I've never understood the "mainstream" economic thinking that our debt and SS/Medicare insolvency aren't looming existential problems. Because that IS the mainstream of economic thinking: this is not a major problem. As you so aptly point out - right now, it's an intractable political problem that will soon enough resolve in accordance with Herb Stein's Law. We're in a box canyon and there's pain on all sides. It's only going to be a "comfortable" ride for a little while longer.
I think it's classic cognitive dissonance. People have had the "my money" idea hammered into their heads for so long that even spending and deficit hawks deem it factual. Some genuinely believe the lockbox myth, others figure it's an inviolable promise.
Most of our fellow citizens don't actually "think." They choose conclusions and shoehorn their personal realities into them.
I can understand "fellow citizens" - half of them are less intelligent than average, and many of those above the average can't be bothered to figure it out. What I cannot understand is those self-styled, self-selected, so-called "elite" economists (e.g., Krugman) who blatantly generate propaganda on behalf of politicians who use the falsehoods to stay in power. And yes, you can hate on the Krugs, but he DOES represent "mainstream" economic thinking vis a vis the deficit and SS/Medicare. He actually DOES. These people - all of them - are thoroughly corrupt and have sold their souls to a cheap bidder.
They've got their team, and they shape their message to fit their team's wants. We just need to understand the motivations and accept that there's no compelling interest toward dispassionate honesty.
You make some very good points. However, the private sector made its own contribution to the mess. Social Security was at one time understood to be a supplement and not your sole source of retirement income as it is today for many people. However, while chanting Milton Friedman's mantra of giving the highest return to the stockholders, many companies got rid of their pensions and retiree health plans in addition to cutting benefits, wages, staff and outsourcing jobs overseas. The 401K replacements notably failed to fill the gap leaving many with reliance upon Social Security. So, while many of your observations regarding our politicians are right on the money, let's not forget how we got into this situation.
You write as if a pay as you go system is inherently a bad thing. When SS wasn't expected to be a main source of retirement income and people had pensions and retiree benefits from their companies and you had a sufficient number of workers supporting the retirees, it wasn't a bad thing. It worked and helped save millions of Americans from poverty in their old age. Now, the situation has changed and we need to make changes to SS as well. However, you need to understand how we got into this situation. Private businesses in effect dumped their retiree pensions and benefits to make stockholders happy and relied upon government picking up the slack with SS. And why we're talking about this, why is it that we have less workers? It became increasingly expensive to have families and that coupled with the cutting of jobs, benefits and salaries and outsourcing to make stockholders happy set the stage for our demographic crisis. Facing reality means facing up to the fact that politicians are not the only ones in love with policies which hurt the nation in the long run.
It *is* inherently bad if it's government doing it. Th incentives are all perverse, and we have the results that prove it.
I get that SS is your hobby horse, and that you despise Milton Friedman. I've heard your arguments, and I don't find them compelling. People voted for this crap, and people should pay for what they voted for. You sound like you want to further raid the private sector to make up for the sins of the public sector. That presumes some sort of "public ownership" of the private sector, which is the same socialistic disaster.
If you want to fix a problem then you need to understand how we got in this fix. Private companies offloaded the retirees to the government and wall street both of which dropped the ball. Companies did this and took other steps which exacerbated the problems with being able to save enough for retirement because they followed Friedman and gave stockholders the highest return possible.
Companies operate under market forces, they don't simply decide 'this is how it should be.' Had Friedman not given them that advice, the outcome would have been pretty much the same, because the distortion created by the government would still produce the same equilibrium.
The problem was caused by government, full stop. The implication of your comment is that companies should be taxed more to fix SS. But, all that would do is pass the cost onto consumers, while likely breaking some companies' finances to the point of company failure.
One element of fixing entitlements I didn't mention is economic growth. Growing an economy faster than spending grows can take some of the strain off the system, and lower corporate taxes (and less government spending/regulation) accelerate economic growth.
Calvin Coolidge cured the 1920 depression in months by cutting taxes and spending.
The horse came before the cart: SS (either intentionally or not) certainly *enabled* (at least gave it the fig leaf of legitimacy) the curtailment of corporate retiree health and pension plans. If your employer is already paying in tens of thousands of dollars annually - on your behalf - to Medicare and SS, why provide a corporate retirement benefit beyond that? I'm amazed that 401k plans are still offered! Worry not: Democrats are coming after those accounts.
Pensions continued to be offered after SS happened. Then, companies started realizing that defined benefit programs carried inherent risk and moral hazard, so they shifted to defined contribution programs. These exist because workers demanded and continue to demand them. Market forces in action.
Yes, SS was a distortion, but blaming the private sector is, as you note, putting the cart before the horse. Companies exist in a competitive environment, and those that might do as David suggests and be more "generous" than the market requires will go out of business. It's not a matter of corporate greed, it's how things work.
Corporate retirement benefits had their genesis in the wage and price controls imposed by the Feds during WW II. Companies could no longer compete for employees on wages, so they offered employee benefits instead.
I was fortunate to have worked for a couple of 100 year-old companies that each offered final average pay defined benefit pensions (which I just happened to manage for a time).
