Next Step in Class Warfare
The Paul Ryan crusade (all hail Ayn Rand) takes a slight turn away from “looters and moochers” of poverty to the real villains of our time–the old leeches who hold onto life beyond their span and suck future generations dry of their heritage.
The Wall Street Journal opens its paywall for an attack on “The Millionaire Retirees Next Door,” those who live it up on Social Security and Medicare, refusing to go willingly onto the ice floe that would release trillions for future generations:
“Many of the million-dollar couples believe they rightfully deserve the benefits they have been promised. They have, after all, spent all of their working years paying into Social Security and Medicare. And true enough, the typical 66-year old couple and their employers, on their behalf, have contributed nearly $500,000 in payroll taxes (in today’s dollars) toward these benefits during their working careers.
“But regardless of how much they have contributed, the hard reality is that the federal government has already spent it. No matter how deserving they are, it is younger generations of workers who have to come up with the money.”
22 Responses to “Next Step in Class Warfare”
LOL Those “The Millionaire Retirees Next Door”, where are they and what are there numbers? Must be ex welfare queens driving Cadillacs…
Is this Htrae that I see here? This Bizarro world where Robin Hood steals from the poor to give to the rich.
Nah, just the U.S House of Representatives in the hands of the Freshman Class.
I believe the more important facts to consider are:
1. There is no “sacred covenant” (as I predicted Bill Clinton would and did say to stupid people in the 1992 campaign) and changes to the programs are inevitable because they are unsustainable as is. (Too many stupid people ignore the warnings even by those running the entitlement programs themselves, including this year’s warning that the programs are in worse shape than before.)
2. Many someday will not be “greedy geezers” but actually people neglected nowadays by liberals, but likely to be there — ordinary people who rely on Social Security more than they thought they would, because they could not save enough for retirement as in the many retirement ads and television commercials. To many the Social Security benefits actually will be considered inadequate. This is without considering a future call for means testing.
3. Times are going to be tough in the 2020s onward because of the demographic problems, wherein the Baby Boomers add greatly to those qualifying for elderly benefits, and a great increase in the dependency ratio, with ugly consequences for taxpayers. (Replacement migration from abroad is impossible.)
4. Few people agree with Ryan’s proposal for transforming Medicare from a federal program directly paying providers to a system of (inadequate) vouchers for private medical insurance. It’s a straw man form of argumentation to overreact to Ryan’s proposal. The common view is that the insurance system likely is doomed eventually and a program like Medicare for everybody will be seen as probably the only viable alternative to that system.
Rudi, in the bubble 1990s, such a millionaire-from-welfare-benefits scenario was certainly conceivable, with or without day trading added to the scenario. (Options, common as they were, more likely.)
Interesting article. One point, seniors retiring used to have equity in their homes or maybe a modest retirement savings account. In many cases, that has all changed in the few years. That money is gone and is not coming back.
Funny, I’m having trouble finding any references to ice floes in that article. What I do find is this:
Perhaps you think this is quite reasonable, Mr. Stein, and the article deserves lambasting for calling it out? If so, fair enough, but then how do we pay for it?
I can’t imagine they will be successful with this attack. “We nearly bankrupted the nation giving tax cuts to the rich so we have to cut Social Security so we can give more tax cuts to the rich.”
Then I never thought they would be sucessful with the whole “give all the money to the rich and we all will be better off” gambit called supply side economics but they were.
There are some profoundly naive people out there.
I don’t think this issue can be reduced to quips and soundbites. This isn’t an attack on retirees, the numbers are what they are.
I don’t agree with raising co-pays on Medicare patients. While the author is correct that would encourage patients to consider costs more carefully, the reality is many of these patients just don’t have the money for the co-pays.
I do agree that some adjustments need to be made in Social Security, possibly including changing the retirement age to receive maximal payments. I also support partial privatization, which the individual taxpayer would have the option of taking or sticking with traditional SS.
DaGoat says:
You will take all the fun out of commenting.
