Debt Becomes Us

The early semi-recommendations from the co-chairs of President Barack Obama's National Commission on Fiscal Responsibility and Reform are kicking up a fuss. Headed by former Sen. Alan Simpson and former Clinton admin stalwart Erskine Bowles, I find the proposals too timid in terms of shrinking the size and cost of government, too reliant on raising taxes, and too slow in implementation. Still, negative reactions to such obvious proposals as increasing the age at which future beneficiaries can claim Social Security are instructive. Keep in mind that the suggestion under discussion would ask that people born in 2006 wait until they are 69 years old to collect Social Security payments:

House Speaker Nancy Pelosi (D-Calif.) called the co-chairs' recommendations "simply unacceptable," saying that, "Any final proposal from the Commission should do what is right for our children and grandchildren's economic security as well as for our nation's fiscal security, and it must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare. And it must strengthen America's middle class families–under siege for the last decade, and unable to withstand further encroachment on their economic security."

And other Democrats are in line to agree with her.

"It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age," Sen. Bernie Sanders (I-Vt.) said of the co-chairs' recommendation regarding Social Security. "As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income. Frankly, there will not be too much demand within the construction industry for 69-year-old bricklayers."

These sorts of proactive outrages are what you might expect, but they also show an absolute lack of seriousness. Indeed, if anything, the idea that Social Security's age requirement would increase only two years (from the current 67 for those born after 1960) over the next many decades is itself laughable. If you can't adjust the age when old-age kicks in after decades of increases in longevity and wealth, then you've got nothing to add to a conversation about out-of-control government spending.

Also on the list, and something that will surely give defense-hag Republicans the vapors: "$100 billion in Illustrative Defense Cuts, including freezing all noncombat military pay at 2011 levels and reducing overseas bases by one third."

More here.

In an upcoming article for the print mag and Reason.com, look for a plan to balance the budget without increasing federal revenue.

Comments

[Alan Vanneman]

I agree totally. If we can't kick the shit out of four-year-olds, whom can we oppress? The fact that Democrats labor so hard to make Social Security "sacred"--fighting for the right of rich people to retire early with full benefits, among other things--shows a party that, deep in its guts, feels itself to be no more than a one-trick pony.

[John Thacker]

The complaint about bricklayers and the working poor is such a canard. That's why the proposal actually makes things better for people who are at the bottom end.

I remember a month or two ago when MNG professed to be surprised at my claim that Democrats consistently supported full benefits for the upper middle class on Social Security, and the only people wanting to make it more progressive were libertarians and conservatives (though not all of each.)

I'm perfectly okay with saying that the working poor who worked all their life should be able to retire, and I know that means that they will have to get back extra compared to what they put in (and it has to be a retirement plan, because I'm less sympathetic to just extra welfare in general.) But the only way mathematically that that works is for some people at the top to get back less than they put in.

[Draco]

But it's not a retirement plan John, it's a welfare program. I blogged on this a few weeks back. You can make any welfare program "work" as long as you are free to tweak the parameters. The question is: will we need a welfare program for some older people, even in a world where most people save successfully for retirement? The answer is probably yes, and personally I think it would be better to call that out explicitly and have a smaller program than Social Security that covers all of those who are too poor (or, unfortunately, too irresponsible - yeah, we're going to have parasites along for the ride, admittedly) to save for their own retirement. It's an error to believe that SS payroll tax bears any relationship to the payments made to people under the program. "Getting back what you put in" only makes sense in a retirement plan.

[Vermont Gun Owner]

Any final proposal from the Commission should do what is right for our children and grandchildren's economic security as well as for our nation's fiscal security, and it must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.

So apparently giving our children a pile of debt and the ability to collect (from an empty fund) two years sooner is what is right?

It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age

1) Thanks for so quickly making me feel good about voting against you.
2) Why is 69 unrephrensible, but 67 is enlightened?
3)Since when is not giving people money "asking them to work"? If they want to retire at 67 (on money they saved, on no money, whatever) I'm fine with that.

[Rich]

You beat me to it, VGO. Right on! I'll add this:

"And it must strengthen America's middle class families?under siege for the last decade, and unable to withstand further encroachment on their economic security."

Oh, I'm sure they'll be given lots more opportunities to "withstand encroachment". The Tea Partiers -- and their foes -- are thinking that "What doesn't kill you, strengthens you."

[John Tabin]

Bernie Sanders is 69 years old. Perhaps he should retire...

[Brett L]

I think you've hit on it. Mandatory retirement at Social Security age for Congresscritters.

[Dave]

If current trends continue, people might be living MUCH MUCH longer by the time 4 year olds turn 69. It is quite possible that lifespans will be indefinite by then, which essentially means that retirees may be due a pension for eternity. The good news is that everyone will likely be so wealthy that no one will care about Social Security any more than they care about regulations for whale oil lamps.

It does drive home how ridiculous all this politicking is, however. Our governing class is so clueless in such a multitude of ways that it goes beyond being unfunny to being hilarious again and then past that to not being funny again.

