Krugman Shows Why Media Will Never Support Social Security Reform
There's little debate in America that with baby boomers retiring, Social Security and Medicare are on a collision course with bankruptcy.
Regardless of this inconvenient truth, powerful media figures like New York Times columnist Paul Krugman stand in the way of any meaningful reform to these programs that might lead to their long-term viability.
Krugman proved that once again in his article Friday:
Let’s turn next to Social Security. There were rumors beforehand that the commission would recommend a rise in the retirement age, and sure enough, that’s what Mr. Bowles and Mr. Simpson do. They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable?
The answer is no, for a number of reasons — including the point that working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor.
But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades. So the Bowles-Simpson proposal is basically saying that janitors should be forced to work longer because these days corporate lawyers live to a ripe old age.
So, in Krugman's view, any rise in the age at which you can receive Social Security is verboten. This is despite the fact that when Social Security was first created, life expectancy was 57. Now it's 77.
That's not to dismiss Krugman's point about differing life expectancies by income. As his own newspaper reported in 2008:
In 1980-82, [Gopal K. Singh, a demographer at the Department of Health and Human Services] said, people in the most affluent group could expect to live 2.8 years longer than people in the most deprived group (75.8 versus 73 years). By 1998-2000, the difference in life expectancy had increased to 4.5 years (79.2 versus 74.7 years), and it continues to grow, he said.
What this means is the poor in 2000 were still living almost 18 years longer than the average person was in 1935 when Social Security was created. But let's take this further:
“If you look at the extremes in 2000,” Dr. Singh said, “men in the most deprived counties had 10 years’ shorter life expectancy than women in the most affluent counties (71.5 years versus 81.3 years).”
So, even in the most deprived counties in America back in 2000, men were still living 14.5 years longer than the average person in 1935.
Readers are advised that the Congressional Budget Office released similar figures in April 2008.
Add this all up and rich people do live longer than poor people. I'm not sure why that would be a shock to anyone. But the fact is that even the poorest people in our country are still living almost 15 years longer than folks did when Social Security was created.
At the time, benefits came at age 65.
This number has barely changed in the past 75 years, as today, depending on the year you were born, you can begin receiving benefits between 65 and 67.
As such, although the poorest Americans have seen their life expectancies rise by almost fifteen years, many still get to retire at the same age as people did 75 years ago when people weren't living nearly as long. The "youngest" Americans born in 1960 and thereafter have to wait only two years longer than their grandparents and great-grandparents did.
Hardly seems equitable, does it?
The bottom line is that the easiest way to solve all the long-term budgetary woes of Social Security is to raise the age at which benefits start. Toward this end, the deficit reduction commission is recommending this age move up only one year to 68 by 2050, and another year to 69 by 2075.
But Krugman and his ilk can't except that, and use this income mortality inequality issue to argue against such a minor change despite life expectancies amongst the poorest Americans being almost fifteen years greater than when this program first went into effect.
Unfortunately, this shows where Krugman and his ilk are: the only tinkering they will accept to Social Security is lifting the income threshold at which people contribute. This obviously comes with no increase in benefit to such people.
In fact, if Krugman and his ilk had their way, benefits would be means-tested whereby folks that made over a certain income wouldn't receive benefits at all.
In Krugman's socialist world, the highest wage earners would pay far more into this system than they currently are, and if they properly set up for their own retirements thereby making over a certain amount when they became eligible for benefits, they wouldn't be entitled.
Sadly, it's this kind of thinking from the left and their media minions that make it impossible to envision any material reform to Social Security until the program goes bankrupt and legislators are forced to address the crisis.
Until then, expect Krugman and others in the press to continually push back against any changes that involve even the slightest adjustment to retirement age.
- Noel Sheppard's blog
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Comments
But isn't Obama's health
Submitted by mandrake on Fri, 11/12/2010 - 11:25am.
But isn't Obama's health care reform bill suppost to fix that by killing off all the elderly anyway?
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Submitted by inquiringmind on Fri, 11/12/2010 - 11:34am.
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Noel, SS retirement age was
Submitted by bassndude on Fri, 11/12/2010 - 11:40am.
