The grandfather clause (repost)

by John Quiggin on August 11, 2012

With the announcement of the Romney-Ryan ticket, I decided to repost this piece on the most striking (to me) aspect of Ryan’s plans, namely the exemption of those currently over 55 (or maybe those who were over 55 in 2010 or 2011, when the plan was first announced. If everything goes to plan for the Repubs, Ryan would be the presumptive candidate after Romney’s second term in 2020. Coincidentally or not, that’s just about the point when the exemption runs out. People retiring after that will have spent a decade or more paying taxes to support benefits for those grandfathered in, but won’t be eligible themselves.

I saw a reference to (US Representative) Paul Ryan’s plan to kill Social Security and Medicare, but only for people currently under 55 (he doesn’t say “kill” of course, but if it was going to make things better he wouldn’t need to exempt everyone likely to care directly about the issue) and it reminded me to post this.

A policy like this has what economists like to call a time-inconsistency problem. To get the policy approved, Ryan needs the votes of people currently over 55 (hence the exemption) and in the current US situation, any Republican majority has to rely heavily on older voters. Say the plan passes. Sooner or later, the combination of demographics and the electoral pendulum means that the Repubs will be out, and the new primarily majority will face three choices (a) Repeal the whole thing if they can do so before it comes into force (b) Keep on paying high taxes to fund benefits they will never receive for the benefit of the selfish old so-and-so’s who voted to cut the rope once they had reached the top; or© extend the same cuts to the (as of 2011) over 55’s, and claw back some money for themselves.

If I were an over-55 Republican, I don’t think I would want to count on (b)

 

* The original grandfather clause was a Jim Crow rule limiting the franchise to people whose grandparents had held it before the Civil War. The UK adopted something similar in relation to immigration in the 1970s. These examples give some good reasons why grandfather clauses (exempting existing participants in a system from unfavorable rule changes)  are bad policy in general, though there may sometimes be exceptions 

{ 153 comments }

1

P O'Neill 08.12.12 at 12:33 am

Even George Bush with the benefit of a bubble in 2005 couldn’t convince the would be reform beneficiaries that there was a pot of gold in something other than the current system.

2

JP Stormcrow 08.12.12 at 1:03 am

It is the kind of thing that you think would give the Saletans (not in the mood to link) and others who like to applaud his political “courage” some pause.

Nah, on second thought, why would it?

3

John Quiggin 08.12.12 at 1:24 am

I saw Saletan – definitely no link from me either

4

Bruce McCulley 08.12.12 at 2:28 am

For many years, a central element in the Republican Party game plan has been to use hot button issues to distract middle class people into voting against their own interests. Now, the blatant hostility of the Ryan budget toward all but the rich makes continuing the con a very tough sell.

5

JP Stormcrow 08.12.12 at 3:11 am

Speaking of Slate, unlike managing editor Rachael Larimore, we don’t understand that Ryan is going to appeal to young voters by keep his mouth shut about being a social conservative because he’s so busy talking about screwing them financially.

It might be wishful thinking, but I’m also hopeful that Ryan will rally young voters. There was a story in the New York Times this week about how social conservatives are “deliberately playing down their own views on issues as a tactical move to attract more young voters to the Republican Party” since young voters, even Republicans, are more likely to support gay marriage and abortion. Ryan’s voting record definitely makes him a social conservative, but he also acts like he has no time for social issues because the economy is a more pressing matter.

6

Omega Centauri 08.12.12 at 3:30 am

Bruce @4, Color me very skeptical about how hard a sell it will be. These people want to be fooled, and the media will help them to do it. I would sure love to be wrong about this! I think the operative tea party principle is vengeance. Anything that will hurt liberals is worth doing, no matter how much it will cost me personally…….

7

Lee A. Arnold 08.12.12 at 3:54 am

This makes the deficits a main campaign issue. But Romney ought know that the deficits are not a real problem. The projections show a time soon when they subside, and economic growth can swallow the dollar denomination of the remaining debt, while the Fed keeps inflation at bay. Nothing will make interest rates jump 3 or 4 points overnight; it is going to be a long slow slog if interest rates rise, at all. There is too much “savings glut” or excess liquidity in the world, not to mention a good deal of quantitative easements, but there are few automatic wage-contract hikes remaining to convert these things into inflation, or sometimes we must explain instead, general inflation.

Meanwhile the 1% needs to keep the domestic economy in a ditch until the world economy comes back, because the new availability of investment opportunities abroad will cause interest rates to rise here by the competitive securities markets, i.e. the interest rate markets, and the higher interest rates will let them make more money on the public debt they owe, and retain their relative share of ownership of the world.

So if Romney, a conniver par excellence, has put any intellectual thought into the deficit at all, he knows it is not a real issue.

But there is the question of whether Romney (A) actually understands the deficits and economics, or whether (B) he has fallen into the same hawkish boobery as his economics advisors and many other businesspeople (but not all).

Then there is the politics of it. It is possible that Romney’s political needs are two, (1) to shore up his base–his internal polling must be iffy, because he is after all a liberal, and (2) to find an issue which he can make tactically into HIS issue: the near-term deficits to come.

So that gives us a 4-matrix, then we have to cross this is whether he is simply calculating as a CEO might: that this is a good ad to run, for a while.

–Taking any quadrant, or perhaps it is an octant from a cube’s volume of possible blabberings, there again seem to be matters he has not thought about.

Is he thinking, intellectually, that he will introduce the deficits as a conversation that the nation should have? Because the conversation we SHOULD be having is this one: The question is whether you need the drastic Romney-Ryan axe, or whether a piecemeal Obamacarian approach is sufficient to ward off a future full of boogeymen. Because Ryan’s own House has been stopping Obama’s more careful, protective approaches, so part of the counter-narrative to Romney is given license to expand, to show when “piecemeal” has been purposefully destroyed to create “drastic”.

Ryan’s own budget does not show balanced budgets until several decades more. Take out the rashness and violence of Ryan’s approach, and what difference would there be?

And on the purely tactical grounds of the availability of ammunition, of materiel, Romney may be be demonstrating a continuing blindness. He was ill-prepared to run into the buzz-saw on Bain and tax returns, and this adds more flames to the blaze. Sorry to mix all these metaphors, but golly I am overwhelmed by the sudden embarrassment of riches.

It still ought to be easy for Romney’s opponents, i.e. Obama and the Dems, to use the deficits issue. They merely continue to deploy Romney’s own audio and video flip-flops against him–and now add, against Ryan as a screen image. And indeed, in the same ads, educate the public on the innards of PPACA with a light, yet lasting, touch. Here again this strikes me as something Romney has NOT thought about; a Romney CEO-style failure if you will.

As to the VP, when Ryan begins to rehearse his “stunning” intellectual “command” of the facts and figures, then please ask Ryan what such intellectual command means in the real world, where somebody will have to buy a prescription drug, or please tell us, how grannies avoid living in the street.

The basic thing is, if you look at it ALL (as Ryan never does, at least in his public showings), then you find that the real policy math always adds up. To just about where we are now, already. In a philosophy class, we might say that this reflects the real nature of the really real, or perhaps it’s because addition and multiplication are commutative, or something.

On the whole, therefore, either Romney may not really understand the economics of what is going on, or else he consciously intends to twist the public’s misunderstandings even further.

In addition, he appears to have made a forced, quick, strategic mistake.

I begin to wonder is this is not the final Romnoidian hemorrage. With “hemorrage” accented on the last syllable like “dressage”, or as people widely now mispronounce “homage”–as in the affectation of a cineaste at a dressy film festival: the Romnoidian hemorRAHGE.

8

Ben Alpers 08.12.12 at 4:19 am

The original grandfather clause was a Jim Crow rule limiting the franchise to people whose grandparents had held it before the Civil War.

This is not quite right. The original grandfather clause exempted people whose grandfather’s held the franchise from having to meet onerous literacy or property requirement in order to vote.

9

Lee A. Arnold 08.12.12 at 4:42 am

John Quiggin, I am always a little amazed that people like Ryan don’t rather automatically see your argument. It’s like they don’t realize that the evolution of the policies in a safety-net will, of course, create something that is a spontaneous Hayekian extended order, and over time it will follow logics that are NOT time-inconsistent. Therefore, disrupting a safety-net in any substantial way would tend to throw unwanted fall-out in lots of directions. It’s like disrupting markets, or any other long-standing institution. It is anti-conservative.

10

Curmudgeon 08.12.12 at 4:57 am

@Lee A. Arnold — Conservatism in its modern form isn’t about conserving existing social arrangements as it is about a particularly vicious kind of revenge-oriented reactionary politics driven by equal parts resentment (at the lower end of the income spectrum), hatred/fear of the other, worship of money, and greed (at the top of the income spectrum). To conservatives, fallout is a feature, not a bug, because it is expected to harm their enemies while improving the relative status of well-placed conservatives.

The only thing a modern conservative cares about is that those he/she hates are made to suffer.

11

Bruce McCulley 08.12.12 at 5:40 am

Omega@6 – I’m afraid you’re right about the Tea Party types. But I do believe that many voters in the mushy middle will think twice about cutting their own throats.

12

Jim Harrison 08.12.12 at 5:57 am

Ryan et. al. have been extremely cynical in promising not to cut benefits for people over 55. They are counting on the usual selfishness of the elderly. The Democrats should be just as cynical now and terrify the old voters with the prospect that they, not their kids, will be hurt. After all, if old people tend to be selfish, they also tend to be fearful. Anyhow, we ought to be fearful—I’m 67 myself—because for all their assurances, the Conservatives will do what they can to cut current benefits if they can get away with it politically. Their real loyalties lie with the wealthy, and even fiscally irresponsible Republicans know that at least part of the tax cuts for the high brackets will have to be paid for with money from someplace.

13

Lee A. Arnold 08.12.12 at 5:59 am

Sometimes fearful, surely, but do old people tend to be selfish?

14

Jim Harrison 08.12.12 at 6:09 am

Well, the premise of the Ryan approach is that old people are indeed selfish; but I based my remark on experience with people of my own age. I certainly don’t mean that all old people are selfish or selfish all the time, but I recognize in myself how the aging process encourages a narrowing of moral focus. You can fight it, but the point is you have to fight it.

15

bad Jim 08.12.12 at 6:35 am

Ryan is perhaps making a calculation about typical time horizons. We boomers are quickly approaching the age at which we’ll benefit from Social Security and Medicare, so these seem very tangible to us. Many of us already benefit from these programs indirectly since we’re taking care of our parents.

However, much younger people have been told for years that there will be nothing left for them, that Social Security is a Ponzi scheme, and in any event regard retirement as something over the horizon, presently invisible and thus not immediately relevant. They’re broke now, so where’s the sense in saving for the future?

Nevertheless, I doubt that even the American electorate will accede to the dismantling of Medicare. Even the young have parents and realize that no one is immortal. It ought to be possible in a single TV commercial to make it clear that Ryan’s replacement of Medicare with vouchers would mean death panels for everyone.

16

John Quiggin 08.12.12 at 7:03 am

A side point, but people have been told for so long that Social Security is a Ponzi scheme, it’s getting to the point someone could have believed the story for much of their working life, retired and collected benefits until their deaths. Presumably “imminent death of Social Security predicted” must lose some of its scare power over time.

17

bad Jim 08.12.12 at 8:09 am

One might think so, but the imminent end of the world is perhaps the oldest Christian tradition yet shows no sign of losing its appeal. There’s something intuitively convincing about scary stories.

Look at gold prices. A great many people are frightened by the prospect of the collapse of our currency, or at least of rampant inflation. You’d think that any sane person would look at interest rates and come to the opposite conclusion, but the most cursory survey of contemporary commentary on deficits would show that sanity is our scarcest commodity.

