Why liberals should back Social Security reform

[alp227]

by Robert Pozen - a senior lecturer at Harvard Business School and a senior fellow at the Brookings Institution. His latest book is “The Fund Industry: How Your Money Is Managed.”

Liberals should not be fighting Social Security reform — they ought to be leading the charge for change, for a simple reason: The program is no longer progressive. Contrary to popular opinion, the structure of federal retirement programs today favors middle and high earners over less well-off retirees.

The notion of Social Security as progressive is based on the criterion of annual benefits received per dollar of contributions. By that measure, the program offers a more generous return to those who earn less and therefore contribute less.

But a more accurate measure of the program’s distributional impact is total lifetime benefits received by workers at different wage levels. By this standard, Social Security is not progressive because low-wage workers live on average a few years less than wealthier workers.

This gap in life expectancy is likely to increase over the next few decades as the costs of breakthrough medical therapies rise. In addition, the gap will have a greater impact on lifetime benefits as the normal retirement age edges up to 67 by 2027. This is why any further increases in the normal retirement age should include special protections for low-wage workers, especially those engaged in physical labor.

Full story: http://www.washingtonpost.com/opinions/how_to_cut_the_social_security_deficit_/2011/03/22/ABqAAqEB_story.html

[Lasher]

1. Not a compelling argument for backing Social Security 'reform'.

Increasing the retirement age is not justified by lower life expectancy of low-wage earners. I'm with Harry Reid. Social Security will be fine for the next 20 years. We can look at it then if we need to.

[exboyfil]

2. Only reform needs to be

remove the cap on income. Discounting this age question (which I have my doubts about given the steeply progressive benefits formula - 90%/32%/15%) once you reach about $50K in income you are subsidizing the system until you reach $105K. At that point you are off the hook as far as additional subsidization. I would be in favor of income over $105K being taxed at 85% of the normal rate with that income not entering into the benefits calculation. Such a approach in a study I saw would bring S.S. into line going forward (ie future benefits won't drop down to 2/3s as currently projected).

The bigger issue is whether the U.S. government is going to honor the Treasuries that the Social Security Fund holds.

[gtar100]

3. The problem with talking about 'reform' is that there are a whole host of

greedy investors drooling over the money. Most efforts to 'reform' Social Security are about turning the money over to Wall Street. Social Security could be changed to be more fair and of greater benefit to our society, but with the monsters banging at its doors, our main objective now should be to protect it and fortify its defenses.

[jtown1123]

4. NO. Pozen is a GOP Privatizer. Dean Baker Rips Pozen a NEW one here:

http://www.businessinsider.com/robert-pozens-liberal-plan-for-social-security-and-dean-bakers-conservative-plan-for-tax-reform-2011-3

[Doctor_J]

5. I support "reform" - Raise the cap to $150,000

Lower the eligibility age to 58. Problem solved.

Leave it to WaPo to pass off right-wing crap as coming from "liberals".

[bossy22]

6. first part will solve the problem

actually eliminating the cap would solve the entire problem

lowering the eligibility age to 58 would increase the problem- social security isnt funded on a 1:1 dependent to worker ratio. The best you can hope for is that for every worker retired a young one is hired but even that case would worsen the dependent to worker ratio

[Doctor_J]

9. Not really

lots of 58 yr olds would retire, opening up jobs for youngsters who would pay in. Also, raising the cap to $150K would create an enormous surplus - plenty to absorb workers aged 58-64

[Enthusiast]

8. That's MY kind of reform! PLUS ONE!

And just imagine how employment opportunities would open up for young people.

[Enthusiast]

7. Social security would be fine

if the money collected wasn't looked upon as some sort of private slush fund or war fund. Republicans spent all the money collected from FICA contributions to enact tax cuts for millionaires and wars of profit and choice.

This slush fund wasn't enough, however, they even had to borrow money for wars and tax cuts. So now all we hear from the corporate TV media is how social security is causing the deficit. I am fucking sick of it and I am really really pissed off at Obama for not standing up to the lying liars.

Obama's silence should come as no surprise as he actually appointed the goddamn deficit commission. Alan Simpson? Born with a fucking silver spoon in his mouth Alan Simpson? Are you fucking shitting me? Obama! Just how completely out of touch are you?