My friend Kenneth Bernstein from Virginia has the self-appointed job of reading the Washington Post opinion page early each morning and alerting hundreds of us when it publishes something that we simply have to read. He came up with a good one today, so I’m sending it along to you. It’s Ezra Klein’s explanation about why rich people want to raise the retirement age for Social Security: basically, it doesn’t affect them and they have little understanding of the lives of those of us whom it would affect.
Klein notes that most people don’t wait until the age where they can receive full retirement benefits before they elect to start receiving Social Security. (He says that that’s 65; I believe that it’s now higher — and scheduled to be higher still in the future.) Instead, most people start collective at age 62.
When they do that, it means they get smaller benefits over their lifetime. We penalize for taking it early. But they do it anyway. They do it because they don’t want to spend their whole lives at that job. Unlike many folks in finance or in the U.S. Senate or writing for the nation’s op-ed pages, they don’t want to work till they drop.
He quotes Nobel Prize winning economist Peter Diamond (no relation) as saying:
What do we know about the people who retire at 62? On average, shorter life expectancy and lower earnings than people retiring at later ages. If anyone stood up and said, “Instead of doing uniform across the board cuts, let’s make them a little worse for people who have shorter life expectancies and lower earnings,” they’d be laughed at. Anything that reduces benefits is going to hurt everybody. It’s going to hit people with short life expectancies, it’s going to hit people with high life expectancies. But we should not make it worse for those retiring earliest.
That’s what’s galling about this easy argument. The people who make it, the pundits and the senators and the CEOs, they’ll never feel it. They don’t want to retire at age 65, and they don’t have short life expectancies, and they’re not mainly relying on Social Security for their retirement income. They’re bravely advocating a cut they’ll never feel.
But you know what they would feel? Social Security taxes don’t apply to income over $110,000. In 2011, Lloyd Blankfein’s total compensation was $16.1 million. That means he paid Social Security taxes on less than 1 percent of his compensation.
If we lifted that cap, if we made all income subject to payroll taxes, the Congressional Budget Office estimates that it would do three times as much to solve Social Security’s shortfall as raising the retirement age to 70. In fact, it would, in one fell swoop, close Social Security’s solvency gap for the next 75 years. That may or may not be the right way to close Social Security’s shortfall, but somehow, it rarely gets mentioned by the folks who think they’re being courageous when they talk about raising a retirement age they’ll never notice.
Raising the cap on Social Security would keep the system solvent for 75 more years — although it would be nice if Congress didn’t keep trying to borrow from it (as Al Gore accused G. W. Bush of doing in 2000 — that’s what the “lockbox” was all about) and then trying to privatize it so as to avoid the need to pay it all back. Raising the retirement age completely misses the reality of most people who do manual labor — labor that they become less able to do once they reach age 60, or 50, or 40 — or for, some jobs, 30. Someone like me can easily work until age 70 or beyond, barring disability; a house painter or a nurse pulling patients into and out of beds, probably not. Even a cashier, standing for eight hours a day, is wearing down her or his body even if they aren’t getting their pulse into the yellow zone. The same goes for a truck driver — sitting for that long can damage your circulatory system. Sure, some people survive — but the ones we see doing so are increasingly outnumbered by the ones who died trying.
The attorneys and business leaders who make up most of Congress and its prominent advisors don’t get it because they don’t do manual labor. They may play hard on the slopes or the jet skis, but that’s not at all the same thing. All it does is help them justify the notion that raising the retirement age is not as cruel as it is. My suspicion is that the punitive nature of this “reform” is part of the point — the more desperate people are, the more pliable they are.
My big encounter with deficit tub-thumpers this year came with the good folks of Rebellious Truths. So I put this challenge to them: if you’re talking about cutting Social Security by raising the retirement age, or cutting benefits, or one of the other notions that all lead to less money in the pockets of the 99% (or let’s call it the 92%, whichever), but you’re not talking about raising the cap on income subject to Social Security taxes — how is what you’re pushing either rebellious or true?
It’s not even that radical of an idea — not like, oh, imposing payroll taxes on income from investment as well as from labor. But let’s leave that idea for an undetermined future moment.
I am reading Red Ink -Inside the High Stakes Politics of the Federal Budget, by David Wessel, Wall Street Journal economics editor ( Inge please do not get mad at me…) He says that “Social Security, about one-fifth of all federal spending, is perhaps the most popular part of the federal budget. In polls, more than 80 percent of Americans say the seventy-five-year-old program has been good for the country” He addresses the funding saying that ” The basic problem is actuarial: there won’t be enough money coming into Social Security at current tax levels to pay benefits that have been promised, particularly once the baby boomers stop paying tax into the system and start claiming benefits” He concludes that “Changes to Social Security are politically delicate because the program touches so many people. Nearly 55 million people, one out of every six Americans, were receiving Social Security benefits at the end of 2011, many more female than male because women live longer” (now I am mad at Inge…)
*For those who have or are working in a West Virginia Coal Mine since they were 20 years old….the thought of waiting until they are 75 for their Social Security Benefits is probably not going to sell well. Either for Firefighters, Line Duty Police Officers, even folks that have worked in Detroit or Sub-Contractors in manual labor….Construction workers, people that work for So. Cal Edison and the Gas Company, bending twisting and contorting themselves, along with plumbers, electricians and the folks that do our yard work for 40 years. No, selling the 75 year old Benefit age is probably not good. How about women that have been working even in offices, sitting with carpal tunnel for the last ten years of their work life, or women that work in Super Markets in a variety of jobs?
No, the answer is simply to raise the cap on the collection of Social Security from the present #110,000 to $1,000,000. Millionaires take Social Security don’t they? Great, kick in then! That would make the system flush for another 50 years……starting on day one – as Mitt Romney might say!
