Macron Bypasses Parliament With ‘Nuclear Option’ on Retirement Age Hike
Dale Coberly talking about the French President Macron forcing retirement reform and what could result if US Social Security is paid for by taxes on the rich in income.
Macron Bypasses Parliament With ‘Nuclear Option’ on Retirement Age Hike, commondreams.org, Jessica Corbett
[The following is copied from article cited in link, with some editing by me. My short comment is below.]
“Amid protests against French President Emmanuel Macron’s unpopular plan to overhaul the country’s pension system, his government on Thursday chose the ‘nuclear option,’ opting to use a constitutional procedure to force through reforms, including raising the retirement age from 62 to 64, without a vote in the lower house of Parliament.
After announcing the government was invoking executive privilege, French Prime Minister Élisabeth Borne “faced scenes of anger and unrest in the National Assembly,”
“Far-leftMP Rachel Keke of the leftist party La France Insoumise stressed that “what the government is doing makes people sick of politics. It should improve people’s lives, not destroy them.
“French trade unions have led national demonstrations and strikes against the overhaul since January. While protesters were oscillating “between rage and resignation” earlier this week, they filled the streets of Paris. The General Confederation of Labor (CGT) said in a statement that “this reform is unfair, unjustified, and unjustifiable, this is what millions of people have been asserting forcefully for weeks in the demonstrations, with the strike, and in all the initiatives. These massive mobilizations are supported by a very large majority of the population and almost all workers.”
“The only response from the government and employers is repression: requisitions, police interventions on workplace occupations, arrests, intimidation, questioning of the right to strike,” the confederation added. “We won’t let it happen! What the CGT denounced as unfair yesterday is even more so today!
This can only encourage us to step up mobilizations and strikes, the fight continues!”
end of quote.
This is what happens when people rely on “the government” to pay for their pensions. What the government pays for, the government can take away.
Of course, the government can take anything away, but it is more difficult for them when the people know they have paid for their own pension themselves, as is the case of American Social Security.
In the “government pays” system people forget who is paying and where that money comes from. “The rich” pay the most in a “progressive tax”… which is the only possible way to pay for general government expenses… and as long as the people don’t understand that “the rich’ resent paying for their (the people’s) personal expenses, they are happy to let the rich pay. Until the rich decide it’s time to stop paying.
The enemies of America’s Social Security have worked for over eighty years to convince the American people that Social Security is welfare … which the people hate. They have by now largely succeeded. And “The Left” has recently decided that they prefer a welfare system that the rich pay for … thus helping to convince the people … mostly “the young” who have no idea how Social Security works (everyone is paying for their own pension … or at least their own pension insurance … paid for by the workers themselves and not by the government)..that Social Security is unfair, and “the old stealing from the rich” while “the government … both Left and Right claim “we can’t afford it’ .. . with the Left demanding the rich pay for the needs of everyone, whether they have paid for Social Security or not.
Because the people, and most politicians and pundits have no idea how Social Security works, all “debate” about Social Security is conducted by people who have no idea what they are talking about. All they have is the lies they have heard all their lives with … for some reason … no effort from anyone to tell them the truth:
Social Security is not paid for by the government. It has nothing to do with “the Debt” or “the Deficit.” And the workers can continue to pay for it forever simply by raisng the amount they pay as their needs increase. This would amount to about a dollar per week increase in the tax over a few years to account for increasing life expectency and somewhat slower wage growth.
I have been dumfounded by the response to this: Americans, especially on the Left are angered that anyone should suggest they pay a dollar more for their Social Security, demanding “the Rich” pay (a great deal more) “because they have more money.”
Be careful what you ask for.
Huge political mistake on his part.
I hope so.
If Macron were honest or not-stupid, there are three ways he could pay for French retirements without raisng the retirement age…which is a death sentence for some workers, and cruel for most, beides being stupid economics.
1) pay for it by raising taxes. the amount would be unnoticeable..about 1% of GDP across the board (all taxpayers) over the next 30 years…and then no more.
2) cut benefits for current and future retirees gradually. this would also be relatively unnoticeable and far fairer than raising the retirement age…which,as said, is a death sentence for some workers. not fun for retirees, but manageable especially if the payout formula is adjusted to favor the poorest workers. this would be better done by a tax on benefits than a “means” test or strictly based on reported earrings…which can hide a number of problems.