I’m fine with means testing for social security and I’m fine with any and all reasonable cuts and taxes. The key word here is “reasonable”. The GOP has long struggled to understand the definition of that word. You can’t pander consistently and shamelessly to the wealthiest and most powerful Americans on one hand, while denigrating and lying to the bulk of Americans on the other without class warfare becoming the inevitable result. I see the latest president wannabee, Newt, is as clueless as ever about that concept, with his recent quip about the “food stamp president”. How America can ever hope to solve it’s problems when so many irresponsible fools are jockeying for power is beyond me.
Dr. J,
I have received the same SSD check (i.e., amount) since 2009, when I was approved for SSD. Next year, I *will* be getting an increase: 7/10 of 1%. And my Medicare premiums will be going up.
I guess I’m not the average worker.
Kathy
Kathy, kudos for discussing numbers. You’ve raised the bar considerably on the people writing vague fabrications about ice floes and transfers to the rich.
The WSJ article wasn’t talking about increases to individual beneficiaries but about greater benefits to successive ones, beyond what you’d expect from inflation. Their numbers suggest that the benefits you’re getting are more generous than they would have been had you gone on SSD in 1999, and you’re getting a raw deal relative to people who go on it in 2019.
I don’t know if their claim is true. If it is I don’t understand why we would be treating people differently depending on what year they happen to retire.
Actual benefits are a function of past contributions in no small part,….which, by the way, suggests to the random older dumb American this was designed to be something of a personal investment program rather than a wholly transfer payment scheme, so my guess is that if there is a projected benefit increase in some out year, it may have something to do with the average contribution pool rising from one retiring class to the next.
Social Security benefits are indexed to wages, rather than to the cost of living, which is a major reason why they’re growing so much and so the program’s expenses are growing so much. Reform efforts to the program include indexing the benefit structure to the cost of living, rather than to wages. (Recall that with stable prices or some deflation in earlier years, we recently saw in the news that there was no cost of living for Social Security beneficiaries.)
http://www.ssa.gov/oact/cola/Benefits.html
DaGoat says:
MAY 14, 2011 AT 9:22 AM
I am sorry you disliked my short comments, possibly a better word would be brief. I posted them from my iPad and I have a terrible time typing on the thing.
I do stand by what I wrote. We are being told that the debt run up in the last thirty years is too high. We went into debt to fund tax cuts that primarily benefited the rich, among other things of course, a couple of wars, a Medicare Drug benefit, expansion of farm and corporate subsidies, security and defense spending, all were put on the nation’s credit card, all without any funding source. Now we are being told that this has to stop, that we must cut more programs, including Medicare, Medicare, Social Security programs that are for the retirees.
This is an amazing conclusion. You don’t consider lowering these programs an attack on retirees? What would you consider an attack on retirees to look like? Would you consider it to be an attack on the wealthy to raise their taxes?
And why must we reduce these payments that we are going to lower in an un-attack like way? We are going to lower them so that we can further lower taxes on the wealthy, continue spending on farm and corporate subsidies, further spend on the wars, security and defense. Not so we can balance the budget. Not so we can pay down any of our debt. So that we can continue to spend while we continue to lower taxes on the wealthy.
And why must we make adjustments to Social Security? It is by far the most fiscally responsible large program in the federal government. It has run a surplus for the last twenty five years to allow for the demographic imbalance brought about by the aging of the baby boomers.
As you know we discussed the privatization of Social Security in 2005 under then President Bush. But there were just a few problems with it that President Bush couldn’t answer. The biggest problem was how to avoid the 2 to 14 trillion dollars of debt that would have to be taken on in the decades long transition from traditional Social Security to the new privatized one. If you remember President Bush and his party weren’t too terribly good at the how to pay for part of anything.
And the other problem was that there was no advantage to privatizing Social Security. The costs of the program would go up, the load or costs to handle the private investments would be higher, lowering returns.And no private company would be able to guarantee the return that the current program does. And no private entity could guarantee to even still be around thirty or forty years down the road.
