Mark Thoma at http://economistsview.typepad.com links to Paul Krugman's latest defense of social security on its 75th anniversary, and Dean Baker has been beating the drums too. I have nothing really original to add to this, but as defending social security against misrepresenting critics has been a core activity of this blog and its predecessor, Maxspeak, from early on, I feel the duty to add to the beating of the drum. "Bipartisan" deficit commission after bipartisan deficit commission seems to find their agreement on doing stuff to social security in the name of deficit reduction, even though social security is the part of the federal budget in better shape than pretty much any other. I think it is the thing that brings together these Washington "experts," who, even if they are not being directly paid by the Wall Street firms that are drooling for the billions from a privatization, they are under the influence of those who have been for so long that those who should know better seem to either forget it or ignore it.
As it is, for this go-around they are pushing for a 70-year retirement age, which Krugman accurately points out seriously hits the poorer groups in the US whose life expectancy is not rising (and, indeed, is falling for some groups, particularly poorer women). The bottom line argument continues to be "cut future benefits now, because, eeek!, if we don't future benefits now, we may need to be cut them in the future,eeek!" meh, feh, gah!
What needs cutting or slowing is the rate of increase of medical costs. Ezra Klein pointed out over the weekend in WaPo that the Repubs are now fighting against the cost control board (IPAB) set up by the Obama health reform, even as they support its spending subsidies, no cuts in defense spending, and the continuation of tax cuts for the rich, all the while playing to the anti-deficit tea partiers, although they do seem to be shying away from Paul Ryan's plan to voucherize social security. And people are whining that the Congressional Dems have nothing to run on this fall?
BTW, we really should pause for a minute or so to appreciate the 75 years of this program, which has been an unqualified success, providing social security for millions of people extremely efficiently and without a single scandal that I am aware of in its entire history. That people of either party are going after it is really the scandal.
I regard it as one of the government programs that pretty much works, as far as I can tell.
Do you think it would be a good idea to replace Social Security with something like a negative income tax for people over some age, such as 65?
What if it were made so that old people with very low income received more than they do now, and old people with very high income receive nothing. In between, there is a gradual reduction, so that the disincentive to work is negligible.
It's been a few years since I read it, but I think I recall reading about something like this in either a Milton Friedman or a Herbert Stein book.
What would be your reaction to that?
We already have a negative income tax, the EITC. I am for leaving social security alone. Maybe some day down the road something will have to be changed. But that is not now and probably not anywhere in the near future.
Keep in mind that if in 2037 or whenever the fund "goes broke," what will happen if nothing is done is that recipients find themselves going from getting something like 170% of what current recipients get, to about 120% of what current recipients get in real terms. (Bruce Webb used to refer to this as "Rosser's Law"). This is simply not remotely a crisis.
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