Those legacy pension plans were closed to new entrants around twenty years ago.
I, too, accrued some pension in my early years working for a defense contractor.
That wage freeze in WWII had a huge and disastrous impact on how health insurance works in the US. As you note, the work-around was to offer benefits, and health insurance was one of them. What happened next is what I called health care's great unhealed wound. Companies lobbied Congress to allow them to expense health insurance costs without their being treated as taxable compensation to the workers. So, company-provided health insurance is untaxed (or paid with pre-tax money, if you prefer), meaning it has a massive advantage over individually purchased insurance.
This skewed the market to employer-provided insurance, meaning that if you lost your job you lost your insurance and if you changed your job you changed your insurance, rather than individually-purchased insurance which would "travel with you." This spawned the pre-existing condition problem and countless others.
Reforming health care properly should include a correction of that mistake, but don't hold your breath.
I understand the thrust of the argument. I also see this govt spending billions that do not exist on a pointless war in Ukraine, with plans of a ten-year commitment that will bind future administrations and the rest of us. I see billions going toward illegals who shouldn't be here in the first place. I see jobs figures in which the one growth industry is govt. These things make it difficult to take "we're going to run out of money" very seriously, partly we've already run out of money but mostly because we manage to find it for things that should not be funded at all.
The gist of Modern Monetary Theory, and of deficit spending in general, is that since our debt is in dollars, printing more dollars isn't a bad thing. And, indeed, that fact has helped kick the can down the road. Ponzi schemes can work for quite a while before they collapse.
But, the fact of current inflation belies that argument, and with an aging population, the day of reckoning is coming due.
Of course government spends recklessly and on things it shouldn't, and all that deserves attention and refutation. But, even if all that were to be ended today, SS and medicare will still go insolvent. They're too far gone to be corrected by cutting other spending.
I'm not sure that "entitlements" accurate describes things that I was forced to pay into under penalty of prison. It doesn't matter if Ukraine is tiny. The federal Dept of Ed is similarly tiny, but it has no place, either. If these people cannot or will not deal with the smaller, easier things, they're surely not going to tackle anything difficult, as Congress has proven for generations.
It was just a few short years ago that SS was projected to run out the year I'm eligible to retire (2050). I think it was about 10 years ago. I won't be surprised if the date gets moved up again while Congress continues to kick the can down the road
TRUTH!!!
I've never understood the "mainstream" economic thinking that our debt and SS/Medicare insolvency aren't looming existential problems. Because that IS the mainstream of economic thinking: this is not a major problem. As you so aptly point out - right now, it's an intractable political problem that will soon enough resolve in accordance with Herb Stein's Law. We're in a box canyon and there's pain on all sides. It's only going to be a "comfortable" ride for a little while longer.
I think it's classic cognitive dissonance. People have had the "my money" idea hammered into their heads for so long that even spending and deficit hawks deem it factual. Some genuinely believe the lockbox myth, others figure it's an inviolable promise.
Most of our fellow citizens don't actually "think." They choose conclusions and shoehorn their personal realities into them.
I can understand "fellow citizens" - half of them are less intelligent than average, and many of those above the average can't be bothered to figure it out. What I cannot understand is those self-styled, self-selected, so-called "elite" economists (e.g., Krugman) who blatantly generate propaganda on behalf of politicians who use the falsehoods to stay in power. And yes, you can hate on the Krugs, but he DOES represent "mainstream" economic thinking vis a vis the deficit and SS/Medicare. He actually DOES. These people - all of them - are thoroughly corrupt and have sold their souls to a cheap bidder.
They've got their team, and they shape their message to fit their team's wants. We just need to understand the motivations and accept that there's no compelling interest toward dispassionate honesty.
You make some very good points. However, the private sector made its own contribution to the mess. Social Security was at one time understood to be a supplement and not your sole source of retirement income as it is today for many people. However, while chanting Milton Friedman's mantra of giving the highest return to the stockholders, many companies got rid of their pensions and retiree health plans in addition to cutting benefits, wages, staff and outsourcing jobs overseas. The 401K replacements notably failed to fill the gap leaving many with reliance upon Social Security. So, while many of your observations regarding our politicians are right on the money, let's not forget how we got into this situation.
Beating that dead horse again, eh? SS was a Ponzi scheme from Day 1. THAT is how we got into this mess.
You write as if a pay as you go system is inherently a bad thing. When SS wasn't expected to be a main source of retirement income and people had pensions and retiree benefits from their companies and you had a sufficient number of workers supporting the retirees, it wasn't a bad thing. It worked and helped save millions of Americans from poverty in their old age. Now, the situation has changed and we need to make changes to SS as well. However, you need to understand how we got into this situation. Private businesses in effect dumped their retiree pensions and benefits to make stockholders happy and relied upon government picking up the slack with SS. And why we're talking about this, why is it that we have less workers? It became increasingly expensive to have families and that coupled with the cutting of jobs, benefits and salaries and outsourcing to make stockholders happy set the stage for our demographic crisis. Facing reality means facing up to the fact that politicians are not the only ones in love with policies which hurt the nation in the long run.
