Boehner: Raise SS age and means-test benefits

[Emeritus]

Where did that come from? No one (until your post) has suggested that the public might eschew responsibility for the acts of our representatives.

I can't put any other meaning on the comment

"a government that is not US." underlining in orginal

The statement makes no sense unless it is a denial of the fundamental relationship that is inherent in the US constitutional structure, one in which We the People are the government.

It is a very common comment by Germans , who mentally separate themselves from the Nazis (no I am not calling anyone a nazi)
Many Europeans, in my experience, think of the regime in power as some kind of separate entity from the people.

 

[dex]

Many Europeans, in my experience, think of the regime in power as some kind of separate entity from the people.

I think that is happening in the USA with all the video of the congress while in session, town hall meetings and interviews.

 

[Emeritus]

The point I was trying to make is that the gvmt did mix them... and because they mixed them they showed us that we were not buying as big a gvmt as we really were... IF the funding for SS was not used to make it look like our deficit was 'low'.... then people would have complained about the deficit a lot sooner...

Representative democracy is a system of government, not a system for producing wise or truthful public policies.

The "deficit" is a totally artificial accounting construct, useful for some purposes, useless for others. States have been selling and leasing back public facilities so they can show voters "reductions in the deficit"

If the government borrows a billion dollars and spends it on something productive the effect on the deficit is the same as borrowing a billion dollars and spending it on a boondoggle. (Feel free to put anythign in either class) What is different is the effect on the future economy. As just one example, Feeding and educating children is immensely productive, whether paid for by parents or the government. Virtually all studies show that athletic stadiums are boondoggles and unproductive.

Guess which ones fly with the voters?



The key is always productive investment, not the deficit.

 

[IndependentlyPoor]

A bit of data that surprised me. I hadn't considered how income [-]affects[/-] relates to life expectancy.

from:
The State of Working America
via
Ezra Klein - More on raising the retirement age

However, it is clear that Mr. Klein has no clue about early retirement:

First, at what age do you want to retire? I'd imagine most affluent workers would pick a number higher than 62. A lot of us like what we're doing, and sitting in an office chair isn't much harder on our bodies than sitting in a chair at home. But that makes us abnormal.

BZZZT! Thanks for playing.

BTW, I do not particularly recommend Klein's blog.

 

[samclem]

A bit of data that surprised me. I hadn't considered how income affects life expectancy.

Why are you proposing a cause/effect relationship between income and life expectancy? I think that's highly unlikely, and that a more likely explanation is that some of the same factors that lead an individual to have low income also lead them to live a shorter life.

For example: It is well known that smoking is far more prevalent among people with lower incomes. This alone is probably an important factor in the life expectancy differences. More fundamentally, the same decisionmaking skills that lead a person to decide that taking up smoking is a good idea might lead them to make suboptimum decisions when it comes to eduction and career choices.

Another possible common root cause: It's likely that health status affects income (as opposed to the reverse causation you propose). A person who has a chronic sickness is likely to die younger than a healthy person, and also likely to be working fewer hours (whether he's a day laborer or a neurosurgeon). Also, I'd imagine that health status affects promotions and thus hourly pay.

 

[Emeritus]

A bit of data that surprised me. I hadn't considered how income affects life expectanc.

To be precise the chart shows income correlates with life expectancy.
There are many reasons why two variables are correlated without either one "affecting" the other. Ie if we find that marriage and happiness are coorrelated it does not mean that marriage causes happiness or that happiness causes marriage. Further research for example might show that money "causes" both

 

[IndependentlyPoor]

Why are you proposing a cause/effect relationship between income and life expectancy? I think that's highly unlikely, and that a more likely explanation is that some of the same factors that lead an individual to have low income also lead them to live a shorter life.

For example: It is well known that smoking is far more prevalent among people with lower incomes. This alone is probably an important factor in the life expectancy differences. More fundamentally, the same decisionmaking skills that lead a person to decide that taking up smoking is a good idea might lead them to make suboptimum decisions when it comes to eduction and career choices.

