Federal Spending on the elderly vs. young

I've noticed an uptick in the idea on the left that the federal government should shift its spending from seniors to kids. Some progressives friendly to the Obama admin have written on this, e.g. Ezra Klein and Kevin Drum. Some on this site have mentioned that they believe we should be willing to look at cuts to spending on the elderly to focus more dollars on, for example, funding universal preschool. 

 

Klein's recent post "Feds spend $7 on elderly for every $1 on kids" is representative, with graphs like:

 

 

In some cases, this spending pattern is taken to support cutting Social Security by reducing how it measures inflation or perhaps raising the eligibility age for medicare, both of which are proposals that the Obama admin. has reportedly put on the table many times in budget negotiations with the GOP.

 

Here are the main problems with this line of thought as I see it:

 

*   First, there is no deal on the table to directly trade some spending on programs for the elderly with spending on kids. There is only cuts to SS and medicare being seriously discussed, and there's absolutely no reason to believe that these will be traded for anything other than keeping tax rates on wealthy parties low. 

 

*  For SS, the US already has the stingiest retirement benefits system in the developed world and people are merely getting back what they paid into the system. In fact, the average recipient is currently getting less on average than she paid in. As Dean Baker points out, giving people their own money back is like saying the Fed Gov is spending vast amounts on holders of Treasuries rather than children. On the contrary, they're just getting their returns.

 

*  For medicare, much of the spending isn't directly benefiting the elderly. The Fed government is paying twice as much as any other country to our doctors, drug companies, hospitals and other parties for health care. A lot of this spending over and above what medicare recipients pay in to the system is going to overpaid health care providers, not the elderly.  

 

*  Cutting social security and raising the retirement age will encourage older people to retire later which will mean fewer jobs for our youth.

 

*  Finally, the central problem in the country's economic system, and which the federal government should be seeking to correct, is the aggregation of wealth at the top. The only reason the richest country in the history of the world isn't providing decent basic services to its citizens of all ages is because the US is plagued with a rapacious wealthy class that wants all of the country's wealth for itself. Ginning up inter-generational conflicts that distract from the actual class war being waged by the wealthy isn't going to help improve basic services for kids or anyone else. That's only going to be achieved if there's organization, cooperation, trust, and a rededication to the public good by as many people of all ages in this country as possible.

 

The end.

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Mark Thoma on the SS trust fund

(#300399)

The basics:

 

Starting in 1983, the payroll tax was deliberately set higher than it needed to be to cover payments to retirees. For the next 30 years, this extra money was sent to the Treasury, and this windfall allowed income tax rates to be lower than they otherwise would have been. During this period, people who paid payroll taxes suffered from this arrangement, while people who paid income taxes benefited.

 

 

Now things have turned around. As the baby boomers have started to retire, payroll taxes are less than they need to be to cover payments to retirees. To make up this shortfall, the Treasury is paying back the money it got over the past 30 years, and this means that income taxes need to be higher than they otherwise would be. For the next few decades, people who pay payroll taxes will benefit from this arrangement, while people who pay income taxes will suffer.

 

If payroll taxpayers and income taxpayers were the same people, none of this would matter. The trust fund really would be a fiction. But they aren't. Payroll taxpayers tend to be the poor and the middle class. Income taxpayers tend to be the upper middle class and the rich. ... When wealthy pundits like Krauthammer claim that the trust fund is a fiction, they're trying to renege on a deal halfway through because they don't want to pay back the loans they got.

One could make the argument

(#300410)
brutusettu's picture

that if we go a quarter step further in Krauthammer's accounting direction,  that using very conservative accounting principals, my 401K has an value of $0 until I start getting cash from it, and that's basically the same as me not having a 401K fund.

 

 

When wealthy pundits like Krauthammer claim that the trust fund is a fiction, they're trying to renege on a deal halfway through because they don't want to pay back the loans they got

Well ya.  If he's not getting a check directly from the federal government, then actions they took had zilch to do with some of the increased wealth he may have gotten.  while on the other hand, if his payments are getting smaller due to increased taxes relative to what they were before, then the moochers are looting his fortune.

"Jazz, the music of unemployment."

