darned SS benefits, the sooner the better.
Rosser
I think I agree with you entirely here. Not sure what you are sorry about w/respect to me.
I have noticed that no one wants to talk about raising the payroll tax, even a dollar a week. My guess is that even though most people can add and subtract, they have no ability to think quantitatively. They think in nightmare logic. “A tax increase???! That’s a non starter!” “But it’s only a dollar.” “You are just a shill for the rich!”
because.. while the very liberal people ARE willing to talk about a tax increase, but only if it’s “on the rich.” Because the poor poor are not allowed to pay for their own groceries. It would hurt them so. Next up, government agents at the check out line examining your tax returns. If you made more money than the guy behind you, you have to pay for his groceries.
I realize that makes me sound like a shill for the rich indeed, but I can understand why they are so afraid of what they call socialism.
As long as the left is unreasonable, the rich will fight for their lives. And so it goes.
Now me, I’d keep SS the way Roosevelt designed it “not a tax on the rich, not the dole, but insurance for workers paid for by workers. It has worked well for a very long time.
IF you want to tax the rich, fine. If you want universal welfare, fine. Just don’t call it Social Security.
nothing personal here. I am talking to the great masses behind you, and the reporters and commentators who cover them. What? They are all watching reruns of The Apprentice”? Figures.
It is true that we have been bombarded by anti-social security propaganda for well, eighty years, but I really thought that most people understood that RJS is an idiot by now, not just about social security but in general. And by the way, who believes he is a liberal? And if he is a liberal just what is a liberal?
So why not a national ad campaign in the voice of American Workers? Explaining the situation.
“FDR gave us the most successful social insurance program in the history of the world. It has transformed the way people retire in the this country and allowed hundreds of millions to live dignified lives after their working lives are over. And it is all paid for by us. The working people of America. Thirty years ago Congress recognized that the huge baby boom generation would present a challenge to the program when it retired. So it created the trust fund and raised everyone’s taxes to pay for it. The trust fund was designed to pay for the retirement of the boomers during that period when they were retiring and there weren’t yet enough workers to pay for their benefits. This plan is working perfectly. The boomers are retiring and the trust fund will now be drawn down. You will hear a bunch of hysterical voices screaming that Social Security is broke. They are lying. Social Security is using the trust fund exactly as it was designed to be used. They will say that there is a huge shortfall! Well, the American worker pays for his retirement. And in order to continue paying for our retirement we will need to pay an additional $1 per week out of our paychecks. Don’t worry Mr. Politician, WE GOT THIS. But they say it is trillions of $! How can that be? Well maybe because they are dishonest and a dollar per week from all of us forever could add up to a lot of money.”
If that script were read by steelworkers and plumbers and mechanics and farmers and teachers and truck drivers and played in heavy rotation I think it could have an impact.
SW
sign me up.
SW
if you can make it happen or find people who can it would be exactly what we need. as for the Trillions of Dollars: take 200 million people times fifty thousand dollars per year average income, times seventy five years and you get seven hundred and fifty trillion dollars…. which is how much money we are going to make while paying that 13 Trillion dollars for the extra two to four years we are expected to live longer than our grandparents.
Big numbers are scary. The Liars like them because they scare people, and because the reporters can’t do arithmetic. And it never occurs to the people that THEY can.
Divide the scary deficit by the amount of money two hundred million people will make over the seventy five year period and it turns out to be less than two percent of our income.
So the question is how much is knowing we will have enough money to eat and keep a roof over our head and enjoy a few of the little pleasures in life when we can no longer work?
I guarantee you won’t miss two percent of your income while you are young and working. How much would you miss not having it when you are old and can’t work?
Well, here’s a hint: Watch out for the scary bit: Two percent of your fifty thousand per year is about one thousand dollars per year. So you save one thousand dollars per year (in Social Security where it is safe from inflation and market losses and even personal bad luck) for about forty years. that’s forty thousand dollars. Spread that over the two “extra” years of retirement they are planning to take away from you. That’s about twenty thousand dollars per year. Think you can live on that?
Answer is yes you can if you have been reasonably prudent. Actually the answer is even better than that. Because your SS savings account is earning real interest, you will actually have about twice that forty thousand saved up (in Social Security) so you can probably expect to have forty thousand a year in “benefits” by then. And if you are among the lucky ones who will live longer, the “benefits” will continue as long as you live.
As for the scary part: if saving an extra thousand dollars a year seems like a burden to you, you need to sit down and think about how you are going to pay for what you need when you DO get old and like most people haven’t saved that much.. or saved it and lost it “in the market”?
It’s because most people don’t save enough…or can’t… that Social Security has to be “mandatory”… a “tax.” People….and oh, Lord, I’m one… are like two year olds. They don’t want to be told they “have to” do something or not do something, but if someone doesn’t “make them,” they can get into big trouble. I know. I’m like that too. But the people who tell you that “you got to be free” and “the market” will save you, are like the nice man who says “want some candy, kid?”
as for the scary bit: a thousand dollars per year is twenty dollars per week. Is that a little less scary? What if I told you you don’t have to come up with it all at once? If you start now you can save just an extra one dollar per week per year. And by the time you get to that twenty dollars per week, in twenty years or so, your income will have gone up by more than two hundred dollars per week. So you’ll have more in your pocket after paying for your retirement than you have today.
Sorry to take so long. But if you don’t take the time to look at this you will be at the mercy of the man in the suit who sells you a fairy tale with a cute sound bite you don’t have to think about.