3) introduce a worker paid “tax” like Anerican Social Security, so the workers know they are paying for the benefits, including retirement age, they want or need. This would need to be done gradually because people would not understand an immediate and all-at-once tax increase even if it was only 2% and they got it back in the form of a longer and more generous retirement. they would panic and insist uppn doing something stupid like “make the rich pay” or “raise the retiremtn age”.
The cost of retirement is the same as the cost of not retirement..it is the cost of food and shelter for the time you will be living after you can no longer work…or even if you are still working. it makes no difference to the economy whether the money comes fom you or “the rich” or out of your mattress or from your savings account or private investments or government taxes. it’s not even really a matter of “who pays”. the workers will pay in the end however the “economy” adjusts to the way we keep books. worker-pays is just the sanest way to keep track of who pays and remind ourselves there is really no free lunch.
If Macron were ho
note to a friend:
the young pay for the old is NOT “the mechanism”. if it were, tthe government would just tax everyone and use the money to pay for pensions for those “eligible.” there would be no need to keep a record of who paid how much toward their eventual benefit, and pay that benefit according to how much they paid in, that record… that accounting… IS “the mechanism.” just as if you put the moey in the bank. the money is not kept in a drawer…but the record of the money is. Those “wothless iou’s” ARE money. That is what money IS. whether they are worthless or not is a question of the good faith and credit of the government…which is exactly what the cash in your wallet depends on.
so, to make it clear: you pay for it with cash (or check or elctronic tranfer of “credit”)…the government gives you an iou in the form of an accounting entry and a well-regulated schedule of repayment according to what you paid and economic conditions (just like bank interest or stock values and inflation or insurance terms)…and when you reach the contract date pays you pack in the form of inflation adjusted cash check or electonic transfer of credits.
as always, sorry for typos. you can figure them out. i have to go. will be back later to answer questions or try to explain better.
I absolutely agree that high income folks should not subsidize low income folks’ social security anymore than they currently do and that it has nothing to do with the deficit and merely helps fund the debt. It is one of the few places where I absolutely part ways with the left and I have and will make it a point not to support politicians who want to transform social security into an entitlement income transfer scheme. I am collecting now and will have to reach my mid 80’s to get back what I paid in but that is a small price to pay for insurance against living too long.
your time to pay-back sounds a little wrong to me. Are you counting “real” dollars, or “present value”?
even if you are at high income level you should be getting back at least your money plus inflation…and any savings scheme must get back inflation first before it gets “real” interest..which in the case of SS is paid automatically by growth in the economy and is the last time i looked about 2% for SS which is just about the discount rate for safe invetment used by people who want to say SS pays back less than you paid in. they forget that you can’t find a “safe” investment that returns their chosen discount rate…and since SS is insurance, the poorer workers are paid back considerably more than that 2%. and if you are an employee, your employer doubles what you paid in…it being a pointless argument whether this is “really” your money or “really” the boss’s [so he an call it a jobs killing tax when that is convenient to his argument of the day.
point is, as you notice, you get the security of knowing you will get back “enough” (arguably) when you will need it most. which don’t get with other investments.
which would be worth paying for even if you got back less than you paid in.
I have just reading this AM about the labor movement after the US Civil War. When the boss class’s Pinkerton’s were not enough the Federal government sent in state militias and eventually regular federal troops.
It has been a long ride for working stiffs and it is far from over.
Payback timing really should net out disability funding. Part of you SS tax funds a true insurance program and not collecting disability is not a negative event really. If you are never disabled you should never expect to recover that “premium”.
i worry that it may be over…just not in the way we would wish.
if i understand you, i think you are right. i’d have to look again to see if the nnon partisan expert liars are counting disability insurance as part of the cost against the retirement benefits. i am sure they do not count the old age part as insurance…treating SS as if it were an ordinary investment and ignoring the insurance benefit.