 

Frank Zappa

New Deal Democrat takes the gloves off with Ezra Klein

(#300318)

"a Washington DC cocktail weenie circuit social climber ... he has become the neoliberal "new democrat" successor to David Broder. He is the designated conduit for acceptable "liberal" DC conventional wisdom reflected back on itself, and further, he defines the acceptable limit of that opinion, with any analysis to his left being dismissed out of hand ...

 

Ezra Klein: no progressive hero, Young-Broder-in-training

 

I don't agree with everything written in the linked piece. But I was struck by the chronicling of Klein's longstanding desire to cut social insurance, and how recently Klein arrived at a post-hoc rationalization for it in terms of helping children.

 

Post-hoc rationalization?

(#300511)

When you start mind-reading you've already lost the argument.

 

By the way, Catchy... or anyone else out there... is there anyone you disagree with whom you respect?

 

I'll name a few of them: Keith Henessey, David Frum, Megan McArdle, Reihan Salam, Bruce Bartlett. All people I sometimes disagree with, Henessy pretty much always disagree with, but they do make me think.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

I respect Ezra Klein

(#300514)

I respect Bruce Bartlett. I haven't read enough Frum. Megan McArdle absolutely not. Tyler Cowen I learn from, and could handle better if he didn't strike me as a poser. We disagree and I respect you.

 

Anyway, there's a reasonable case to be made that Klein might be sucking up to the Obama admin. with this particular "help the kids by cutting social insurance" meme, and I'm not the only one to suspect it. 

 

That doesn't negate all the other good work he does on his wonkblog, which is overall very informative. I can see why Brad DeLong likes him so much. I'd probably be more comfortable if Klein was considered a centrist rather than a progressive who rides the line of respectable discourse.  

Megan McArdle

(#300518)

had one of the most stupid pronouncements in the history of blogdom... that bit about how we should train kids to charge shooters after Newtown. Truly, laughably, and frighteningly stupid. But she also says some very smart things... this I think was one of the smartest takes on Netflix.

 

I respect you too, Catchy, but I wish you wouldn't try to read motives even onto even strangers like Klein. It's neither provable nor falsifiable, so it doesn't lead to fruitful debate.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

That was a good article by McArdle

(#300522)

Wonders never cease I guess.

 

It's not appropriate to place a ban on reading motives into major figures in the press. They have an enormous professional self-interest in sucking up to the power structure. 

 

When someone of Ezra Klein's intelligence is making bad arguments in support of positions that just happen to align with Obama admin policies, it's more than fair to point this out, and insulting the fellow also seems like a good idea.

 

More people holding these folk's feet to the fire would create a better world. Ezra Klein can handle it, and a decent fellow would recognize the criticisms I've been linking to as a perfectly acceptable way of keeping him honest.   

 

 

I just don't think it's persuasive

(#300527)

You get amens from the people that agree with you, and disdain from the people that don't.

 

And if it happens to be true, then it's unlikely to be conscious, so the subject couldn't recognize it even if he or she were inclined to.

 

Having said that, it's an error I too will make at some point, probably in the not too distant future.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

I say go ahead and err on that side

(#300530)

And counterbalance the colossal credulity gifted to most of our opinion-makers, who could hardly be more prone to parrot conventional wisdom and suck up to powerful interests. 

 

When someone of Dean Baker's stature, co-director of one of the best economic think tanks in the country, is pulling punches over Ezra's stance on these issues, there may be a point to these tactics. 

 

For example, perhaps Klein might someday subconsciously calibrate his opinions on cutting social insurance in order to avoid push back from the left.

To Quote a Stunningly Beautiful Comment from Your Link...

(#300319)

Our refusal to reason about the ultimate end merely assures the incoherence of our priorities, at both an individual and a social level. It leads to the tragedy of Captain Ahab, whose means were all rational, but whose purpose was insane. We cannot lend rationality to the pursuit of a white whale across the oceans merely by employing the most advanced techniques of whaling. To do more efficiently that which should not be done in the first place is no cause for rejoicing.

 

Best Wishes, Traveller

Ezra at it again

(#300261)

Have seniors really paid for Medicare and Social Security?

 

"the more serious concern is that trends in government spending and taxation will “squeeze-out” important government programs and investments that are core to our economic future. Or, put more directly, that Social Security, Medicare and low taxes will end up squeezing out education, infrastructure and research."