Since you support at least partial privatization I am sure that you can answer these questions. Anything else would be irresponsible. So tell me how will you pay for the transition? And which companies have you found that can guarantee the rate of return and the stability of the government? I await your response
I’ll be back later to discuss the not a miracle of supply side economics. I need to know if this expanded discussion of my quips and soundbites are helping you understand them. If not I need a little more direction from you on the exact nature of your confusion. Oh, do get back to me on the privatization questions. To date no supporter of privatization has had the least idea on how to pay for the transition.
merkin, if you want to write an article, why not submit it to TMV editorial instead of burying in comments. You can send to us. Commenters’ rules are to keep comments shorter, and you can post a link to the rest if you like.
archangel/ dr.e
Merkin:”And which companies have you found that can guarantee the rate of return and the stability of the government? I await your response”
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I have to answer that one. The last company that I heard of that could guarantee a rate of return that consistently beat inflation, was the one run by Bernie Madoff, and for the same reason — they’re able to continually take more from those who are paying to fund the extra to the one getting paid. It’s a great scheme while it lasts, but always comes to a nasty end. It’s already paying out more than it’s taking in, even though the tax rates are far greater than when the current retirees started working.
Merkin, I’ll give you short answers since I am a terrible typist even on my keyboard, let alone a phone.
I don’t consider giving somebody less money to be an attack. It’s the fad now to call anything that might effect someone negatively an attack, which seems to me to be hyperbole.
The way the privatization plan was proposed (there were different versions but I think this was the most common) was first to be OPTIONAL. Anybody who wanted to stick with the standard plan would have that option. For those that wanted to assume more risk, there would be approved plans using highly rated bonds, high-dividend stocks, etc. These would not be as safe as government bonds, but would offer the possibility of higher returns. No one would be allowed to place all of their FICA taxes in private funds, a percentage will still be required to be placed in traditional SS, however those funds would receive a lower % payout than if they had stayed 100% in traditional SS.
Obviously privatization was not aimed at people like you who want as safe an investment as US bonds. For those, the traditional SS would still be available.
I agree with you the government isn’t very good at figuring out how to pay for things. To me that is a reason to privatize, not to rely more on the government.
I agree that raising the retirement age or otherwise cutting benefits is inevitable. However, the move on now would essentially just abandon promises made for decades. A million isn’t what it used to be and these “millionares” aren’t Wall Street Fat Cats. We are talking doctors who spent year learning to treat people and Engineers who participated in making the next big idea a reality.
And, in fact, what we are actually talking about, when we means test retiree’s, is punishing savings. Some guy who made it big on leveraged mortgages, but blows a lot of it on fast cars, will be fine. Someone who works hard all their life and saves will get hurt.
David P. Summers — yes, this is the cruel anti-thrift irony that would be associated with the “Medicaid trap” now, applied to the other entitlements.
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Merkin wrote:
??? (and !!!) Social Security’s unsustainability has been a fact long known. The “trust fund” bonds that would be used to pay Social Security’s deficits to come (formerly in 2016, now happening earlier) have no value and will require more revenue from the federal government to pay full benefits to the recipients.
Thank you, but I don’t understand how I’ve done what you say I’ve done given that your response does not appear to account for what I wrote.
I would not have qualified for SSD in 1999, Dr. J. I did not have enough work hours in 1999.
If I had qualified for SSD in 1999, it’s difficult for me to understand what you mean when you say that a cost-of-living increase of less than one percent after two years of no increases at all, and given the fact that costs of almost everything (food, medical costs, rent) have gone up much more than 1% is more generous than I would have gotten in 1999. My rent is going up by 4% beginning next month. So can you explain your thinking when you tell me my increase of less than one percent next year is more generous than it would have been in 1999? I mean, that doesn’t really make sense, mathematically speaking.
It would also be nice to know how cost-of-living increases could be so much more generous in 2019 when they are so low now.
Kathy
I’m not talking about cost-of-living adjustments, which are indexed to the CPI. I’m talking about the base that they’re applied to, which according to DLS is indexed to faster-rising wages.
But really I’m just repeating what the WSJ article said, which hopefully put it better: