• Monthly
  • $25
  • $50
  • $100
  • $other
  • use PayPal

SPRING FUNDRAISER

Is it time for our Spring fundraiser already? If you enjoy what we offer, and have the means, please consider donating. The sooner we reach our modest goal, the faster we can get back to business as (un)usual. Please, stay safe and we’ll see you down the road.
FacebookTwitterRedditEmail

The Washington Post Wants to Cut Social Security Again

I guess we can always count on The Washington Post to print misleading pieces calling for cuts in Social Security. After all, what are newspapers for? Anyhow, Robert Samuelson gives us one of his usual tirades, misrepresenting most of the key items in the debate.

The basis of his outrage is a bill proposed by Representative John Larson to increase Social Security. The proposal is for a modest overall increase in benefits with a larger increase for the poor. The proposal also calls for indexing benefits to a cost of living index designed to monitor the expenses faced by seniors, instead of the population as a whole. Samuelson complains that this could lead to higher benefits.

The gist of Samuelson’s argument is that seniors are doing very well right now. He cites a recently done study by C. Adam Bee and Joshua Mitchell, two economists were at the Census Bureau at the time, that found, based on tax filings that seniors had higher incomes than we had realized.

While the study did show seniors were doing better than earlier survey data, the picture is not altogether positive. For example, the average income for seniors in the bottom decile is just $7,500, for the second decile it’s $13,000. It probably would not seem too outrageous to most people to want t give these people somewhat higher benefits. Even for the 5th decile, the average income was only $32,500. (These figures are all in 2012 dollars, so add about 15 percent to put them in today’s dollars.)

But perhaps more importantly, the main reason Bee and Mitchell found higher income levels than previous data is under-reported pension income. Samuelson misleading reports the issue by saying that most of the “underreporting involve income from IRAs, 401(k) plans and traditional pensions.” Actually, for middle-income households under-reporting of 401(k) income was pretty much irrelevant. The problem was missed pension income.

This matters because we know defined-benefit pensions are disappearing rapidly. While a substantial number of middle-income retirees in 2012 still had traditional defined-benefit pensions, that is much less true today. These pensions will be even rarer ten years from now in 2029. So, while it is good to know that defined-benefit pensions had been more effective in maintaining retirement income levels than we realized, that information does not tell us much about a future in which few retirees will have them.

Samuelson also seems unaware of the fact that Social Security benefits are being cut. People who reached age 62 after 2008 receive benefits, based on their earnings, that are roughly 6 percent less than people who reached age 62 before 2003. This is due to an increase in the age at which full benefits are received. Due to a further increase, people who reach age 62 after 2022 will get a further cut of 6 percent.

The complaint on the indexation formula is bizarre. Why would we not want a cost-of-living adjustment that tracks the cost of living of seniors? Samuelson actually does not know that this change in the formula will lead to higher benefits for seniors. There have been many years when the CPI-E (the index that tracks consumption patterns of seniors) has risen less rapidly than the overall CPI.

On this issue, it is worth noting that current CPI shows an inflation rate that is about 0.5 percentage points lower than the CPI that was in place a quarter-century ago. This means, for example, if the current CPI shows an inflation rate of 2.0 percent for 2019, then if we had a CPI that used the same methodology as the CPI did in 1994, it would have shown an inflation rate of 2.5 percent. This difference means that benefits rise post-retirement by 0.5 percentage points less than in prior decades. After ten years, this means a benefit that is roughly 5.0 percent lower. After 20 years it means a benefit that is roughly 10 percent lower. It seems that he does not know these facts based on his complaints that Democrats never allow cuts to Social Security.

He is also wrong that Democrats oppose cuts to Medicare. In fact, many leading Democrats are pushing bills that would reduce the amount that Medicare pays drug companies. It is hard to understand how anyone who reads the newspapers can be unaware of these proposals.