 

Did someone forget defense and security spending, which is 1/2 the budget?

 

SS has a dedicated tax and doesn't belong for a second on this "squeezing" list. However as Klein notes, absolutely the average SS beneficiary has entirely paid for their SS.

 

"the typical retired couple paid $122,000 in lifetime Medicare taxes but can expect to receive benefits worth $387,000." 

 

* One should be able to draw out more than one pays into a social insurance system, since these aren't supposed to be pre-funded programs. 

 

* More importantly, the benefits aren't "worth" 387k, that's just what the US overpays for them. E.g. the US pays:

  • At least 2x more for doctors
  • 3 - 5x as much for MRIs and CATs
  • much more for prescription drugs 
  • 3x times as much on average for each procedure or surgery
  • In general: our health care outcomes are the same but we pay 100% to 300% more for each unit of care received

* Also important: expanding public insurance is the only known way to bend the health care cost curve, and now that Obamacare is coming on-line, you can hardly save a rat cent by most of the proposed reductions in medicare coverage, especially raising the eligibility age.

 

"The point here isn’t that seniors don’t deserve their benefits, or have done something wrong. It’s that the structure and politics of the federal budget right now are leading to a situation in which spending on retirees and keeping taxes low on current workers could really shortchange needed investments in our future."

 

It's entirely unclear why Klein isn't highlighting the situation in which spending on the military and keeping taxes low on wealthy individuals and corporations is shortchanging needed investments in our future. Since neither tradeoff is actually on any negotiating table re" the federal budget, why not just talk about the latter since it's a more preferable hypothetical?

 

Moreover, keeping taxes low on workers is essential for growth right now, which is in turn essential to having an economy that can fund research, education, and infrastructure.

 

These pieces aren't particularly logical and just happen to provide potential cover for the Obama admin selling out the D base. This might be coincidental, perhaps not. 

Ahem...

(#300466)

Actually the military is less than a quarter of the budget these days.

 

Also, there's an internal contradiction here... you say:

expanding public insurance is the only known way to bend the health care cost curve,

The recent pronounced drop in health care cost inflation is not explained by expanding public insurance, but let's assume you're right. It's that public insurance that you say is overpaying for benefits. You mean single-payer didn't solve all our problems? I'm shocked.

 

On a deeper level, Catchy, I think our disagreements stem partially from being interested in different things. You are interested in expounding the best policy. I'm interested in the political meat-grinder... how to get to the best possible outcome. Because you understand that when you argue against any compromise you are actually arguing for the radical austerity that is the sequester, right? Is being right better than doing right? Or perhaps I short-change you and you have some scenario in your mind that leads to a preferable outcome. It's just that I don't hear about that sort of reasoning, and would be interested to hear more. Or not. Maybe it shouldn't matter to people arguing on the internet like us.

 

 

"I don't want us to descend into a nation of bloggers." - Steve Jobs

Ahem

(#300485)

I said "defense and security" not just the military. Add the CIA, VA, Dept. of Homeland security, FBI, etc. and you get over 40% of the federal budget dedicated to defense and security. 

 

Ezra Klein is a beltway monster for claiming that only SS and medicare are squeezing out potential spending on infrastructure.

 

=

 

I agree healthcare costs haven't been increasing, but I don't believe the causes for this slowdown are well-understood. I haven't seen much on this, though, and if you have info. feel free to share it. Until then, I stand by statement that expanding public insurance is the only known mechanism for curbing healthcare costs.

 

... let's assume you're right. It's that public insurance that you say is overpaying for benefits. You mean single-payer didn't solve all our problems? I'm shocked.

 

Wags, public insurance is paying much less than private insurance even though it's overpaying. And medicare's expenses are being inflated by our private health care system. Single payer actually would solve all our problems.

 

Re: your realism and my supposed idealism, this is a diary both about why Ezra Klein isn't currently advocating good policy and isn't likely to meat-grind out good policy in future either. His framing is divisive, demoralizing to the base, and more likely to merely excuse cutting social insurance than funding infrastructure, research, and youth investments down the road.

 

I think it's reasonable to point out the extent to which Klein spins bad policy by the Obama admin.

40% of discretionary spending, maybe

(#300487)

Not 40% of the federal budget.