So I may be a little off and I am certainly counting both what I have paid in— I had a number of years where I was paying in on self employment and would have been paid as income what my employer paid in for social security— and my employers paid in considering imputed interest as balancing out inflation. I did wait until 70 to start collecting, but I am still paying in some and I am fortunate enough to be paying taxes on most of what I am receiving. Plainly double taxation as interest does not account for 85% of my benefits. That being said, as noted I am grateful to have the insurance against out living my money even if things were a little dicey when raising and educating my children, paying for my house and saving for retirement. I surely would not want to depend on the Bezos and Musks of the world to support me although I believe my daughters would be able to feed me something other than cat food if I live too long. I could probably make it to 80 on just my savings if I worked at least part time but I would have to ratchet down my lifestyle which would also mean I would pay a lot less in taxes and would not boost the economy as much as I do currently.
it sounds to me like your case is one of those reasons I hate “averages”..expecially in Social Security calculations. there are too many different cases for an “average” to bee meaningful.
i did a careful series of calculations a few years ago and i convinced myself at least that even high income earners who paid both the employee and employer share came out just about even, if they lived the expected life expectancy..even as in real interest over one percent but definitely including enough to cover inflation. which is one reason i don’t support raising the cap.
Macron did what he pledged to do. There will be a political price, but I think he does not care as much about that as some may imagine. He got re-elected already I just have a hunch he’s a rare bird that is going to walk far away when this term is over. Whether it was wise or not, is a different question.
pledged to who? that’s the trouble with “government pays” which is the point of my essay.
if Bush 2 promised to “save Social Security” and cut benefits or raised the retirement age so people who weren’t paying attention found themselves dirt poor or worse when they reached retirement age…without knowing why… you could say he “did what he promised.” “See, Social Security is still on the books. I saved it, see.”
He publicly articulated almost precisely this “reform” prior to his recent reelection. Again, not arguing its wisdom, just that he said this was his intention and also got elected. I lived and worked there from 1997 to early 2001. Several of my French colleagues blew right through the normal retirement age and kept working. This surprised me as I imagined there was a lot of incentives and controls not to do so. I was wrong.
there is no reaon to stop working if you are healthy and like your job and don’t want to do something else with your life besides make money for the boss.
as for what Macron promised..i don’t actually know…but i can guarantee the people did not understand it…especially did not understand what it could mean if they reached retirement age an that pension wasn’t there.
also…maybe a “majority” voted for it, but there are two things about majorities… a lot of the majority don’t like “social security” because they are sure they can do better and hate taxes. and the rest of the majority really do not understand anything… they are told lies and stampeded into voting against what they really want and need if they only knew what it was.
As usual Mr. Coberly great comments on this topic. You and other are correct in that few understand SS due to years of misinformation.
Approved your comment. Was wondering why you needed approval Minor stuff. Good to see you again.
good to see you again too. hope all is well with you and family.
typo..”raised the retirement AGE”
The problem isn’t the government taking away pensions. The private sector is perfectly good at taking away pensions, and they’ve been doing it for decades. We all know that a contract is a sacred trust as long it is to the advantage of the party with all the money and power.
i agree with you. but it seems as though up to now congressmen have been afraid that the people had the power.
but power takes knowledge.
one other thing, with worker paid, you paid for it and there is no reason why you can’t pay enough to provide for a longer or richer retirement. of course you’d have to convince the majority of voters that would be a good idea. (it would. trouble with private pensions has made SS more necessary even than in used to be. worth paying a little more for.)
I wish all comment threads on Social Security were as intelligent and sane as this one has been. Thank you all.
It looks like I spoke to soon. or just a coincidence that allthe intelligent people commented on Sunday. and Monday they let in the clowns.
If France can get away with raising the minimum retirement age (to a couple of years below the minimum age in the US) by an executive order, and that energizes voters sufficiently, then sooner than you can say Jacques Pompidou they will vote in a leftist who will reverse it.
We wouldn’t be able to do that.
They appear to be more interested in reducing income inequality more than we are, if they are not doing payroll deductions to fund their form of Social Security. We wouldn’t be able to do that.
It is impossible to have a coherent debate on this issue when two fundamental premises are wrong.
US SS is an individually self-funded retirement fund. Present workers are paying for existing retirees and future retirees but not for themselves. It is a general fund which is vulnerable to shifts in demography. If you want self-funded retirement, do away with SS, but people have demonstrated that they are incapable of funding their own retirement.
French workers know very well that they are paying social security taxes. They know they are paying healthcare taxes as well. I assume that almost no one here has worked in France and is simply making stuff up to support a view.
