Social Security Inequation: This is Rich, Living Longer While Everyone Else Enjoys It Less; Putting Two Together

Here are two stories I came across that seemed like they absolutely had to go together. Since I’ve not seen anyone else pairing them, we’ll do it here. One is from economist Paul Krugman, the other from Robert Reich, also an economist, and the former Secretary of labor under President Clinton. Each concerns Social Security, the wealthy and why the system may not be anywhere as close to insolvency as some (are they all Republicans?) would have the rest of us presuppose.

Krugman: Some of Us Are Living Longer- The Rich

The Krugman piece was the first to catch my eye back in November. It concerned the suspect work product of the National Commission on Fiscal Responsibility and Reform tasked with finding a supposedly bipartisan solution to the nation’s fiscal problems. (See: The Hijacked Commission, by Paul Krugman, November 11, 2010.)

The commission announced its plan November 10th. As Mr. Krugman points out, the section of the plan on tax reform was summarized in seven bullet points the last of which was “Reduce the Deficit” while the first was “Lower Rates.” The commission was, in fact, all about tax reduction being a priority, stating that one of its “Guiding Principles and Values” was to “Cap revenue at or below 21% of G.D.P.”

Krugman writes many great articles, but this was one of his best. The whole article is worth reading but for purposes of this National Notice story what caught my eye about Social Security was this:

Let’s turn next to Social Security. There were rumors beforehand that the commission would recommend a rise in the retirement age, and sure enough, that’s what Mr. Bowles and Mr. Simpson do. They want the age at which Social Security becomes available to rise along with average life expectancy. Is that reasonable?

The answer is no, for a number of reasons — including the point that working until you’re 69, which may sound doable for people with desk jobs, is a lot harder for the many Americans who still do physical labor.

But beyond that, the proposal seemingly ignores a crucial point: while average life expectancy is indeed rising, it’s doing so mainly for high earners, precisely the people who need Social Security least. Life expectancy in the bottom half of the income distribution has barely inched up over the past three decades. So the Bowles-Simpson proposal is basically saying that janitors should be forced to work longer because these days corporate lawyers live to a ripe old age.

Reich: Some of Us Are Paying Less Into the Social Security System- The Rich

The Krugman statistics about who, exactly, is living longer came to mind when I came across the Robert Reich piece, the basic point of which was that there is no problem with the solvency of the Social Security system except that the wealthy are now paying proportionately less into than ever before and because “Now a much larger portion of total income goes to the top -- almost twice the share they got back then.” (See: How to fix Social Security, Marketplace, Wednesday, February 23, 2011.)

As Reich points in his commentary on Marketplace and in a column that appeared a number of places, including in the Christian Science Monitor and the Huffington Post (Budget baloney: Social Security isn't to blame for deficit, and the Best Way to Fix It Permanently, February 16, 2011) the solvency question was addressed and supposed to have been dispensed with by Alan Greenspan’s Social Security commission back in 1983 by gradually increasing payroll taxes and raising the retirement age.

Why hasn’t the Social Security system stayed in balance and “fixed for good” as Alan Greenspan’s 1983 commission expected? Reich explains that it is all due to fact a shift of income to wealthier Americans who pay proportionately less to Social Security because their contributions to the system are capped after they earn more that $106,000:

The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.

Today, though, the Social Security payroll tax hits only about 84 percent of total income.

It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.

Putting Two Together

In other words, putting Krugman’ and Reich’s points together, the wealthy are living longer, longer then the rest of us, presumably getting more Social Security benefits paid out to them as a result, while at the same time they are paying proportionately less and less of their income into the Social Security system. And the system is becoming unbalanced because the wealthy are hoarding a greater and greater proportion of the nation’s income, thus subjecting an increasing amount of that income to an artificial cap that’s now limiting how much of the nation’s income is going to support Social Security to a lower percentage than everyone expected when things were last put in balance. . . That’s because in 1983 no one expected the degree to which income inequality would increase in the last 28 years.