And medicare's expenses are being inflated by our private health care system. Single payer actually would solve all our problems.

Politics will still exist in a single-payor system, Catchy. Medicare is a single-payor system and they still overpay for some things, as you point out. Private interest lobbies still have power. I don't understand why you think that would disappear. I too think single-payer is a more rational system, but it is very unlikely that it would lower our costs to European levels, because our lobbies wouldn't let it.

 

I notice that you didn't reply to my thrust at the end. You don't really care that you are implicitly advocating the radical austerity of the sequester, do you?

"I don't want us to descend into a nation of bloggers." - Steve Jobs

We were talking about the debt-to-GDP ratio

(#300489)

"lower[ing] our costs to European levels" would lead to massive surpluses, and all you were discussing was stabilizing debt-to-GDP ratios. 

 

i haven't done the calculations, but I would bet that our single payer system, even if it's not as efficient as many European countries, would easily bend the cost down past a stable debt-to-GDP ratio.

40% or above of total federal spending is my estimate

(#300488)

Consider:

 

... Each year the Director of National Intelligence releases a total budget figure for national intelligence. For fiscal 2013 it was $52.6 billion ...

Next there’s $19.2 billion for the nuclear bomb-making arm of the Energy Department. Homeland Security includes $13.2 billion for customs and border patrol and $10.5 billion for the Coast Guard.

Then there is the considerable cost of wars past. The budget shows almost $139 billion for Veterans Affairs, though the numbers are presented in the budget text in a way that anyone not reading carefully would think is less than half that much.

Add all these up and the total cost grows 86 percent, to $977.5 billion. Most military intelligence spending is buried in these figures.

Meanwhile, wars are debt-financed, even though taxes were raised to help pay for every war American prior to Afghanistan and Iraq. Add in interest costs attributable to past conflicts, as the pacifist War Resisters League does, and the fiscal 2013 cost of national security comes to more than $1.3 trillion—two and a half times the basic Defense budget.

 

That's already 36-7% of the federal budget and we haven't included domestic security spending for the FBI or the rest of the DHS budget. I likely exaggerated saying security and defense spending was 1/2 the federal budget, but it is at least close to or above 40% and much larger than either SS (22%) or spending on medicare/medicaid (23%).

 

Klein ignored defense and security aspects of the budget, which serves to reify conventional beltway wisdom, and which I think is a disservice to his readers.

I don't know why you want to argue this, Catchy

(#300508)

$977 billion in a $3.8 trillion dollar budget is about a quarter. Security can't be 40% because the entire discretionary budget is only about 40%.

 

My guess is that The War Resister's League is calculating past war's expenses on the margin... you could as easily make the same calculation for Medicare, if you wanted to be so tediously tendentious.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

The point stands even if it's 25%

(#300513)

since defense spending is bigger than either SS or medicare+medicaid. 

 

So why did Klein only mention SS and medicare+medicaid when talking about crowding out investment? 

 

(From the mandatory side of the fed budget, I was counting the VA as defense + security spending, plus some portion of interest on the debt, though I take your point that the accounting I linked is tendentious. Still, defense + security spending is surely closer to 40% than 25%.)

Dean Baker, co-director of

(#300263)

the Center for Economic Policy Research on Ezra Klein of the Washington Post: "That may not be a smart thing to say if you're looking for a job in the Obama administration, but it happens to be the truth."

 

Seems like a fair shot to me.

WPost story on retirees

(#300195)

For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly, according to a growing consensus of new research.

 

Personally I'm not wild about our retirement-age population, who are more likely to vote Republican, and who often seem to be fine with Republican promises of not touching their retirement benefits while gutting younger peoples'.

 

But that doesn't justify indiscriminately punishing people with few financial resources, including a significant portion that don't vote Republican. Moreover, they're not going to be the only ones affected by the cuts that've been proposed.

 

If our current retirees are in bad shape, the ones who follow will on average be in worse shape, since they've been living longer under the effects of a successful class war, had to spend more time paying down school debt vs. saving for retirement, etc.

Well...