Another possible common root cause: It's likely that health status affects income (as opposed to the reverse causation you propose). A person who has a chronic sickness is likely to die younger than a healthy person, and also likely to be working fewer hours (whether he's a day laborer or a neurosurgeon). Also, I'd imagine that health status affects promotions and thus hourly pay.

Gimme a break already! It is an interesting bit of data. Despite the fact that I used the word "affect" I did not claim any sort of causal relationship.
Now can we talk about how this relates to raising the retirement age, particularly the argument that uses the overall average increase in life expectancy to justify the change?

 

[lets-retire]

Nevermind, overly sarcastic and pessimistic.

 

[LARS]

Why are you proposing a cause/effect relationship between income and life expectancy? I think that's highly unlikely, and that a more likely explanation is that some of the same factors that lead an individual to have low income also lead them to live a shorter life.

I'm not surprised one bit that there is a cause/effect between income and life expectancy. Higher socio-economic levels have more/better access to preventative and on-going healthcare, which extends life expectancy.

Moreover, there is a link between higher incomes and education levels, which (education) leads to more awareness of health issues.

Finally, at the lowest socio-economic level people are at risk for early deaths (be it early childhood or young males).

 

[samclem]

Gimme a break already! It is an interesting bit of data. Despite the fact that I used the word "affect" I did not claim any sort of causal relationship.

Okay. I just thought you meant what you wrote, and "affect" does imply causation.

Now can we talk about how this relates to raising the retirement age, particularly the argument that uses the overall average increase in life expectancy to justify the change?

I don't see that the difference in expected remaining lifespan between a 60YO low income worker and a 60 YO with a higher income has much to do with when workers (by policy) should qualify for full SS. I'd favor treating everyone equally: We gradually adjust the FRA so that the average retiree can expect to draw 12 years of SS payments. Rich, poor, healthy, unhealthy. We can keep the "you can take reduced benefits a few years earlier" option, which helps (in a small way) someone who believes they may not have many good years left to retire. That option should not be linked to income.

 

[IndependentlyPoor]

Let me try this one again.
The recent increase in life expectancy has benefitted the upper income cohort more than the low income cohort. Raising the retirement age makes SS a relatively worse deal for the poor. Causality has nothing to do with it.

And the data is for males age 60. No infant mortality involved.

Apologies for typos/wording. My Internet connection just failed and I am posting this from my iPhone.

 

[haha]

A bit of data that surprised me. I hadn't considered how income [-]affects[/-] relates to life expectancy.

from:
The State of Working America
via
Ezra Klein - More on raising the retirement age

However, it is clear that Mr. Klein has no clue about early retirement:
BZZZT! Thanks for playing.

BTW, I do not particularly recommend Klein's blog.

This focus on life expenctancy is misleading. Poor people tend to have poor children tend to have high perinatal mortality and often enough get shot or otherwise removed from the living long before they reach SS age. I would really like to see the data for income and life expectancy beyond age 66, which is what counts. All these gurus who harp on life expectancy are deliberately distorting reality.

Ha

 

[samclem]

I'm not surprised one bit that there is a cause/effect between income and life expectancy. Higher socio-economic levels have more/better access to preventative and on-going healthcare, which extends life expectancy.

Sure, it's likely that poor people get lower quality health care and that this reduces their life expectancy. But the provided graphic by itself doesn't indicate any causation.

Moreover, there is a link between higher incomes and education levels, which (education) leads to more awareness of health issues.

True, and "link" does not equal "causation." I suppose somebody might learn something in their higher education that helps them live longer, but I've been to lots of schoolin' and I can't think of any specific facts I picked up in my formal education after HS that falls into this category.

