[Guest post by Noam Scheiber:]
I'm of the view that it's a bit futile to worry about Social Security's long-term actuarial balance before you've figured out what to do about Medicare and Medicaid, whose contributions to our deficits over the next several decades are far, far bigger. (Though given that they had to enact some tricky Medicare cuts to help pay for health care-reform, I see why administration officials prefer to brainstorm about Social Security these days.) I'm also skeptical of the politics of Social Security reform, given that conservatives love urging Democrats to make fixes that would strengthen the program's trust fund, then turn around and deny that such a trust fund exists.
Still, if we're having a conversation about how to shore up Social Security over the long-term--and Obama's deficit commisison may thrust that conversation on us--Jed Graham of Investor's Business Daily has a pretty smart proposal. The basic idea, which he calls "Old-Age Risk-Sharing," would be a series of cuts that hit young, affluent retirees hardest, then phase out completely over 20 years, so that older retirees receive all the benefits they'd get under the current system. (Graham elaborated on this in a recent book called A Well-Tailored Safety Net.) The beauty of the approach is that low-income workers--typically the people least able to work beyond their early 60s because their jobs are physically grueling--would see little in the way of cuts, while more affluent workers would have an incentive to keep working, something many are capable of. To borrow Graham's example:
In general, Graham shows how this is a much more nimble approach than, say, raising the retirement age or early-retirement age, which hits people in those grueling jobs pretty hard. Though his proposal accomplishes something similar, it distributes the additional work years to people best able (and most willing) to shoulder them, while ensuring that no one will be destitute in very old age.
I might like to see the cuts phase out for low-income workers a little sooner than 20 years (since they're actuarially less likely to live that long), but it's a pretty reasonable place to start the discussion--assuming we have to have it.
Update: Graham e-mails about that last point:
Super thinking! We should have stuck with the idea of SS as social insurance, not a guaranteed pension regardless of need.
Super thinking! We should have stuck with the idea of SS as social insurance, not a guaranteed pension regardless of need.
This is excellent. I hope it goes somewhere.
This is excellent. I hope it goes somewhere.
So. All the pain for us youngins...all the gain for oldsters. Oh, that's a really f-ing splendid idea. I wonder how old Jed Graham is. Lemme guess...nearing retirement!!
How about an immediate benefit cut for wealthy oldsters? Why should my generation bear all the pain? THEY are the wealthy ones. Our generation will be poorer, growth will be slower, benefits less ...
These phonies are always talking about "not passing on debt to their grandchildren." Well, HERE I AM!! Stop passing on your debt now.
So. All the pain for us youngins...all the gain for oldsters. Oh, that's a really f-ing splendid idea. I wonder how old Jed Graham is. Lemme guess...nearing retirement!!
How about an immediate benefit cut for wealthy oldsters? Why should my generation bear all the pain? THEY are the wealthy ones. Our generation will be poorer, growth will be slower, benefits less ...
These phonies are always talking about "not passing on debt to their grandchildren." Well, HERE I AM!! Stop passing on your debt now.
Agreed with roi and lib ref, many of the folks I know doing more, say university work for example, delay their retirement already.
Agreed with roi and lib ref, many of the folks I know doing more, say university work for example, delay their retirement already.
First Name
Last Name
Address 1
City
State
Zip
The Democratic majority: It emerged!
Why I worry that Obama doesn't realize just how bad things are.
Obama has reinvented the state in more ways than you can imagine.
The only way Obama can pull his presidency back from the brink.
Obama can't govern without an angry, energized left.
Obama needs to learn Reagan's lessons from 1982.
A counter-history of the Obama presidency.
Was I too harsh on the president?
Read Full Article »