(#300185)

I would come to the same conclusions if I started with your assumptions. To wit: any deal Obama comes to will necessarily be a total capitulation to Republican priorities. But if we traded some slight adjustments to entitlements, in a way that protected the most vulnerable seniors, and traded that for more progressive taxation via closing up loopholes in the tax code that benefit the rich, wouldn't we be helping us address the debt while also alleviating the problem you identify in your last bullet point?

 

You accuse me of wanting to reform Republicans. I know they will always favor the rich and want to defund programs that help the poor. That has been a constant in my life, like the sun rising. What hasn't been a constant is this tax shibboleth. Ronald Reagan raised taxes plenty of times. There are voices in the party that think the no-new-taxes fixation is unhealthy. One day they will win, and whatever we can do to hasten that day will be a step toward a more sane public policy.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

Let Republicans propose the cuts

(#300196)
HankP's picture

they're the ones who want cuts, they need to put them out there front and center.

 

But of course they won't, which tells you everything you need to know about their principles. This is all about hanging the label "Medicare cutters" on the Democrats.

 

I blame it all on the Internet

"if we traded some slight adjustments to entitlements"

(#300188)

I request that you just say "cuts". These aren't some random changes or adjustments being proposed, they're specifically cuts.

 

"in a way that protected the most vulnerable seniors"

 

It's of course better to protect those on the very low end than not, but unfortunately the US's retirees are in general in terrible, terrible financial shape right now, SS is extremely stingy, for 1/4th of its recipients SS is their only source of income, and for nearly 1/2 it's more than 90% of their income. In other words, unless you're talking of exempting about 1/2 of SS recipients from these cuts, you're not protecting all those who are truly vulnerable to them.

 

"and traded that for more progressive taxation via closing up loopholes in the tax code that benefit the rich, "

 

That's a terrible trade. We should be taxing the rich in order to avoid cuts to vital social programs like SS and medicare and in order to increase them.

 

"wouldn't we be helping us address the debt"

 

First, cutting the debt is a means to an end, not an end in itself. You could just be creating a pot of money for Republicans to steal again with a tax cut to the wealthy. Any deal with cuts to entitlements should be tied to actual and more desirable ends, e.g. universal preschool. Second, we should be taking on more debt short-term right now, not less. Third, the cutting proposals don't address the long-term debt to any significant degree since that's driven almost solely by rising health care costs. Finally, as a political strategy, Democrats should be raising taxes on the wealthy and providing direct benefits to the majority with the increased revenue. That's the way to demonstrate its value. Few people are going to cheer for raising other people's taxes so that something abstract like paying down public debt can be achieved. Many will cheer if it means their SS checks get bigger or don't get smaller. 

 

"while also alleviating the problem you identify in your last bullet point?"

 

It depends if the revenue from closing loopholes is greater than the spending withheld to lower incomes. Even if the balance is slightly tilted towards revenue, it won't be significant enough to accept cutting the average SS recipient's payout over their lifetime by 5%, which is what chained CPI does.

Actually, no

(#300464)

Third, the cutting proposals don't address the long-term debt to any significant degree since that's driven almost solely by rising health care costs.

Health care costs are a big driver, but you know what is a bigger driver of our deficits? Interest payments on our debt. Take a look, on page 9. Mandatory spending (which included Medicare, SS, Medicaid, etc.) from 2012 to 2023 grows by 1.1% of GDP. Meanwhile, the interest expense grows by 1.9% of GDP. 

 

This is the third time I've posted a reply... this site is not taking my comments, for some reason, so I'll just leave it at that.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

Glad you got some words in, wags

(#300467)

By "long-term" I was thinking exactly beyond the 10 yr. timeframe you're quoting to me. That's when projected rising costs on healthcare really start to kick in, and which the present nonsense doesn't address.

 

My view, which I basically just copy from economists with decent predictive records, is that w/in the next 10 yrs. the deficit ranks low as a concern and there's been more than enough reduction over that timeframe already. 

Not true, Catchy

(#300470)

Take a look at page 12. By 2037, net interest on the debt is going to cost us more than either Social Security or Medicare. Yet you insist that "cutting the debt is a means to an end, not an end in itself"?

"I don't want us to descend into a nation of bloggers." - Steve Jobs

You're using the alternate fiscal scenario

(#300472)

As opposed to the baseline scenario, and the biggest difference between the two is taxes, not health care spending.

