It's a common theme of the right that Social Security will collapse if we don't do something to cut back on the terrible problem of giving money to people who earned it. The right have been fighting Social Security since it was first proposed (although a few Republicans did vote for it in 1935), and many have been trying to privatize it ever since. Just last night, Paul Ryan claimed that "Social Security [is] going bankrupt. These are indisputable facts". Well, no. Social Security is fully funded for at least another 25 years if we do nothing. But there are some trivial things we can do to make it viable for much longer. For example, raising the contribution cap can bring in a lot of money: if the cap were eliminated entirely, it'd bring in about $130B a year, enough to pay $6K a year to every beneficiary, or add about 50 years to the viability of the trust fund. (current revenues are about $500B) The people who would be paying, for the most part, don't really need social security, nor is the cost a big part of their income. That they don't need it is often used as an excuse for them to not pay, and a rationale for "means testing", meaning they wouldn't be eligible. This is wrongheaded. There's a big group who need social security a little bit. Although they have other income, SS helps them. This group is the largest share of the contributors.
So how is it that the supposed actuarial problems of dramatically increasing life expectancy and the baby boom are not eating up the entire trust fund? Well, they are, a little. But only a little. It turns out that life expectancy increases have taken place in two broad areas: firstly that life expectancy for children is dramatically higher than it was in 1935. This actually adds to the labor force. It means that all those kids who were dying of whooping cough, smallpox, polio and all the rest, aren't anymore, and are are helping to pay for it all. Life expectancy for oldsters has gone up too--but not much. The demographic that matters: average life expectancy of a 65 year old has increased from about 14 to 18 years. This is a lot of new seniors for sure: in 1935 there were about 8 million people over 65, and today there are about 40 million: a factor of 5. but wait: there were fewer than 30M people paying payroll tax in 1935, but today there are almost 150M--coincidentally a factor of 5. So it all balances.
12 October 2012
04 October 2012
There You Go Again
I think the largest reason Obama seemed overwhelmed by his opponents aggressive, lying attacks in last nights debate was because he was afraid of one line: Ronald Reagan's quip "There You Go Again". It was dishonest in 1980 (Carter argued that Reagan had fought medicare and was fighting Carter's plan, which was true, but Reagan claimed he had an alternative, which he didn't), but that didn't seem to matter. Over and over, Romney lied about Obama's policy and his own proposals, or blamed him for things which were clearly not his fault. For example, a few days after he was inaugurated, Obama promised to halve the deficit. This was done before the magnitude of the collapse was understood and when TARP was still expected to be used to buy toxic assets and minimize foreclosures instead of subsidizing banks. Nevertheless, he has brought the deficit from $1.5 to $1.2T and is on course for $900B in 2014. (fy 2013 has already started). Why has this happened? Almost entirely, republican obstructionism.
Ending the Bush tax cuts on schedule after 2010 would have subtracted about $400B from the deficit, but it's an article of faith for republicans and some democrats that this would have sent the fragile economy into a dive. Many economists disagree but lets ignore that. Obama wanted to end the cuts only for incomes over $250K--about 2% of tax filers, but about 30% of all income. The 2010 "deal" added about $80B a year to the deficit instead of ending the Bush tax cuts on schedule--subtracting almost $500B had nothing been done or $230B had we done what Obama wanted. Had the Bush cuts expired, and nothing else been done, the deficit would be half what the president inherited, just as promised, and had Obama's plan been used, it'd have been about 2/3rd. instead, it's about 5/6ths.
What's going to happen after the election? Panic about the "fiscal cliff", which was caused by this foolishness and the even more foolish debt limit fight last year, will probably push all of this off another few years. What should happen? Abandon the "sequester". Rescind the Bush cuts for high incomes, keep them for low incomes. Rescind the payroll tax cap completely and restore rates to their pre 2010 level (6.2%. It's now 4%) for incomes over $100K.
Had the original House health care plan (the one with the public option, which oddly, Romney endorsed last night) been passed, it would have already been in effect, saving $200B or more, while the most important parts of ACA for the budget, the mandate and the exchange, don't go into effect until 2014 and won't have much impact for some years to come. Add this to the Obama tax hike for millionaires plan, and we'd have been almost to the half he promised. But the republicans filibustered this, with help from a couple of right wing democrats. (the democrats sort of had 60 votes for about 3 months. Franken wasn't seated until Kennedy was out of the picture, and the time that Kennedy's substitute (Kirk) and Brown's election was the only period when the Ds might have had enough votes to override a filibuster. But Lieberman and Ben Nelson sided with the Rs on health care.)
Romney had the gall to blame all of this on democrats refusing to to work with republicans. All night he was baiting Obama to blame the republicans for their extreme obstructionism. But he never fell for it, but he was intimidated into not fighting with the facts, which are completely in Obama's favor. He had the gall to accuse Obama of lying, "using his own facts", which was exactly what he himself was doing.
Romney is right, that congressional democrats work with republican presidents much better than republicans work with democratic presidents. This is not the fault of the democrats. The fact is, the deficit is almost entirely the fault of irresponsible republican policies and maintained by irresponsible republican obstructionism.
Ending the Bush tax cuts on schedule after 2010 would have subtracted about $400B from the deficit, but it's an article of faith for republicans and some democrats that this would have sent the fragile economy into a dive. Many economists disagree but lets ignore that. Obama wanted to end the cuts only for incomes over $250K--about 2% of tax filers, but about 30% of all income. The 2010 "deal" added about $80B a year to the deficit instead of ending the Bush tax cuts on schedule--subtracting almost $500B had nothing been done or $230B had we done what Obama wanted. Had the Bush cuts expired, and nothing else been done, the deficit would be half what the president inherited, just as promised, and had Obama's plan been used, it'd have been about 2/3rd. instead, it's about 5/6ths.
What's going to happen after the election? Panic about the "fiscal cliff", which was caused by this foolishness and the even more foolish debt limit fight last year, will probably push all of this off another few years. What should happen? Abandon the "sequester". Rescind the Bush cuts for high incomes, keep them for low incomes. Rescind the payroll tax cap completely and restore rates to their pre 2010 level (6.2%. It's now 4%) for incomes over $100K.
Had the original House health care plan (the one with the public option, which oddly, Romney endorsed last night) been passed, it would have already been in effect, saving $200B or more, while the most important parts of ACA for the budget, the mandate and the exchange, don't go into effect until 2014 and won't have much impact for some years to come. Add this to the Obama tax hike for millionaires plan, and we'd have been almost to the half he promised. But the republicans filibustered this, with help from a couple of right wing democrats. (the democrats sort of had 60 votes for about 3 months. Franken wasn't seated until Kennedy was out of the picture, and the time that Kennedy's substitute (Kirk) and Brown's election was the only period when the Ds might have had enough votes to override a filibuster. But Lieberman and Ben Nelson sided with the Rs on health care.)
Romney had the gall to blame all of this on democrats refusing to to work with republicans. All night he was baiting Obama to blame the republicans for their extreme obstructionism. But he never fell for it, but he was intimidated into not fighting with the facts, which are completely in Obama's favor. He had the gall to accuse Obama of lying, "using his own facts", which was exactly what he himself was doing.
Romney is right, that congressional democrats work with republican presidents much better than republicans work with democratic presidents. This is not the fault of the democrats. The fact is, the deficit is almost entirely the fault of irresponsible republican policies and maintained by irresponsible republican obstructionism.
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