Are Tax Expenditures the Deficit Commission’s Next Target?

If the deficit commission doesn’t attack entitlements, what will it cut instead? One alternative would be “tax expenditures” like the dependent care tax credit and the earned income tax credit. But cutting these would weaken Social Security and Medicare in indirect but very important ways.

The redoubtable Martin Feldstein, Harvard professor, former Reagan advisor, and longtime career-maker in the economics profession, has some advice for our National Commission on Fiscal Responsibility and Reform. If it wants to reduce spending and can’t muster the votes to attack Social Security and Medicare – this being Washington, military spending reductions are, of course off the table – why not cut tax expenditures? Feldstein wrote, in a Wall Street Journal op-ed last week, Continue reading Are Tax Expenditures the Deficit Commission’s Next Target?

Cutting Social Security: The Moral Equivalent of TARP

That seems to be the message that Neel Kashkari, who served as financial bailout czar in the waning years of the Bush Administration, was trying to convey in an op-ed in today’s Washington Post.

TARP was “deeply unpopular.” It “betray[ed] our sense of fairness.” But once “people could feel the crisis,” it was clear that “we all had to sacrifice” to stop the 2008 financial-sector meltdown. With Social Security, it’s the same thing, says Kashkari, a former Goldman Sachs banker and now a managing director at bond-market giant PIMCO.

Cutting entitlements would “again betray our sense of fairness.” But “the promises our country has made over the past few decades, combined with changing demographics and rising costs, have put us on a path to national insolvency.” We must get past our “’me-too’ mentality” and “think beyond what is in our own immediate self-interest.”

Who does he mean by “we”? And who is Kashkari, a former Goldman Sachs banker, to lecture the public about civic virtue? Continue reading Cutting Social Security: The Moral Equivalent of TARP

A Modest Proposal for the “Catfood Commission”

What would the world be like if Social Security was privatized, or merely slashed and phased out? A satire by a French intellectual suggests what we might do with all those old people. Erskine Bowles, Alan Simpson, and their colleagues on the National Commission on Fiscal Responsibility and Reform might want to take note.

Regis Debray is a French intellectual and journalist. Once renowned as one of Che Guevara’s companions at the time Che was captured and executed (Debray himself served three years in a Bolivian prison before an international appeal secured his release), he has since become known as an incisive thinker on “mediology”: the ways in which cultural meaning is transmitted in society.

He’s also a wicked satirist. Four years ago, Debray produced a short satirical book, Continue reading A Modest Proposal for the “Catfood Commission”

No, Personal Savings Won’t Be Your Main Retirement Income!

It’s amazing how persistently certain elements of popular myth hang on: for example, in the pages of the Washington Post.

A Sunday Post op-ed by retired NPR producer Jonathan Kern uses some tough love to convince feckless members of Generations X and Y (if not Z) that they need to “seriously bulk up savings,” now, or risk not being able to eat in their old age. He writes:

“If your junior-high soundtrack was more Bangles or Britney than Beatles, I am going to try to scare some sense into you with three words about life in retirement, based on personal experience: The paychecks stop.”

Kern cites a recent study from the Employee Benefit Research Institute to the effect that Continue reading No, Personal Savings Won’t Be Your Main Retirement Income!

Behavioral Economics’ Wrong Message on Retirement

Trendy economics trains us to overlook the most obvious explanations to big problems in favor of subtler and perhaps just distracting alternatives. For instance, why don’t people save more for their retirement? Probably, because they just aren’t making enough money to save.

But in the current political environment, a lot of economists find it easier to pore over such clever but minor-league matters as the propensity to procrastinate, or “choice overload” when workers’ 401(k)s offers them too many investment options. What it doesn’t do is solve the problem.

George Loewenstein and Peter Ubel, an economist and a business and public policy expert, respectively, published an excellent op-ed in yesterday’s New York Times. Briefly, they criticized the very fashionable discipline of behavioral economics. If you haven’t run across it before, behavioral economics

Continue reading Behavioral Economics’ Wrong Message on Retirement

How the Public Really Thinks About Social Security

Just because the AmericaSpeaks “Our Budget, Our Economy” forum produced encouraging results are Social Security’s friends, doesn’t mean we should assume that deliberative forums like this one are a reliable tool for determining what the public really thinks about this issue – or any other.

What do three high-profile, deficit-related projects – the National Commission on Fiscal Responsibility and Reform, the June 26 AmericaSpeaksOur Budget, Our Economy” forum, and the 2010 Fiscal Forum (held April 28) – have in common? All are fully or partially funded by Pete Peterson, the multi-billionaire co-founder of the Blackstone Group. Together, they form a three-pronged strategy to get around an intractable problem: namely, that while the Washington/Wall Street elite are in agreement that Social Security must be cut, the public are not.

That’s clear from “Understanding Public Opinion on Deficits and Social Security,” the excellent paper that Benjamin I. Page and Lawrence R. Jacobs published just before the AmericaSpeaks event. In it, Continue reading How the Public Really Thinks About Social Security

Feedback Loop

When pension benefits are cut overseas, it’s not just a sad sidelight to the Social Security wars in the U.S. It has a direct effect on the debate in this country. Greece is the latest to do so, joining Hungary, France, Italy, Germany, and others that have enacted or are considering such moves. You can bet the deficit hawks in this country are watching, and are encouraged.

The new law, enacted Thursday, raises the age for receiving full pension benefits to 65 for all Greek workers; shifts benefits calculation to key off lifetime earnings rather than the retiree’s most recent, highest-paid years; and makes it easier for employers to fire workers. (That last has an effect on pension levels too, since it will lead to more and longer periods of unemployment, especially for low-wage workers, depressing one component of the formula used to calculate benefits.)

This should all sound very familiar. The last time a really serious surge of interest in “reforming” Social Security hit Congress – as opposed to the Bush administration’s comic-opera privatization campaign in 2005 – was in the mid-’90s. That’s when a small but highly influential group of lawmakers, Continue reading Feedback Loop

Robert N. Butler and the Battle for Social Security

Butler, who died Sunday at 83, was not just a distinguished scientist, author, and crusader for the elderly. He was the catalyst for one of the most powerful social movements of the last half-century – a movement that has widened access to health care in the U.S. and kept Social Security from being dismembered, among many other things.

Gray Power has changed this country powerfully for the better since it burst onto the scene a bit more than 40 years. While the first White House Conference on Aging was held in 1961, it took the rest of the decade for the elderly to begin organizing in large numbers, a trend that accelerated after Butler started using the term “ageism” to describe the treatment they receive at the hands of society and, especially, the medical profession: Continue reading Robert N. Butler and the Battle for Social Security