Noel, SS retirement age was raised under Regan. By two years I think.
Save a SeAL, club a liberal/troll!!
No, it started out at 65,
Submitted by WhoIsJohnGalt on Fri, 11/12/2010 - 2:55pm.
but in the early sixties, the age was lowered to 62 with only partial benefits, full benefits at 65, but it's going up as shown below:
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/14/session/L3RpbWUvMTI4OTU4Nzk1OS9zaWQvWHFRLWRUZWs%3D
Unfortunately, this shows
Submitted by Cappmann1962 on Mon, 11/15/2010 - 4:46pm.
Unfortunately, this shows where Krugman and his ilk are: the only tinkering they will accept to Social Security is lifting the income threshold at which people contribute.
The fix isn't to lift the income threshold. They need to LOWER it. When 40-50% of the country doesn't pay anything, but is still able to collect upon retirement, the system will obviously fail.
Sadly, it's this kind of thinking from the left and their media minions that make it impossible to envision any material reform to Social Security until the program goes bankrupt and legislators are forced to address the crisis.
Even more sadly, the program is broken BECAUSE of politicians. The SS program was put into the General Fund so politicians could dip into it to pay for their social experiments, and at the time and for the forseeable future, it was relatively solvent. But as is usual for politicians, especially "progressive" politicians, like a teenage girl with daddy's credit card at the mall, they couldn't stop dipping. This is the one point I never see made in discussions about SS. I would like to see exactly how much money has been taken out of SS and spent on other things over the years since it was placed into the General Fund. THAT would be an eye-opener...
Krugman should have no objections...
Submitted by sherlock1 on Fri, 11/12/2010 - 11:41am.
to a provision that allowed the wealthy to opt out of receiving SS benefits, then. The Gates and the Soros and the Krugmans should put their money where their mouths are, and show us the way to help our fellow man.
BTW for those who don't know, the people of Washington (state) rejected an initiative that would have imposed a state income tax for the first time, but only on the "rich", those making more than $250K per annum, or $400K as a couple. Many who opposed this measure saw it as the camel's nose under the edge of the tent, that would ultimately lead to a state income tax for almost everyone. But many also argued that such a tax would drive those who create the most jobs, the small entrepreneur, out of the state.
Maybe there is hope for our country yet.
I agree
Submitted by dirtydan64 on Fri, 11/12/2010 - 11:42am.
Krugman is as pure a socialist as they come, however this Debt Commission has it all wrong as well, they haven't scratched the surface when it comes to deep cuts in Gov't !!! We need to ask these people on the Commsision why they haven't thought or added it on to there report to shut down all Federal Dept such as Energy, Education, EPA and many many others and return all these debt back to their respective States where it would be better managed and cost a hell of alot less then a building full of beauracrats who thing they know better what's needed for each state then those who live in say Wisconsin, Maryland or New Mexico ? Same for the Dept of Agriculture every state is different, every state has different climates and each state knows what works best for there particular climate/situation right ?
With respect to SS, the biggest loss in revenue for SS is when they decide Americans should only have to pay up to a certain amount each year then your off the hook until the following calender year of which you then start to pay into the system again, where bby SS is losing Billions & Billions of revenue by not having every employee pay into the SS system if they are recieveing a pay check weekly, monthly, and bi-weekly would re-store alot of the lost revenues in SS. Another things they could have suggested was that Gov't employee's who do not pay into SS should not be able to collect from SS when they decide to retire with there heafty pension plans provided by us the Tax payers better known as Double dipping or a 2 fer this must also be added in the report of the Debt Commission suggestion, along with cutting off the pay to former members of Congress when they no longer serve but make sure there paid handsomely for the short career when average Americans have to wrk there whole entire life to get what they recieve, it's gotta stop !!!
How about having real Americans on this Debt Commission, who have no skin in Politics, no skin in anyone in Congress or there respective states Political system just everyday people who really want and have good ideas that these Politicians are so afraid to suggest let alone instiute into the grand scheme of things to lower our debt and stop the BS that continues in the Beltway !!