 

In the baseline scenario, taxes in 2037 are up to 23.7% of GDP while in the alternate scenario they've been at 18.5% for over 15 yrs.

 

In the baseline scenario, interest on the debt is only 2.7% of GDP in 2037, while medicare and medicaid's share of spending has nearly doubled to 9.6% of GDP (and most of this increase comes during 2022 - 2037, not 2012 - 2022).

 

In the alternate fiscal scenario, where the estate, excise, corporate, income and other taxes are lower than current rates, net interest is 9.5%. But spending in this scenario on health care is only marginally higher - instead of the baseline's 9.6% of GDP, it's 10.4% in the alternate scenario.

 

This suggests that in order to avoid a devastating interest burden on the national debt, it's just as or more important to not let tax rates sunset after their 10 yr. timeframe than to reign in health care costs.

 

This is a 2012 report

(#300486)

You do realize that the baseline scenario is letting the Bush tax cuts expire for everyone, something no Democratic or Republican politician that I know of is advocating. The alternate fiscal scenario is far closer to current policy.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

Sorry

(#300500)

I can't tell if what you've linked is a reasonable guide to what interest on the debt will be, given that part of the Bush tax cuts in fact expired.  

 

I also wonder whether this doc factors in the recent 500 billion savings to medicare that are being realized.

 

... which reminds of a further point that Klein has made at other times, but has conveniently forgot now that it's time to defend Obama's unwillingness to just cancel the sequester: Obamacare has all kinds of experimental cost controls and our projections of rising health care costs in the future are very speculative. 

 

So it's ridiculous to knowingly impose savage cuts today b/c of very uncertain projections of spending and debt more than 10 yrs out. 

 

 

Please explain

(#300506)

it's time to defend Obama's unwillingness to just cancel the sequester

 

Has Obama attained dictatorial powers I hadn't heard of?

"I don't want us to descend into a nation of bloggers." - Steve Jobs

How about "unwillingness to advocate repealing the sequester"?

(#300512)

I hope that's clearer: Don't forget Obama threatened to veto any attempts to repeal the sequester back in November 2011.

 

From what I can tell, Obama prefers getting a third installment of a grand bargain as his first choice, having the sequester kick in as his second, and repealing the sequester as his third choice.  

 

 

Please don't ask me to swallow the claim that the head of the D party, which controls both the WH and the Senate, is powerless in this situation.

I interpret that differently

(#300519)

I see it as a shot across the bow to Republicans who then -- and now -- would seek to replace the sequester with spending cuts that wouldn't hurt defense.

 

And yes, the President requires the assent of the House of Representatives to replace legislation, Catchy. That's what it says in the US constitution, and I would hope it shouldn't be so hard to persuade you of it.

"I don't want us to descend into a nation of bloggers." - Steve Jobs

Huh

(#300178)
Bird Dog's picture

Do you call it corporate spending when pensioners get their monthly checks?

 

"Transparency and the rule of law will be the touchstones of this presidency."

--Barack Obama, January 2009

For defined benefit plans

(#300179)
HankP's picture

corporations purchase annuities to pay their pension obligations, and pension obligations are off-balance sheet long term liabilities. If the corporation does accrual accounting (the vast majority), I don't think their payments are considered "spending" as normally listed on a P&L. If they do cash accounting, then I think it would be considered spending. It's a very complicated subject that depends on actuarial estimates, past funding of pensions, investment returns and other factors.

 

But of course private pension plans operated by corporations are nothing at all like SS.

 

I blame it all on the Internet

Thank you,

(#300207)
Bird Dog's picture

for affirming my point. Pension payments are not "spending". Similarly, Social Security "spending".

"Transparency and the rule of law will be the touchstones of this presidency."

--Barack Obama, January 2009

Wouldn't that help me out?

(#300216)

If SS payments aren't spending, then saying the Fed government is spending way more on seniors than children is inaccurate.

 

Right?

Not only that

(#300310)
HankP's picture

it means there's no need to do anything to SS since it won't affect any spending problem that the government may have.

 

I blame it all on the Internet

Playing with words

(#300209)
HankP's picture

Since the company either has paid or is paying for it, of course it's spending. The money doesn't just magically appear in a pension fund. It's just a fluke of accounting terminology and wordplay to say that pensions are not technically spending as far as a P&L is concerned. Perhaps you can explain where the money came from without a company "spending".

