Social Security
Other words that weren't mentioned, even for their economic impact: Iraq, Afghanistan, education.
When Treasury Secretary Geithner spoke to a local audience last month, he assured us that the ensuing weeks would be filled with dramatic political theater. When the news broke last evening that President Obama was going to enter today's round of debt negotiations by "offering Social Security cuts," I thought immediately of the movie theater, and in particular the scene in Bull Durham in which Crash tells Nuke to throw the next pitch at the mascot. It could be that the right narrative to explain this development in the debt negotiations is as The Washington Post reports:
Here are two headlines and excerpts to make a budget wonk smile, both from The Wall Street Journal:
Promise on Taxes Sparks GOP Rift
Two decades after President George H.W. Bush abandoned his "read my lips" promise, some Republicans are chafing at their party's stand against new taxes.
A few prominent GOP lawmakers believe they will have to raise some tax revenue if they are to bring Democrats along on a bipartisan compromise to address the U.S.'s long-term fiscal problems. Many Democrats want higher taxes to cover at least part of future budget gaps. That has led to clashes between Republican lawmakers and a Washington advocacy group, Americans for Tax Reform, the self-appointed keeper of the party's anti-tax flame.
Democrats Split on Social Security
From my inbox, this morning, from Fidelity Investments:
In 2011, Social Security withholdings taxes are being reduced by 2%. Since this money was intended for retirement savings, why not consider putting it into your own workplace savings plan? Check the amount that you are currently contributing and, if you are eligible to do so, consider increasing your contributions now to take advantage of this opportunity.
Why not? Officially, because I am going to spend that money on things I would never have purchased otherwise, so that I may do my part to ensure enough aggregate demand to continue the recovery. Technically, because the 2% was not intended for retirement saving -- it is being covered by the General Fund and my Social Security benefits are not any lower because of it. My generation delays, your generation pays.
At his blog today, Ezra Klein takes issue with a suggestion by Andrew Biggs that we improve government finances by raising the early eligibility age (EEA) for receiving Social Security benefits. The EEA has remained at 62 despite the ongoing increases in the full benefit age (FBA, usually called the normal retirement age) from its historic level of 65 to 66 today and 67 within a decade. Both Ezra's and Andrew's contributions are worthwhile. I can add the following six points to the discussion:
1) Social Security exists to prevent people from outliving their means of supporting themselves.
The core program is for Old Age and Survivors Insurance. None of the ages being discussed -- 62, 65, 67, even 70 when all age-related aspects of the program max out -- constitute old age. What matters for the effectiveness of Social Security as an insurance program is whether it keeps the truly old -- think age 85 and almost certainly unable to work -- out of poverty.
