Re: [Pen-l] Social security

[joel blau <jblau@xxxxxxxxx>]

I think you've strung together a series of half-truths here, so that by 
the time you get to the end of your argument, there isn't much there. 
Let me try to correct them.

1. Social Security expenditures will exceed revenue in 2017. According 
to the latest (2008) Trust Fund  Report,  however,  every obligation can 
be  paid through 2041. I don't know whether they're still  using such  
conservative calculations, but  for a while,  the they telescoped the 
arrival of the year when they couldn't pay what was owed by predicting 
an average GDP growth rate of 1.7%. If we have an average growth rate of 
1.7% for next 33 years, that's a much bigger catastrophe than the 
prospect that in 2041, social security won't be adequately funded.

2. Social Security is a disguised anti-poverty program, which is the 
only way we can have a sustained anti-poverty program in this country. 
It provides 50% of the income for  65% of its recipients; 90%+ of the 
income of 33% of its recipients; and 100% of the income for 20% of its 
recipients.   You say that  social security is a kind of self-help 
program for the middle-class, when what we should do is simply to pay 
the poor. First, it's not accurate to say that it is redistributive 
among the middle-class (by which I assume you mean the current ceiling 
of $102,00) because though it is regressive in its revenue collection, 
it is fairly progressive in its distribution (earnings at the ceiling 
get about 21% of their annual salary, while the take-up rate for poor 
workers--people who are not "middle-class" by any stretch of the 
imagination--is about 42%). Second, (and I think you must know this), if 
we did just pay the poor, that program would last the microsecond until 
some conservative politician came along to denounce the program for 
"just paying the poor." In short, paying social security to people who 
earn $102,000 and up is the ransom to the affluent that must be paid in 
order for poor workers to have a source of income in their old age.

3. You say that social security exists to boost current government 
revenues. This has more than just a tinge of the longstanding 
conservative argument that government programs exist solely to help the 
government, which seems like a pretty cramped reading of the functions 
of social welfare (help the poor, increase aggregate demand, partially 
mitigate inequality, distinguish between the worthy and unworthy poor, 
showcase the government as caring, nurture political linkages with 
recipients, pacify the electorate, etc). If you want to insist that 
governmental institution-building belongs on this list, sure--it 
probably does. But to argue that this is   social security's  sole  or 
primary function is to look at it through a very narrow aperture.

Joel Blau

David B. Shemano wrote:
> Doug Henwood writes:
>
>   
> > > > At some point in time, if we continue on our present path, ss
> > > > expenditures will exceed ss taxes.  At this point, general tax
> > > > revenues are supposed to start paying ss expenditures (i.e. pay
> > > > those T-bills the SSA is supposedly holding).  This, tautologically,
> > > > means that the Congress will have to reduce or eliminate non-ss
> > > > expenditures that would have been funded in the absence of the ss
> > > > obligation, unless Congress is willing to raise non-ss taxes.
> > > >         
> > > On the other hand, if all the dire predictions about SS's bankruptcy
> > > don't come to pass - and I think they won't - then there won't be much
> > > of a problem, will there?
> > >       
>
> As long as the present level of ss taxation exceeds ss expenditures, then everything will be hunky-dory.  My understanding is expenditures will exceed revenues starting in 2017, at which point Congress will have to make explicit choices.
>
>   
> > > > I am all for "insurance against poverty," whatever that means.
> > > >         
> > > Using government money to keep people from being poor. That's not
> > > complicated, is it?
> > >       
>
> SS, as presently consituted, is generally neither insurance nor linked to poverty. Insurance implies a pooling of assets to guard against events that will likely not happen and be catastrophic for an individual when it does happen.  If lifespans were 65, I suppose we could characterize SS as insurance against the improbability of living past 65, but since lifespans are edging closer to 80, payments for reaching 65 are not insurance.  And benefits are not linked to poverty or means tested, as you know, which is why the program retains its popularity with the middle class (they are willing to prepay retirement funds for themselves, but not others).
>
>   
> > > >   I don't believe that is what social security as presently
> > > > constituted is.  It is simply a scheme to increase present
> > > > government revenues to pay for present government expenditures.
> > > >         
> > > Easy for you to say. For most elderly people, SS is about all they've
> > > got.
> > >       
>
> As constituted SS is a redistribution from the middle class to the middle class, with the elderly poor benefiting.  I would prefer that we eliminate the redistributuion from the middle to the middle, and simply pay the poor.  However, if we did that, which would slash SS taxes, the government would lose the benefit of the surplius -- that is the heart of the political matter.  That is why I say something is going to occur when expenditures exceed taxes -- without the ability to spend the surplus, SS will become a drag on other spending, and Congress is not going to like that.
>
> David Shemano
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>
>   


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