The rich don’t pay taxes, at least not at the rates you believe. The wealthiest pay minimal taxes far below the nominal income tax rates. They benefit disproportionately from the US system of laws, social structure, infrastructure and defense and pay a trivial amount to support all that. America has the worst Gini idex of developed nations; it is on par with the DRC!
Now, you can debate.
Mmm, need some edits.
…three fundamental premises…
US SS is NOT an individually self-funded retirement fund.
You got my attention. Make your point. SS is funded by individuals. Although not brought up, 40% of Medicare is paid by the Gov.
Past SS payments are credited to individuals by the Gov and, debited to the Gov. when paid out. The same holds true for interest.
asserting that you have the fundamental principles is not the same as knowing what you are talking about. you apparently don’t understand ordinary banking in which people “invest” their money and when they come to withdraw their money=plus-interest the actual cash comes from “younger_ (more recent) depositers who are investing their money for the same reason…hope or faith of getting it back later…from the investment of still-later investors.
the enemies of SS like to call it a Ponzi scheme because it depends on those later investors to pay the earlier investors…but that is exactly what ALL investors rely upon.
American Social Security gives each investor an accounting entry…which is an iou which is what all money is. when that investment matures the accounting entry is turned (ultimately) into actual cash…which the investor turns back into the economy exacly as happens with a bond holder or a stock holder. soe details differ…as they differ between other investment vehicles…introduction of which to meet new needs has always been a feathre of the financial market.
you are stuck with a simple minded understanding of finance…and, apparently…economic justice…which does not work well and has not worked at all since the Great Depression.
I think I have a better idea than you of how much taxes the Rich pay. they certainly pay more than you, and rich as they are they cannot pay for all of your personal needs. there is a good deal of abuse of the tax-structure, and that is a problem we should be working on..but just stating that it happens is not exactly an argument for destroying Social Security, which works, and replacing it with some bankers fantasy, or some Leftist fantasy.
ordinary (private) investments are also vulnerable to shifts in demographics. you might want to learn about that…you could probably find some evidence in back pages of the Wall Street Journal.
Then go back at look at what you wrote..not a coherent argument to be found. only assertions leaping to conclusions that turn out to be sound bites from successful propaganda.
I was not making an argument. I was correcting errors in the debate. If you were not biased and blinkered, you would take time to verify the facts and then come back. Instead you are simply spouting vitriol because the facts are not aligned with your personal world view.
you missed my point…because you are too riled up by the perception of an attack on your pre-conceived notions. Now, I happen to have been a professor of finance in three top business schools, so I will ignore your assertions about my comprehension of finance. I also happen to be in the top 0.5% of income so I do know what rich people pay.
Your description of Social Security is simply wrong. An individual does not simply get back what he put in. That is not how it works.
I never suggested changing or replacing social security. When did I say that? Again, the foam erupting from your mouth got in your eyes and kept you from reading what I wrote.
I happen to be a supporter of social programs including universal healthcare and education. I think bankers should all be shot. i think communists are delusional. I think conservatives are inhumane.
now, if you want to re-read my post and discuss the issue at hand, let’s. If instead you want to get red in the face again and continue with ad hominem attacks, then…well, drop it.
dear professor expat
sounds like you are the one who is red in the face.
as my wife likes to say “you can always tell a professor: butn you can’t tell him much.”
i have no doubt what i said may not be clear enough for you. but it was hardly “preconceived.” i do my own work and i check it twice.
‘ordinary banking’ is saving, not investing.
Saving … mean(s) putting your money into products such as a bank time account (CD). Investing — using some of your money with the aim of helping to make it grow by buying assets that might increase in value, such as stocks, property or shares in a mutual fund.
Wells Fargo Bank
#4 on the list of largest US banks
I am trying to point out the similarities between all forms of “finance.”
you are pointing out the differences. where does that get us?
yes, there is a difference between Fords and Ferraris…but there might also be similarities if you only look.
Hey, I am currently ‘looking at’ an Audi electric GT that I got spam e-mail about. I owned an Audi once, bought new on a stock-sale windfall, drove for many years, but one of the worst cars I ever owned, and I have owned many. This new Audi, a GT, costs 4x what the aging/classic last-of-the-line Saabs I currently drive, which at the time was about the most expensive car I ever bought, and not on a stock windfall.
