Monday, September 12, 2011

Tea Party Debate and Social Security

What little I saw of the Republican debate didn't make me very happy, specifically, the social security issue has been in-artfully handled. Romney calling it an essential program made me ill, it was pure pandering. Perry, while essentially correct that it is a Ponzi scheme, has been remarkably unserious about how to handle the fact that the program is going broke. This issue is going to haunt the candidates in the general if they don't get their act together.

The fact is that no one is going to win the general election with either position. Saying that Social Security is hunky dory will alienate the tea partyers who know that's a lie. Implying the program will be gutted wholesale will also lose the election.

I previously posted on the constitutional issues surrounding social security reform. The purists among us may favor elimination, but that's not happening for a while. The only viable strategy is a slow reform, that reduces social security to a social safety for the elderly poor, while the rest of Americans get used to planning for their own retirement. Incremental reform is the correct and politically possible path to improvement. I even have a slogan; "Saving social security for our seniors who need it most." From previous post, here is what could be done:
  • Reduce Social Security outlays as follows:
- Price index initial benefits (the current CPI overstates inflation, increasing pay outs unnecessarily)
- Raise the normal retirement age
- Cut Social Security disability program by 10%
  • Means test social security
- I would explicitly use the internal revenue code on means testing to return these taxes to the social security trust fund. From a big picture accounting view, this makes no difference, but it would send the message that we are saving social security for those Americans who need it most.

Ultimately, the percent of the average American's retirement income that comes from social security needs to be reduced. Americans have to save more for retirement, which will drive a rising GDP. (There is a strong correlation between a nation's savings rate and GDP growth.)

Some other asides from the debate:
  • Why is Huntsman in this debate, but not Gary Johnson? Huntsman veers from occasionally very sharp to just plain goofy with disrespect, trying to score cheap points.
  • The Republicans seemed like the anti-war party, especially compared to Obama. Who'd ahve thought. Only Santorum seems ready to start another war.
  • CNN's fact checking leaves something to be desired. They claim that the stimulus created or saved 1.5 million jobs. Bull. No matter what figure is used, it is all opinion, there is no fact, because the basic premise is unprovable.
  • Debbie W-Schulz as a commenter? Really? Could we be any more disrespectful of the tea party movement than to give her free reign under the guise of impartial observer?
Why couldn't I enjoy the full debate? Late flight, some southern BBQ and enjoying one of these:

A fairly decent IPA, especially on draft, but in the south, they don't want to scare away the clientele, so it is billed as a pale ale.


  1. "Tea party" CNN debate? Huh? WTF
    Next let's have Bill Maher host a "tea party" debate since MSNBC has already been tapped on the whole debate thingy.

  2. Doo Doo, agreed. Pretty pathetic at times.

  3. In fairness, Soc Sec won't go under water for another 15-20 years. and at that point it isn't bankrupt, it just won't be 100% self funding. That would suggest that radical changes aren't necessary if we act early.

    As you your ideas, means testing always sounds good until you ask who determines where to draw the line. Upping the retirement age also sounds like a simple fix, unless you are one of the many folks in their 50's who get laid off and no one wants to rehire you because you are too old. The whole thing is based on the assumption that anyone who wants to work can work up to retirement age. Reality doesn't work that way. Another way to effectively put in place means testing is to start taxing income beyond the current threshold. I forget the number but it stops somewhere around the first 100 thousand dollars made. I don't know, but I wonder if it would really need to be increased very much to keep things in check.

    I think a much bigger crisis on the horizon is Medicare, and trimming what doctors get reimbursed isn't a viable solution.

  4. Kelly,
    Thanks. A few responses, first, Congress draws the line. Hopefully, they will draw the line lower and lower over time. Increasing the retirement age is inevitable, just a matter of how much warning they give future retirees. If Obama keeps giving tax holidays on social security taxes, the fund will go broke a lot faster than your current data indicates.
    With respect to the income cap on social security, that hardly seems fair, since those folks don't get any return, even if they are poor when they are old.

    I really like Paul Ryan's medicare ideas, it could provide salvation for a system that will break soon, as you indicate.

  5. I'll have to look up Paul Ryan's medicare ideas, I'm not familiar with them.

    By the way, saw an interview with Buddy Roemer in the daily show last week. I was very impressed. Seems like a genuine guy. Its too bad his campaign isn't not getting anywhere.