Reprinted from the Center for Economic and Policy Research (July 29, 2012)
By Dean Baker
The effort by the rich to take away Social Security keeps building momentum. Today Bill Keller urges his fellow baby boomers:
“FELLOW boomers, we have done more than our share to make this mess. It’s not our fault that there are a lot of us, but we have resisted any move to fix the system. We should make a sensible reform of entitlements our generation’s cause. We should stiffen the spines of our politicians, and push lobby groups like A.A.R.P. to climb out of the bunker and lead.”
“Lead” in this context means supporting cuts to Social Security and Medicare. That is really brave for Mr. Keller to stand up and call for sacrifice from his age cohort. Does Keller know that the typical near retiree has total wealth of $170,000. This includes everything in their 401(k), all their other financial assets and the equity in their homes. Another way to put this is that the typical near retiree (between the ages of 55-64) could take all their wealth and pay off their mortgage. After that they would be entirely dependent on their Social Security to cover all their living costs.
Does this situation describe Mr. Keller’s finances? My guess is that it doesn’t. If that is true, how does Keller claim to speak for people who are in a hugely different financial situation than him? Is he really that ignorant of the issues that the NYT gives him a column to write about or is he dishonest? Readers will have to debate that in the months and years ahead.
This is not the only place in the piece where Keller lets ignorance and/or dishonesty get the better of him. At one point he calls for a change in the indexation formula for Social Security’s cost of living adjustment that would be the equivalent of a 3.0 percent across the board cut in benefits. (We know, got to do something about those high living seniors.)
Keller describes this 3.0 percent cut in Social Security benefits as:
“They also include technical fixes like aligning the automatic cost-of-living formula with reality.”
Is that right? Has Keller studied the cost-of-living for the elderly? Did he evaluate the Bureau of Labor Statistics elderly index, which generally shows that senior citizens experience a higher rate of inflation than the index used for making the annual cost of living adjustment for Social Security.
If he did, he shows zero evidence of this fact in his piece. It sure sounds like he is just repeating pablum that passed for wisdom in Washington elite circles, but rightly gets ridiculed everywhere else.
While Keller appeals to arithmetic it is not on his side. The arithmetic says that we have no problem affording the projected increase in retirees, just as we were able to afford a sharp reduction in the ratio of workers or retirees over the last decade.
The problems result from the fact that we have a broken health care system that causes us to pay more than twice as much per person for our health care as people in other wealthy country. But fixing the health care system would likely mean lower payments to insurers, hospitals, drug companies and doctors.
The other problem is the sharp upward redistribution of income over the last three decades. This has meant less money for middle income families and also less money for programs like Social Security and Medicare.
These problems can be fixed but that would require Mr. Keller to appeal to his fellow one percenters, not his fellow baby boomers. He probably doesn’t have the courage or integrity to do that.
Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.