Tuesday, September 07, 2010

On Raising The Retirement Age For Social Security

They are trying to do that over the pond, too, in France. The proposal there is to raise the retirement age from 60 to 62. The French kinda take things differently, as these pictures from the demonstrations show.

Such demonstrations for such a reason would never happen here. The wingnuts say that it's because the socialist-islamofascist-French-surrender-monkeys are like that and, besides, Europe is dying out, what with all that leisure time spent in godless activities and the wimminz refusing to breed. That last bit about the uppity and selfish women is also the reason why the French need to raise the retirement age.

Which is a very sloppy way of saying that the wingnuts do control the conversation here to some extent and what they don't control the corporations and the protestant work ethic do. And the government budget concerns.

Those budget concerns are a very odd bird. It goes somewhere quietly nesting whenever Republicans are in power. You don't hear a peep from it, even if George Bush The Younger in fact sends money to Iraq by the truck load and that money just disappears. But when the Democrats are in power, the bird suddenly flies around all over the place, peeping and peeping, and so we all naturally must pay attention and tighten our belts and accept a higher retirement age and/or less pension money.

That is a remarkable trick!

Social Security now does seem endangered in its present form because both parties want to fix it. What those fixes are still varies. The Republicans want to privatize the accounts, in order to then disappear the system altogether.

They like the idea of the elderly begging on the streets. Remember that odd government budget bird? Any country in which that focus switch takes place so easily is not a country where enough people are capable of surfing the stock market competently with their own retirement funds. And I haven't even mentioned the recent problems in the financial markets and what those do to private retirement accounts.

President Obama has stated, very firmly, that he will not try to privatize Social Security. Instead, he will cut out bits here and there, to make it all solvent again. How odd it is that wars are not waged on that basis. We could decide to shorten the length of a war when the money runs out, kill fewer people, say, but no. Money for wars will always be found. What's harder to find (must turn pockets all the way inside out) is money for social services or education. Or the care of veterans after the wars.

All this is weird-and-wonderful. The proposed solutions to the Social Security "crisis" are also weird in that certain solutions simply are off the table, from the very beginning.

Removing the gap on the payroll taxes which finance the system is one of those. The current system of financing Social Security is regressive, loaded towards the lower earners. And note that it is only labor income which is taxed to cover the system. Income from investments and such is not taxed at all, which increases the overall regression on the financing side.

Another solution off the table is means-testing those who qualify for Social Security, despite the fact that several industrialized countries do exactly that to balance their books. If the point of Social Security is to serve as a safety net for the elderly, then only those who fall off the tightropes of capitalism really need it. From that standpoint means-testing would be a good idea to make the system cheaper. After all, when we pay insurance for our house or our car we don't demand all the insurance payments back if the house doesn't burn down or if the car doesn't get stolen.

The reason for picking out those two forgotten proposals: removing the payroll tax gap and introducing means-testing is not that they would be the ones I'd necessarily choose but to point out that they are off the table before the table is set, most likely because they share something that has to do with the hidden values underlying the U.S. politics on this question: The system must not begin to look like an income-transfer program between social classes, because such a program would not be supported by the voting part of the population.

But all the proposals on the table also affect the different social classes differently. Raising the retirement age will have much more serious effects on blue-collar workers and workers in the serving occupations where one stands all day long. The physical wear-and-tear in those jobs is greater. A longer working life is harder and more painful and any bout of unemployment is likely to become permanent. Add to that the effects of ageism which all older workers will face and you have something every bit as problematic as those other proposals.