Coberly is always advocating that the US just continue to do what it has been doing to fund Social Security, just doing it a wee bit better. Some might/do think much more could be done, but we mostly know that they is something that there is much political resistance to such changes, among the wealthy and the not-at-all-wealthy MAGA people alike.
that was pretty close to mindless, but not progressive.
Suggesting that something has to be done about income inequality is essential to progressivism in my book. And suggesting tiny changes to payroll taxes is more or less mindless. But do go on.
speaking of way out comments.
there is no doubt that doing something about inequality is essential to progressivism. ” making the rich pay for Social Security ” is not. in fact it will kill the most progressive program in America.
tiny increases in the payroll “tax” so workers can pay for their own longer life expectancy is the way to save social security from those who want to destroy it to save it.
Perhaps ‘The rich’ in the US don’t pay much in taxes, ala Warren Buffet who pays the same percentage rate (or less?) than his office help. But what about the Rich in France?
I don’t know about the rich in France. but I don’t believe a modern state can pay its bills without a progressive tax. but that doesn’t mean every tax has to be progressive. do us a favor and find a useful statistic that tellsus what “the rich” pay, and what “the poor”(you poor people who make less than 200k or so) pay, and tell us what each pays. i am not so worried about “percent of their income.” but last time i looked the rich pay about 17% and the poor(-ish) pay about 10%. in any case it is irrelevant: we need to pay for what we need. the simplest method and fairest is best, if we can get it. making the rich pay for your groceries is not “fair” even if they have more money than you, making them pay a higher rate for defense and general government is.
the rich may not pay as much in taxes as you think they should..a mindlessly “progressive” tax rate. but they pay more than you…and more than the rest of us.
the mindless progressives may be part of the reason they are so desperate to keep all their money…less the mindless poor take it all away.
that’s politics in America..two sides that don’t know what they are talking about shouting mindless slogans at neach other while real problems go unsolved.
That is certainly true, but they could be paying far more.
And hardly notice the difference.
Hey, I’m beginning to sound like a mindless progressive!
A mindless progressive, just like Warren Buffet?
my idea of a mindless progressive is someone who says “make the rich pay their fair share for my groceries.”
or “Social Security is not broke, it works because it is worker paid. We can fix it by making the rich pay for it.” [near quote from Social SecurityWorks]
The meme ‘making the rich pay for my groceries’ is just a way of complaining about the very idea of dealing with ‘income inequality’.
There is way too much of that in the US.
it is a stupid way of complaining about income inequality.
might be smarter to join unions and vote for a living minimum wage’
I can’t keep this up. you just muddy the waters and i have better things to do than be reduced to bad temper by mindless comments.
ah, sweet vitriol, professor?
That means income at the top of the income distribution was 13.53 times higher than income at the bottom, a 4.9% increase from 2020. In addition, the ratio of the 50th- to 10th-percentile (inequality between the middle and bottom of the income distribution) also increased — up 4.0% from 4.34 in 2020 to 4.52 in 2021.Sep 13, 2022
Increase in Income Inequality Driven by Real Declines in Income at the Bottom
The top 400 earners in the US pay 8.2%.
Facts, Coberly, facts. You’re quick with epithets and schoolyard taunts from a safe distance but you fail to support your views or your baseless attacks with logic or facts.
i don’t remember making any taunts or schoolyard epithets. I think you have me confursed with you.
I don’t know what the top 400 earners pay in tax, or which taxes. I did see a statistical abstracts which said the top 1% or so of earners (I do not remember the exact number) paid an average Income tax of about 17% of earnings after deductions.
as for facts, a fact is that i am tired of responding to people who don’t know what they are talking about with respect to Social Security and think that their academic credentials is the same as a valid argument.
Statistical Abstracts for 2008 was my source for tax at 17% of AGI for incomes between 100,000 and 199,999 year 2004 , 8 million filers out of 240 million total. goes up to about 24% of AGI for higher incomes.
check it out yourself.
the thing about facts is that you have to be a little precise about which facts you are talking about.
I really don’t have time to teach you that.
This may help of maybe not?
Buffet is good at making money. I don’t think he is good at making tax policy.