IMHO...
Submitted by C-townGiant on Fri, 11/12/2010 - 12:24pm.
Krugman has awfully big stones to refer to himself as an "economist."
He is merely a hyper-partisan, ultra-liberal, bitter hack pundit.
And that's being nice.
People who do not contribute
Submitted by Dan The Man 2 on Fri, 11/12/2010 - 6:23pm.
People who do not contribute to SSI do not collect anything from SS. I stopped paying into SSI 29 years ago, except for a few months there, and do not have enough credits for SS; even for death benefits. However, after my retirement I am working and do have to pay into it and will get to collect substantialy reduced benefits due to my collecting pension benefits; they are reduced about 50 percent of what a normal person gets. So I plan to start drawing at the earliest moment which now is 62.
CONGRESS: HOW BOLD ???
Submitted by reelman46 on Fri, 11/12/2010 - 7:12pm.
Okay, the election smoke has cleared and the air is vibrating with "fiscal reform". The real worries to many like myself is the boldness required will be neutered by the "in crowd", the demo-socialists and OzBama agents. This baloney Debt Panel seems to distract and deflect some IMMEDIATE concerns. So what would a "BOLD" reform-minded new House do. IMHO these need attention in 2011: 1...A freeze of the total federal budget at 2008 levels. 2...A 10% income tax cut across the board plus keeping the cuts due to expire. 3...A forensic audit of Fannie and Freddie. (made public in full before 2012) 4...A law limiting future "czars" to 2 per presidential term by majority vote of BOTH houses. 5...Permanent elimination of capital gains and inheritance taxes in 2011. 6...Repeal of OzBama Care sent to the Senate monthly this spring. 7...Defunding of PBS, NPR, NEA and Planned Parenthood from the tax trough in 2012. 8...A forensic audit of the Federal Reserve. (made public in full before 2012) 9...A reduction of the Dept. of Education budget by 50% in 2012. 10.A Balanced Budget Bill effective 2012. 11.A reduction of the 126% EPA budget gain in the last 2 years by 120%. 12.The sunsetting of as many federal agencies as possible...just 15 would be a great start. 13.A private Social Security option (50% of worker share) for those born before 1965. 14.A total income Flat Tax of 15% for all worker over age 20 starting in 2012. 15.A bill physically sealing our southern border with mass deportation of illegal aliens in spring 2011. 16.Health Care Plan shopping nationwide with Texas Model liability limits bill in early spring 2011. 17.A freeze on all federal employee raises...that includes congress...until 2015. 18.A bill the mandates all bills that can apply to federal employees must apply effective before 2012. 19.Welfare payments reduced by half after the 1st childbirth for unmarried applicants (effective before 2012). 20.A forensic audit of any union leadership that contributes to federal candidates. (made public in full before 2012) I know you have ten more but its a START... beware the distractions, the lies, the demonizing and the rope-a-dope by all the low life that put America 13 trillion in debt while reducing our paychecks and freedoms. Stay upset and near your Fax machine because the ball is only on the tee. http://theconservativecrawfish.wordpress.comDoug Schexnayder, Ph.D. (theconservativecrawfish<
The issue is wrong.
Submitted by c5then on Fri, 11/12/2010 - 11:47am.
It souldn't be how do we tweak the fundamentally flawed system to extend it's life, or to lessen it's deficit in the future. The issue should be how do we completely change the system to eliminate the ponzi scheme foundation that it is built on. SS should be transitioned into a 401k type system with each person who contributes voluntarily having their own seperate account.
The idea that you take money from people who are working to pay people who are "retired" is communist in nature. Never mind that there will be only 4 people working for every retired person in the not too distant future.
Madison and Jefferson and Franklin built a Republic - Roberts killed it!
Suggestion
Submitted by Cappmann1962 on Fri, 11/12/2010 - 2:31pm.
I'm willing to do my part to alleviate the strain on the system... Give me back all the money I've paid into it over the years - no interest. Then, STOP TAKING MONEY OUT OF MY PAY IN TAXES. We'll call it even at that point... Oh, and put those who opt to stay in back into a secure account and remove it from the general fund so the libs can't dip into it to pay for their "social programs". THAT's what broke it in the first place...