In short, Robert Samuelson wants to cut Social Security and make seniors worse off. We get that. He just doesn’t have much of an argument to push his case.

This column originally appeared on Dean Baker’s blog.

More articles by:

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

June 02, 2020
Zoltan Grossman
Deploying Federal Troops in a War at Home Would Make a Bad Situation Worse
Nicholas Buccola
Amy Cooper is Christian Cooper’s Lost, Younger Sister 
Manuel García, Jr.
Global Warming is Nuclear War
Patrick Cockburn
An Unavoidable Recognition of Failure: Trump’s Withdrawal From Afghanistan
John Feffer
Is It Time to Boycott the USA?
Kathy Kelly
Beating Swords to Plowshares
Lawrence Davidson
U.S. Urban Riots Revisited
Sam Pizzigati
“Failed State” Status Here We Come
Ron Jacobs
In Defense of Antifa
Cesar Chelala
Bolsonaro and Trump: Separated at Birth
George Wuerthner
The BLM’s License to Destroy Sagebrush Ecosystems
Danny Antonelli
The Absurdity of Hope
Binoy Kampmark
Sinister Flatulence: Trump Versus Twitter
John Stanton
How Much Violence and Destruction is Enough for Depraved American Leaders and Their Subjects?
Richard C. Gross
The Enemy Within
Thomas Knapp
Trump’s “Free Speech:” Doctrine: Never, Ever, Ever Mention He’s a Liar
John W. Whitehead
This Is Not a Revolution. It’s a Blueprint for Locking Down the Nation
June 01, 2020
Joshua Frank
It’s a Class War Now Too
Richard D. Wolff
Why the Neoliberal Agenda is a Failure at Fighting Coronavirus
Henry Giroux
Racial Domestic Terrorism and the Legacy of State Violence
Ron Jacobs
The Second Longest War in the United States
Kanishka Chowdhury
The Return of the “Outside Agitator”
Lee Hall
“You Loot; We Shoot”
Dave Lindorff
Eruptions of Rage
Jake Johnston
An Impending Crisis: COVID-19 in Haiti, Ongoing Instability, and the Dangers of Continued U.S. Deportations
Nick Pemberton
What is Capitalism?
Linda G. Ford
“Do Not Resuscitate”: My Experience with Hospice, Inc.
Medea Benjamin - Nicolas J. S. Davies
Who Are the Secret Puppet-Masters Behind Trump’s War on Iran?
Manuel García, Jr.
A Simple Model for Global Warming
Howard Lisnoff
Is the Pandemic Creating a Resurgence of Unionism? 
Frances Madeson
Federal Prisons Should Not be Death Chambers
Hayley Brown – Dean Baker
The Impact of Upward Redistribution on Social Security Solvency
Raúl Carrillo
We Need a Public Option for Banking
Kathy Kelly
Our Disaster: Why the United States Bears Responsibility for Yemen’s Humanitarian Crisis
Sonali Kolhatkar
An Open Letter to Joe Biden on Race
Scott Owen
On Sheep, Shepherds, Wolves and Other Political Creatures
John Kendall Hawkins
All Night Jazz All The Time
Weekend Edition
May 29, 2020
Friday - Sunday
Tim Wise
Protest, Uprisings, and Race War
Nick Pemberton
White Supremacy is the Virus; Police are the Vector
T.J. Coles
What’s NATO Up to These Days? Provoking Russia, Draining Healthcare Budgets and Protecting Its Own from COVID
Benjamin Dangl
Bibles at the Barricades: How the Right Seized Power in Bolivia
Kevin Alexander Gray - Jeffrey St. Clair - JoAnn Wypijewski
There is No Peace: an Incitement to Justice
Jeffrey St. Clair
A Few Good Sadists
Jeff Mackler
The Plague of Racist Cop Murders: Ahmaud Arbery, George Floyd and the COVID-19 Pandemic
Joshua Frank
In Search of a Lost Socialism
FacebookTwitterRedditEmail