 

I blame it all on the Internet

Huh

(#300284)
Bird Dog's picture

Ridiculous comment. Social Security checks are called transfer payments for a reason. Masking your failure to understand of generally accepted accounting principles by claiming "playing with words" is of course your decision and not my concern.

The real issue is the misappropriation of pension and SS monies to pay for other things. In the case of the federal government, those misappropriations are covered by IOUs. For the other entities, they are unfunded liabilities.

But that aside, I made my initial comment because the comparison of "spending" between children and old folks is a phony one.

 

"Transparency and the rule of law will be the touchstones of this presidency."

--Barack Obama, January 2009

No, spending is spending

(#300309)
HankP's picture

masking your failure to understand transactions separated in time is of course your decision.

 

SS has bonds with the full faith and credit of the US behind them. Besides, there is no other mechanism for surpluses today to be saved for spending in the future since the government can't "save" the same way individuals or corporations can. Just another fallacy derived from treating government finance like household finance.

 

I blame it all on the Internet

Also agreed

(#300286)

However, our liberal leading lights might still make their argument using just medicare, in which case federal spending would be 4-1 in favor of the elderly over children. 

 

From my PoV, justifying cuts to SS and medicare with an alleged concern for children isn't much better than justifying an Afghanistan invasion with an alleged concern for their women.

Why is the USA is the richest country in the world?

(#300169)
mmghosh's picture

Its partly because smart people from all over the world emigrate to the US where they have the opportunity to make money with little in the way of class conflict to deny them.  I don't think this aspect of America will change.

 

You complain about, say, doctors being paid twice as much compared to other parts of the world.  And this may be true

The overall median 9 month salary for all professors was $73,000, placing a slight majority of professors among the top 15% of earners at age 25 or older.[7] Yet, their salaries remain considerably below that of some other comparable professions (even when including summer compensation) such as lawyers (who earned a median of $110,000) and physicians (whose median earnings ranged from $137,000 to $322,000 depending on speciality).

But this also true in all professions - say university professors.

 

http://www.universityworldnews.com/article.php?story=20101120000509387

The numbers of French academics and researchers relocating in the US may be comparatively small, but they tend to be the best.

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* Working among the greatest talents in the world, thanks to the internationally open system of recruitment, "synonymous with competition and excellence".
* Higher pay than in France, especially at the start of a career. Researchers in the US earn between US$65,000 and $80,000, while senior university professors salaries range from $112,000 in the public sector to $140,000 in the private sector. In France pay ranges from about EUR30,000 (US$40,800) to EUR73,000.
* Good infrastructure - campus, laboratories and libraries.

* Better working conditions and ample time to devote to research.
* Fairer recruitment and evaluation systems than in France, based on transparency and peer review rather than 'cliques' and 'clans' that "tend to encumber the French system".
* A flexible, uncompartmentalised system.
* An open disciplinary approach, with 'movable demarcation lines', that was less rigid and less conservative than the French system. "I find the American system more tolerant, more welcoming," said Professor Virginie Greene of Harvard University: "It's possible to display a certain amount of intellectual eccentricity".

Interesting...

(#300170)

I honestly don't think money is the attractor for Europeans, who IMHO have a very good quality of life that is not fully reflected in salaries. This is especially true in France.

 

But the French system is quite rigid and top-down for professionals and academics. I don't have personal experience, but I've been in France a few times and I have anecdotal information that tends to back up that stereotype. This can be stifling, I would imagine, so freer spirits would be compelled to seek looser pastures. Their loss would mean those who they leave behind are on average more conformist, so the cycle is self-perpetuating.

 

In tech, if you look at a guy like Linus Torvalds, it's a similar picture. He did not go to the US for the money, and has not dedicated his time to maximize his millions. He went for the culture to be found at Silicon Valley. Elon Musk is another one like that.

 

And America today is way more structured than 50 years ago. Back then, you got off the boat and got a job within days (even hours), with few credentials. If you were a good worker, you were quickly rewarded, if not, out you went as quickly as you came in.

This was clear enough to Larkin, whose patriotism rested on the notion that England was the worst place on earth with the possible exception of everywhere else.