C5, you know that any
Submitted by Dan The Man 2 on Fri, 11/12/2010 - 6:27pm.
C5, you know that any accounts the government has access to will not be secure. I forsee in the near future the government changing the 401K rules becasue there is so much money in them; like a ripe zip waiting to be squished.
Two-tiered retirement?
Submitted by Anneke9 on Fri, 11/12/2010 - 11:56am.
"...working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor."
Why did reading Krugman's quote remind me of Marx's quote: “From each, according to his ability; to each, according to his need” ?
The next "progressive" idea will be a two-tiered retirement system in which higher paid, white collar workers are expected to retire at an older age while lower paid workers who do physical labor get to retire at a younger age.
But wait.... workers who do physical labor? Don't a lot of those folks belong to unions? What a great incentive: work for a union and retire earlier. Who needs Card Check?
And he conveniently forgets...
Submitted by C-townGiant on Fri, 11/12/2010 - 12:33pm.
...that most "ditch diggers" have been promoted out of the ditch by age 69.
As a matter of fact, nobody digs ditches by hand anymore. Why do they think the Ditch Witch was invented?
Likewise, most general contractors have moved on from working from someone else and have formed their own business by then. People don't work the drive-thru window at McDonalds forever (I started at Mickey D's at 16 and was promoted to swing manager in three months, shift manager in another 4 months, and assistant general manager on my one year anniversary...all while playing fall and spring sports and maintaining a 3.5 GPA...AND SCREWING AROUND AT WORK!), or be a hotel maid forever, or bag groceries forever.
The fact is that people move up the ladder if they are willing to put in just a little extra effort. Those people become Conservatives. Those that want everything handed to them on a silver platter without working for it...well...they become liberals. And poor.
So they get exactly what they deserve. These are my observations from 34+ years in the workforce (got my first job at a pet store in 8th grade...cleaning cages). In many different industries and occupations. It is by no means the be all end all, but it is overwhelmingly accurate in my case.
As a matter of fact, nobody
Submitted by Dan The Man 2 on Fri, 11/12/2010 - 6:31pm.
As a matter of fact, nobody digs ditches by hand anymore. Says who? I dug plenty of ditches by hand and it is still done when needed.SS would also be fine had
Submitted by bassndude on Fri, 11/12/2010 - 11:58am.
SS would also be fine had congress not spent the money on who knows what. The thing with congress, is if there is money there, they will spend it. Reguardless of weather it is theirs to spend on not. And now, we have a congress that will spend money they wont' have for 40 more years!
Save a SeAL, club a liberal/troll!!
Craziness of the entilement people
Submitted by octavioj on Fri, 11/12/2010 - 11:59am.
Quick calculation:
2075 - 69 = 2006 . That means that the people who will retire at 69 are 4 years old. How is that for entitlement? Just like France, students that have not even started working and paying into the system were on the streets complaining about raising the retirement age. This is the same mentality Dr. Krugman is proposing.
Arguments for or aginst SS
Submitted by bassndude on Fri, 11/12/2010 - 12:16pm.
Arguments for or aginst SS are mute at this point. They cannot simply do away with it and they cannot admit they blew the money out the window. They have collected billions over the years that was supposed to be invested and collect 3% over your working life time, which sounded pretty good, but mostly because you could not opt out of it. They gave you no choice for your own retirement. Still don't. Truth be known, if they could get away with it, they would raid our 401K's and everthing else.
The whole thing started out as a feel good progressive plan to avoid another decade of 1930's and poor on every corner.
The biggest problem with SS is, it is a goverment program. That, in a nut shell is why it don't and won't work.
Save a SeAL, club a liberal/troll!!
Thank you Octa. That is what
Submitted by inquiringmind on Fri, 11/12/2010 - 2:41pm.
Thank you Octa. That is what I saw first in this whole equation. 2075!?! Really? What is the big gripe for smeone who is 4 years old right now? Plus a person could always opt for early retirement just like they can now.
good read, very informative!
