What do you think of the argument many are making that raising the retirement age is fine for professional/white collar folks, but that it's unfair for those (factory workers, janitors, miners, etc.) with physically strenuous jobs?    

When Washington succeeds in getting the unemplyment rate down below 5%, then I will be happy to engage in a discussion of long-term fiscal balance.   But this whole discussion is jumping the gun in a major way.  I refuse to start banging my head against the deficit wall just because some damn beltway commission says, "Now is the time when we talk about the deficit!"

With all due respect, this makes me sad.  That chairmen (one of whom is on the freaking board at Morgan Stanley, a former investment banker--and that's the Dem!) can make such recommendations, and get the attention and the approbation of mainstream Americans is hard to witness. 

Please at least read Kuttner; I couldn't remember other detractors of the report's rec's, but too many were simply grisly--like co-pay for veteran care, loads of invisible taxes on the people who can least afford them, while those at the top profit on our labor, our taxes, our tax policy, the wars, health care, on and on.  This crap is crap.

http://www.commondreams.org/view/2010/11/15-2

Hi Ami,

I just blogged about this the other day. When considering what is a reasonable deal, it really all is in the framing, isn't it?

So if this is framed in terms of 'saving SocSec' from those intent on destroying it, and that the chances it gets destroyed down the road are increasing, then sure, it is reasonable to accept benefit cuts.

But that seems the wrong frame to me. Here are some questions I find reasonable, and that reframe it differently:

(i) How much is the shortfall in funding?

About 1% of GDP, or $150 bn. That isn't a lot of money in the greater scheme of things. It could be easily covered by a tax on banks (on balance sheet, or on transactions, or both). It could be covered by a carbon tax (but that is regressive). It could be covered by dedicating just the funds from the expiring tax cuts on the rich to the SocSec trust fund.

This of course means that it stops being purely a non-profit mutual fund 'pays-out-what-you-paid-in' structure. Which to some seems 'unfair', but that raises the next question:

(ii) Is the problem with US society that the inequality in incomes that is currently trending wider fast, is not trending wider fast enough? Or should something be done in various ways to "bend the inequality curve", so to speak?

In my opinion, the latter. In which case it is not that future benefits should be cut, but they should if anything be raised. And then be funded out of a less regressive taxation system.

I realize it involves that dreaded notion of 'redistribution'. But how much redistribution are we really talking about? Putting its solvency beyond question requires, as I said, 1% of GDP of funding. And 1% of redistribution hardly seems excessive. 2% of GDP in redistributive funding would really improve social welfare. But then who wants social welfare, eh...? All these terms and frames that have been so vilified it is impossible to even mention them without raising hackles.

So lets go back to another question providing some context for the 'fairness' question of 'taking from the rich to give to the working class'.

(iii) Why exactly is there a shortfall in funding?

Workers' wages haven't kept up with increases in productivity over the last thirty years. In fact they have, in real terms, fallen! Average income for the bottom 90% of households are down to levels last seen in the sixties while their productivity is up 50%, while incomes for the top 1% have tripled. And SocSec is largely funded out of a percentage of the income of that bottom 90%. If the Reagan revolution - of deregulation, destruction of unions, imbalanced raising and lowering of trade barriers (hurting workers and helping the managerial and professional classes) - hadn't kept workers' income from keeping pace with productivity, there would be no shortfall. I.e. the GOP-constructed economic framework has redistributed income upward from workers to the rich. And it has in the process - surrepticiously - defunded Social Security.

In other words, the Social Security shortfall is part of a larger story - the general weakening of its funding base, that is to say the wages of the lower and middle classes. And, note that this weakening has been an intentional process. Government legislation and regulation has weakened those wages. And now, they turn around and get all outraged about 'redistribution' when it comes to covering the shortfall in SocSec? Chutzpah! Or something worse...

So you can fix SocSec just by raising the real minimum wage to what it was in the sixties - i.e. some 30% higher than it is now. You can stop subsidizing the Health Care sector - Doctors, Drugmakers, Equipment makers - and bring costs in line with other developed countries. That would raise taxable worker income up 10% or so. You can pass EFCA and encourage unionization and do all kinds of things to roll back the Reagan revolution, and you're likely to indirectly close that SocSec funding gap without anything that looks too ickily like 'redistribution' or 'welfare'.

I could go on. But you've probably had enough of my ranting...

;0)

Just got this in an email from a far-away friend who may have been lurking here, dunno for sure.  Timely coincidence, if not.  ;o)  Hudson has some pretty impressive credentials, and his hair is seriously on fire over some of these proposals via Obama.  I learned several key things that seem obvious once he spells them out in such plain language.

http://www.creditwritedowns.com/2010/11/mr-obamas-most-recent-2-sellout-...