Raising the retirement age of social security.

[Direckshun]

A really enlightening piece outlining some solid rebuttals to one of the more popular ideas for reforming social security.

It is often remarked in the media and by the wealthy that the retirement age should be raised. But that's because those who are making the arguments likely love their jobs, are living substantially longer than they were in the 1980s, and make enough bank so that they don't need to rely on social security when they retire.

None of that is true for the lower economic half of society. The lower economic half largely don't work jobs they want to work at forever, they aren't living that much longer than they were in 1980s, and of course will rely on social security when they retire.

The 1980s are worth noting because they were the latest overhaul of social security. People often argue that social security wasn't designed in the 1930s to deal with the 21st century. No... but it was redesigned in the 1980s. Since then, the rich have gotten richer while everybody else has essentially stayed the same.

Another relatively popular solution for social security solution, one that would make the program solvent for the rest of our and our children's lifetimes, would be to simply apply social security taxation to those making over $110,000.

But, of course, the 1% doesn't like that. So they prefer the methodology that hurts the bottom 50% instead.

http://www.washingtonpost.com/blogs/...etirement-age/

Why rich guys want to raise the retirement age
Posted by Ezra Klein
on November 21, 2012 at 2:14 pm

If you’re the CEO of Goldman Sachs – if you have a job that you love, a job that makes you so much money you can literally build a Scrooge McDuck room where you can swim through a pile of gold coins wearing only a topcoat – then you should perhaps think twice before saying this:

You can look at the history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed. Maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.

That’s Lloyd Blankfein, CEO of Goldman Sachs, talking to CBS. And he’s not saying anything that people, particularly wealthier people with desk jobs, don’t say all the time in Washington and New York. So I don’t want to just pick on him. But the cavalier endorsement of raising the retirement age by people who really love their jobs, who make so much money they barely pay Social Security taxes, and who are, actuarially speaking, are ensured a long and healthy life, drives me nuts.

If you want talk about cutting Social Security, talk about cutting it. It’s a reasonable point of view. You’re allowed to hold it.

But “cutting” Social Security is unpopular and people don’t like to talk about it. So folks who want to cut the program have instead settled on an elliptical argument about life expectancy. Social Security, they say, was designed at a time when Americans didn’t live quite so long. And so raising the retirement age isn’t a “cut.” It’s a restoration of the program’s original purpose. It doesn’t hurt anything or anyone.

The first point worth making here is that the country’s economy has grown 15-fold since Social Security was passed into law. One of the things the richest society the world has ever known can buy is a decent retirement for people who don’t have jobs they love and who don’t want to work forever.

The second point worth making is that Social Security was overhauled in the ’80s. So the promises the program is carrying out today were made then. And, since the ’80s, the idea that we’ve all gained so many years of life simply isn’t true.

Some of us have gained in life expectancy, of course. As you can see on this graph, since 1977, the life expectancy of male workers retiring at age 65 has risen six years in the top half of the income distribution. But if you’re in the bottom half of the income distribution? Then you’ve only gained 1.3 years.



If you’re wealthy, you do have many more years to enjoy Social Security. But if you’re not, you don’t. And so making it so people who aren’t wealthy have to wait longer to use Social Security is a particularly cruel and regressive way to cut the program.

It’s also a cut that’s particularly tough on people who spend their lives in jobs they don’t enjoy.

You know what age most people actually begin taking Social Security? Sixty-five is what most people think. That’s the law’s standard retirement age. But that’s wrong. Most people begin taking Social Security benefits at 62, which is as early as the law allows you to take them.

When they do that, it means they get smaller benefits over their lifetime. We penalize for taking it early. But they do it anyway. They do it because they don’t want to spend their whole lives at that job. Unlike many folks in finance or in the U.S. Senate or writing for the nation’s op-ed pages, they don’t want to work till they drop.

As Peter Diamond, the Nobel laureate economist and Social Security expert, told Dylan Matthews:

What do we know about the people who retire at 62? On average, shorter life expectancy and lower earnings than people retiring at later ages. If anyone stood up and said, “Instead of doing uniform across the board cuts, let’s make them a little worse for people who have shorter life expectancies and lower earnings,” they’d be laughed at. Anything that reduces benefits is going to hurt everybody. It’s going to hit people with short life expectancies, it’s going to hit people with high life expectancies. But we should not make it worse for those retiring earliest.

That’s what’s galling about this easy argument. The people who make it, the pundits and the senators and the CEOs, they’ll never feel it. They don’t want to retire at age 65, and they don’t have short life expectancies, and they’re not mainly relying on Social Security for their retirement income. They’re bravely advocating a cut they’ll never feel.

But you know what they would feel? Social Security taxes don’t apply to income over $110,000. In 2011, Lloyd Blankfein’s total compensation was $16.1 million. That means he paid Social Security taxes on less than 1 percent of his compensation.

If we lifted that cap, if we made all income subject to payroll taxes, the Congressional Budget Office estimates that it would do three times as much to solve Social Security’s shortfall as raising the retirement age to 70. In fact, it would, in one fell swoop, close Social Security’s solvency gap for the next 75 years. That may or may not be the right way to close Social Security’s shortfall, but somehow, it rarely gets mentioned by the folks who think they’re being courageous when they talk about raising a retirement age they’ll never notice.