Submitted by wiwf on Fri, 11/12/2010 - 12:18pm.
good read, very informative!i heave been paying into SSN since 1965-
Submitted by JIMMY1660 on Fri, 11/12/2010 - 12:38pm.
if that money collected from me was in a private account:
#1-the SOB's in Washington could not steal it as easily.
#2-i would have much more at the end than Uncle Sam will give me.
#3-you have the takers being supported by the makers-why.
you don't contribute you get jack!!
no freebies
the Free Lunch is over for all.
no ticky no laundry.
Folks like Krugman love
Submitted by Ashrak on Fri, 11/12/2010 - 12:58pm.
Folks like Krugman love collectivist policies until it comes to applying that standard to paying the bill.
Pay off people 35 and under
Submitted by Red Jeep on Fri, 11/12/2010 - 1:24pm.
Pay off people 35 and under all they have contributed to SS. Tell them it is their responsibility to provide for their retirement. By accepting the payout no SS for them. Also allow people 36 and over to opt out of the system as well and pay them off.
Provide SS for people 36 and over who want to be in the system. Once the last person on the program who is age 36 now dies that's it. No more SS. Problem solved.
The SS Ponzi scheme might have worked but the birth control pill and abortion assured its demise.
Sounds simple Red Jeep, but
Submitted by bassndude on Fri, 11/12/2010 - 1:32pm.
Sounds simple Red Jeep, but it wont work. Who is going to pay back the folks who have paid into the system and are now ready to retire? Congress did not save that money nor invest it. They spent it on frog ponds and shipping crates for snails.
Save a SeAL, club a liberal/troll!!
How about January 1 we cease the following:
Submitted by Red Jeep on Fri, 11/12/2010 - 1:44pm.
Departments of Energy and Education
NPR and PBS contributions
Any Rural dept of anything there are 4 or 5 now.
Bureau of Indian affairs.
U.S. Commission of Fine Arts.
U.S. Commission on Civil Rights
U.S. Department of Heath and Human Services
AND...a whole lot more. that should help pay for it.
Toast Toast Toast
Submitted by Thoreau on Fri, 11/12/2010 - 4:28pm.
Yea, it's a nice sentiment but the fact is SS is bankrupt. There is nothing from which to pay back. It's a black hole of communist utopia.
We simply have to cut it off. For people 10-15 years away from retirement, keep paying- if you can, but everyone else will have to get the shaft. You really need an accountant to look through the books and calculate it all out, as far as weening people off of it. But it's done for. The problem is how to deprecate the clusterfk without getting people killed.
But none of that is gonna fly with the current government makeup. We might have a shot in 2 years, but not now. It's simply going to collapse or be diluted with hyper-inflation until then. So that $1000 a month will become $200 buying power.
Over-promising
Submitted by ajkrik on Fri, 11/12/2010 - 4:03pm.
None of this should surprise anyone. The various governments across the country have been over-promising for decades. As many commenters point out we have far too many government agencies at all levels, and the years of borrowing has loaded down the relative productivity of the economy. And the chickens are just beginning to come home to roost.
As to Social Security, it is not and never has been anything but a welfare program that has morphed into a ponzi retirement scam. The taxes we pay in go out the next day and this has been common knowledge for decades. And yet people still whine "I paid in and want my benefits!"
Even Hannity was whining the other night about how he wants his benefits. Give me a break! What a hypocrite to be demanding that government stop deficit spending but then complain when his share of this scam is threatened.
It should be TRASHED in its entirety. Tax from general revenues to pay seniors who earn under 30,000 enough for rent, food and utilities. All the other stuff is just actuarial tricks that avoid the elimination of SS.
figures don't lie by liars figure
Submitted by ruby2ssday on Fri, 11/12/2010 - 4:16pm.
Don't get taken in by the "we are living longer" scam using the average life expectancy. Long ago the average life expectancy was 46 years, now it is 70. But take a look at this greatly simplified age at death comparison for then and now:
old age at death = 0,0,60,70,100 yeilds a life expectancy of 46
new age at death = 60,60,60,70,100 yeilds a life expectancy of 70
Are people in fact living longer? No, all we did between the old and the new was lop off the childhood deaths. Both charts have the same number of SS eligible retirees (2).