Anyway, you should stick with suggestions about the ‘tax which is not a tax’.
I try to. but then people like you fly in from outer space with irrelevant comments. irrelevant and wrong. i try to be kind, but it’s hard when they keep pecking at your feet.
Then just stick to great suggestions about slight adjustments topayroll taxes.
I try to. but then i have to respond to your way-out comments.
Berkshire said Saturday that a largely unrealized $53 billion decline in the value of its investments forced it to report a loss of nearly $44 billion, or $29,754 per Class A share. That is down from $28.1 billion, or $18,488 per Class A share, a year ago.
Buffet firm reports $44B loss
AP – August 2022
The great thing about Capitalism no doubt is that a middling successful company like Berkshire with many, many shareholders who worship Warren Buffet, can lose that much money in a year & still function. In large part because they don’t have to worry (much) about ‘paying for other people’s groceries’.
There is almost zero chance that the US will adopt a social security plan that relies on federal income- and wealth-taxes, alas. What this has to do with French President Macron raising the retirement age in his country is beyond me. A gutsy move on his part though.
It was a somewhat pointless move and unnecessary right now. There are other issues which need to be addressed more urgently than the retirement age. Granted, 62 is far too young given changes in demography and lifespan, but it could have been handled better. Frankly, it’s a moot point. Anyone joining the work force today won’t retire for another 40 odd years, by which point it won’t matter.
62 sounds young from American point of view. i do not know what working conditions are in France. I know the retirement age for some workers with State Pensions and hard jobs is 55.
in any case if people have paid for their own pensions they should be able to retire at any age “actuarily” paid for. That’s the whole point of my trying to remind people that they pay for their own Social Security and if they think a higher benefit is necessary (or lower retirement age) all they need to do is pay for it. There are good reasons for why they might want to do that.
And if that doesn’t work for you, you can make a bundle on Wall St or in Silicon Valley and live comfortably ever after.
Macron’s Government Survives No-Confidence Vote
NY Times – just in
The French National Assembly rejected a no-confidence motion against the government of President Emmanuel Macron, ensuring that a fiercely contested bill raising the retirement age to 64 from 62 becomes the law of the land.
The motion received 278 votes, nine short of the 287 needed to pass. The close result reflected widespread anger at the overhaul to the pension law, at Mr. Macron for his apparent aloofness and at the way the measure was rammed through Parliament last week without a full vote on the bill itself. France’s upper house of Parliament, the Senate, passed the pension bill this month. …
(It was a close vote however.)
‘It Just Feels Good to Vent Your Anger’: Spasms of Violence Jolt Paris
NY Times – March 24
As an enormous march against an unpopular pension overhaul was winding down in Paris, small groups of young protesters began planning their next move as night fell.
“Let’s go to the Bastille,” a man in his 20s told his friends. Another, checking social media on his phone, said, “It looks like Châtelet is the meeting point,” referring to a different section of the capital. A few minutes later, the groups slipped out of the square.
And so began a “wild protest,” as the participants call such activities, in which groups of a few dozen young men and women, some clad in black and masked, roam the streets, knocking over city bikes and scooters, and setting fires while playing cat-and-mouse with the police. “Paris, rise up!” they chanted.
Wild protests have become a fixture of Parisian nightlife after the French government rammed through a pension bill last week raising the retirement age to 64, from 62, without a vote in the lower house of Parliament. …
French Anger Shifts From Pension Law to Focus on Macron
… blue-collar workers (have been) leading a wave of demonstrations and strikes across the country.
Those huge protests have shifted in character over the past week. They have become angrier and, in some cities, more violent — especially after nightfall. They have been less about the fury felt over the raising of the retirement age to 64 from 62, and more about Mr. Macron and the way he rammed the law through Parliament without a full vote.
Finally, they have broadened into something approaching a constitutional crisis.
“We have moved from a social crisis on the subject of retirement to the beginnings of democratic crisis,” Laurent Berger, the leader of the French Democratic Confederation of Labor, the largest and most moderate labor union in France, said in an interview. “Anger is rising, and before us we have a president who does not see that reality.” …
Ah, the New York Times, a long time enemy of Social Security, would like to shift the attention from anger at destroying French social security to generalized vandalism about “democracy.”