Solutions Within Reach

Reich points out that the solution for balancing the system is therefore easy. Since the whole problem is that the shift in income to the wealthier earners has exempted more national income from going into the system by virtue of that cap on the ceiling income over which wealthier earners are exempted from paying into the system, all you have to do is raise that ceiling. Then the percent of income being subject to Social Security contributions will go back to the percent it used to be:

If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.

Presto. Social Security’s long-term (beyond 26 years from now) problem would be solved.

That’s the easy solution. Another solution Reich doesn’t mention would be to reverse the unexpected trend in income inequality. Do wealthiest earners really need to be earning twice the share of total national income they were earning back in 1983? Does the top 1 percent in the country need to now be earning "more than 20 percent" of the nation's total income instead of the 11.6% that very lucky and elite 1% was earning back in 1983?

Those two possible solutions both involving asking for a contribution from the longer-living (and greater benefit-collecting) rich aren’t the ones being talked about however. For some reason, increased taxes for the well-to-do always seem to be off the table. Instead, what is being talked about is having the rest of the public shoulder the extra burden resulting from the increasing income inequality. As Krugman noted, the National Commission on Fiscal Responsibility and Reform is suggesting an increase in the retirement age. Alternatively, benefits might be reduced.

As for Reich’s suggested solution, Reich makes this point:

Not incidentally, several months ago the White House considered proposing that the ceiling be lifted to $180,000. Somehow, though, that proposal didn’t make it into the President’s budget.

“I Am a Republican When”- - Time Traveling to Look at the Drift of Republican Party in 2004

This post is a time trip back to the 2004 presidential elections. I wrote and distributed the following essay in July of that year to catalog the reasons not even Republicans should have been voting for George W. Bush. (I also prepared and circulated the above pretzel visual at that time.)

In 2004 I was working in state government for a Republican administration.

Am I, or was I a Republican?

I grew up in family with a mixed political heritage, both Republican and Democrat. My father grew up in a home where President Franklin Roosevelt was referred to as "that damn man." By the 60s, time of the civil rights era (and an increasingly vexatious Vietnam) sentiment in the household where I was growing up had definitely swung mostly to the Democratic side. Personally, though there will always be a place in my heart for what I consider traditional Republican values that I deem to include a common sense respect for the workings of the marketplace and a wariness about exactly how much government can achieve when it chooses to intervene.

That meant that the right kind of Republican could gain my support. On the state level I worked with many Republicans I deeply respected. I particularly valued it when they were straighter shooters than some Democrats with whom I have worked.

The problem in 2004, as you will see from what I wrote below, is that the Republican party was drifting away from those traditional ideas. Where is the party now? That would be a good subject for a second essay but I would suggest that the drift away from traditional values begun then, has in many respects continued.

Here is was my evaluative catalog circa 2004:


I AM A REPUBLICAN! I AM A REPUBLICAN WHEN. . .


I think I think a lot like you.

I think I think a lot deeper than other people.

I also thought that invading Iraq might be a good thing if it were done the right way for the right reasons.

I come from a Republican-steeped heritage and I believe in Republican principles.

I vote Republican.

Why then, have I so often voted Democrat?

I AM a Republican when I remember that the Republican party was formed as an anti-slavery party. I am glad that we went on from there and that women now have the vote. I think that there still remains other prejudice and discrimination that needs to be eliminated.

I AM a Republican because I believe in a balanced budget.

I AM a Republican because, like Teddy Roosevelt, I love the environment. I have lived long enough so that each morning when I get up and look at my river and breathe my air I say thank you for the clean air and the clean water acts and I don’t want to go backward. I remember how it was.

I AM a Republican because I believe in Teddy Roosevelt, the Trust-Buster, and, like him, I think that government should be at least big enough to win when it takes on the fight with the conglomerates.

