Category Archives: Retirement

Hank Aaron’s Chinese menu: Fixing Social Security at the NASI

The National Academy of Social Insurance hosted a decidedly unusual trio of luncheon speakers at its annual conference last week. Henry J. Aaron of the Brookings Institution, keynote, was there to unveil a new plan he’s devised to solidify Social Security’s funding for the next 75 years, if not beyond. Nancy J. Altman, president of Social Security Works, and Jason Fichtner, a senior research fellow at the Mercatus Center at George Mason University, were on hand to respond to and discuss Aaron’s proposal.

Aaron has perhaps the deepest knowledge of the Social Security system – and social insurance in general – of anyone alive today. Altman is also a leading expert and a longtime, passionate defender of the program against right-wing attempts to dismantle it. Fichtner served in the Social Security Administration under George W. Bush and is a critic of the program who has argued that it crowds out private savings and offers negative incentives to work and who advocates stabilizing its finances by cutting benefits while cutting payroll taxes.

Aaron and Altman have never been friendly to such ideas. Normally, that would place them on one side of the Social Security discussion and Fichtner on the other. That wasn’t so last week.

Continue reading Hank Aaron’s Chinese menu: Fixing Social Security at the NASI

The Soft Underbelly

Having failed in numerous frontal assaults on Social Security, the Republican congressional leadership several years ago adopted a new strategy for dismantling the program: attack and demonize Disability Insurance, which they consider to be its soft underbelly. With this week’s passage of the Bipartisan Budget Act of 2015, they drew blood.

We’ve been hearing it for years now: Disability Insurance is overgenerous, fraud-ridden, a well-intentioned program that’s mutated into a form of middle-class welfare. Criteria for awarding benefits need to be tightened, or the $150 billion DI trust fund will go bankrupt. The traditional solution for imbalances in Social Security’s trust funds—shifting money between the DI and the Old Age and Survivors’ (OASI) fund—shouldn’t be used unless “substantive reforms” are implemented.

How wonderful, then, that according to the Wall Street Journal, “Social Security will get its first upgrade since the 1980s to fix Disability Insurance,” thanks to a kumbaya moment between the White House and congressional Republican and Democratic leaders. The two-year Bipartisan Budget Act of 2015, Continue reading The Soft Underbelly

Hardship Case

Means-testing Social Security is a popular position among Republican presidential candidates this election cycle—if not among prospective voters. That means, essentially, turning the nation’s retirement system into a welfare program, targeted at those with real hardships. But how do you figure out who’s a “real” hardship case and who’s not? In fact, it’s well-nigh impossible.

When Alan Simpson and Erskine Bowles, the chairs of President Obama’s 2010 deficit commission, gave up on finding common ground with their colleagues and released their own set of deficit reduction proposal, they called for two big changes in Social Security: gradually raising the eligibility age for full benefits from 67 to 69 and upping the early-retirement age for reduced benefits from 62 to 64. They also directed the Social Security Administration to design a “hardship exemption for those who cannot work past 62 but who do not qualify for disability benefits.”

It all seemed eminently reasonable—so much so that most of our current class of Republican presidential candidates are calling for Continue reading Hardship Case

A Lifeline, Not a Safety Net

What’s the biggest source of income for Americans in the last years of their lives? Whether you live to 65, 75, or 85-plus, no matter if you’re married or single, the answer is the same: Social Security. And in the you’re-on-your-own, 401(k) era, this hard fact is only becoming more so.

More Americans are elderly—over 65—today than at any time in the nation’s history, and more of these older people are living to a really advanced age than ever before. It’s safe to say we collect more data on them than ever before, as well. That means we’ve never had as good a chance to study the financial health of the elderly.

Using data from University of Michigan’s Health and Retirement Study (HRS), sponsored by the National Institute on Aging, the Employee Benefit Research Institute has just released a fascinating analysis of individuals who responded to the HRS survey in 2010 and died before the next, 2012 survey. Continue reading A Lifeline, Not a Safety Net

Social Security’s enemies, in search of the politically “doable”

In Washington, it’s fashionable to bill oneself as a pragmatist, attuned to political realities and more interested in finding politically doable solutions to practical problems than fighting unwinnable wars. But there’s a double standard in what The Village defines as “realistic.”

C. Eugene Steuerle is a bona fide member of the Washington policy elite. A former deputy assistant secretary of the Treasury for tax analysis and a longtime fellow at the Urban Institute, he is considered one of the architects of the 1986 tax reform and, on the center-right, a Social Security guru. With two other think-tank researchers, Benjamin H. Harris at the Brookings Institution and Pamela J. Perun of the Aspen Institute, he recently co-authored a major paper for the Pension Research Council at The Wharton School on Social Security and retirement policy, titled “Entitlement Reform and the Future of Pensions.”

Continue reading Social Security’s enemies, in search of the politically “doable”

Brookings, Social Security, and the welfare state

We’ve had the evidence before us for a long time: Social Security is the most effective—and cost-effective—US anti-poverty program, both for adults and children. So why do recent writings by scholars at the Brookings Institution ignore it?

“Evidence-based decision-making” may be the most popular catch phrase in Washington. The Big Data revolution has convinced The Village—OK, and lots of other strongholds of mainstream consensus thinking—that everything can now be measured, and that the metrics can yield smart, “actionable” decisions. “Evidence” appears to center-right Democrats as the talisman that will bridge the partisan divide and coax Republicans to play nicely with them.

I’m not writing this to step all over the need to measure program effectiveness—like every other secular religion of the past 200-some years, it’s probably true to some extent, just not as true as the true believers often think. What puzzles me, however, is why some evidence grabs the spotlight and some doesn’t.

Continue reading Brookings, Social Security, and the welfare state

Expand Social Security? How Outlandish!

The Rebuild America Act, introduced in March by Sen. Tom Harkin, as a wish-list of progressive ideas that would be widely discussed in this election if it reflected anything other than the standard Washington agenda. One very important section but little-noticed of the bill would actually expand Social Security.

Thanks to Ken Buffin of Buffin Partners, Inc., and the Buffin Foundation, for calling attention to the Social Security provisions of the Rebuild America Act in his latest monthly Commentary. Two of the three main provisions are familiar: Continue reading Expand Social Security? How Outlandish!

Pie in the Sky in Eastern Europe: The Ryan Plan in Action

Vice presidential candidate Paul Ryan has been pushing Social Security privatization for the better part of a decade. What if his plan was actually implemented? An important new paper looks at what happened when Hungary and Poland attempted something similar with their national pension systems. The results were ugly.

It’s been reported that Paul Ryan is no longer pushing Social Security privatization. House Republican leaders “refused” to let their Budget Committee chair “add changes to Social Security” into the budget he wrote last year and that passed the chamber with solid GOP support. This year, he and his colleagues again “left the program untouched.”

That’s not quite true. Ryan has now written two budgets, both of which include Continue reading Pie in the Sky in Eastern Europe: The Ryan Plan in Action

Why You Should Celebrate Social Security’s Birthday on Aug. 14

Social Security’s 77th birthday comes up on Tues., August 14. The Alliance for Retired American is planning events all over the country to celebrate (see details below!). As well it might – Social Security’s benefit checks keep 20 million people out of poverty every year and are helping to prop up consumer spending while the rest of us dig ourselves out of debt. Some people, however, would prefer you stayed home.

I recently spoke with a prominent, U.S.-based money manager for an unrelated project. First, he lambasted the Federal Reserve for keeping interest rates too low, “monetizing the debt,” and preventing a much needed dose of government austerity. Then he told me why Continue reading Why You Should Celebrate Social Security’s Birthday on Aug. 14