18

Tim Wilkinson 08.12.12 at 10:53 am

I’ll repost too then. Part of a comment posted on the moribund ‘Rawlsian transition’ thread seems apposite here:

I wonder if other kinds of reliance on the assumption that things won’t change (in certain ways) are also regarded as violations of the Rule of Law? One…who has planned their retirement on the basis of a state pension scheme only to find that it has been run down. Or who has relied on the NHS only to find, after developing a medical condition, that only a substandard service is available on the NHS and the government says they should have taken out private medical insurance (before developing the condition, of course).

Should we expect an outcry from Hayekians?

What’s more, I’m not entirely clear on the legal status of ‘entitlement’ programmes, but don’t some of them have a quasi-contractual nature (possibly even in the legal sense of ‘quasi-contract’, related to reliance interests and ‘promissory estoppel’) , opening up the possibility that those common law rules of property which do so much to maintain the sovereignty of international capital over nation-states might actually be drafted in to challenge such a move? (Presumably not, since it’s incredible that such an issue, if a propos, would not have been raised already, but there might be at least some rhetorical capital to be made of this kind of consideration.)

19

Steve Williams 08.12.12 at 11:51 am

Jim Harrison@14:

“I certainly don’t mean that all old people are selfish or selfish all the time, but I recognize in myself how the aging process encourages a narrowing of moral focus.”

I agree that, electorally, old people en bloc tend to present an effective buffer to changes to their own entitlements, without often seeming to worry about the life chances or futures of those younger than themselves (there’s really no other way to consider a vote for a Republican candidate these days). However, I’m cautious about characterizing this as ‘selfishness’ because the idea that ‘demanding commitments made be kept’ and holding politicians’ feet over the fire to achieve this, is selfishness seems perilously close to a Republican talking point, of the ‘how can you care about American workers when there are people starving in Africa’ variety. Would that everyone was as good as making politicians follow up their promises as old people are.

Unrelated: Paul Ryan truly has to be having one of the most staggering second acts in American political history. Where did this idea that he’s a deficit hawk come from? I know about the budget, but he had the reputation beforehand, and I can’t possibly imagine a less-deserved reputation. From 2000 to 2008, he legislated as a straight-down-the-middle Bush Republican. Amongst other things, he voted for the auto bailout, TARP, Medicare Part D and the Iraq War. Whatever your opinion on the values of these policies, they certainly don’t seem to show a near-religious devotion to starve-the-beast fiscal conservatism or preventing increases in government’s unfunded liabilities. Yet where are we hearing this from right now? We aren’t, we just hear that he’s a ‘fiscal hawk’, my ass.

20

Guido Nius 08.12.12 at 12:38 pm

I do not see old people having a more narrow moral focus but I do see them vulnerable to propaganda based on creating a nostalgic image of the society in which they happened to be young. That and many old people are bitter about not having any young people who’ll want to be around them. In politics some see a possibility of a getting even which most of them wouldn’t even want to have in their immediate surroundings.

It is a sad situation.

21

Watson Ladd 08.12.12 at 1:04 pm

JQ: The problems with Social Security are manifold, but it is stable. The big issue is the low rate of returns on assets held, and low returns on the taxes. If you are a low-income worker you pay 12% of your wages (add employer contributions) for a benefit you might never see., and no one can retire on Social Security alone. This is a real problem which Democrats don’t address, and Republicans use as an excuse to destroy the whole system.

22

Red 08.12.12 at 1:16 pm

Lee @7: I like what you say a great deal except for your assumption that this is Romney’s CEO-like decision. Rather, it is imposed on him–he is no longer in control of his campaign, if he ever was.

23

David J. Littleboy 08.12.12 at 1:40 pm

“Presumably “imminent death of Social Security predicted” must lose some of its scare power over time.”

I think not: there’s a sucker born every minute. FWIW, the US has, and will continue to have for a long long time the lowest ratio of elderly to working folks of any of the industrialized countries. Social Security is, of course, in the black for the next 30 years or so if we do nothing, and trivial to make financially secure foreever simply be eliminating the cap on SS taxes. (Bur everyone here knows that, of course.) The Japanese, on the other hand, have a major disaster on their hands. (Inversely, the Japanese have medical costs largely under control, at about 1/3 per person US costs. This makes their elderly problem less of a disaster than it might otherwise be, but it’s still a disaster.) My in-laws are mostly MDs and dentists and while nowhere near as affluent as US MDs and dentists, they are still quite comfortably affluent and seriously conservative. But the idea that a country could fail to provide medical/dental insurance for it’s whole population is unthinkable, even to the craziest of the crazy far right over here.

As usual, I digress. Sorry.

24

JP Stormcrow 08.12.12 at 1:45 pm

and no one can retire on Social Security alone.

And yet many do (26% was latest figure I’ve seen). Such a puzzle!

25

Watson Ladd 08.12.12 at 2:18 pm

What percentage of the pre-retirement income do they receive in benefits? How much could they have if they saved 10% of their income in an index fund and spent 2% on life insurance and disability insurance?

26

Consumatopia 08.12.12 at 2:28 pm

I’d like to see Democrats announce in advance that the next time they take power, they’ll take option (a)–that any cuts Republicans make with grandfather clause exemptions that take effect in the future will be undone by Democrats as soon as power is retaken. Such cuts should be seen as purely imaginary–the CBO projections and private agencies considering our credit rating should assume that these cuts will never take effect.

I suspect that would be enough to deter Republicans from making such cuts–they’re already predisposed to assume that spending cuts in the future are a mirage.

27

Bruce Wilder 08.12.12 at 2:53 pm

I’d have liked to have seen Democrats in power actually reverse anything George W. Bush did with regard to foreign policy or economic policy. Instead, we got Obama.

It’s the Democrats, who have no credibility with me. I believe the Republicans will do what they promise, because they have a solid record of having done so. Democrats, not so much.

28

Cahokia 08.12.12 at 2:56 pm

Ah, our first Generation X candidate. As a fellow X’er from the midwest I humbly beseech the Boomers to pause and consider how morally vacuous and opportunistic this red state ticket has become. The idea that corporate interests, contributions at 2:1 for Ro-Ry-Republicans http://www.corporatecrimereporter.com/news/200/corporate-criminal-2012-donations-to-democrats-and-republicans-top-18-million/ , might need the most malleable executive branch available if economic troubles spill over from E.U. and cause banks to need support and executives to need less investigation. For the honor of serving Mitt, they have chosen a little known X’er whose only private sector experience was working at McDonald’s.

29

christian_h 08.12.12 at 3:09 pm

Watson, I suppose you know very well that the supposed “low rate of return” Social Security provides is a myth, as the calculation of this return ignores the legacy debt. This is exactly one of those transition problems – even if privatizing retirement saving completely was a good idea, it would be incredibly expensive since someone would have to pay (at least part of) benefits already accrued.

There’s also the question of risk, of course. I know any number of people on defined contribution plans who are unable to retire even though they planned to do so years ago, due to the crisis-depressed markets.

30

christian_h 08.12.12 at 3:13 pm

I’m with Bruce. I would never in my life trust a Democratic promise as outlined by Cahokia (28.). Every couple years, somewhere in the US, unions elect Democrats in states to undo anti-labor legislation or pension busting done by Republicans. It never happens. Instead the Democrats extract more concessions. We are on our own fighting the Social Security/ Medicare destruction machine, forget the Democrats. On the plus side, it definitely can be done. Both programs are incredibly popular.

31

Watson Ladd 08.12.12 at 3:37 pm

christian_h: True: the money they pay in today goes to benefit current retirees. That doesn’t change the low returns the workers paying in face. Imagine for simplicity that the population was stable, inflation zero, and economic growth 2% (long-term real growth). Also imagine people drop dead only after starting to collect at 70 when they turn 90, and all enter the workforce at 25. Then the collected taxes of 45 years finance 20 years: each worker gets 24% of their income financed by 12% when they were working. But remember that 2% real growth? A rough calculation indicates that they will have saved 8.5 times their income by retirement, which can finance a very nice annuity replacing about 40% of income. That’s a pretty big difference.

32

William Timberman 08.12.12 at 4:07 pm

Given that the first allegiance of officeholders is to their own careers, and that Democrats have been bludgeoned over the last forty years into believing that those careers are only possible if they abandon their traditional constituencies. I share Bruce Wilder’s and christian_h’s contempt for them as political allies. A year or so ago I called Democrats at best, placeholders; at worst, part of the enemy’s baggage train. Nothing that they’ve done since has given me any reason to change my mind.

33

Bloix 08.12.12 at 4:17 pm

#23 – “The Japanese, on the other hand, have a major disaster on their hands.”

Dean Baker disagrees with you:

“Productivity growth in Japan has averaged almost 2.0 percent annually over the last two decades. At this rate, output per worker hour will be nearly 170 percent higher in 50 years.

“This means that if retirees consume 80 percent as much as active workers, and the ratio of workers to retirees fall from 2.5 today to 1.8 in 50 years, then consumption per worker and per retiree can increase by 120 percent over this period, assuming no reduction in hours worked.

“In fact, this would understate the actual gain in living standards since there will be fewer children to support and there will also be gains in living standards associated with less crowding. (Tokyo won’t need to pay workers to push people into subway cars.)”

http://www.cepr.net/index.php/blogs/beat-the-press/abc-and-the-independent-are-terrified-by-the-prospect-of-japan-getting-less-crowded

34

Antoni Jaume 08.12.12 at 4:26 pm

Cahokia, what are Ro-Ry-Republicans?

35

William Timberman 08.12.12 at 4:30 pm

One other note on the selfishness of the old: I’m old — at least by comparison to many of the commenters here — and I’m retired on the proceeds of a fairly generous defined-benefit plan. Because of the way that plan was structured when I began working for the organization that provided it, I never contributed via FICA to Social Security or Medicare, and am not eligible for either now.

Still, I’d gladly go back to work as a greeter for Walmart if it would guarantee that those programs, as well as the benefits I’m currently enjoying, would be preserved for future generations. (Although I read that Walmart has recently done away with its greeters, the principle remains.) We old folks have children and grandchildren, and more of us care about what happens to them than younger critics of our self-centeredness seem to realize.

36

bourbaki 08.12.12 at 5:56 pm

@Watson Ladd

According to this study (which I got via Dean Baker ) an “average” man who turns 65 in 2010 would have paid ~$294,000 in SS taxes and would receive ~$290,000 in SS retirement money.

The salient point is that the amounts are all in constant (2011) dollars and the amount paid in taxes is calculated by assuming that the taxed money (which includes the employers share) was invested with a %2 real rate of return.

Given that this is essentially risk free and there are a great deal of other important insurance aspects to SS, as Paul Ryan is well aware, it seems like a pretty good deal to me.

37

Lee A. Arnold 08.12.12 at 6:16 pm

John Quiggin, it strikes me that Romney may avoid arguing with 55-year-olds, but his campaign may try to place Social Security at front and center of a specific constituency: the 20-somethings who have been misled by the IOUSA and Simpson-Bowles falsehoods. Whether or not that can do anything to impinge upon the results to come in the U.S. electoral college, is another story. But it still means that the Obama campaign must suggest why Social Security is not in serious budget danger: and unfortunately this may depend upon the sort of intelligent exposition which the Democrats are unable to muster. (And in the case of deficits, they loathe to do.) They could do worse than to use the graph to show that Social Security is not really a big deal, it stays flat as a percentage of GDP, p. 99 of the Long-Term Budget Outlook: http://cbo.gov/sites/default/files/cbofiles/attachments/06-05-Long-Term_Budget_Outlook.pdf

38

chrismealy 08.12.12 at 7:04 pm

Is there a term for being-born-in-the-wrong-year risk? Social Security is the only thing that deals with that. Just giving 4% of GDP to old people works when the market is up or down, no matter how bad your timing is, or what year you were born.

I know you can buy real annuities, but that’s only because they’re backing by TIPS, and they only sell them to fairly old people to begin with.

