Online Bookmarks of M. Fioretti
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2013/11/21: a funny thing has happened in the past year or so. Suddenly, we’re hearing
open discussion of the idea that Social Security should be expanded, not cut.
Talk of Social Security expansion has even reached the Senate, with Tom Harkin
introducing legislation that would increase benefits. A few days ago Senator
Elizabeth Warren gave a stirring floor speech making the case for expanded
benefits.
Where is this coming from? One answer is that the fiscal scolds driving the
cut-Social-Security orthodoxy have, deservedly, lost a lot of credibility over
the past few years. (Giving the ludicrous Paul Ryan an award for fiscal
responsibility? And where’s my debt crisis?) Beyond that, America’s overall
retirement system is in big trouble. There’s just one part of that system
that’s working well: Social Security. And this suggests that we should make
that program stronger, not weaker.
Before I get there, however, let me briefly take on two bad arguments for
cutting Social Security that you still hear a lot.
One is that we should raise the retirement age — currently 66, and scheduled to
rise to 67 — because people are living longer. This sounds plausible until you
look at exactly who is living longer. The rise in life expectancy, it turns
out, is overwhelmingly a story about affluent, well-educated Americans. Those
with lower incomes and less education have, at best, seen hardly any rise in
life expectancy at age 65; in fact, those with less education have seen their
life expectancy decline.
So this common argument amounts, in effect, to the notion that we can’t let
janitors retire because lawyers are living longer. And lower-income Americans,
in case you haven’t noticed, are the people who need Social Security most.
The other argument is that seniors are doing just fine. Hey, their poverty rate
is only 9 percent.
There are two big problems here. First, there are well-known flaws with the
official poverty measure, and these flaws almost surely lead to serious
understatement of elderly poverty. Furthermore, the elderly poverty rate is highly likely to rise sharply in the future, as the failure of America’s private pension system takes its toll.
open discussion of the idea that Social Security should be expanded, not cut.
Talk of Social Security expansion has even reached the Senate, with Tom Harkin
introducing legislation that would increase benefits. A few days ago Senator
Elizabeth Warren gave a stirring floor speech making the case for expanded
benefits.
Where is this coming from? One answer is that the fiscal scolds driving the
cut-Social-Security orthodoxy have, deservedly, lost a lot of credibility over
the past few years. (Giving the ludicrous Paul Ryan an award for fiscal
responsibility? And where’s my debt crisis?) Beyond that, America’s overall
retirement system is in big trouble. There’s just one part of that system
that’s working well: Social Security. And this suggests that we should make
that program stronger, not weaker.
Before I get there, however, let me briefly take on two bad arguments for
cutting Social Security that you still hear a lot.
One is that we should raise the retirement age — currently 66, and scheduled to
rise to 67 — because people are living longer. This sounds plausible until you
look at exactly who is living longer. The rise in life expectancy, it turns
out, is overwhelmingly a story about affluent, well-educated Americans. Those
with lower incomes and less education have, at best, seen hardly any rise in
life expectancy at age 65; in fact, those with less education have seen their
life expectancy decline.
So this common argument amounts, in effect, to the notion that we can’t let
janitors retire because lawyers are living longer. And lower-income Americans,
in case you haven’t noticed, are the people who need Social Security most.
The other argument is that seniors are doing just fine. Hey, their poverty rate
is only 9 percent.
There are two big problems here. First, there are well-known flaws with the
official poverty measure, and these flaws almost surely lead to serious
understatement of elderly poverty. Furthermore, the elderly poverty rate is highly likely to rise sharply in the future, as the failure of America’s private pension system takes its toll.