Everyone single person I met that collects social security early does so because they were laid off after the age of 50 and couldn’t find another job. They were the lucky ones who had a small savings; maybe a small pension, and/or 401K (that cost them a huge penalty for cashing out early) but they needed that money to make it to age 62. And they did not qualify for MediCal because that doesn’t kick in until 65, so private insurance ate up another portion of their so called retirement money.
These people who come up with these bright ideas are clueless about whats its like to be part of the 99%. Don’t get me started about our government reps. They have a lovely retirement plan. No wonder they work so hard at getting elected to government posts. They jump from one office to another. Civil servants my ass!
*Bravo Inge! Bravo!
Vern should read the Red Ink, not because of the title but for references to the kind of conservatives he likes. The Wall Street economics editor writes: “In May 2010, Gates marked the sixty-fifth anniversary of the Allied victory in Europe with a speech at the Dwight D. Eisenhower Presidential Library in Abilene, Kansas. He spoke not about General Eisenhower’s battlefield victories but about President Eisenhower’s frustrations with the defense budget, which Gates clearly shared. Some of their concerns were similar. Both were frustrated at the military’s insatiable appetite for new weapons. Some of their concerns were different. Eisenhower complained that it took the army fifty years to get rid of horses. Gates complained, “Health care costs are eating the Defense Department alive” Eisenhower would have been stunned.”
“When Gates spoke, the Defense Department was spending as much as on health care-about $50 billion-as on the war in Iraq. The tab had risen since: in 2011 it came to $54 billion. Health care consumes about 10 percent of the defense budget (excluding the costs of Iraq and Afghanistan). One big reason: Tricare, the military health insurance created in 1995, is significantly more generous than insurance offered to other employees”
The author prefaces the defense budget chapter by saying: “By any yardstick, the Pentagon budget is huge. Last year’s was equal to the value of all the goods and services produced in the economy of Indonesia, the fourth most populous country on Earth. The $700 billion total was 30 percent higher, adjusted for inflation, than the Cold War peak hit during Ronald Reagan’s presidency. About $150 billion of that went for Iraq and Afghanistan, a sum that will wane as the troops come home. But even the rest of the defense budget-the peacetime budget known to insiders as “the base”- is higher than at any time since World War II. The central question now is how much the defense budget should be cut.”
In today’s news, CEOs from different corporations including defense related, were advocating for cuts to “entitlements” programs and increasing the retirement age…
*Constituents…..ever heard of them? These are folks that actually have jobs that some Congress person is responsible for – upwords of 250,000 each in this country.
Ever heard of the Space Station and Douglass Aircraft in Huntington Beach? Yep, alot of Middle Class Jobs were created in Huntington Beach and that fed alot of folks and made work for a bunch of people at the German Village.
Ratheon….GE, TRW….Boeing…..hey, the list goes on and on. They are the “Masters of War” that Bob Dylan spoke of. He was right of course….but jobs trump ethics too many times in life. That is why the Chinese say: “Life is a Balance – Ying and Yang, plus and minus!” When you have equilibrium, you are willing to have a Desalination Plant in Huntington Beach because with lots of people…the cost of water will eventually become ridiculous. So, you bite the bullet and kill a few protozoa in the process of creating affordable progress.
Little doubt, that creating bullets and bombs and exporting them to Africa is not worthy of a kind and loving society. However, when the Chinese discoved Black Powder….they didn’t care what folks were using it for…..they just sold it and made a bunch in Exports. Along with Tea…of course, then the English came and took them and India over….cause that is where the money was.
It kind of goes like that……get it?
I get it. The Pentagon is a large employer, and its budget is huge. “The US defense budget is greater than the combined defense budgets of the next seventeen largest spenders” states the Wall Street editor. “The United States spends about $700 billion a year on its military. That’s more than the combined military budgets of China, the United Kingdom, France, Russia, Japan, Saudi Arabia, Germany, India, Italy, Brazil, South Korea, Australia, Canada, Turkey, the United Arab Emirates, Spain and Israel”
Comparing some of the services provided by Medicare, one of the programs being threatened to be cut, to the costs of operating aircraft carriers, David Wessel writes : “ The price tag on these ships is staggering. The navy estimates each aircraft carrier costs in excess of $11 billion, more than Medicare spends annually on knee, hip, and shoulder joint replacements for nearly seven hundred thousand elderly. Aircraft carriers are expensive even in death: it costs about $2 billion to decommission a carrier, including removing and storing two nuclear reactors.”
The Chinese launched their first aircraft carrier a few weeks ago. How many do we need? “Then Defense Secretary , Robert Gates said in a 2010 speech: But consider the massive over-match the US already enjoys. Consider, too, the growing anti-ship capabilities of adversaries. Do we really need eleven carrier strike groups for another thirty years when no other country has more than one?
I need to return the book and thanks Joe, my local librarian, for his recommendation.
*There is nothing worse than “old technology” just ask Bill Gates or those guys at Microsoft…that have very unpleasant ways of updating your “Old Technology”.
We do the same thing. We sell our old Aircraft Carriers, Ships and Planes to various South American countries. In exchange we get cheap labor, joint military defense packs and the enduring approval of various military huntas.
Nothing wrong with replacing our old stuff with new. New Planes, New Ships and Soldiers, Sailors and Marines. It keeps that money moving from one place to another. Rightfully, you mention our military is bigger than the top 20 countries in world. Just goes to show why we are considered the “World Peace Keepers”. Or “Policemen”!
We need to draw down at times, to re-tool our Military Machines. Come out with new technology or give time for the current manufacturers to develop new killing technologies. Nothing wrong with that. We usually stand down for 5 to 6 years and then comes the giant build-up again.
The Germans said it best: “We are very good at WAR or REBUILDING!”