39

TM 08.12.12 at 8:29 pm

From my experience I can testify that young Americans, and probably Americans in general, don’t understand the principles that underlie Social Security. They don’t understand the idea of a generational contract. They don’t understand that SS is not an investment but a transfer of resources from the economically active generation to the older generation, and one cannot even begin to explain that such a transfer is economically more efficient than if it were effected individually (via family solidarity or the accumulation of assets). Midlevel college students I have tried to teach couldn’t even name Roosevelt let alone Bismarck. They do not know – how could they – that the oldest Social Security-like systems have been in successful operation for more than a century, surviving world wars and other upheavals that wiped out most of most people’s assets. It is the extent of American ignorance that really makes me worried. I’m afraid a gifted demagogue could turn that ignorance into almost any political project. The only good news is that Romney and Ryan don’t appear to be very gifted.

http://www.slideshare.net/amenning/the-human-population-challenge

40

Watson Ladd 08.12.12 at 8:31 pm

There are better ways to extract 4% a year then a regressive tax.

41

TM 08.12.12 at 8:49 pm

On the Japanese, when you compare the Japanese population pyramid from 1950 to the current one, you see that although the share of old people has increased dramatically, the share of the economically active population has actually increased (and that is without taking into account the actual labor force participation rate, which has also increased), because there are fewer children. Demographic scaremongers tend to ignore the fact that children are expensive too. Demographic aging per se doesn’t cause any insurmountable economic difficulty. On the other hand, what tends to be forgotten is that population stabilization together with long life necessarily lead to an aging population structure (at least for a transition period). And a Social Security-type system is a necessary condition for population stabilization because otherwise, people have to rely on their children in old age.

42

Martin Bento 08.12.12 at 9:01 pm

Cahokia is on to it. It is important than Ryan is an Xer, as the Republicans hope to play on the anti-boomer hostility so common in Gen X, and which they hope X has managed or is managing to transfer to the millennials (the millennials are key here; the Xers and Silents don’t have sufficient numgers). THough there has been some attenuation lately, as absolute age effects have tended to mitigate cohort effects, substantialy all their lives the boomers have voted democratic and Xers republican, but if the repubs pull this off, the Xer cry will be “the boomers screwed us again”. You run into this all over the net, including on liberal sites, and I think it is time it was dealt with directly. Of course, to get the money they hope to get, the Repubs have to screw at least some of the boomers too, at least measuring by demographic boom, which is what counts moneywise (I’m with Strauss and Howe and many others demographers in holding that the children of the early sixties are more like xers than boomers culturally, though they are still part of the demographic boom).

A related problem is that the nationally-prominent democrats are boomers or older (save Obama by the definition above). The Repubs have Ryan, Walker, Palin – the Xers produced fighters for their side. Cue the “the boomers ruined everything” narrative already prominent in surprising circles to be put to use.
.

43

chris 08.12.12 at 9:27 pm

A year or so ago I called Democrats at best, placeholders; at worst, part of the enemy’s baggage train. Nothing that they’ve done since has given me any reason to change my mind.

Nothing? Really? Do you by any chance have one of those preexisting — oh wait, it doesn’t matter any more. Of course, it might start mattering again if Romney gets his way and repeals “Obamacare”.

Take a look sometime at the legislation the Democrats passed (partially) when they were the majority in the part of Congress that is actually controlled by the majority. Do you want to give that agenda a chance to become law? Or do you think the country is better off without it? Whichever way your preferences lean, don’t try to tell me it doesn’t matter, because I’m out of patience with that particular line of fatalist bullshit.

44

mrearl 08.12.12 at 9:36 pm

The politics of this pick are counter-intuitive. Romney rejects Senator Portman of Ohio, with 18 electoral votes, where Obama holds only about a 2-point advantage in the polls. Instead he selects a Congressman from Wisconsin, 11 electoral votes and a 5-point Obama advantage, who has not run a statewide race and who has the baggage and targets described above. Granted they are assets with some constituencies, but those voters have nowhere else to go.

Bemusing.

45

William Timberman 08.12.12 at 10:03 pm

Chris, one person’s fatalist bullshit is another’s clarity about the difference between what’s claimed and what’s delivered, and about the reasons given by the self-serving for the discrepancies between them. Likewise, one person’s pragmatism is another’s nest-feathering, or worse, cowardice.

It also should go without saying that the limits of your patience aren’t of as much concern to me in making my political judgments as you seem to believe they ought to be.

46

christian_h 08.12.12 at 10:13 pm

chris, all I at least have been saying that relying on the Democrats to protect entitlements is foolish. That does not mean that having Democrats in office might not be (is, in my judgement) advantageous for the fight to protect entitlements – merely that the party is not in any way our ally in this fight.

You can of course ignore the numerous examples on the state (and local – ask my union organizer friends in in L.A. about Villaragosa) level of unions pouring all their energy into electing Democrats when what they should do is fight for their members, only to have the Democrats they elected turn on them from day one – now with labour’s defenses non-existent since they colluded in putting the union busters into office in the first place – but you do so at your peril.

Those of us who take the fight over entitlements seriously need to prepare to take on all comers, and we need to prepare now. I’m glad to see by the way that there seems to be a good level of awareness of this in general on the liberal left.

47

Martin Bento 08.12.12 at 10:13 pm

PS. Paul Ryan named his dog “Boomer”. The other one is named “Sooner”. Not sure what exactly that means, but I would be curious to know. I suspect a generational dig, but perhaps I’m wrong.

48

William Timberman 08.12.12 at 10:23 pm

Martin Bento, see the history of the land rush in Oklahoma.

49

Lee A. Arnold 08.12.12 at 10:26 pm

mrearl #42: “The politics of this pick are counter-intuitive.”

It seems to be from a position of weakness. One thing I would add is that Romney’s internal polling may have started to show that Obama’s attack on him as a vulture capitalist was making inroads against the emotions of the “Anybody but Obama” crowd. If so, Romney may have needed to shore-up the interest of the Tea Party base. So this is the best of a bad situation, for him. I believe he would have done better byhiring Fred Thompson for VP, a folksy avuncular with TV Q-score who might have slung the hash back on tax returns and imitated a PaulRyan-like deficit hawkery. Mitt could have bought himself a month of tactical time, to launch some other ploy.

50

David 08.13.12 at 12:46 am

@ JP Stormcrow, #5: Ah, yes. The NYTimes article. A several hundred word definition of smarmy.

51

JW Mason 08.13.12 at 1:21 am

It seems to be from a position of weakness. One thing I would add is that Romney’s internal polling may have started to show that Obama’s attack on him as a vulture capitalist was making inroads against the emotions of the “Anybody but Obama” crowd. If so, Romney may have needed to shore-up the interest of the Tea Party base. So this is the best of a bad situation, for him.

I usually find Lee A. Arnold unduly optimistic, but this seems plausible.

52

JP Stormcrow 08.13.12 at 2:28 am

You don’t question Paul Ryan’s political courage, Paul Ryan’s political courage questions you.

53

Ben Alpers 08.13.12 at 2:38 am

PS. Paul Ryan named his dog “Boomer”. The other one is named “Sooner”. Not sure what exactly that means, but I would be curious to know. I suspect a generational dig, but perhaps I’m wrong.

Almost certainly not a reference to the land run, William Timberman…at least not directly.

“Boomer Sooner” is the fightsong of the University of Oklahoma as well as what OU fans shout at football games (and elsewhere). The universities two mascots (both ponies) are also named “Boomer” and “Sooner.”

So why does Ryan, who is neither an Oklahoman or an OU grad (I’m happy to say) have dogs with these names? My guess is that his wife, Janna Little, named them. According to Wikipedia, she’s a cousin of Oklahoma “Democratic” Congressman Dan Boren and a native of Oklahoma (though not an OU grad).

54

William Timberman 08.13.12 at 3:13 am

Yeah, Ben Alpers, sorry to mislead, but for someone like me, who’s lived in OK (Lawton High School, class of ’61, Oklahoma State University, 1961-65) the connection to OU is obvious. The rest has something to do with Faulkner’s observation that the past isn’t even past, and something to do with an OSU student’s lifelong reluctance to mention anything to do with OU.

55

John Quiggin 08.13.12 at 3:13 am

As regards the generational analysis, if you take the proposals at face value, Ryan is the ultimate Generation traitor. The grandfather clause is dated precisely so that boomers (including Jonesers) and Silents cash in for life, while X-ers and younger pay the taxes and get nothing. So, I’m not seeing how some of the analysis above is supposed to work.

56

chris 08.13.12 at 3:55 am

@JQ 55: But Ryan personally is set for life anyway — as a congressman and then ex-congressman, let alone a high-profile conservative, his nest is sure to be well feathered even if he goes down in flames. Look at what happened to the last Republican losing VP candidate — without even half Ryan’s achievements (such as they are).

Personal wealth makes you largely exempt to the misery caused by Republican policies (well, not global warming, but most of them). This is not an accident.

Something that just occurred to me that I haven’t seen much mention of elsewhere yet: Can Ryan run for VP and House at the same time? If not, who is going to run for his district? Is it a potential pickup as an open seat?

57

JP Stormcrow 08.13.12 at 4:19 am

if you take the proposals at face value

Hoping no one in the media doing this is part of how I think they will try to pull it off. For instance Jacob Weisberg can admit, A valid critique of the plan Ryan developed as chairman of the House budget committee is that while it may be a useful document to start a conversation, it is utterly unrealistic as a matter of policy. and Another fair criticism for Ryan, somewhat at odds with the first, is that while he may be a devotee of Ayn Rand, he has voted more like a Republican hack than a revolutionary. yet conclude with In the event of a Republican victory, Ryan would be as dominant a figure on economic policy as Dick Cheney was on foreign policy under George W. Bush. He understands the hard choices ahead and has a coherent view of how to make them. (Although he admittedly says that they will probably lose due to this step towards “conservative honesty”.)

The outline I see them trying is:
1) Soften the stark generational aspects somewhat (but retain the old people vote by demonizing the Obamacare stealing from Medicare accusation*).
2) But build on the idea that it is irrevocably broken for younger people and them being the only ones with a plan to fix it (Obama and the Dems know Obamacare etc. won’t fix it but are pulling a fast one on you). So a “plan” even if it disadvantages you is better than a disaster where you are left with nothing**.

Personally, I think it is going to be a hard needle to thread, but they will have plenty of media support from the usual suspects (but hopefully some significant media pushback as well).

*See the end of this Fox segment for that part of it.

Obama cut $700 billion from Medicare to pay for Obamacare. With the Ryan plan, it keeps people who are 55 and over on their plan now, so they don’t have to worry about that. So this ad saying he would hurt the elderly — his plan would actually keep it in place.

**And this theme is aided and abetted by the entire national political media with its incessant drumbeat of the need for people to sacrifice. An egregious example from Face the Nation this morning:

Obama mostly talks about “raising taxes on the two percent. Where are the other bold plans that require sacrifice from the rest of the country?”

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JP Stormcrow 08.13.12 at 4:20 am

chris@56: He is running for both and is a shoo in.

59

GiT 08.13.12 at 4:23 am

60

JP Stormcrow 08.13.12 at 4:27 am

Boy that turned out to be long and the Wesiberg quotes hard to read …

But speaking of Weisberg he inadvertently reveals one of the real issues with what the choice does to this election:

Ryan’s presence on the ticket makes this a better and more interesting election. It forces the debate the country needs to have about entitlement spending and ensures that the remaining months will be more than an argument about whose negative ads are more disgusting.

Right, better to debate stupid austerity and “entitlements” crap rather than the action freaking economic crisis that continues to afflict the country and the world. I guess not that anything would have made the media talk about that in a coherent manner.

If the national political media were a country, there would be principled grounds for invading it.

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JW Mason 08.13.12 at 5:00 am

better to debate stupid austerity and “entitlements” crap

Well, yeah. Better to debate it than to take it for granted. Digby, for what it’s worth, agrees with Weisberg on this.