[Fiscal Meth]

They're saying the first person who will live to be over a hundred and fifty is probably already alive. Good thing he's got Pelosi on his side to make sure that he won't have to wait 2 more years to start taking welfare for the remaining 60% of his life. This also means that millions of people who were not yet born when this guy retired will also be collecting ss before this guy dies.

[Tulpa]

It makes a big difference whether lifespan will be indefinite with 20-year-old physique vs. indefinite with 90-year-old physique.

If the former, retirement won't be necessary (though that may present its own problems). If the latter, expect a shitload of suicides. I know I sure as hell wouldn't want to live forever as a decrepit old man.

[Draco]

Two things:

1) Social Security is nothing but a welfare program for older Americans; we need to start treating it as such, explicitly. If we're going to keep it at all, it makes sense to run it with more options to deal with the requirements of physical laborers and other variants of the diverse American work force. Like any welfare program, you can tweak the parameters to make it work. The essential task is to determine how much of the pie being baked by the productive class should be served to the retired class. It's not a problem beyond our powers.

2) The idea of balancing the budget is crazy overall, and borderline insane given the problems our economy is facing right now (10% unemployment). See here for a quick guide to why balancing the budget (or, worse, running a surplus) is a terrible idea. It's not surprising people don't understand this, because it requires understanding finance in a fiat currency regime. But we're going to need to get conservatives and libertarians to start understanding it before we recommend actions (massive federal spending cuts) which may turn out to be catastrophic in the current environment. I'm against a massive, intrusive Federal government. But I'm not against them injecting net financial assets into the private sector (which is what government spending does), when called for.

[Ben Bernanke]

Therefore, if we wish to increase our standard of living without bound we will need to increase our national debt without bound
...
To check the validity of the premises in this argument, you'll have to do additional reading.

Draco, I like the cut of your jib.

[cynical]

"If we're going to keep it at all, it makes sense to run it with more options to deal with the requirements of physical laborers and other variants of the diverse American work force."

Social Security already includes disability payments, and as far as I know, you're more likely to get granted if you're A) limited in the jobs you can perform and B) older.

[Max]

They're paying you plenty for this shit, Nick. You get those stupid leather jackets at Wal-Mart anyway, don't you?

[Todd]

I'm a bit more sanguine about this plan. Would I like something better than this? Definitely! But politics is the art of the possible, and I think this is the best deal we can get. More importantly, I like how things are structured in this plan, though we can definitely argue over numbers. Getting rid of a lot of dumb tax breaks and creating a means to both roll back SS and Medicare/aid spending and start shrinking our overseas military footprint is a net good thing.

Think of it like BRAC. While it didn't get all the wasteful spending at home down at once, it created a mechanism that's proven itself effective since it's been rolled out. Also, I think this proposed tax code could lead to a means by which America could lose the corporate income tax, and I think that would be a net good.

[Kenneth]

We need to cut spending (especially on Medicare) AND raise taxes AND raise the retirement age for Social Security.

Too bad Washington partisanship and ideological blindspots prevent us from sensible centrist solutions and instead just promote gridlock and partisan bickering.

[R C Dean]

We need to cut spending (especially on Medicare) AND raise taxes AND raise the retirement age for Social Security.

Two thirds right, Kenneth.

As a practical matter, we are close to the limit on what we can actually collect at the federal level. Raise taxes, and behavior will change and capital will flee.

This year's tax receipts are just about equal to total federal expenditures in 2004 or 2005. Cut the spending to those levels, and you have balanced the budget without raising taxes.

No one who says we need to raise taxes to balance the budget should be taken seriously.

[Kenneth]

If you don't want to raise taxes to Clinton levels you're going to have to cut the defense budget and wind down the wars, and those are some sacred cows on the right too.

[R C Dean]

You will note, of course, that total government expenditures in 2004-2005 included both the current wars and pretty much the same military establishment we have now, but point taken.

I, for one, would cut defense by bringing home most of our overseas forces (outside of the war zones, initially), closing those bases, demobilizing those units, and restructuring so that the Army, at least, consists of cadres that can be used to remobilize on relatively short notice.

Our involvement in Afghanistan and Iraq could be wrapped up in pretty short order. Iraq is just about done, anyway. Afghanistan could be handled with a change to the ROE (essentially, heavy covering fire for our withdrawal, then let the Afghans revert to the barbarism they apparently so earnestly desire).

Air Forces and Navies can't be dialed up and down the same way an Army can, so there's probably less to be had there, but I've got no objection to having the military take its fair share of cuts.

[Jeffersonian]

Government is just one giant round-robin purse-snatch to guys like Bernie Sanders (Commie - VT)

[Stretchy]

Currently retired and soon-to-be retired individuals are, at least partly, responsible for our massive debt burden. Correct? Why aren't they being asked to share some of the burden in correcting the problem?

Neither Paul Ryan's roadmap nor, the debt commission proposal ask any current seniors who, are just as responsible to make even a single sacrifice.

Until someone proposes to make cuts to social security and medicare, not just in the future but, for current recipients, I can not take any of these proposals seriously.

[melman]

"there will not be too much demand within the construction industry for 69-year-old bricklayers"

or, he could get a less strenuous job for a year or two until retirement

or, he could save enough during his 51 year bricklaying career so he could last a year or two until the full SSI benefits kick in