As it happens, we do have a way of taking most of the impact of "access to medical care" out of the equation and seeing if a group of Americans with a "higher" socioeconomic status (which conflates all kinds of factors: income, education, etc) live longer than those with "lower" socioeconomic status.
If we look at US active duty military retirees, all of them have access to the same medical care system. Officers and enlisted personnel both have to pass the same physical exam when they join the military, and for the next 20 years they live under the same medical care system. So, the primary differences between the officer and enlisted retiree populations are income and education levels, but both get about the same medical care. A 60 YO retired officer can expect to live 23.1 additional years. A 60 YO retired enlisted serviceman can expect to live just 19.6 additional years (Figures for 2004, and all for active duty retirees. Link) What accounts for the difference? I can't say for sure, but I'd look to self-chosen lifestyle factors (smoking rates, risky behaviors, etc) rather than any life-extending hygiene tips the officers might have learned in grad school.

 

[IndependentlyPoor]

Okay. I just thought you meant what you wrote, and "affect" does imply causation.

I don't see that the difference in expected remaining lifespan between a 60YO low income worker and a 60 YO with a higher income has much to do with when workers (by policy) should qualify for full SS. I'd favor treating everyone equally: We gradually adjust the FRA so that the average retiree can expect to draw 12 years of SS payments. Rich, poor, healthy, unhealthy. We can keep the "you can take reduced benefits a few years earlier" option, which helps (in a small way) someone who believes they may not have many good years left to retire. That option should not be linked to income.

Some earlier posts (sorry, too much trouble to quote them with this slow connection) were concerned with richer participants getting a relatively worse deal than the poor. This data is relevant to that determination.

And if I change cohorts when calculating an average it can affect the result, causal or not.

 

[samclem]

Let me try this one again.
The recent increase in life expectancy has benefitted the upper income cohort more than the low income cohort. Raising the retirement age makes SS a relatively worse deal for the poor. Causality has nothing to do with it.

I'd prefer to concentrate on helping poor people to live as long as wealthier people--that's the root and more fundamental issue.

The lower life expectancy for lower income people (and for black Americans of all incomes) did come up as an issue during the SS privatization debate about 5-8 years ago. The point was that with private accounts these groups would reap a disproportionate benefit, since the proceeds from the accounts would go to their heirs. It would be a way to help some families out of poverty. But, this point was lost in the screaming and fear-mongering about risking Granny's life savings in the rsiky stock options.

 

[Emeritus]

As it happens, we do have a way of taking most of the impact of "access to medical care" out of the equation and seeing if a group of Americans with a "higher" socioeconomic status (which conflates all kinds of factors: income, education, etc) live longer than those with "lower" socioeconomic status.
If we look at US active duty military retirees, all of them have access to the same medical care system. Officers and enlisted personnel both have to pass the same physical exam when they join the military, and for the next 20 years they live under the same medical care system. So, the primary differences between the officer and enlisted retiree populations are income and education levels, but both get about the same medical care. A 60 YO retired officer can expect to live 23.1 additional years. A 60 YO retired enlisted serviceman can expect to live just 19.6 additional years (Figures for 2004, and all for active duty retirees. Link) What accounts for the difference? I can't say for sure, but I'd look to self-chosen lifestyle factors (smoking rates, risky behaviors, etc) rather than any life-extending hygiene tips the officers might have learned in grad school.

Interesting example, but you leave out a few key points.
1) They are not in general selected from the same pools. Recruits are not randomly assigned to be Officers and Enlisted categories. Both genetic and environmental factors prior to military service may be relevant. I agree that these may play out in lifestyle.

2) It would be interesting to prove that the health care for the two groups is the same. On a purely anecdotal level I'm not so sure, but I do not know.

 

[Emeritus]

I'd prefer to concentrate on helping poor people to live as long as wealthier people--that's the root and more fundamental issue.

The lower life expectancy for lower income people (and for black Americans of all incomes) did come up as an issue during the SS privatization debate about 5-8 years ago. The point was that with private accounts these groups would reap a disproportionate benefit, since the proceeds from the accounts would go to their heirs. It would be a way to help some families out of poverty. But, this point was lost in the screaming and fear-mongering about risking Granny's life savings in the rsiky stock options.