Again, I don’t mean to pick on Blankfein here. He’s not saying anything unusual, and he’s one of the CEOs who’s pretty straightforward about the fact that his taxes are going to need to go up. But he and all these folks who like to talk about raising the Social Security retirement age as if it’s a no-brainer need to think harder about why they’ve settled on the cut to Social Security that will concentrate its pain on people who haven’t fully shared in the remarkable increase in life expectancy, who don’t make much money and who don’t love going to their jobs every day.

[Direckshun]

It should be noted that social security is not a driver of the deficit (Medicare is), and is on pace to remain in the black for at least another twenty years before it even comes close to becoming insolvent.

[Brainiac]

Believe it or not, I agree with you on this issue. There's no reason to cap the payroll tax at $110,000 of income. It's an incredibly regressive tax.

[cdcox]

Yeah, social security could be fixed in an afternoon if both houses of congress would be sensible. I'd favor keeping the payroll tax income over $110K. Raising the age at which benefits kick in is just going to keep old codgers in the work place longer occupying opportunities for younger workers. Of course if older folks want to keep working and have the skills employers are willing to pay for, they have the freedom to keep working.

Medicare is a much tougher nut to crack.

[Direckshun]

Originally Posted by Brainiac

Believe it or not, I agree with you on this issue. There's no reason to cap the payroll tax at $110,000 of income. It's an incredibly regressive tax.

We're totally going to run for office together.

I'm already saving money for our bicycle built for two.

[go bowe]

Originally Posted by Direckshun

We're totally going to run for office together.

I'm already saving money for our bicycle built for two.

[Carlota69]

You know what Pisses me off? These assholes in congress and the senate as well as former Presidents make an average of 200k a year plus kick ass medical benefits after they retire, on our backs. Before we go after the average working mans soc sec and Medicare, why don't we Stop paying these ****ers so much money when they a done working??? I love how they talk about how soc sec and Medicare is hurting us, yet they arent willing to cut their retirement? I say we start there, and then see where we a when it comes to "entitlements" (which we have paid into) for the rest of us.

[Brainiac]

Originally Posted by Direckshun

We're totally going to run for office together.

I'm already saving money for our bicycle built for two.

I could never run for office with someone who always votes a straight ticket. It doesn't matter whether or it's a Democrat or a Republican. That mindset is just foreign to me.

Sorry to disappoint. You might try Cosmo or BRC.

[Donger]

Originally Posted by Brainiac

Believe it or not, I agree with you on this issue. There's no reason to cap the payroll tax at $110,000 of income. It's an incredibly regressive tax.

I agree.

[ROYC75]

Originally Posted by Carlota69

You know what Pisses me off? These assholes in congress and the senate as well as former Presidents make an average of 200k a year plus kick ass medical benefits after they retire, on our backs. Before we go after the average working mans soc sec and Medicare, why don't we Stop paying these ****ers so much money when they a done working??? I love how they talk about how soc sec and Medicare is hurting us, yet they arent willing to cut their retirement? I say we start there, and then see where we a when it comes to "entitlements" (which we have paid into) for the rest of us.

[patteeu]

Originally Posted by Brainiac

Believe it or not, I agree with you on this issue. There's no reason to cap the payroll tax at $110,000 of income. It's an incredibly regressive tax.

There's a huge reason to cap it. SS is supposed to be a self-funding, forced pension program with limited wealth transfer characteristics, not welfare. It's not regressive, it's actually progressive as is. Because you shouldn't look at it as if it's a tax that leads to across the board benefits, it's a tax on the working class that leads to a working class specific benefit. High income earners pay a pittance into the program relative to their income, but they receive a pittance out of it too because the program isn't intended for them.

If we're going to go this route, why have SS at all? Why not just expand our welfare programs, raise income taxes and eliminate payroll taxes?

[patteeu]

Originally Posted by Carlota69

You know what Pisses me off? These assholes in congress and the senate as well as former Presidents make an average of 200k a year plus kick ass medical benefits after they retire, on our backs. Before we go after the average working mans soc sec and Medicare, why don't we Stop paying these ****ers so much money when they a done working??? I love how they talk about how soc sec and Medicare is hurting us, yet they arent willing to cut their retirement? I say we start there, and then see where we a when it comes to "entitlements" (which we have paid into) for the rest of us.

That's fine and I wouldn't have any problem with doing that, except that after we're done we'll find that we're in exactly the same place (within the rounding error) because it would have such a trivial impact on our fiscal condition.

[BigRedChief]

Social Security is in fine shape. No crisis for now. Medicare is the entitlement thats got to be reined in.

[Trivers]

Originally Posted by patteeu

There's a huge reason to cap it. SS is supposed to be a self-funding, forced pension program with limited wealth transfer characteristics, not welfare. It's not regressive, it's actually progressive as is. Because you shouldn't look at it as if it's a tax that leads to across the board benefits, it's a tax on the working class that leads to a working class specific benefit. High income earners pay a pittance into the program relative to their income, but they receive a pittance out of it too because the program isn't intended for them.

If we're going to go this route, why have SS at all? Why not just expand our welfare programs, raise income taxes and eliminate payroll taxes?

Wait, you are bringing logic into the discussion. That is not allowed by those that think increasing taxes on everything solves all problems.

[patteeu]

Originally Posted by BigRedChief

Social Security is in fine shape. No crisis. Medicare is the entitlement thats got to be reined in.

Medicare is by far the bigger problem, but SS still needs to be fixed. Increasing the retirement age (over a period of years) and increasing the cap number to account for wage inflation is a better solution than the class warfare solution advocated by this article because it better retains the original character of the program.