62

Maggie 08.13.12 at 6:18 am

Eleven years is nowhere near long enough to radically revise one’s retirement plans. So by picking Ryan you automatically sacrifice the votes of all rational 54 year olds. But not only them, right? 53 year olds too, and so on. There’s no way any middle-classer over 35 or can recover from a switch to radical self-sufficiency in time for retirement, and most of them know it – though as you proceed down the age scale you will catch an increasing number who don’t realize it or think they’ll beat the odds. Still, that’s a lot of votes to sacrifice. And they’re going to make it up where, exactly? As you’re going down the age scale you also cross-taper into liberalism on social issues, buffering any Republican gains from stoking generational economic conflict. While also running smack-dab into those who’re taking the worst of it WRT student debt, stagnant wages etc. Who are the young adults who don’t mind Republican social positions and are self-secure enough (really or notionally) to be motivated by entitlement-slashing, but who weren’t already voting Republican anyway? Can they possibly be numerous enough to make up for writing off so many of the middle-aged?

Also, what exactly is supposed to motivate the old to pull up the ladder after themselves? If they’re selfish, can’t they just as easily be selfishly unconcerned about the next cohort’s benefits supposedly bankrupting the rest of us after they’re dead? Wouldn’t many who depend on SS want to play it safe and steer clear of entitlement-slashers, assurances that they’ll personally be spared notwithstanding? Not to mention all the marriages and various intimate social connections between people from either side of the cut-off. There just aren’t enough Tea Partiers and Randroids to make up for screwing up the traditional Republican advantage among older people. The Ryan pick just strikes me as stupid – stupider, even, than the Palin pick.

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Dr. Hilarius 08.13.12 at 6:35 am

I share TM’s concern over the ignorance of the American public about economic and labor history. Lacking any factual foundation to analyze claims about medicare and SS funding, for a big piece of the electorate it’s still a war of sound bites. When I encounter people who worry that SS will be going bankrupt, I discover they interpret this to mean zero payments for all, not payment reductions to 76%.

To a great extent this election will be decided by turnout. Ryan will help the Republicans rally its base distrustful of Romney and give hope to social conservatives (Ryan’s solid against abortion). The other side of their strategy is to suppress Democratic turnout.

I am not an Obama supporter. I was tepid on him out the outset, seeing people project their hopes onto a centrist Democrat in the mode of Clinton. Still, I will hold my nose and vote for Obama and urge others to do so. Sure, it’s a lesser-of-two-evils argument but the evils of a Romney/Ryan regime are far, far more evil than those Obama presents. Right now the various federal agencies are only beginning to rebuilt from either budget cuts or being stacked with people who oppose their own stated mission. And the Supreme Court. Don’t think that precedent counts for spit with 5 members of this court. All they need to say is “our previous holding on this issue was in error” and do what they want.

We are no longer fighting for progress, we are fighting a rear-guard defense against the destruction of the New Deal.

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John Quiggin 08.13.12 at 7:34 am

Count me as an optimist regarding November. I think the grandfather clause will simultaneously
(1) make it clear to everyone under 55 that they are getting screwed
(2) not sway a lot of over-55 votes. Those who take voting seriously as a civic duty won’t go for something as cynical as this, while the smart cynics will intuit the logic of the post. There are plenty of dumb cynics, but they are mostly rusted-on Repubs of the kind who keep Rush Limbaugh in business

OTOH, the hope that the Dems will be locked into a positive program still seems pretty desperate to me.

65

Marc 08.13.12 at 8:26 am

@64: These plans are a reflection of the dead end that the Republican party has driven itself into. Their true believers want the real thing, and the real thing is extremely unpopular. They therefore end up with absurd “compromises” that suffer from precisely the flaws that you’ve identified.

I’m puzzled by the last part, because the outline of what Obama will actually do is pretty clear. He’s going to sunset the Bush tax cuts for the rich and phase in his health care plan. The people on the left screaming wolf about entitlement betrayals have zero credibility and zero evidence behind them. He may or may not tinker around the edges, but that isn’t the same as the stab in the back rhetoric would lead one to believe.

Whether this leads to a positive program will purely be a function of whether the Democrats take the House, whether they hold the Senate, and whether they eliminate the filibuster. I’d view the odds of all three occurring together as low, but not zero.

66

bad Jim 08.13.12 at 9:17 am

The oddest thing about the Republican plan is the idea that taking care of old folks is bad – not just an unsustainable indulgence, but somehow morally wrong. The indifference to need isn’t limited to the old, of course; Ryan wants to eliminate nearly all spending that promotes the general welfare out of a deep conviction that altruism is malignant.

Anyone who remembers the speeches Reagan used to give, back when he was a shill for GE, railing against the prospect of Socialized Medicine and the specter of an America that used to be free, will recognize the panic: the most frightening words you will ever hear are “I’m from the government and I’m here to help”, as though government – we the people, we your neighbors, your community – could never be anything but a threat.

I’ll go out on a limb and agree with the Very Serious People that the Zombie-Eyed Granny-Starver is actually being comparatively courageous in offering the prospect of starvation to people who aren’t actually paying attention to actuarial certainties.

67

reason 08.13.12 at 9:54 am

Is this the middle class equivalent of the “throw granny under the train” act that Paul Krugman found so amusing?

68

Martin Bento 08.13.12 at 11:49 am

By my math. someone born in 63 will turn 49 sometime this year, so I think the over 55 exclusion will miss the Jonesers and the tail end of the boomers if enacted next year. And, of course, Ryan is a traitor to his generation, that’s what makes him an effective salesperson.

What this will set up, though, is generational war. This is not the strategy to pass the bill; it is what the republicans can exploit to manage the aftermath. If the Republicans hope to retain electoral viability, someone besides the Republicans must be blamed for the destruction of SS and Medicare, and the rhetoric to make that the boomers is already buzzing around in the public square, . If it passes, the Xers will immediately work to strip benefits from the boomers too, and their priors will lead them to blame the boomers despite the fact that they have been voting Republican all their lives. The issue will be seen as generational rather than partisan. The Ryan plan will be used to justify every nasty thing an Xer ever said about a boomer, and it will join the Xers to the millennials, which the Republicans need for their longterm viability, which is otherwise in doubt even without this.

The generational divide is the only card the Repubs have that can counter the racial divide, which is working seriously against them. Gen X has been more republican than the boomers (less so lately) despite being significantly less white. If you limit it to whites, Gen X is much more republican than the boomers. Extending that another generation is the best hope the Republicans have to stay viable despite all the racial bridges they have burned. Millennials are even less white than Xers, and the trend doesn’t look to be reversing, so this doesn’t seem maintainable, but no one knows enough to plan more than a generation ahead anyway. If the millennials turn out politically like the Xers, the Repubs can stay in the game much longer than otherwise, and try to work out something else. So far, though, the millennials are more like the boomers in most respects and something must change that. This is also why the libertarians are showing so strong in the Repub coalition; they are the only ones who speak to the millennials.

69

chris 08.13.12 at 12:19 pm

government – we the people, we your neighbors, your community – could never be anything but a threat.

Maybe this explains why this agenda shares a base with people who look around at their neighbors and see them as threats to be hunted down and shot? (Specifically, usually, the ones who look different or worship differently from the fearful themselves.) If the people are a danger to the people-like-you, how can the government be any better?

There’s no way any middle-classer over 35 or can recover from a switch to radical self-sufficiency in time for retirement

Time doesn’t matter — there’s no way anyone limited to post-Reagan wages can fully provide for their present and their future at the same time no matter how old they are. We need to bring back the income convergence of the 50s and 60s or private people aren’t going to have the means to implement private retirement no matter how much advance notice they have or how wisely they plan, even if the market magically starts producing risk-free 10% returns (which it won’t).

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Jexpat 08.13.12 at 1:40 pm

Apparently Marc was absent from class in from mid July- early August, 2011.

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Lee A. Arnold 08.13.12 at 2:30 pm

I am not sure that the generational divide can be made to work all that well. I tend to agree with Maggie #62 and John #64. I was at a dinner party recently with a bunch of 20-year-olds, and they all said, Social Security isn’t going to be there for us, and I said, No, that is just a huge Wall Street campaign to get hold of that money, they are spending about a billion on this IOUSA crap, but if you look at a long-term budget chart, you will see that Social Security is easy to do, and all the people will be covered, and the real problem is medical spending long-term, which is why we need a universal healthcare system–and they said, Oh, really?!

So it is actually rather easy to explain, because there are other factors too, and 20-year-olds find it easy to understand that there are billion-dollar lies. (I guess this is probably the going rate on lies.)

72

MPAVictoria 08.13.12 at 2:59 pm

“Time doesn’t matter—there’s no way anyone limited to post-Reagan wages can fully provide for their present and their future at the same time no matter how old they are. “

Exactly! If you have no money to save then advance warning isn’t really any help at all.

73

Watson Ladd 08.13.12 at 3:44 pm

Right, because passive asset management is such a lucrative business for Wall Street, and we can totally depend on the age structure of the US remaining the same. Social security can be kept working. It will never be a good deal the way it was in the 1960’s and 1970’s.

74

Salient 08.13.12 at 5:09 pm

Also, what exactly is supposed to motivate the old to pull up the ladder after themselves?

True. It’s never presented as destroying anything for the younger generations, and people don’t discuss it in those terms, so why should we assume folks are feeling destructive inclinations they don’t voice? Maybe the over 55 thing won’t win any votes, but it will definitely discourage any national media from printing a “Ryan Budget: What This Means For You” type scare headline. (Even if such an article is written, the first line will emphasize “55 or older: no change” and use words like “gradual transition” and the rest will be buried in paragraph seven.)

It’s more like, “this new plan will save a program that would otherwise collapse, but since will we need some time to get this new plan ready and operational, we’re building in a delay.” The decade-long clause makes a lot of intuitive sense, just like the delay in most Obamacare provisions. Get the infrastructure built up, then start the program.

It’s like the disappearance of public subsidization for universities [in the US]. Most folks never quite realized that went away or never quite realized it was there in the first place, and at this point you hear people whose university education was mostly publicly subsidized, criticizing college students who take out loans to pay for their no-longer-publicly-subsidized university education as making “bad decisions.” They’re mostly unaware of the behind the scenes stuff that has changed between generations.

75

Salient 08.13.12 at 5:15 pm

Watson, people age, individual private assets are unstable, and Social Security is a perfectly sensible mechanism for mitigating that instability. The problem with your counterargument is it presupposes the population of workers won’t be willing to help ensure the stability of their parents’ lives. That’s a tough position to hold.

76

js. 08.13.12 at 5:15 pm

Doesn’t the argument assume though that sufficient numbers of voters take these sorts of relatively detailed policy considerations into account (and properly into account) when making their choice about who to vote for? And isn’t there plenty of evidence to suggest that this is simply not the case? (I don’t mean these questions to be rhetorical. I’m sure other people on here know more about these things than I do. But the above has certainly been my strong impression.)

As several people have pointed out, the choice of Ryan is supposed to shore up the parts of Republican base that inherently mistrust Romney. And at that level, it should work, I’d think. If the argument is then that the problem should be easy enough to explain to those not already committed to voting Republican, then sure, I am sympathetic (while taking due account of the fecklessness of Democrats, the entire media establishment, etc.).

77

Watson Ladd 08.13.12 at 5:53 pm

Salient, Social Security is a regressive tax used to fund a universal benefit, in this case a steady stream of income for people over 65. It’s an incredibly expensive benefit, and along with medicare makes the total federal taxes people pay almost flat as a function of income. The biggest redistributive effect it has is stealing from the heirs of people too sick to make it to 65, and giving that money to people who don’t need it as much. As the population pyramid becomes a cylinder, or worse, a carrot, Social Security becomes wildly expensive, even if economic growth continues because of its reliance on wages as a revenue source.

Social Security benefits can be cut at any time. Insurance companies can’t do that. Social Security payments don’t fluctuate with your investments: the stupidity of that is obvious when properly phrased, as retirees have some degree of flexibility in their spending. Most Americans do not save enough for their retirement. If they saved all the Social Security taxes they payed, they would.