It *is* inherently bad if it's government doing it. Th incentives are all perverse, and we have the results that prove it.
I get that SS is your hobby horse, and that you despise Milton Friedman. I've heard your arguments, and I don't find them compelling. People voted for this crap, and people should pay for what they voted for. You sound like you want to further raid the private sector to make up for the sins of the public sector. That presumes some sort of "public ownership" of the private sector, which is the same socialistic disaster.
If you want to fix a problem then you need to understand how we got in this fix. Private companies offloaded the retirees to the government and wall street both of which dropped the ball. Companies did this and took other steps which exacerbated the problems with being able to save enough for retirement because they followed Friedman and gave stockholders the highest return possible.
Companies operate under market forces, they don't simply decide 'this is how it should be.' Had Friedman not given them that advice, the outcome would have been pretty much the same, because the distortion created by the government would still produce the same equilibrium.
The problem was caused by government, full stop. The implication of your comment is that companies should be taxed more to fix SS. But, all that would do is pass the cost onto consumers, while likely breaking some companies' finances to the point of company failure.
One element of fixing entitlements I didn't mention is economic growth. Growing an economy faster than spending grows can take some of the strain off the system, and lower corporate taxes (and less government spending/regulation) accelerate economic growth.
Calvin Coolidge cured the 1920 depression in months by cutting taxes and spending.
The horse came before the cart: SS (either intentionally or not) certainly *enabled* (at least gave it the fig leaf of legitimacy) the curtailment of corporate retiree health and pension plans. If your employer is already paying in tens of thousands of dollars annually - on your behalf - to Medicare and SS, why provide a corporate retirement benefit beyond that? I'm amazed that 401k plans are still offered! Worry not: Democrats are coming after those accounts.
Pensions continued to be offered after SS happened. Then, companies started realizing that defined benefit programs carried inherent risk and moral hazard, so they shifted to defined contribution programs. These exist because workers demanded and continue to demand them. Market forces in action.
Yes, SS was a distortion, but blaming the private sector is, as you note, putting the cart before the horse. Companies exist in a competitive environment, and those that might do as David suggests and be more "generous" than the market requires will go out of business. It's not a matter of corporate greed, it's how things work.
Corporate retirement benefits had their genesis in the wage and price controls imposed by the Feds during WW II. Companies could no longer compete for employees on wages, so they offered employee benefits instead.
I was fortunate to have worked for a couple of 100 year-old companies that each offered final average pay defined benefit pensions (which I just happened to manage for a time).
Those legacy pension plans were closed to new entrants around twenty years ago.
I, too, accrued some pension in my early years working for a defense contractor.
That wage freeze in WWII had a huge and disastrous impact on how health insurance works in the US. As you note, the work-around was to offer benefits, and health insurance was one of them. What happened next is what I called health care's great unhealed wound. Companies lobbied Congress to allow them to expense health insurance costs without their being treated as taxable compensation to the workers. So, company-provided health insurance is untaxed (or paid with pre-tax money, if you prefer), meaning it has a massive advantage over individually purchased insurance.
This skewed the market to employer-provided insurance, meaning that if you lost your job you lost your insurance and if you changed your job you changed your insurance, rather than individually-purchased insurance which would "travel with you." This spawned the pre-existing condition problem and countless others.
Reforming health care properly should include a correction of that mistake, but don't hold your breath.
I understand the thrust of the argument. I also see this govt spending billions that do not exist on a pointless war in Ukraine, with plans of a ten-year commitment that will bind future administrations and the rest of us. I see billions going toward illegals who shouldn't be here in the first place. I see jobs figures in which the one growth industry is govt. These things make it difficult to take "we're going to run out of money" very seriously, partly we've already run out of money but mostly because we manage to find it for things that should not be funded at all.
The gist of Modern Monetary Theory, and of deficit spending in general, is that since our debt is in dollars, printing more dollars isn't a bad thing. And, indeed, that fact has helped kick the can down the road. Ponzi schemes can work for quite a while before they collapse.
But, the fact of current inflation belies that argument, and with an aging population, the day of reckoning is coming due.
Of course government spends recklessly and on things it shouldn't, and all that deserves attention and refutation. But, even if all that were to be ended today, SS and medicare will still go insolvent. They're too far gone to be corrected by cutting other spending.
In terms of the total budget, “aid” to Ukraine is tiny. “Entitlements” (Social Security, Medicare, etc.) are huge chucks of what drives the debt.
I'm not sure that "entitlements" accurate describes things that I was forced to pay into under penalty of prison. It doesn't matter if Ukraine is tiny. The federal Dept of Ed is similarly tiny, but it has no place, either. If these people cannot or will not deal with the smaller, easier things, they're surely not going to tackle anything difficult, as Congress has proven for generations.
Point taken, but "entitlements" is the colloquial term for those programs, and has been for decades.
And, for sure, it's near-certain that the only fixes will be bandaids and patches.
It was just a few short years ago that SS was projected to run out the year I'm eligible to retire (2050). I think it was about 10 years ago. I won't be surprised if the date gets moved up again while Congress continues to kick the can down the road