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. 

bernie-the-sandernistas-cover-344x550

Weekend Edition
June 14, 2019
Friday - Sunday
Michael Hudson
Trump’s Trade Threats are Really Cold War 2.0
Bruce E. Levine
Tom Paine, Christianity, and Modern Psychiatry
Jason Hirthler
Mainstream 101: Supporting Imperialism, Suppressing Socialism
T.J. Coles
How Much Do Humans Pollute? A Breakdown of Industrial, Vehicular and Household C02 Emissions
Andrew Levine
Whither The Trump Paradox?
Jeffrey St. Clair
Roaming Charges: In the Land of 10,000 Talkers, All With Broken Tongues
Pete Dolack
Look to U.S. Executive Suites, Not Beijing, For Why Production is Moved
Paul Street
It Can’t Happen Here: From Buzz Windrip and Doremus Jessup to Donald Trump and MSNBC
Rob Urie
Capitalism Versus Democracy
Richard Moser
The Climate Counter-Offensive: Secrecy, Deception and Disarming the Green New Deal
Naman Habtom-Desta
Up in the Air: the Fallacy of Aerial Campaigns
Ramzy Baroud
Kushner as a Colonial Administrator: Let’s Talk About the ‘Israeli Model’
Mark Hand
Residents of Toxic W.Va. Town Keep Hope Alive
John Kendall Hawkins
Alias Anything You Please: a Lifetime of Dylan
Linn Washington Jr.
Bigots in Blue: Philadelphia Police Department is a Home For Hate
David Macaray
UAW Faces Its Moment of Truth
Brian Cloughley
Trump’s Washington Detests the Belt and Road Initiative
Horace G. Campbell
Edward Seaga and the Institutionalization of Thuggery, Violence and Dehumanization in Jamaica
Graham Peebles
Zero Waste: The Global Plastics Crisis
Michael Schwalbe
Oppose Inequality, Not Cops
Ron Jacobs
Scott Noble’s History of Resistance
Olivia Alperstein
The Climate Crisis is Also a Health Emergency
David Rosen
Time to Break Up the 21st Century Tech Trusts
George Wuerthner
The Highest Use of Public Forests: Carbon Storage
Ralph Nader
It is Time to Rediscover Print Newspapers
Nick Licata
How SDS Imploded: an Inside Account
Rachel Smolker – Anne Peterman
The GE American Chestnut: Restoration of a Beloved Species or Trojan Horse for Tree Biotechnology?
Sam Pizzigati
Can Society Survive Without Empathy?
Manuel E. Yepe
China and Russia in Strategic Alliance
Patrick Walker
Green New Deal “Climate Kids” Should Hijack the Impeachment Conversation
Colin Todhunter
Encouraging Illegal Planting of Bt Brinjal in India
Robert Koehler
The Armed Bureaucracy
David Swanson
Anyone Who’d Rather Not be Shot Should Read this Book
Jonathan Power
To St. Petersburg With Love
Marc Levy
How to Tell a Joke in Combat
Thomas Knapp
Pork is Not the Problem
Manuel García, Jr.
Global Warming and Solar Minimum: a Response to Renee Parsons
Jill Richardson
Straight People Don’t Need a Parade
B. R. Gowani
The Indian Subcontinent’s Third Partition
Adolf Alzuphar
Diary: The Black Body in LA
Jonah Raskin
‘69 and All That Weird Shit
Michael Doliner
My Surprise Party
Stephen Cooper
The Fullness of Half Pint
Charles R. Larson
Review: Chris Arnade’s “Dignity: Seeking Respect in Back Row America”
David Yearsley
Sword and Sheath Songs
FacebookTwitterRedditEmail