Social Security is so broken that those who have a choice to enroll or not by and large do not. There are several alternatives: one is a government pension program, one is everyone saves for themselves with income supplementation for poorer persons, another is a mandate to save with private plan administrators. Many countries do one of these. The alternative to Social Security is not toss granny on the garbage heap.

78

TM 08.13.12 at 6:58 pm

“There are several alternatives: one is a government pension program, one is everyone saves for themselves with income supplementation for poorer persons, another is a mandate to save with private plan administrators. Many countries do one of these.”

None of these so-called alternatives have ever and could ever work large scale. The only system that has historically been shown to work is a SS-style transfer payment. A “mandate to save with private plan administrators” would be a gold rush for the financial industry and a waste of money for everybody else. Switzerland has such a system but that is *in addition* to SS (locally known as AHV). Swiss employers are obliged by law to put a portion of wages into pension funds. Employees get a personal statement but they don’t have a say over their investment. Years ago, the law mandated a minimum return of 4%. In boom times, pension funds refused to raise the return, claiming that they were accumulating a cushion for the bad times. When the crash came, pension funds petitioned the legislature to lower the minimum return. It is now down to 2%. So yes, pension funds can and do cut benefits. But that’s not all. The accumulation of vast assets in pension funds has perverse consequences. How are these savings invested? Real estate. They are pushing property values and rents up. The Swiss rental market is one of the highest in the world. So a Swiss worker may be forced to invest in the pension fund that owns the apartment that he or she rents. He or she pays a high rent in order to later get a minimal return on his or her savings. Sounds like a good deal?

Watson, an economy as a whole cannot “save”. It is always the economically active portion of the population that has to provide for those too young, too old or too sick to provide for themselves. That fundamental fact doesn’t change whatever the mechanism of provision, whether by transfer, by accumulation and liquidation of assets, or by inter-clan solidarity. Accumulating assets, even if that were possible for the bulk of the working population, can solve neither the uncertainty problem nor the demographic problem. When an increasing number of retirees are selling off their assets to a decreasing number of working people, the value of those assets (whatever they are) must necessarily decrease. Social Security is simply the most efficient way to effect the generational transfer.

79

nick 08.13.12 at 7:00 pm

“Social Security benefits can be cut at any time. Insurance companies can’t do that.”

80

Dr. Hilarius 08.13.12 at 7:03 pm

Watson, when FDR pushed for the establishment of SS he had the wisdom to recognize that if was only for the poor or the improvident that it would be seen as a giveaway to the undeserving. Its universal coverage is what made it politically possible.

The rate of return isn’t as important as it’s reliability. For decades now, Wall Street has been pushing the idea that the stock market is the best long-term investment (maybe, if you can outlive the downturns). SS has predictability which is vital to people making plans about how to live out their lives.

Insurance companies can’t cut benefits? I’m not betting my old age on that proposition. Would your governmental pension plan be mandatory? If it’s not, it won’t work. If it is, it’s politically impossible.

Your are correct that Americans don’t save enough. But they are not going to save the equivalent of current SS taxes. A similar argument is made against buying a house as an investment as well as a place to live. In certain markets, renting makes sense, particularly when renting is much cheaper than buying. But study after study shows that people do not save the difference between renting a home and buying an equivalent home. They either rent a more expensive place or buy other things. Same for SS. Retirement is in the future, a new car is now.

81

TM 08.13.12 at 7:13 pm

bad Jim 66: “The oddest thing about the Republican plan is the idea that taking care of old folks is bad – not just an unsustainable indulgence, but somehow morally wrong.”

Compare reason magazine’s recent “generation warfare” cover: SS=grandma mugging her grandchild (http://reason.com/archives/2012/07/23/generational-warfare). The malice is quite breathtaking. As if today’s youngsters have never been provided for by their parents and grandparents. As if all generational transfer goes from the young to the old. Of course, it’s easy to think that way when you are young and naive and when everybody seems to encourage that kind of self-centeredness as a virtue. Remember also David Brook’s “The Geezers’ Crusade” (NYT, February 1, 2010) when he asserted that “the federal government now spends $7 on the elderly for each $1 it spends on children” (omitting to mention that society does spend a lot on children, only it’s mostly by state and local government). I don’t think today’s youth are particularly selfish but they keep getting these cues that generational warfare is the new radical chic. That, combined with the general ignorance described in 39, cannot fail to convince some of them that destroying SS is the good fight.

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TM 08.13.12 at 7:20 pm

Also, a while ago the statistic made the round that older people’s net worth was, what, 46 times the net worth of those under 35 (or something like that). Remember that? Classical statistical fallacy: a rich person is more likely to be old than young. But an old person is NOT more likely to be rich than poor. The vast majority of American seniors do not have nearly enough savings to be able to afford retirement without SS.

83

MPAVictoria 08.13.12 at 7:32 pm

“Social Security is so broken..”

Let me stop you there Watson, Social Security is not broken. That is a lie that had been perpetrated on the American public. With minor adjustments SS can continue to pay out benefits indefinitely. I don’t know where you got your information but you need to do some more research. May I suggest Paul Krugman’s blog?

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nick s 08.13.12 at 7:47 pm

Social Security benefits can be cut at any time. Insurance companies can’t do that.

Gosh, you’re funny.

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Lee A. Arnold 08.13.12 at 9:21 pm

#77 manages to fit misinformation and misinterpretation into every sentence. Social Security pays out progressively, and it avoids the bad politics that would be generated by eliminating the “regressiveness” of the income cap. Social Security is not expensive; it has almost no overhead. It has benefits for survivors–even survivors of workers who die before 65, as the life of Paul Ryan demonstrates. The projections already include the changing age demographics, and Social Security is projected to remain FLAT as a percentage of GDP from now through another 50 years: it is not “wildly expensive”, far from it, it is completely affordable.

Social Security benefits can only be cut with political consequences. You would have to sue a private insurance company, and good luck with that, if you live that long. Social Security covers food and rent for many retirees; the idea that there is flexibility in much of this spending is unreal. Indeed it is as unreal as the expectation of good savings rates and good investment advice among younger workers, not to mention the expectation good Wall Street practices. Most of the taxes saved would not go into savings–certainly not, say, at this moment in time. Meanwhile the vagaries of life and old age would necessitate a means-testing bureaucracy far exceeding Social Security in overhead expense and intrusiveness.

I don’t think Social Security has to pay for itself, though I realize that there is political protection for the program in trying to make it add up. Regardless, Social Security is considered to be “broken” only due to propaganda, not due to any intrinsic problems. It is not a pension, pensions are going belly-up everywhere.

Social Security is profoundly wise. It is a really simple idea that covers a multitude of sins. It is part of the safety net.

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John Quiggin 08.13.12 at 10:02 pm

@Martin – you’re right on the math. True Boomers get grandfathered in, Joneses and after are out.

87

Salem 08.13.12 at 10:08 pm

@TM78:

Watson, an economy as a whole cannot “save”.

Of course it can, it just can’t do it merely by accumulating cash balances. S = I. You are right that the economically active have to provide for the inactive regardless of the mechanism of provision, but the level of productivity is not fixed. Savings get channelled into investment, which raises future output, and so today’s saver gets a claim on tomorrow’s higher productivity. In that world there doesn’t need to be a generational transfer. In theory SS could be run like this, with the government using the (forced) savings to raise tomorrow’s output, e.g. infrastructure spending, R&D, etc. In practice, it’s just a transfer. So the questions are:

- Is saving in the USA too high or too low?
– What is the effect of SS on levels of saving and investment?
– What are the other incentive effects of SS?
– What are the distributional effects of SS?
– Compared to what?

88

john c. halasz 08.13.12 at 11:09 pm

@ 87:

The level of aggregate economy-wide savings in a country is crucially determined by the CA balance, and that’s, er, not something ordinary workers have much say in, eh?

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TM 08.13.12 at 11:33 pm

87: “Savings get channelled into investment, which raises future output, and so today’s saver gets a claim on tomorrow’s higher productivity. In that world there doesn’t need to be a generational transfer.” SS is indeed a claim on tomorrow’s productivity.

“In theory SS could be run like this, with the government using the (forced) savings to raise tomorrow’s output, e.g. infrastructure spending, R&D, etc. In practice, it’s just a transfer.” Let’s think this through. Pretend there’s no SS but the amount of the SS tax is by some mechanism invested into something. Pretend this system has been around for decades. Each retiree retires with an account that represents the amount saved plus interest. Then they start drawing down their accounts. In the aggregate, you have net investment if more workers pay in than retirees taking out. Otherwise, there is no net investment – “just a transfer”, as you say, or even net disinvestment. Just as with SS. In the aggregate, and under idealized assumptions, there is really no difference between that “savings” scenario and SS. Both are equally affected by changes in demographics and productivity. Except that under realistic assumptions it turns out that SS is vastly superior.

90

TM 08.13.12 at 11:34 pm

“In the aggregate, you have net investment if more workers pay in than retirees taking out.” I should have said, “if workers pay in more than retirees take out”.

91

Barry 08.14.12 at 12:02 am

Nick: “Social Security benefits can be cut at any time. Insurance companies can’t do that.”

Are you that ignorant of the joys of corporate bankruptcy? Loot, and leave an empty shell for the creditors.

92

Anthony 08.14.12 at 12:57 am

“The biggest redistributive effect [Social Security] has is stealing from the heirs of people too sick to make it to 65, and giving that money to people who don’t need it as much.” Social Security is social insurance. Living to an age where working becomes difficult is the event insured against. Those who don’t make it to the specified age don’t collect, any more than those whose houses fail to burn down can collect on their fire insurance. If retirement is up to the individual, he may undersave, or if he doesn’t reach retirement age oversave for an eventuality he will never experience. It’s a feature, not a bug, that Social Security benefits cannot generally be passed to heirs.

93

Watson Ladd 08.14.12 at 1:15 am

So let me first summarize all the counterarguments to I said. The first is the equivalence argument: whether PAYGO or via investment, the payments to retirees must come from the economy, so we are in the same boat no matter what. The second argument is that none of the alternatives I outlined could work. The third is that insurance companies can go bankrupt leaving policyholders in the lurch, including annuities.

I’ll begin with the second and third, because they basically amount to the same argument: unless government guaranties a safe retirement it is impossible for persons to provide for their retirement, since private actors have a multitude of ways to evade contractual restrictions. However, this doesn’t apply in the United States to owners of securities: while the GF case lead to the loss of client money, the regulations are structured to segregate client funds and make them recoverable in bankruptcy. There are many ways to separate the fortunes of a money manager from their clients, or align their incentives: mutualization, establishing trusts to hold the assets, etc. So that covers the counterparty risk. We could also imagine a PBGC ensuring retirement savings further.

Many people have additional savings for retirement beyond Social Security. Somehow that market functions. Also, the Netherlands has a privatized pension system covering most workers. source in addition to a Social Security-like system. Note also this was characteristic of the US during the 1950’s and 1960’s.

Not also government is not a good counterparty either. The 1980’s law changes cut benefits, and last summer saw the US almost default for no reason. This dysfunction might be temporary, but I would prefer to have a choice of whom to trust.

The first argument is technically correct. However, Social Security is financed currently only from proceeds to labor. This means that when the share of the GDP that goes to capital increases, the burden falls harder on those who must support the system. From a welfare perspective the Social Security tax is poorly designed. Secondly, and this will get a bit technical, and I might get it wrong, a transfer from people at the beginning of their working lives to the end of their working lives encourages consumption rather then investment. A person at the end of their life has no reason to invest, whereas someone at the beginning of their life has very good reasons to invest. The argument that we will see no net investment because the redemption of assets by the aged will simply be offset by the consumption by the young is misleading while correct.

