Brad Plumer: The case for expanding Social Security, not cutting it

Posted by AzBlueMeanie:

Ssi_cardThe Beltway media "conventional wisdom" is dominated by the unholy partnership between the Neocon Washington Post and the Pete Peterson Foundation (an organization singularly dedicated to the destruction of Social Security and Medicare), and the "Washington insider" nonsense of POLITICO Tiger Beat on the Potomac that constantly pushes the conservative media entertainment complex GOPropaganda talking points. So it should come as no surprise to anyone that the Beltway media "conventional wisdom" in in fact almost always WRONG and badly misleads the public.

Case in point, the Beltway media villagers' "conventional wisdom" that Social Security benefits need to be reduced, in real terms and in chained CPI cost of living adjustments in the  future, and the beneficiary age needs to be raised. The Beltway media villagers are Pete Peterson's finger puppets. We are having the wrong policy conversation.

Brad Plumer today makes The case for expanding Social Security, not cutting it:

Nowadays, whenever Social Security comes up in policy debates around
Washington, the discussion often focuses on how best to cut benefits in
order to shore up the program’s finances.

But a big new report (pdf)
from the New America Foundation
suggests that the conventional wisdom
is exactly backward. Congress should be looking at ways to expand
Social Security, not shrink it — particularly at a time when
traditional corporate pensions are disappearing, and 401(k)s have proved
fairly risky.

The major proposal in the report is to add a brand new benefit to
Social Security, called Part B, which would provide a flat $11,699 per
year to all retired workers. This would come on top of regular Social
Security, which would also be protected from any further cuts.

The net effect is that the new Social Security program would replace a
far bigger chunk of a worker’s lifetime earnings than the current
program does. Kevin Drum offers up this chart:

Social-security-b

So how much would this cost in taxes? Quite a bit. At the moment, Social Security is expected to experience a funding shortfall by 2033. Congress will need to raise taxes by between 1 and 1.5 percent of GDP just to maintain current benefits. On top of that, the expanded benefits proposed by New America would cost an estimated 3.7 percent of GDP. The net cost: About 5 percent of GDP.

That’s a large hike. But the New America report, written by Michael
Lind, Steven Hill, Robert Hiltonsmith and Joshua Freedman, makes a case
that alternative retirement options for Americans aren’t working.
Defined-benefit employer plans are vanishing. Workers aren’t saving
enough or dipping into their retirement funds too often. And
private-savings plans like 401(k)s or IRAs are proving quite volatile —
the financial crisis wiped out an estimated $2.8 trillion from
retirement plans.

As a result, fewer Americans are well-positioned for retirement:

Household-savings

“Retirement security is often thought of as three-legged ‘stool’
consisting of Social Security, employer retirement plans, and private
savings,” the report argues. “Social Security has been far more stable
and successful than the other two legs of the stool. The reliance on
these other legs of the system has resulted in a retirement security
crisis for most Americans.”

Needless to say, this isn’t the sort of proposal Congress is likely
to take up anytime soon. Hiking taxes by 5 percent of GDP is far outside
the bounds of what either party is contemplating. And if Congress was willing
to raise taxes by 5 percent of GDP, there would undoubtedly be lots of
debate about whether expanding Social Security was really the best
investment it could make. (Scientific research? Preschool? A crash
program to cut carbon emissions and tackle climate change? And so on…)

So the New America report is probably best thought of as a way to shift the “Overton window”
and expand the bounds of the current debate on Social Security — and to
make a case that lawmakers should pay closer attention to what’s
happening with U.S. retirement savings before making any changes to
safety-net programs.

It's almost a certainty that the Beltway media villagers will not be discussing this policy proposal, and will stick with their GOPropaganda talking points.

UPDATE: Kevin Drum has more at Mother Jones, NAF Proposes Big Expansion of Social Security. "This is the first serious shot across the bow from the forces who not
only don't want to compromise on Social Security, but want to expand it."

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