Sunday, March 16, 2014

It Was Never About Social Security

Atrios points to a CEPR blog post with an aim of whacking Abby Huntsman -- daughter of former Utah governor Jon Huntsman -- over bad reporting on Social Security.

The LA Times got into it, too, with a scathing article about Huntsman's performance on the show she shares with several millennials, MSNBC's The Cycle. Abby ranted on about how horrible Social Security is for her age cohort.
She thinks Social Security is going bankrupt, leaving her and her generation with nothing. "This is infuriating," she said, bouncing up and down in her chair like a petulant toddler, "because none of our elected officials seem to care enough to do anything about it." 
Unfortunately, almost everything she said about Social Security in the name of making it "sustainable" for her generation was wrong.
Dead wrong. 
 Read the article to find out more. To the CEPR post:
There are two big problems with the basics of Huntsman's story. First, most of the gain in life expectancy that she points to in the segment is the result of reduced infant mortality, not people living longer. For example, the Social Security trustees report shows life expectancy at birth increased by more than 15 years from 1940 to 2012, however life expectancy at age 65 has increased by just 6.5 years. It's great to see lower infant mortality rates, but this doesn't affect the finances of Social Security, it is the increase in life expectancy at age 65 that matters.
However the  bigger problem with Huntsman's diatribe is that this increase in life expectancy was expected at the time the program was created. As a result, a number of increases in the tax rate were put into place in the next five decades. The initial tax rate was just 2.0 percent of wages on both the worker and the employer. Since 1990 it has been 6.2 percent of wages for both employer and employee. (The taxable wage base was also increased substantially.) These increases were put in place to deal with the costs associated with a rise in the ratio of retirees to workers. The age for receiving full benefits has also been increased from 65 to 66 at present, and will rise to 67 for people reaching age 62 after 2022. It is flat-out wrong to claim either that the increase in life expectancy caught anyone by surprise or that no changes were made to deal with longer life expectancies.
The gist of Abby Huntsman's rant was that the millennials are going to take it in the shorts because of grandma and grandpa, when in fact if millennials get the expected wage rises over their careers, they should be fine with yet another simple 0.5 percent FICA tax increase easily paid for by their rising standards of living, which will pay for SS well into the next century.

Abby Huntsman press photo, courtesy MSNBC.
Not sure what they're promoting here,
but it might not be brains, or honesty.
It turns out the only problem might be that those wage rises won't happen because of growing income inequality. So, who are the bad guys, grandma and grandpa or fatcat CEOs and hedge-fund managers?

The bottom line is that it isn't now and never was about Social Security. It was and continues to be about tax cuts for the rich and hating on the poor. And poor, poor Abby Huntsman, like many who go down the "Social Security is killing us" road, ends up looking pretty stupid or, worse, conniving (sounds better than evil). And being hot won't help her unless she was on Fox instead of MSNBC.

Dear Abby,


Your friend,

The Rational World

1 comment:

  1. Social Security has been in trouble for sometime. Recent estimates put the depletion of the fund at 2033. A change needs to occur for this great piece of American legislature to remain active and strong.closest social security office