No what killed it was the fact that poor people were worse off with privatization but rich people did much better. DW and I both paid the full social social level for many years. Privatization would be a fabulous deal for us at the expense of low income people for whom the social security system pays a much higher percentage of income. Even the GOP was embarrassed by how negative it was for the poor.

When you added in that privatization destroyed the spousal pensions of GOP stay at home moms it was DOA

It had nothing to do with the stock market

 

[samclem]

No what killed it was the fact that poor people were worse off with privatization but rich people did much better.
. . . .
It had nothing to do with the stock market

Harry Reid's response to President Bush's 2005 SOU Address:

But maybe most of all, the Bush plan isn't really Social Security reform.
It's more like Social Security roulette. Democrats are all for giving Americans more of a say and more choices when it comes to their retirement savings. But that doesn't mean taking Social Security's guarantee and gambling with it.

Here's a totally neutral (okay, maybe not) look from the Heritage Foundation at how the Private Retirement Accounts (PRA) might have benefited various groups, based on actual stock market returns for the 40 years prior to 2001.

In principle, we looked at three representative workers who were born in 1940 and participated from 1965 to 2004 in a hypothetical PRA plan. Workers' incomes are expressed in real inflation-adjusted dollars. The low-income worker earned $15,000 a year, the moderate-income worker $35,000 and the upper-income worker $65,000.

Their PRAs were funded through Social Security payroll taxes on a sliding scale, with workers at the low end of the income scale allowed to invest 7 percent of their incomes in PRAs and those at the top allowed to invest 2.5 percent. The mythical PRAs were invested in balanced portfolios of large-company stocks and government bonds. With the introduction of these PRAs, traditional Social Security payments would be cut in half, in order to prevent double-dipping.

This approach is novel because, unlike most other research, our analysis uses actual rates of return for stocks and bonds over the course of those 40 years.
. . .
Case 1: Low-Income Worker.
If a worker earning $15,000 per year had set aside 6 percent of his earnings in a PRA, at retirement, the worker's PRA, under this study, would've been worth $111,000, which could be used to purchase an annuity that would provide $640 per month for life. The worker also would receive a reduced Social Security benefit of $419 per month for a monthly income of $1,058. Today, that worker receives $837 per month from Social Security, a difference of 26.5 percent.

Case 2: Low-Income Dual-Earner Couple.
A couple earning $40,000 annually would have been able to divert 6.5 percent of the wife's earnings and 5.5 percent of the husband's earnings to their individual PRAs. At retirement, they would have a combined PRA of more than $288,000, which could be used to purchase a joint and survivor annuity that would provide $1,553 per month for life. Combined with their reduced traditional Social Security benefits of $995, this would provide them with a monthly retirement benefit of $2,548.

Under current law, the couple would receive Social Security benefits of only $1,990 per month. Put another way, the couple's retirement income would be 28 percent higher if they had been allowed access to PRAs 40 years ago.

Case 3: Moderate-Income Worker.
A worker earning $35,000 per year who put 5 percent of his earnings into a PRA would build an account worth $215,000. That could be converted to an annuity that pays $1,244 per month for life. That, combined with $734 in reduced traditional Social Security benefits, adds up to $1,978 in monthly income. That's 35 percent more than the $1,468 per month that worker receives today under traditional Social Security.

Case 4: High-Income Worker.
The high-income earner, the worker making $65,000 per year over that 40-year period, also would fare better. Allowed to contribute just 2.5 percent of earnings to a PRA, this worker still would build a nest egg of more than $280,000 by retirement. That would be enough for an annuity that pays $1,618 per month, which, combined with the reduced traditional Social Security benefit of $955, would give this worker a monthly retirement benefit of $2,572. Under current law, that worker receives $1,909 per month in Social Security. Again, we see a 35 percent advantage for the worker in a PRA.

In these simulations, everybody gained.