To see this note that the redemption and buying is flow, while the investment is a stock. The total amount invested is different between a pure transfer and an investment model, even though the flows might be the same. Total economy arguments mislead: clearly there is spending money with an eye towards making more in the future, vs. spending to satisfy immediate needs, and the balance between these two can be shifted by policy.

94

Watson Ladd 08.14.12 at 1:19 am

@Anthony: We don’t insure against events with positive utility. So long as you haven’t retired yet, living longer has a positive financial impact. It’s when you retire that you look to buy an annuity.

95

MPAVictoria 08.14.12 at 1:48 am

“the payments to retirees must come from the economy”
You do understand that these retires will spend these payments right?

96

TM 08.14.12 at 1:57 am

“Also, the Netherlands has a privatized pension system covering most workers in addition to a Social Security-like system.”

That may be but it would never work stand-alone. Similar to the Swiss example (see 78), they both call it a three-pillar approach. I pointed to some of the problems with the Swiss model. In light of 89, I should point out that whenever a mandatory pension fund system is enacted, there will be net accumulation of assets in the systems for the first few decades, with potentially perverse effects, until beneficiaries start retiring in large numbers. I haven’t looked it up but I suspect both the Swiss and the Dutch model are still in the accumulating phase. SS also has been in surplus for many decades but for a different, namely purely demographic reason. As to your argument about the regressiveness of the SS system, those are well taken but the financing model isn’t set in stone. Why not raise the FICA cap and redistribute to the lower end? In any case it’s hard to see how privatizing the system would make it less regressive.

97

TM 08.14.12 at 2:03 am

“To see this note that the redemption and buying is flow, while the investment is a stock.”

Well, in the Swiss or Dutch system, the retiree will in the end liquidate the accumulated stock. Imagine how much you’d have to accumulate in order to be able to retire on the ROI of your savings! That’s not gonna happen for most of us in the 99%.

98

Bruce Webb 08.14.12 at 2:09 am

Hmm, history. Back in the day (1983 and right after the compromise on SS that eventually came out of the Greenspan Commission) Cato sponsored a conference on SS ‘Reform’ and published papers including the semi-(in)famous Butler-Germanis ‘Leninist Strategy’ in their Fall issue of the Cato Journal. http://www.cato.org/pubs/journal/cj3n2/cj3n2-11.pdf
on page 555 we find a section entitled “Detaching supporters of Social Security”. Its central tactic is spelled out as: “A necessary step toward this objective is to honor all outstanding claims on the current system. Without such a commitment, we can never overcome the political opposition to reform, because the retired (or nearly retired) population will continue to strongly oppose any package that threatens to significantly reduce their benefits”
Some might call this 1983 tactic as “Grandfather Clause”.

Fast forward to 2001 and Bush’s CSSS, the Commission to Strengthen Social Security which laid out five fundamental principles for ‘reform':
http://govinfo.library.unt.edu/csss/index.htm
Bullet point no. 1 “Modernization must not change Social Security benefits for retirees or near-retirees.”

Sorry Quiggen this is only “striking” to people who haven’t been paying effing attention since Day one. The Leninist Strategy of 1983 can be summed up in three bullet points:
One. Reassure those in or approaching retirement that THEIR benefits won’t be affected.
Two. Convince Gen-X they will get ZERO out of the system as then configured.
Three. Blame Greedy Geezer Boomers.

And they have followed this script religiously in every single iteration of ‘reform’ since. The problem for Ryan is that the Leninist Strategy has aged out in that category One has now overlapped with designated Fall Guys in category Three. Which now means them giving the Presumed Guilty (Boomers) a Get Out of Penury Free Card while slapping all the penalties on the Aggrieved Victims of Greedy Geezers (Gen-X)

But there is nothing new in the basic messaging. It just has passed its “Best Used By” shelf date since originally promulgated in 1983 and reaffirmed in 2001. (And in all such plans since). You just needed to be paying attention.

99

derrida derider 08.14.12 at 2:38 am

Salem@87 -

Yes, but aggregate investment is subject to diminishing returns. In a country with an already very high K/L ratio, sharply diminishing returns. You just don’t get a lot more aggregate productivity from capital deepening unless your capital pool starts reasonably shallow (eg a developing country in takeoff) – certainly not enough to counter the effects of an old population. Have a look at the Japanese economy to see what I mean.

Yes, you can put the money into FOREIGN investment to get a decent return – but that carries obvious risks, both that there will be no actual productivity return (eg from political instability) or that you won’t be able to appropriate that return for yourself when you need it (ie default in one form or another).

100

Dr. Hilarius 08.14.12 at 5:50 am

Bruce Webb: excellent post. The right has never had an interest in reform. They consciously want to kill the New Deal. Also the 1965 voting rights act and every other law that moved us out of the era of the Robber Barons.

101

Martin Bento 08.14.12 at 7:29 am

Bruce, I agree, the original plan was screw the boomers, but it is too late to screw most of them now. But they were always the designated fall guys, and the current situation is ideal for that. Passing the Ryan plan would not be the end of it. There would be a fierce backlash aimed at boomers, which the Republicans can stoke and support to cut benefits for them too. The Reason article linked above is a good, if actually moderate, example. “It’s just the numbers” talk is leavened with boomer hatred, but the proposal on the table will actually spare most of the boomers. The blame has been laid before the deed is done, and it is not on Republicans.

102

Salem 08.14.12 at 9:28 am

derrida@99:

It’s certainly plausible that US investment is already high enough/too high, so we shouldn’t be saving more. And therefore that SS causes disincentives to save is a feature not a bug. Frankly this is mostly my view too. But note the extreme unpopularity of such a view in other contexts around here.

103

Barry 08.14.12 at 10:45 am

Watson Ladd:
“However, this doesn’t apply in the United States to owners of securities: while the GF case lead to the loss of client money, the regulations are structured to segregate client funds and make them recoverable in bankruptcy. There are many ways to separate the fortunes of a money manager from their clients, or align their incentives: mutualization, establishing trusts to hold the assets, etc. So that covers the counterparty risk. We could also imagine a PBGC ensuring retirement savings further.”

IOW, a government bailout.

“Many people have additional savings for retirement beyond Social Security. Somehow that market functions.”

Yes, which doesn’t make this an argument for privatizing SS, for the reason that SS is a *floor*. Please have somebody explain that to you.

” Also, the Netherlands has a privatized pension system covering most workers. source in addition to a Social Security-like system. “

‘Privatized’ in the sense of being required by the government? If not, how does it cover ‘most workers’?

“Note also this was characteristic of the US during the 1950’s and 1960’s.”

An economic era which the right has crushed, and doesn’t intend to bring back.
Even for you, this is strikingly dishonest.

104

Barry 08.14.12 at 10:47 am

Martin Bento 08.14.12 at 7:29 am

” Bruce, I agree, the original plan was screw the boomers, but it is too late to screw most of them now. But they were always the designated fall guys, and the current situation is ideal for that. Passing the Ryan plan would not be the end of it. There would be a fierce backlash aimed at boomers, which the Republicans can stoke and support to cut benefits for them too. The Reason article linked above is a good, if actually moderate, example. “It’s just the numbers” talk is leavened with boomer hatred, but the proposal on the table will actually spare most of the boomers. The blame has been laid before the deed is done, and it is not on Republicans.”

When this last came up, I pointed out that ‘you don’t have it, so they shouldn’t either’ is a prime Republican message. It works well. If there were major grandfathered hits enacted, the next election cycle (i.e., two years) would see massive attacks on the grandfather clause.

105

Salient 08.14.12 at 1:00 pm

Shucks, I thought exposing Watson to some patently trollish and idiotic Watsonese would illustrate how painfully “obvious” it is that he’s being “stupid” (to use his words for it) and maybe that would trigger some self-awareness, but apparently all it did was encourage him to ramp up the trolling to multiple-paragraph bursts. Sorry for FTT.

106

Watson Ladd 08.14.12 at 2:27 pm

A quick question to all the defenders of Social Security: If you could pay more in Social Security taxes and have a corresponding increase in benefits, would you move money from your other savings and investments to do so?

107

Salient 08.14.12 at 3:10 pm

A quick question to Watson Ladd: what’s that got to do with the self-immolating grandfather clause in Ryan’s plan? And really, are you really expecting folks to take time and care to answer your question, given your off-base summary of the responses levied against you so far?

108

James 08.14.12 at 3:29 pm

Ryan’s plan was an effort to set the tone of the national conversation. From the perspective it was successful. It got the President to talk about spending levels and pretty much killed the idea of another stimulus package. As a plan that has a chance of implementation, it has no hope. The Senate will never pass it, even a 60 majority Republican Senate.

Ryan as the VP: I would guess that the number 1-2 options passed on the offer. The ideal choice would have been someone who could give Romney a large traditional blue state (Christy or someone who pulls weight in Pennsylvania) or a candidate who can pull Hispanic voters (Rubio). Both Christy and Rubio have a shot at the Presidential nominations in four years given the likely result that Romney loses. It is unlikely that the economy turns around in 3 years and Biden doesn’t strike me as a strong Democratic candidate.

The Social Security discussions always run into talking points that are only correct at the bases of levels. Currently Social Security funds are used to prop up General Revenue spending. When the incoming Social Security revenues go negative, the General revenue spending will have to be cut twice. Once to account for the missing revenue provided by borrowing from SS and a second time to pay for benefits owed to SS recipients. This will be achieved through cuts in spending, cuts to SS, an increase in taxes, or an increase in borrowing. The confusion arises on the right by assuming the SS funds must cover all of SS spending. The confusion arises on the left by assuming that the SS trust fund is actual money that can simply be withdrawn.

109

Watson Ladd 08.14.12 at 3:48 pm

James, no. The trust fund buys T-bills. This does slightly reduce the interest rate on T-bills. But plenty of people love T-bills: the rates will not rise that much. If you want to treat Social Security as part of the government budget, you ignore the trust fund vs. treasury distinction, because the trust fund’s assets are treasury obligations so they cancel.

110

TM 08.14.12 at 4:04 pm

Salem 110, Social Security does not cause “disincentives to save”. Again check out 89.

Barry 103: “‘Privatized’ in the sense of being required by the government? If not, how does it cover ‘most workers’?”

Mandatory pension fund schemes are indeed quite heavy-handed government programs. In the light of the health insurance mandate battle, it is dubious whether the Swiss or Dutch models would even pass constitutional muster in the US. Something for Watson to consider. SS is simple, it works, it is cheap, and it is constitutional. It doesn’t reduce choice and it doesn’t prevent anybody from making their own private retirement arrangements as they see fit. Right-wingers want to replace it with something more complicated, more expensive, less economically predictable, requiring more government involvement. Isn’t that interesting.

111

JW Mason 08.14.12 at 4:16 pm

The confusion arises on the left by assuming that the SS trust fund is actual money that can simply be withdrawn.

Nobody assumes that, I don’t think.

On the left, we recognize that Social Security payments are a government expense, and Social Security contributions are a form of revenue. There’s no requirement for an exact match between a particular revenue stream and a particular category of spending. The whole “trust fund” question, the “returns” it gets, etc. is just silliness. That’s the left position, from what I can tell.

Seen this way, Social Security funding is a complete nonissue. Its costs rise very moderately. As Dean Baker and others have pointed out over and over and over, the increase in spending required to keep payments at their statutory level forever is smaller than the changes that have been made in the program in every decade since its creation. There is just no problem here, and anyone who says there is is either trying to fool you or has been fooled themselves.

Theoretically of course it might be nice to make Social Security taxes more progressive. but the example of Europe shows that generous universal public services funded by flat or regressive taxes are vastly more conducive to egalitarian outcomes than stingy public services funded by more progressive taxes. Social Security is the most successful income security program we have, there’s no reason to mess with it.

112

Tim Wilkinson 08.14.12 at 4:57 pm

‘you don’t have it, so they shouldn’t either’

From conversations with e.g. Sun-readers, I can report that this seems to have been a successful right-wing strategy in the UK too, against unions, public sector workers, students, etc. This is of course not to be confused with ‘levelling down’ or ‘the politics of envy’.