I AM a Republican because I believe in Northeastern values. I believe in progress and education and a vital modern evolving economy.

I AM a Republican because I believe in the power of free enterprise and the force and power of market forces. I AM a Republican when Capitalism defeats Communism and tears down a wall. I AM NOT a Republican when it means government regulation telling beef producers they are forbidden to test for mad cow disease as the market and consumers want.

I AM Republican because I believe in investment and effective use of our capital resources. Right now, in this time of changing technology and speeding progress, the best investment in this country I see is investing in the people of this country. By this I don’t mean tax cuts that strip money from the middle class and hand it to a rich minority that doesn’t need to squander it living in more luxury. I would like to see our capital invested in our own country, in our own people.

I AM a Republican because I believe in a strong economy and a strong Wall Street, but I ruefully and perplexedly recognize the statistics show that for years the economy has consistently been stronger under Democrats. I don’t know why this is, but I think it may have something to do with distribution of resources.

I AM NOT a Republican when the party of Lincoln panders to take in the Dixiecrat wing of the Democratic party. I remember why the Republican party was formed. I don’t like the Bob Jones University and other kinds of prejudice that people try and sell as Republican values.

I AM a Republican when it means hating Saddam Hussein and considering him a villain, just as the Democrats and I guess the rest of the world does. I AM NOT a Republican when Republicans advocate invading another country with no world support. I AM a Republican when we seek, even belatedly, UN and world support to help with what needs to be done in Iraq. I AM NOT a Republican when we oppose the United Nations in effective population control and AIDS-reduction measures.

I AM a Republican because I believe in a strong United States. I AM NOT a Republican when it means fostering and perpetuating an ever greater dependence on foreign oil.

I AM a Republican and believe in the Grand Old Party when it means believing in manners and good conduct, the real kind. I AM NOT a Republican when a bunch of adulterous fogey old men lead a hypocritical and expensive attack on a President’s private life that deserved to remain private.

I believe in sober, reasoned, careful thought. I AM a Republican when it means believing in where Darwin lead us and wanting stem cell research to lead to cures for Alzheimer’s, Parkinson’s and a panoply of other afflictions. I AM NOT a Republican when it means obliterating science and sex information from school text books. I AM NOT a Republican when it means ignoring global warming or not signing the Kyoto Accords. I AM a Republican who believes in the kind of science that Nobel Laureates can believe in.

I AM a Republican who is proud to see my Republican ancestors and Republican family dressed in their Union blues, their World War II Army, Navy, Air Force and Red Cross uniforms. I AM impressed by the soldiers who have been shot at, captured, died and killed. I AM NOT impressed by a service dodger and stay-at-homer who dons a Top Gun inform and declares a war won without recognizing that most of our soldiers have yet to die in a conflict. I have seen the photographs of our Civil War dead. I have seen the photographs of our World War II dead and of D-Day. I can think of no better way to acknowledge our debt to those who are fighting for us than to acknowledge the full measure of their sacrifice and I do not understand why pictures of flag-draped coffins must be banished from sight and mind in place of Fox-News-war-glitz and obliviating happy-talk.

I AM a Republican when it means being faithful to a belief in the separation of Church and State. I AM NOT a Republican when it means the hypocrisy of using “Faith Based” initiatives to discriminatorily, and secretly, funnel government money to a small fraction of Religious Right communities willing to believe only in Jesus. I AM NOT a Republican who, when told by the Italians July 4th week of year 2000, that Air Force One needs to be rerouted because terrorists plan to use a hijacked airplane as a missile to bring down the plane and who then maintains only a resolute, narrow and blind focus on delivering to the Religious Right and launching an attack on other people’s private life styles and draping “nude” statues in the nation’s Capital. I ache when the 9/11 Commission decries a “lack of imagination” as having not prevented the attacks.

I AM a Republican who when told the nation is under a phenomenal attack would have gotten up from reading “My Pet Goat.” I AM a Republican who does not get tied of swatting at flies and protects the nation. I AM NOT a Republican with a failure of imagination.