Note the use of annuities in computing the monthly cash payouts. If not inflation adjusted annuities, we can assume the advantages of the the PRA would diminish over time. And using an annuity does eliminate the relatively greater advantages (due to lower life expectancy) to low-income people of having a lump sum that can be passed along to heirs.

Still, despite the advantages of limited privatization of SS, I do know that some people are more interested in relative equality than absolute prosperity, and for them the idea that wealthier folks gain more is abominable and far more salient than the the idea of poor folks having a lot more to spend in retirement. These people will find it even more distasteful that Americans would own these funds and be less dependent on the SS teat. IMO, that's what killed the limited privatization of SS, but I'm willing to admit that it's an opinion rather than arrogantly assert that I know absolutely what killed it.

 

[Emeritus]

Harry Reid's response to President Bush's 2005 SOU Address:

Here's a totally neutral (okay, maybe not) look from the Heritage Foundation at how the Private Retirement Accounts (PRA) might have benefited various groups, based on actual stock market returns for the 40 years prior to 2001.

In these simulations, everybody gained. Still, I do know that some people are more interested in relative equality than absolute prosperity, and for them the idea that wealthier folks gain more is abominable and far more salient than the the idea of poor folks having a lot more to spend in retirement. These people will find it even more distasteful that Americans would own these funds and be less dependent on the SS teat. IMO, that's what killed the limited privatization of SS, but I'm willing to admit that it's an opinion rather than arrogantly assert that I know absolutely what killed it.

its not neutral and it is simplistic. Exactly what happened to the non working spouse of the 15,000 a year worker? and the families of those who die.

And what happens to those who get screwed by eh bernie maddofs of the world

not to mention compare it to the return on investment of social security for low income workers

THERE IS NO MAGIC MONEY
you cant take trillions of dollars dump it in the stock market and make simplistic analyses of what happens. You also have to add in the taxes for the higher borrowing cost.

SS has very low administrative costs and the money comes in and goes out. you cant beat it for efficiency. There are no big fees for wall street that is why the Heritage foundation hates it.

for an in depth analysis see

[PDF] Rethinking pension reform: Ten myths about social security systems


psu.edu [PDF][SIZE=-1]PR Orszag, JE Stiglitz - 1999 - Citeseer
... against the roughly 2 per cent the social security system will produce."25 Similarly, Palacios and
Whitehouse (1998) argue that the higher rate of return under a private scheme "is an important
reason for reform."26 As in Myth #1, this myth conflates "privatization" with "prefunding ...
Cited by 388 - Related articles - View as HTML - All 16 versions[/SIZE]

 

[Independent]

Sure, it's likely that poor people get lower quality health care and that this reduces their life expectancy. But the provided graphic by itself doesn't indicate any causation.

True, and "link" does not equal "causation." I suppose somebody might learn something in their higher education that helps them live longer, but I've been to lots of schoolin' and I can't think of any specific facts I picked up in my formal education after HS that falls into this category.

As it happens, we do have a way of taking most of the impact of "access to medical care" out of the equation and seeing if a group of Americans with a "higher" socioeconomic status (which conflates all kinds of factors: income, education, etc) live longer than those with "lower" socioeconomic status.
If we look at US active duty military retirees, all of them have access to the same medical care system. Officers and enlisted personnel both have to pass the same physical exam when they join the military, and for the next 20 years they live under the same medical care system. So, the primary differences between the officer and enlisted retiree populations are income and education levels, but both get about the same medical care. A 60 YO retired officer can expect to live 23.1 additional years. A 60 YO retired enlisted serviceman can expect to live just 19.6 additional years (Figures for 2004, and all for active duty retirees. Link) What accounts for the difference? I can't say for sure, but I'd look to self-chosen lifestyle factors (smoking rates, risky behaviors, etc) rather than any life-extending hygiene tips the officers might have learned in grad school.

Interesting link. Thanks.

 

[Westernskies]

You want the last word, take it.