Wednesday, October 22, 2008

Tough Talk on Social Security

The elderly vote faithfully. When pollsters survey "registered elderly voters," they may as well call them "likely elderly voters." Because of their high electoral participation, candidates from both parties court older voters. They also try to attract younger voters, but this group has a very poor track record of showing up to the polls.

Because they do not ordinarily work, older workers pay close attention to health care, social security, and other issues that impact their class more substantially than others. For this reason, social security remains a sacred cow. You cannot touch it. Getting rid of social security is not a reality. Privatizing it remains unpopular. Increasing taxes to pay for it, gets some attention, but remains unpopular. Obama has said he would increases taxes on workers making $250,000 to help subsidize social security, but this probably will not do much to solve the problem. McCain strikes back with typical Republican anti-tax rhetoric, but provides no solution himself.

A recent article by Robert J. Samuelson, a writer for Newsweek and the Washington Post, offers a sober perspective on social security and the presidential election: due to the need to attract older voters, neither candidate will offer an honest take on the state of social security. The article is definitely worth a read. Here are some highlights:

* The basic ways to fund social security for the increasingly large population of beneficiaries is to reduce payments, limit the ages of eligibility, or
increase medicare co-payments or deductibles, but Obama rejected all three
options, while McCain has remained silent;

* It is unfair for today's workers making over $250,000 to pay higher taxes to subsidize the retirement income of elderly people making over $250,000;

* Calls on young people to protest the candidates seeking their votes, but ignoring their interests.
The analysis sounds interesting, but theoretically a tax increase could help maintain benefit levels. Samuelson says that would be too draconian. I also wonder what percentage of retirees have incomes of $250,000 or above, but still receive social security, and how substantial the amount is that they receive. I assume this does not represent the largest chunk of beneficiaries. Nevertheless, the article provides some interesting insight -- something that is a rare find in the morass of reporting today.

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