I AM a Republican who believes that the focus on the Religious Right that should be the focus of the highest quarters of our nation’s government is a focus on the fundamentalist Muslim Religious Right that wants to attack us, so that attacks can be imagined and prevented before they happen.

Separation of church and state is good enough for me to want to export to Iraq and it is good enough for me to want here at home. I guess I care more about this because when it comes to my faith there are things I believe, and I want to believe what I believe without being told what I have to believe.

I am a law and order kind of guy. I like my streets safe and I put stock in law enforcement and the police. I like DNA testing because it means that innocent go free which means we don’t stop pursuit of the guilty. I acknowledge and respect that people in Montana are going to want to carry the guns that can protect them; they have mountain lions there. I rather enjoy venison. I am aghast, however, by legislators who kowtow to the National Rifle Association so that we have laws that prevent us from doing anything about the fact that 100 percent of the guns used in crimes were sold by only 20 percent of Federally licensed firearms and that it has been possible to trace half of all the crime guns to just 1 percent of Federally licensed firearms dealers.

As a law and order guy, I am attracted to the idea of a national identity card, or at least a better way of getting on airplanes, and I think more along these lines and things to deal with terrorism should have been done a long time ago. But to whom do we give the Big Brother power? I don’t see putting it in the hands of John Ashcroft and his Ken Starr minions. I may want security but I am still a Libertarian and I don’t want the government investigating or telling me what to do in my sex life, especially when these people are wont to do such investigations as a way of “getting” someone.

As a law and order guy, I believe in a full complement of judges on the courts. I like my justice swift. But I believe in moderate judges. I don’t need a judge who tells me that the Bible requires women to be subservient to men, that in a marriage ''the woman is to place herself under the authority of the man'' and who scoffs “rape victims become pregnant as often as it snows in Miami.” These people don’t need to be nominated to the bench. They don’t need to be championed.

I understand that there is no clear scientific line to draw to say absolutely when human life begins, so I respect and understand my many fellow Republicans who conclude that life begins when their religion tells them it does, but I personally don’t believe a clump of cells is a human being or that stem cell research is wrong. If it is a question of finding judges to overturn Roe v. Wade, I am not interested. Like quite a few of my fellow Republicans, I believe in a woman’s right to choose. Further, if it is a question of finding judges to nominate who would strain not to follow established precedent, I think that is a way to wind up with judges who are incompetent or worse.

I don’t see why it’s not possible to govern from the center. After all, that’s where I am. It isn’t as if the last election wasn’t actually, in a number of ways, lost to the Democrats. And it can’t exactly be said that everything done to snatch victory from the Democrats was absolutely on the fair and square.

As a Republican I believe in limiting government because of the ability of government to make mistakes. This is why, as much as I hate criminals and love to lock them up and get them out of society, I think differently from a lot who think much like me, and I don't embrace the death penalty. Over and over again DNA testing has shown me how right I am about how wrong government can be. Whoever these people are I want them kept around so that the true story can always be told and the guilty pursued, and found. And as for those who are guilty I want them around long enough to tell me about their accomplices and their other crimes. - - Former Republican Governor Thomas H. Kean of New Jersey, chairman of the 9/11 commission
says about the Trade Center hijackers, “If there are unanswered questions, it is mostly because "the people who were at the heart of the plot are dead."

I thought that invading Iraq might be a good idea. I had Thomas Friedman hopes. To me it seemed that the Middle East has been sort of a Gordian knot. Even if we know now that the sanctions were working mostly the way they were supposed to, it also seemed that they were counterproductive in that they created poverty. I think that Middle East could really use a country that is an Arab success story, a country with freedoms and a working egalitarian economy. I don’t know why we haven’t been thinking about Afghanistan with these possibilities in mind, but that is something else to talk about.