113

James 08.14.12 at 6:15 pm

Watson Ladd@109 “no. The trust fund buys T-bills. This does slightly reduce the interest rate on T-bills.”

This is an example of assuming that the Social Security Trust Fund has actual value. T-bills create the illusion that there is something in the Social Security account. It is simply an accounting mechanism from one branch of the government to another branch. Congress has the legal authority to negate the entire amount at any time. Even if Congress leaves the numbers as is, should Social Security ever cash in a large dollar amount of T-bills, Congress would still be forced to reallocate moneys by cutting spending, raising taxes, cutting benefits or increasing borrowing as mentioned in my original post.

114

James 08.14.12 at 6:19 pm

A more accurate description is the Social Security trust fund buys numbers on a ledger. These numbers are promised by the good intentions of the current Congress but backed by the actions of a future Congress.

115

Lee A. Arnold 08.14.12 at 7:06 pm

The Social Security trust fund does not buy marketable T-bills.

116

Salient 08.14.12 at 7:26 pm

@Jason, I think I agree with you that separating revenues into “Social Security money” and “income tax etc. money” is mostly arbitrary, so “loans” from the trust fund are just reallocation (Congress would be the entity doing the ‘cashing in’ in the first place).

And while that’s true of most revenue/spending, and doesn’t speak to the viability of SS in perpetuity, I think you’re on to something. Suppose Congress passes Ryan’s grandfathered outphasing of Social Security and future Congresses don’t intervene. Ten years (or so) after it passes, voila, they’ve eliminated a huge revenue source. Not to mention, Ryan’s plan authorizes each individual to divert a substantial amount of their payroll taxes into a private retirement account, reducing another huge federal revenue source:

A system of individual accounts would be established in 2012. In that year, workers who are age 55 or younger would be able to participate in voluntary individual accounts, funded with a portion of their payroll taxes…

Bleh, and then this loss of revenue provokes another round of cuts to entitlements (Medicare/Medicaid) in a pretend attempt to address the sudden deficit. Also, from the same CBO report:

…A system of individual accounts would be established in 2012. In that year, workers who are age 55 or younger would be able to participate in voluntary individual accounts, funded with a portion of their payroll taxes. As necessary, the government would make payments to account holders during their retirement to guarantee that their contributions earned a rate of return at least equal to the rate of inflation — CBO [.pdf]

So we’ll start this insane practice of refueling accounts that got wiped out on the market… ten years from now. Hence the grandfather clause. … Holy shit. Setting that back a decade means you don’t have to score those guaranteed payments to account holders on a ten-year budget forecast, in part because you can’t predict market volatility over a ten-year timespan, but Ryan gets to pinky-swear promise folks 55-65 that their retirement money will be every bit as secure as Social Security.

117

Cranky Observer 08.14.12 at 7:33 pm

James @ 6:15,
I thought the Radical Right was all about Constitutional originalism. Or did Amendment XIV Section 4 not go into exile?

Cranky

118

Lee A. Arnold 08.14.12 at 7:55 pm

@ James #108 — There is also the issue of a serious class war. The annual surpluses that are called the Social Security Trust fund come out of hikes in payroll taxes. This surplus has been used every year to help cover immediate general expenses. Over the last 30 years, payroll taxes have been increased several times, while only income taxes have been reduced. for example, the Bush tax cuts left a hole in the budget that was matched almost dollar for dollar by the payroll surpluses in the first several years. Well of course, income taxes fall on higher brackets, and indeed the Bush tax cuts favored the wealthy. So the issue is about whether the topmost brackets get away with this swindle. For a simple picture of the hydraulics of this (plus a look at the “transition cost” that would be engendered by moving to another system: an extra $6 trillion, plus) see this lovely little cartoon (if I say so myself) uploaded in 2006 and still going strong:
http://www.youtube.com/watch?v=Tts2uTWt6e8&list=PL8AC650E4705BC0D1&index=2&feature=plpp_video

Here is the chapter list of a new cartoon series started on the economic crisis:

119

Britta 08.14.12 at 8:54 pm

Some points:

1) SS is not just a government 401K. It also provides fairly significant general support through survivor’s benefits, and is one of the few (if not only) programs which allows the middle class to remain middle class (in addition to helping the poor, of course,) after a disaster such as death of a breadwinner. Contra Watson’s claim, this means that if you have dependents/spouse and don’t survive to retirement age, the money you pay in goes to support your dependents, and therefore, indirectly benefits you, unless you’re a selfish bastard who doesn’t care if your children starve.

2) On generations. I doubt millenials will trend Republican, no matter how many Hitler youth hip magazines they make for us. We’re less white and we’re more socially liberal on issues that seem to be litmus tests for Republicans (abortion, gay marriage). Plus, we’re the children of baby boomers, and unlike the X-ers and their Silent Generation parents, there’s no generation gap and we don’t particularly want to screw over our parents, especially since they’ve helped us out so much and many of us still live at home. On top of that, we’re the generation that is getting screwed by the past few decades of Republican (and, to be fair, Clintonian) economic policies. Over 1/3 of us don’t have health care, we’re on average carrying $30,000 of student debt, and employment prospects are fairly grim. I’m sheltered from large swaths of the US and maybe underestimating people’s stupidity, but I don’t see millenials voting Republican. In fact, given Republican decisions to double down on the old wealthy white racist vote, if current trends keep up I’m not sure they have much longterm future as a major political party. Or maybe I’m overly optimistic.

120

Britta 08.14.12 at 8:55 pm

(ah, html fail => snark comprehension fail. Hitler youth was supposed to be struck through)

121

JW Mason 08.14.12 at 9:48 pm

SS is not just a government 401K. It also provides fairly significant general support through survivor’s benefits, and is one of the few (if not only) programs which allows the middle class to remain middle class (in addition to helping the poor, of course,) after a disaster such as death of a breadwinner.

Very important point.

122

Martin Bento 08.14.12 at 10:24 pm

Britta, I hope you’re right and I actually kinda think so. While I think transferring Gen X resentments to the millennials is the hope, I don’t think it will wash.

123

JW Mason 08.14.12 at 10:41 pm

I doubt millenials will trend Republican

Isn’t there good evidence that the first presidential vote people cast has a strong permanent influence on their partisan identification? Doesn’t bode well for you guys…

124

JW Mason 08.14.12 at 10:44 pm

Hitler youth was supposed to be struck through

Oh, what a shame. While many thousands of em dashes have been unwittingly turned into strikethroughs by the Secret Undocumented CT Formatting Code, this could have been the first documented intentional use of a strikethrough. Too bad.

125

Maggie 08.15.12 at 1:55 am

I largely agree with Britta (and found “Hitler Youth hip magazines” perfectly legible). I would go even further. Inter-generational conflict is not a central cultural idea like it was in the ’50s through ’80s, and by its nature once it fades, it fades for almost everyone. It seems you only get decisive generational loyalties when people are pretty well age-segregated in their life cycle and social functions. You’d need another national trauma on the scale of Depression/WWII to get big mass-scale uniform social patterns by age again. Birth control, feminism, anti-discrimination laws, and the collapse of traditional job security have shaken up social relationships and mingled age cohorts together; people have kids, get married, get re-married, and pursue career goals whenever they happen to be able to, in no set order. You don’t associate with other people who were born in 19??. You associate with other people in your college classes (NB increasingly not “your college”) or your department, or your kids’ friends’ parents, and they could be almost any age. Oh, and your dad is eight years older than your mom, but had his first kids when he was really young, so you have a half-brother who graduated the year you learned to walk.And everyone from Grandma to Jayden Jr. is on Facebook openly venting their concerns, sometimes ideologically or “economically” but just as often by appeals to emotion or common sense. The idea that you’re going to get all these various people to line up by birth year and ‘let’s you and him fight’ is kind of silly. You might be able to divide them by some other quality, like income probably, but not age I think.

126

Watson Ladd 08.15.12 at 2:03 am

Britta, the conditions under which dependents benefit are rather strict. If you marry at 22, kids at 23 then die at 41, your children don’t get a single cent.

As for letting the middle class remain middle class, Social Security pays out a pitiful amount. Americans who rely on it for retirement are in for a surprise. Survivor benefits are also a bit wonky: a surviving spouse doesn’t receive them unless taking care of children below the age of 16.

One third of all Americans have no savings beyond Social Security for retirement. With the housing market, the other big source of assets depressed, they will be in for a nasty surprise. One quarter say its because they cannot afford to source. With Social Security one of the biggest budget items for a working-class individual, maybe it’s part of the problem.

127

piglet 08.15.12 at 3:16 am

“With Social Security one of the biggest budget items for a working-class individual, maybe it’s part of the problem.”

People here took your arguments seriously and addressed them respectfully but now you are just getting silly.

128

Britta 08.15.12 at 6:50 am

Watson,

The benefits expire at 18 or after graduation from high school. I don’t see what’s so strange or weirdly restrictive about that. (It used to be at 21 or college graduation, before Republicans got at it). That’s also when child support payments and foster care end. Benefits vary depending on your pre-death earnings, (and I’m no expert on this, but apparently know far more than you) and can be quite significant. I know my mother received $1,000/month per child, which added up to $36,000/year. In what world is that insignificant? Oh right, the world where earning 7 figures is “middle class.”

Anyways, I’m not going to address you anymore, because you’re beginning troll obviously.

129

John Quiggin 08.15.12 at 9:57 am

Watson, it seems to me that you’re derailing the thread. Please, no more comments on this one.

130

Barry 08.15.12 at 12:48 pm

Piglet: “People here took your arguments seriously and addressed them respectfully but now you are just getting silly.”

In the end, arguments against Social Security tend to be either ignorant, dishonest, or evil. Perhaps there’s a reason :)

131

James 08.15.12 at 2:32 pm

Lee A. Arnold @118:
You are correct. Social Security funds have been used to tax the working class and offset general spending. This by itself would not be so bad if the increased tax monies where spent to increase the safety net. Unfortunately this was not the case. I am with you that the existing Social Security program should be left in place. The program has achieved its goals. Given all the failed or unfunded programs, it would be foolish to correct government spending by changing a working program.

Your video makes an error in assuming the increased productivity results in a realized increased wage which then makes up for the decrease in the number of workers. This is counter to the established liberal position that real wages for the working class have been stagnant for X years. So yes, there is a real funding problem for social security. The fix will most likely include both the left and right solutions as to be politically protected. (EG increase the maximum taxable earnings amount for Social Security and decrease benefits). The decrease in benefits will probably be focused on individuals getting SS benefits whom are not yet at retirement age as they have less voting power compared with the elderly.

Cranky @117
No idea what you are trying to say. Here is the law on Social Security obligations if this helps explain:
http://www.ssa.gov/history/nestor.html
Supreme Court Case: Flemming vs. Nestor
Section 1104 of the 1935 Act, entitled “RESERVATION OF POWER,” specifically said: “The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.” This was upheld by the Supreme Court in 1960.

132

Martin Bento 08.15.12 at 8:09 pm

Maggie, you must hang on different websites than I do. On most liberal political sites I visit, boomer-bashing is not constant, but comes up now and then. It is not always virulent, though it sometimes is. It makes sense for conservatives: if you think e.g. feminism was a horrible mistake, well, fair enough, your quarrel is largely with boomers. But it comes from avowed liberals too. I don’t see any other generation consistently attacked like this, and it is very political helpful for the conservatives.

133

Porkypine 08.16.12 at 5:22 am

All of this attention being paid to “grandfathering” is interesting, but in the end, utterly meaningless. The Republicans will never live up to any “deal” they reach on anything. As soon as they have the power, they will move to grab to whole loaf, and savagely defend their right to do so. The Bush tax cuts were supposed to be temporary, but many of us knew at the time that by the time their expiration drew near, they would be chisled into the GOP version of the 10 commamdments. Like Clinton famously said: “Republicans. You have to hit them in the head with a 2×4 just to get their attention.” It’s enough to make you want to join the carpenters union.

