Latest on Social Security
Following on the NYT quote, I thought it’d be good to post LBO’s most recent take on Social Security:
Also, this is from my radio commentary for tomorrow:
Speaking of austerity, the Wall Street Journal reported on Friday that the AARP, nominally an interest group fighting on behalf of older Americans, has decided to stop resisting calls for cuts to Social Security benefits, reversing its long opposition to such a cruel move. The group’s policy chief, John Rother, said, “The ship was sailing. I wanted to be at the wheel when that happens.” But of course he’s not going to be at the wheel. His turn is going to make it a lot easier for bad people to take the wheel. He’s already emboldened such types, within hours of the publication of the Journal’s story.
Rother was apparently inspired to make this change by the news that Obama is planning to tackle Social Security sometime in his first, and perhaps only, term as president. I’ve long thought that it’s going to take a Democrat to cut Social Security (and, along with it, Medicare), since Republicans would attract too much opposition.
Social Security is not a serious problem. Talk of its imminent bankruptcy is way overblown, and is based on extremely gloomy economic and demographic assumptions. But even if those come to pass, the numbers are actually quite small by the standards of the federal budget. For example, if you just removed the cap on the Social Security tax—wage and salary income above $106,800 is now exempt from the tax, as is investment income—then Social Security would be solvent as far as they eye can see, even given the bearish underlying assumptions. So this is a non-problem.
AARP has essentially become an insurance company. It opposed single-payer because it sells health insurance (though they’ll give you a lot of nonsensical policy justifications for their self-interested stance). I wouldn’t be surprised at all if it’s now looking to expand into the retirement annuity business. But if Social Security cuts go through, catfood might be a more promising line of business.