ES EN
Menu Menú

Publications

Publicaciones

Search Publications

Buscar publicaciones

Filters Filtro de búsqueda

to a

clear selection Quitar los filtros

none

Article Artículo

Fun With Numbers: Means Testing Social Security

Todd Ganos at Forbes Magazine is upset that people earning $150,000 a year get Social Security. Hey, I'm upset that people earning $1 million a year get interest on government bonds. In both cases they don't need it, but you know what? They paid for it.

But let's skip the morality play and have some fun with numbers. We want to figure out how much money we could in principle save by taking away Social Security benefits from these rich retirees. Ganos tells readers:

"According to the Congressional Budget Office, there are approximately 25.6 million senior households in the United States.  The average annual pre-tax income of the top 10% of senior households is approximately $197,000.  Does such a household need Social Security retirement income payments?"

Okay, so the average income for this top 10 percent of seniors is $197,000 a year. Let's suppose that the average income for the top 1 percent of seniors is $1 million a year, which is probably pretty much in the ballpark. That leaves the average income for the remaining 9 percent of these wealthy seniors at just under $110,000. And that is still an average. Many will have considerably lower incomes. Yet, Ganos thinks we can painlessly take away Social Security benefits for this group that average (for them) close to $20,000 a year. He must not have heard all the howls of pain last fall about the job creators being devastated by an increase in their tax rate of 4 percentage points on income over $450,000 a year. 

If we want to be serious about this exercise, we would look at the actual distribution of benefits rather than playing games with averages that include the Warren Buffets of the world. We did this a few years back. If you wanted to cover 10 percent of the benefits paid out (not 10 percent of seniors), you had to get to individuals with incomes of less than $50,000, not counting their Social Security benefits. (We took person income to keep things simpler, many seniors do live alone.)

Dean Baker / June 07, 2013

Article Artículo

Robert Samuelson Wants to Abolish Peter Peterson's and Bill Gates' Bank Accounts

Sorry, I misread the piece. It was the Social Security and Medicare trust funds that he wants to abolish. It would be the same thing -- destroying large amounts of wealth, just different people involved.

In the case of Peter Peterson and Bill Gates, we would be destroying the wealth of two very rich people. In the case of the Social Security and Medicare trust funds we would be destroying $3 trillion in wealth that belongs to the country's workers. Of course I should have realized off the bat that Samuelson could not be talking about destroying Peterson and Gates' bank accounts. The Post never would allow a column in the paper suggesting that we confiscate the wealth of the rich.

Okay, what is Samuelson's argument? It's a bit hard to tell.

He tells us:

"In the public mind, the trust funds suggest that Social Security and Medicare are quarantined from the rest of government. As long as the funds remain solvent, promised benefits can be paid. So policy focuses on strengthening the trust funds. Against that background, it was inevitable that the trustees’ latest reports would be cast as good news. Slower-than-expected increases in health-care costs have extended the life of the Medicare trust fund until 2026, two years later than last year’s estimate. The Social Security trust fund is projected to pay promised benefits through 2033, the same as last year. This seems comfortably distant."

Yes, this is exactly right. The trust funds are legally quarantined from the rest of the government, which is all that matters for these programs. The mind that Samuelson attributes to the public is 100 percent on the mark. So where is the problem?

Dean Baker / June 07, 2013

Article Artículo

Latin America and the Caribbean

Latin America Just Says "No" to the War on Drugs

Ahead of today’s closing of the Organization of American States (OAS) General Assembly in Guatemala, numerous drug policy, human rights and other organizations called on the governments of the Americas [PDF] to consider alternatives to the decades-long U.S.-led “war on drugs.” The open letter appeals from these groups echo those made ahead of the Central American Integration System summit at the beginning of May: “Prohibitionist policies and the war on drugs have intensified violent conflict in the region,” and human rights have suffered. Human Rights Watch Americas Director José Miguel Vivanco made a similar declaration: “The ‘drug war’ has taken a huge toll in the Americas, from the carnage of brutal drug-trafficking organizations to the egregious abuses by security forces fighting them,” and “Governments should find new policies to address the harm drug use causes while curbing the violence and abuse that have plagued the current approach.” Human Rights Watch recommends decriminalization of personal drug use.

The drug question was the focus of the meeting, which followed the release of an OAS report that considers alternative policies including legalization and treatment, as opposed to criminalization and incarceration. Timed to coincide with the OAS General Assembly, an op-ed in the Guardian of London on Tuesday by Colombian president Juan Manuel Santos summarizes four drug policy scenarios described in the OAS report.

The OAS report is just the latest in a tide of policy papers, studies, opinion pieces, rallies and marches all with a similar refrain: it’s time for a change on drug policy. While the U.S. continues to express resistance (Kerry is reported to have remarked at the assembly that “I say to all those who speak about legalization and reform:  the challenges go far beyond a single ingredient. Drugs destroy lives, destroy families.”), countries in Latin America are moving ahead. Most notably, Uruguay is poised to become the first country in the region to legalize and regulate marijuana, with the lower house expected to soon approve such reforms that are backed by President José Mujica and his Frente Amplio party.

CEPR / June 06, 2013

Article Artículo

The Most Depressing Blogpost in a Long Time

Brad Plummer shows us two charts from a new publication from the International Labor Organization (ILO) that purport to tell us we face a tradeoff between job quality and jobs. The charts, one for wealthy countries and one for developing countries, seem to show that countries that had a deterioration in job quality saw the most job growth.

http://www.washingtonpost.com/blogs/wonkblog/files/2013/06/job-quality.png

 

That would be bad news. The intended take away is that if we want to have jobs then workers will have to take lower pay and fewer benefits. However it is not clear that this is the story the charts actually show.

For some reason the ILO opted not to publish the regression results on which these charts are based so we have to rely on visual inspection to get a sense of the story. In the case of the developing country chart, it doesn't look like we have much. In fact we have more countries in the wrong quadrants (negative job growth and job deterioration or positive job growth and job improvement) than in the right quadrants (positive job growth and job deterioration or negative job growth and job improvement). There are 11 countries in the wrong quadrants and 8 in the right quadrants. (I'm not counting Ukraine and Thailand, which are right on the line to my eyes.) That does not look like really solid evidence where I sit.

Dean Baker / June 04, 2013