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Maggie 08.16.12 at 6:24 am

Martin, I wasn’t talking about websites, but people I know or have opportunity to observe in real life. I’ve heard a little anti-boomer sentiment from youngish, underpaid humanities academics, but only a bit, and the complaint there largely seems to be with their not having replicated their own opportunities, not wanting to screw them over. The language of generational conflict is largely media language these days; I don’t see a lot of people attaching these labels to themselves, and some of them I’m not even familiar with. (“Joneses”?) I’m not saying it’s not an opinion that exists in some quarters, but it’s not going to take hold in a major way.

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reason 08.16.12 at 10:52 am

Martin,
as a boomer (by some definitions) myself, I also find it tedious in the extreme (it is just as offensive to INDIVIDUALS as sexism or racism). It is an easy way to pin the blame on some nebulous other.

136

Barry 08.16.12 at 12:21 pm

Martin: “It makes sense for conservatives: if you think e.g. feminism was a horrible mistake, well, fair enough, your quarrel is largely with boomers. “

‘The Feminine Mystique’ was published in what year?

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Barry 08.16.12 at 12:23 pm

To me, there are two irritations with Boomer-bashing:

1) It’s the 1%, stupid!
2) It’s a rare thing for Boomer-bashers to have even a basic which-year-it-happened understanding of recent history. They’re like jokes about people in the far future mashing up everything in the 20th century into one confused stew (‘and my great-grandfather fought the VC at the Battle of the Bulge, riding a Model T fighter dirigible!’).

138

reason 08.16.12 at 12:30 pm

bad Jim @17
“You’d think that any sane person would look at interest rates and come to the opposite conclusion, but the most cursory survey of contemporary commentary on deficits would show that sanity is our scarcest commodity.”

This by the way is one of the best sentences EVER.

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Tim Wilkinson 08.16.12 at 12:50 pm

My own mild irritation with some members of that generation is with the sell-outs: I detect a certain antinomianism based on an enduring self-image of being “right on”, which allows them to reconcile right-wing views on the prolitics opf production and distribution with a kind of transcendent ‘leftiness’. Blair with his guitar-twanging brand of belligerent Thatcherism is an example; those who have gone into marketing as a conveniently lucrative outlet for their cool creativity, and in general those who threw in the towel when the wall came down

I have equal antipathy – of a fairly abstract and impersonal kind; more like disappointment, really – to those of later generations who exhibit the same kind of self-indulgence, though: to some extent boomers of the 60s generation set themselves a high standard to live up to, and their ordinary human foibles are thus cast into sharper relief as a result. But also, they knew better. Those only slightl;y younger than me (b. ’72) and younger have, unless their own families kept the flame alive, not been exposed to left-wing ideas at all.

And the late Robert Nozick, of course, whom I do if I’m honest hold in some contempt.

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Tim Wilkinson 08.16.12 at 12:52 pm

apolo;gies fro grarbledness which I apoligise for

141

GiT 08.16.12 at 1:12 pm

But the top 20% of boomers have made out quite well. Their average networth in, say, ’04 was in the 3-4 million range. Surely that segment is the chief target of ‘boomer hate’.

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TM 08.16.12 at 6:03 pm

“The language of generational conflict is largely media language these days”

Absolutely. The media will make up whatever it takes in order to avoid talking about class inequality and the 1%. And if it is some nonsense as what GiT just spouted. 20% of boomers millionaires? BS. Older people are on average richer (because it takes time to accumulate wealth if you haven’t inherited it, and in addition because young people are particularly screwed up right now) but still only a tiny minority among them are rich. According to Census (http://www.mlive.com/news/us-world/index.ssf/2011/11/us_wealth_gap_between_young_an.html), only 20% of the over-65 households have a net worth of $250,000 or more. (I couldn’t find the source for the 80th percentile and no comparable figure for other age groups but median net worth numbers can be found here: http://www.federalreserve.gov/Pubs/Bulletin/2012/articles/scf/scf.htm#networth).

Btw TDB just published another piece of boomer-bashing:
http://www.thedailybeast.com/features/2012/07/generation-screwed.html

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Martin Bento 08.17.12 at 12:14 am

Boy, that TBD article is a perfect example of what I’m talking about. John Quiggan doesn’t see how Gen X boomer resentment can translate into support for a policy that protects boomers and screws Gen X? Precisely what that article does. It treats boomer opposition to Ryan as stupidity because the boomer are presumed not to know that they are excluded, despite the fact that the Republicans keep screaming this. Support for Ryan among the younger is credited to their wisdom in knowing that Medicare as we know it is doomed anyway, so Ryan is actually serving their interest by ensuring that they will get *something*. Does anyone buy this? Well, Maggie has her anecdotes and I have mine, but the woman writing this article has poll data. Romney has gained about 5 points since appointing Ryan and she shows it is coming from Xers and millennials, not boomers or older. While I don’t think the polls are yet detailed enough to directly show why, entitlement reform is the issue that has been most discussed since Ryan’s appointment, and the one where the interests of the generations can diverge. Although it probably does matter, as I suggested, that Ryan is, in fact, Gen X, and the comparable liberal lions are all boomers or older.

Barry, sure, and A Vindication of the RIghts of Women was published in the 18th century. Tons of books expressing all kinds of ideas are published all the time. That is not a marker of political success. IF it were, we would date the communist era from 1848 when the Manifesto was published. Postwar feminism had few major concrete achievements before about 1970.There were some feminist intellectuals like Freidan, but it was the boomers who embraced it en masse, which was necessary for its political success. Note that this is just feminism; I’m not crediting the boomers for all of the social change of that time. The Silents got the ball rolling on black civil rights and did most of the institutional heavy lifting; the boomers continued this, and carried the war against prejudice further in the cultural realm. The boomers started the gay rights movement (the Stonewall rioters; Harvey Milk), but Gen X embraced it more fully and achieved more (and gay rights is probably the one area where Gen X is more progressive than boomers). But feminism achieved a breathtaking amount between 1970 – when married woman could not get separate credit cards, when unequal pay was open, legal, and socially acceptable, likewise barring woman from most professions, when divorce was very hard to get, and abuse did not always constitute grounds (depends on the state), when abortion was a crime, and when it was considered right and proper that woman should be compelled to submit in the home and not have much life outside it – and 1980, when things were much different. That one belongs, as I said,, largely to boomers.

Maggie, the children of the early sixties are part of the demographic “baby boom”, but, according to most of those who study such things, are more akin to Gen X in their actual attitudes. Some, therefore, just lob them in with Gen X, while others call them a separate group, “Generation Jones” being one name that is somewhat popular.

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John Quiggin 08.17.12 at 1:20 am

@Martin “. Romney has gained about 5 points since appointing Ryan and she shows it is coming from Xers and millennials, not boomers or older. “

This is incorrect, at least according to Nate Silver, who estimates a 1 per cent bounce, well below the average for VP picks.

On the generational analysis, the argument in the OP suggests that Ryan (and Gen X voters who share his views) aren’t crazy. The Repubs need the votes of the 55+ group, so they attempt to mollify them with the grandfather clause, knowing it can’t be sustained for long.

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GiT 08.17.12 at 1:53 am

TM

My, aren’t you touchy. “Spouting nonsense” indeed.

http://www.cepr.net/documents/publications/baby-boomer-wealth-2009-02.pdf

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Martin Bento 08.17.12 at 2:11 am

John, well, I was going by TPM’s metapoll analysis. In any case, I’m not suggesting Ryan is crazy at all, and I’m not addressing the OP. When I wrote that the Repubs were going to exploit Gen X resentment of the boomers to tear down entitlements and escape the blame for it, you replied:

“As regards the generational analysis, if you take the proposals at face value, Ryan is the ultimate Generation traitor. The grandfather clause is dated precisely so that boomers (including Jonesers) and Silents cash in for life, while X-ers and younger pay the taxes and get nothing. So, I’m not seeing how some of the analysis above is supposed to work.”

The TDB article shows how it works. No, it is not rational, but Gen X resentment of the boomers isn’t rational either, but is nonetheless potent. This is another form of bigotry Republicans can exploit, and they are good at that.

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Martin Bento 08.17.12 at 2:16 am

It occurs to me that my previous comment responding to Barry might invite a long debate over which generation deserves how much credit for what. Sounds boring to me. My point in the original comment was that boomers participated in social changes that social conservatives hate, and they are therefore a logical target if any generation is, but there also seems great resentment from avowed liberal Gen Xers, which is harder to explain.

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godoggo 08.17.12 at 2:39 am

Maybe because it’s their parents?

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godoggo 08.17.12 at 3:58 am

No intended hidden meanings there, btw.

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TM 08.17.12 at 4:14 am

Ok GiT. “But the top 20% of boomers have made out quite well. Their average networth in, say, ‘04 was in the 3-4 million range. Surely that segment is the chief target of ‘boomer hate’.” On rereading this, I now see that it refers to the mean net worth of the top quintile. That of course doesn’t imply that they are all millionaires. It just means that the top 1% are rich enough to drive the mean up that high. We know from ample sources that even the wealth distribution within the top 10%, top 5% and the top 1% is highly unequal. The mean of any broad group just doesn’t tell us anything useful.

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GiT 08.17.12 at 9:17 am

Well, it tells us something.

We’re probably looking at something like this for percentile means

80-90: 500k
90-95: 1 mil
95-99: 2.5 mil
99-100: 20 mil

Those are likely a tad on the high side, but that’s just off the cuff.

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TM 08.17.12 at 4:56 pm

GiT, what’s the point? What does this prove about boomers in particular? Wealth distribution is extremely unequal in all age groups. The older age groups tends to have more wealth than the younger ones (median and mean household figures can be found in the FRB link given in 142 but the distribution within age groups is not given). That is not unusual. The question is, is there anything about the wealth of the boomer generation in particular that justifies or at least explains “boomer hate”, and the answer is no. Most boomers are not rich. Most retirees are not rich. So what’s the point?

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Charles Peterson 08.18.12 at 3:28 am

My Republican mother did indeed live on middling social security alone for the last 8 or so years of her life. She was never frugal unless she had to be, always buying furniture and stuff, always had debts, pets, no savings, sometimes got free food from foodbanks. I made 30% downpayment and repairs on a house for her in about year 4 of that, she then made full P.I.T. payments from her S.S. until her death on standard 7.5% FHA loan. Of course the biggest expense was healthcare, which didn’t cost her a dime with the loss-leading experimental MA plans she could take advantage of; she ultimately exhausted her 365 Medicare hospital days, and ended her days on Medicaid in a ventilator equipped nursing home, with 60 mile trips to an emergency room once a month. She would have it no other way. Thankfully Texas still exempted homes from medicaid seizure then, but that rule has changed since. I don’t intend to live on Social Security alone, but I still live in that same house, nearly paid off, just in case.

I had always heard since I was in grade school that Social Security was a ponzi scheme, would be broke next year, etc., and believed and repeated these things to her. Despite her hardcore conservative background as an FDR hater, America Firster, not far from where Republicans are now, she brushed all such concerns aside. She also seemed to think Social Security came from Johnson, who was President about the time she originally started collecting survivor’s benefits. The private fixed annuity my father bought for the princely sum of $225,000 in 1963 was inflated away to nearly nothing by 1983 when it ended. The indexing of social security benefits was the thing that really put the security in Social Security back then.

All this taught me there is no substitute for a program like this, and it galls me the same old lies are still being told, and believed by kids, even after my payroll tax was hiked 50% in 1983 to deal with the demographic issue.

I understand quite well that future benefits paid by the future workers, another reason I think everything possible should be done to improve our most important resource, the human resource. It puzzles me that people who have private investments are in that same boat too, but never think about it that way, they seem to think their hard saved money grows under special lamps in Wall Street.

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