How Should Social Security Benefits Respond to an Economic Collapse?

[unhappycamper]

http://www.opednews.com/articles/How-Should-Social-Security-by-Dean-Baker-Economics_Social-Security-140819-391.html



How Should Social Security Benefits Respond to an Economic Collapse?
By Dean Baker
OpEdNews Op Eds 8/19/2014 at 23:36:48

This is the issue that Andrew Biggs implicitly raises in his Wall Street Journal column highlighting the jump in the size of the projections of the Social Security shortfall since 2008. Biggs complains that progressives have responded to the economic collapse by proposing an increase in benefits that would make the shortfall even larger rather than supporting plans for eliminating the projected shortfall. While Biggs' focus is explicitly the solvency of the program, the actions of progressives can only be understood against the larger economic context.

The calls for expansion of benefits are at least in part a response to the economic collapse.It's worth noting that this collapse was 100 percent preventable and that it was one of the worst blunders in the history of economic policy-making in the history of the world. Unfortunately the top economic advisers in both political parties whose errors were responsible did not have their standing affected by this mistake.

As a result of the collapse, many people nearing retirement saw much of their savings disappear as the stock market collapsed, house prices plummeted and they lost their jobs during their peak savings years. This meant that millions of workers had to draw down their savings to support their families at a point where they had planned to be accumulating wealth for retirement. In addition, due to the weakness of the labor market created by high unemployment, tens of millions of workers have seen stagnant wages over the last six years when they could have expected to see real wage growth in the neighborhood of 1.0 percent annually had the economy continued on the path projected in 2008.

In short, the collapse hugely increased the need for Social Security, which is the basis for the response of progressives. Biggs is correct that the cost of additional benefits will have to be covered at some point, but there is no obvious reason that it is necessary to come up with the full plan today. Part of the cost can be recovered by increasing the payroll cap as has been proposed by people across the political spectrum.

[Demeter]

1. Sorry, we don't do context in this country

because, frankly, we never DID do context in this country. That goes hand in hand with having no living history.

If you can't remember things, every day is a new day. And the wheel has to be reinvented...over and over and over and over....

We especially don't do context in political economics. Because when your emotional development among the 1% Elitists averages out to be that of a two-year-old child's, there's only two states of being: fear and greed.

I despair.

[MisterP]

2. I remember when Lynne Cheney tried to take over the history curricula

http://en.wikipedia.org/wiki/American_Council_of_Trustees_and_Alumni
I remember one of the neocon-written bullet points was that colonialism didn't profit Europe a-tall
late 80s/early 90s also was the "History/Science Wars," often boiling down to grumpy old men angry that people were daring use analyses from after 1940--why, some of them were French or German!

[Demeter]

3. It didn't? That must be news to the former empires of the world

ALL of whom benefited. Whether they got to keep those benefits or not depended on how evil and corrupt they were....the more, the less.

And any analysis that includes more information and thought can't be all bad...especially if it isn't written for a master race.

[MisterP]

4. Bill Kristol's wife was the main writer or this weird reactionary philosophy

http://en.wikipedia.org/wiki/Gertrude_Himmelfarb

[Demeter]

5. That's one scary lady

is she related to Sarah Palin, by any chance?