Used to be that money collected for SS was used to buy gov't bonds. The general gov't got the cash but incurred a legal debt and paid interest. Then LBJ decided to eliminate the middle step to improve the debt picture. Then the money collected for SS was just added to the general gov't fund and an off-books paper IOU was put in a drawer at the SS office. Should have stuck with the original method and placed a legal debt on the gov't for SS retirement funds.
I forsee in the near future a "needs test" for SS. If you have an IRA or 401k you don't get SS. That is of course unless the gov't confiscates your IRA & 401k under the "Guaranteed Retirement Plan" currently being discussed by the demos in congress.
Bernie Madoff ran a voluntary high-stakes Ponzi scheme . . .
Submitted by Galvanic on Fri, 11/12/2010 - 5:48pm.
. . . and went to prison.
The Federal government is running a compulsory public Ponzi scheme that's already gone into the red during this recession, and Krugman doesn't want to even attempt to fix it.
That's the kind of economics that wins one a Nobel Prize. It's says something about academia that an individual can earn a PhD in economics yet not even have enough financial sense to run a convenience store.
To describe Krugman as intellectually dishonest is too generous.
Far be it from me to disagree
Submitted by dscott on Fri, 11/12/2010 - 9:42pm.
Far be it from me to disagree with a fellow conservative such as Noel, never mind the nincompoop Krugman, HOWEVER...
The idea you are going to solve Social Security's problems with raising the age of retirement from 66 1/2 to 69 or whatever it is is nonsense. NONSENSE, because the Commission spread that change over 30 years! In other words there will be no decernable effect.
Even if that change were made over a 10 year period, it is still NONSENSE. Why? Because of many factors starting with human behavior. It's called the extrapolation fallacy.
1) early retirement will still be at 62 1/2
2) Those who retire early get more money cummulatively than those who wait until they are 70 1/2 (which is highest payout possible under the rules). Why? Because if you only live to say 80 years old you are way ahead by collecting early. What's the average lifespan in the US: 77.9 years Of course females can expect to live longer. Male - 75.4; Female 80.4 Table 7
75.4
80.4
The problem with Social Security is NOT the senior citizens who collect, the problem is the thieving politicians who misappropriated the funds for the past 30 years!!!!
The fact is the federal government is under NO OBLIGATION to payback ANY of those FICA collected funds BECAUSE it was a TAX, NOT a premium. The SCOTUS ruled on this a long time ago.
The fact is when Tip O'Neill and Ronald Reagan came to a compromise back in the 80s to "save" Social Security, NO ONE in the Dem Controlled Congress at the time had any intention of saving ONE PENNY of that surplus for later use by the pensioners. EVERY PENNY OF THAT MONEY WAS SPENT. The only reason why Democrats agreed to any reform of SS was to increase the tax receipts so they could go on spending as usual. NO OTHER REASON.
The fact is if you bother to read the SS Trust Fund summary and look at their chart for expendatures, by 2019 OSI payouts will DOUBLE (by $500 billion a year).
The bottom line: As long as a liberal's lips are moving, THEY ARE LYING.
The only way to make Social Security work is to convert it to a pension plan and place it under the legal restrictions for one. That means, Congress will no longer be allowed to pilfer funds via low interest IOUs which they have no obligation to pay back, that means Congress has to start paying back the $3.5 trillion they stole over a reasonable period of time say 30 years, that means an end to survivor benefits like children getting monthly checks for deceased parents until age 18 (this is what life insurance is for), that means a zero COLA increase for the forseeable future until the program is actuarilly sound,and it also means an end to the disproportionality of payout to contributions - those at the low end of the economic scale should be treated equally to the high end people otherwise the system is not sustainable. Tell me how many politicians will sign their name to what I just laid out? That is why the entire system is going to crumble and the government will go bust along with the economy. Politicians simply don't have the BALLS to do the proper thing and ignore the whining of liberals.