While I thought that invading Iraq could be a good idea, I wasn’t sure I trusted that the way we were getting into the war was right. I wasn’t sure whether I detected a worrisome eagerness, an `I am going to finish my Daddy’s war' attitude.- - And I supported that other war with little reservation.- - I didn’t understand the way we were proposing to do this war, without world support. I didn’t understand why we couldn’t persuade. I was very worried that we were willing to tell the world that we newly believed a thing called a “preemptive war” was a thing the major nations of world could now consider themselves at liberty to launch after ages of that not having been the case.

But then there were the Weapons of Mass Destruction. I really believed that there were Weapons of Mass Destruction. I didn’t believe that there were Weapons of Mass Destruction because I just imagined that there were. I believed that there were Weapons of Mass Destruction because I was told that there were. I wasn’t sure about trusting the president, but I decided to trust the president on this. I had to trust the president. I had only one president to trust. Since 9/11, like it or not, I have had only one president to trust. And this was serious business. And so, I talked to many others who were seriously debating what we should do. I talked to people who had family members who were going to be amongst those sent to Iraq. We shared doubts about the way that this was being done. We thought it could be done better. But, on balance, because of the Weapons of Mass Destruction I counseled them that, even if we were not going to war in the best possible way, it was still the right decision.

Now I have found out how misinformed I was when I talked about Weapons of Mass Destruction. This was for one reason only. I trusted, and I was lied to.

This wasn’t the result of an accidental to-be-further-examined intelligence failure. I know enough about how government works to know how things go. The guy at the top gets what he wants. The guy at the top always gets mostly what he wants. Usually, the guy at the top gets essentially exactly what he wants. If the top guy wants bad ecological science from the Department of the Interior, the Department of the Interior is going to offer up bad ecological science. The top guy gets what he wants. I don’t blame the underlings for what happened at Abu Ghraib. If you take the guy in charge of Guantanamo and put him in charge of the Iraqi prisons, you will get predicable results. You will get Guantanamo prisons in Iraq.

Now what have we got? I listened when, at the press conference releasing the Joint Committee on intelligence failures, the committee said that we are now less safe from terrorism than before we went to war in Iraq. This is because of the way we went into the war. We went into a part of the world where oil is a volatile issue with an oil-company president and Halliburton no-bids-needed cynicism. We went in without world support for trumped-up, made-up reasons we were willing to lie to the world about. An then there is Abu Ghraib. It is nothing more than an invitation for the world to scoff at our professed sincerity and hate us.

As a Republican I am wary of government and its capacity for ill.

I am not enamored of government secrecy. My trust-busting friend Teddy Roosevelt, who wisely battled Standard Oil Co., would be very unhappy to hear about the shrouding in secrecy of all the meetings the oil industry is having with the nation’s administration to establish our country’s energy policy. The oil companies and the Enrons are the last ones who should be setting the nation’s agenda.

Growing up as a Republican, George Orwell was a hero of mine. I still hold his cautions worthy. - When it comes to governance, I do not consider it simple prankishness to give the title of “The Healthy Forests Initiatives” to a handing over of our National Parks to the lumber industry for clear cutting.

It is not a tolerable prank to call weakening the Clean Air Act the “Clear Skies Initiative.”

There are times, perhaps when I am a Democrat. I guess I am a Democrat when it comes to ready availability of health care because the Republicans have no plan. I think I am a Democrat on health care for Republican reasons: because not having portable health care when people want and need to change jobs is a drag on the economy. I guess, as a Republican, I would want the government to be able to shop around for the best deal on pharmaceuticals, but the national Republicans don’t want that. I guess that keeps me a Democrat on the subject of health care.

Yes, I AM a Republican. And I think I am pretty conservative.

I AM NOT a Watergate Republican.

I AM NOT an Iran Contra Republican.

I am absolutely certainly NOT a George W. Bush Republican- Impossible! The man embarrasses me, mightily. The man embarrasses me every single day.