Affording Old People

I agree with Doug Elmendorf’s Washington Post op-ed in which he outlines our fundamental fiscal problem, i.e. the high costs of Social Security and Medicare, and proposes a solution—making both programs “more progressive” by which I presume he means increasing FICA max and changing the benefits formula:

Instead, we should focus on reducing Social Security and Medicare benefits for high-income beneficiaries and raising payroll taxes on workers with high earnings. For example, the Congressional Budget Office has analyzed options to lower Social Security benefits for workers in the top half of the lifetime earnings distribution but leave benefits for those in the bottom half unchanged. There are a variety of ways to increase tax revenue for Social Security by imposing a payroll tax on income above the current-law taxable maximum. Taken together, such targeted measures could eliminate much of the estimated 75-year shortfall in the system. In Medicare, additional tax revenue could be raised by boosting the payroll tax rate for workers with higher earnings. Also, the additional premiums paid by higher-income beneficiaries in Medicare Part B could be extended to cover a much larger share of beneficiaries than the current 6 percent (a figure that will increase in coming years under current law but just by about half a percentage point per year).

I also support other reforms that he dismisses: increasing the Social Security (and Medicare!) retirement age and cutting military spending while also reducing the scope of the missions we’re demanding from our military.

I wish he’d included more numbers in his op-ed. My recollection is that it’s hard to bring Social Security in line without draconian cuts even if both of the reforms above were implemented which is difficult enough. That’s why I also support something Dr. Elmendorf doesn’t even mention: restraining the increase in the Medicare reimbursement rate to the non-healthcare rate of inflation.

I honestly don’t see any way to bring our operating costs, the greatest part of which are Social Security, Medicare, military spending, and interest on the debt, into line with our income without imposing some of the pain on suppliers as well as consumers which is why I also support the limitation above.

Most of all we need more robust economic growth, something darned hard to accomplish while spending so much on things (military, education, healthcare) that are mostly or completely paid for via tax dollars and borrowing.

10 comments… add one
  • Jimbino Link

    In the meantime, we could save Medicare funds by eliminating the unfair payments for disability and for spouses and children. As it is now, up to 5 of a man’s spouses and ex-spouses, along with their children, can qualify to receive SS benefits based on his work contributions alone.

  • jan Link

    “Most of all we need more robust economic growth, something darned hard to accomplish while spending so much on things (military, education, healthcare) that are mostly or completely paid for via tax dollars and borrowing.”

    It’s difficult to cultivate “robust economic growth” when you have so many small businesses disgruntled or discouraged by the multitudes of government minions running around with clipboards, tasking employers with compliance to the most trivial of rules and regs — such as, “how far away paper towel dispensers should be in the food prep area of a small coffee house.”

    There are a multitude of components in generating a good economy, one of the most important being the offering of incentives to open or grow a business, rather than adding more burdens to the daily operations of merely keeping the doors open for business.

    Also, those coveted taxpayer dollars are often thrown away by reckless government spending, unaccountable for the costliness or cost overrides of poorly-run social programs, many which fail to meet standards of competence or goals set. Annually, there is some kind of report issued by the government detailing some of the fraud and/or fiscal abuses — but, nothing is ever done about it — except to demand more revenue from the taxpayer (preferably a “rich” one).

  • Andy Link

    “Affording old people” really boils down to the political question of how to pay for the promises made to the boomers which requires convincing people who will do the paying (the post-boomer generations) that they aren’t getting the shaft. That’s a tall order.

  • I am 69 and having been collecting Social Security for a little over 3 years. I have not come close to collecting the amount of money I paid in and considering the fragile nature of my health never will. The Republican base is made up of old white people so they will never cut Social Security or Medicare. Since Reagan we boomers have been paying extra Social Security withholding to pay for our Social Security benefits, the government has used that money for other things like wars of choice and tax breaks for the 1%.

  • According to the actuarial analysis the typical Social Security recipient will collect roughly what was put in plus interest, maybe a bit more. The typical Medicare recipient collects enormously more than was put in.

  • Jimbino Link

    I don’t know what low-level of “interest” you’re figuring, Schuler, but my spreadsheet shows I’ll be out a couple of million dollars at 65 for not having had my SS contributions over the years invested instead in the S&P 500. And, at my death, my heirs would get those millions; they’ll get not a cent from SS.

  • Gray Shambler Link

    I barely know what a spreadsheet is but I know we don’t want old people competing with winos for handouts on the same street corner.

  • steve Link

    If you want to increase SS retirement age, you need to remember the very large discrepancy in life expectancy by income. If you increase the age, especially for men, they could end up paying into SS their entire lives and get little to no benefits. You should have an age and income linked increase.


  • Andy Link


    It would be much simpler to just means-test benefits.

  • steve Link


    Simpler, but does it really make sense? If we raise the age to 70, knowing that males in the lowest decile have a life expectancy of about 70, does that really make sense? Granted, means testing dead people is really easy. OTOH, if what you are suggesting is means testing in place of raising the age, I guess that could work.


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