Posted by Bob Lord
Laura Clawson at Daily Kos wrote an excellent post last Sunday on the unfairness of raising the Socail Security retirement age. Laura writes great stuff, and this post is no exception. Laura makes the point that the gains in life expectancies of 65 year-olds have been realized almost exclusively by those in the top half of the income distribution. She shows how life expectancies for 65 year-olds in the bottom half of the income distribution barely have budged since 1982, when the Social Security system last was overhauled. She explains well how the bodies of those who work in jobs requiring physical labor break down before their white collar counterparts. It's pathetic that such explanation is required, but in today's toxic political environment, clearly it is.
Laura nailed it in showing how the plan to raise the social security retirement age, a plan the Republicans love and too many Democrats are willing to accept, is mean spirited and callous. She left out the larcenous nature of the proposal, so I'll try to fill in. Essentially, the proposal seeks to pay for the extended social security benefits of those in the top half of the income distribution by cutting the benefits of those in the bottom half. In other words, the essence of the proposal is to steal from poorer retirees in order to stuff the pockets of their wealthier counterparts. Here are the details:
According to Laura's research, the life expectancies of 65 year-old males in the bottom half of the income distribution have increased by 1.5 years since 1982, from 15 years to 16.5 years. The life expectancies of 65 year-old males in the top half of the income distribution have increased 5.4 years, from 16.1 years to 21.5 years. Although Laura didn't provide them in her post, the differentials are similar for 65 year-old females.
Obviously, the projected shortfall in the social security trust fund is attiributable to the huge increase in life expectancies of wealthier retirees. But for that increase, there would be no need to raise the retirement age for anyone. Because of that increase, the fund now is too small.
It's easiest to examine this using a population of only two retirees. When the system was created, we expected that the poorer retiree would be entitled to 15 retirement years and the wealthier retiree would be entitled to 16.1 retirement years, so we strucutured the employment tax rates to produce a fund containing a total of 31.1 retirement years. But, lo and behold, we find ourselves short, because we owe the poorer retiree 16.5 retirement years and the welthier retiree 21.5 retirement years, for a total of 38.0 retirement years, or 6.9 more retirement years than we have in the fund. Why is this? Primarily, it is because our wealthier retiree made good money, which enabled him to buy high quality health care, and he worked in an office, which didn't cause his body to break down from manual labor. This enabled him to buy more than 5 additional years of life. His poorer counterpart was not nearly as fortunate.
You would think that our wealthier retiree would be happy to bear by himself the additional living expenses of his good fortune. But our wealthier retiree is somewhat of a piece of shit, because he wants to force his poorer counterpart to contribute to those living expenses. As Laura points out in her blog, wealthy public figures like Lloyd Blankfein and Alan Greenspan (who created this problem when he re-structured the system in 1982) are calling on Congress to raise the retirement age. In our little two retiree example, that would mean raising the retirement age to 68.45. That would leave our poorer retiree with 12.05 retirement years and our wealthier retiree with 18.05 retirement years, for a total of 31.1 retirement years, thereby restoring the solvency of the fund.
This is all to illustrate the obvious problem: In our example, and in the real world, raising the retirement age involves taking retirement years from poorer retirees and giving them to wealthier retirees. That's theft, plain and simple. In our example, the poorer retiree saw his expected retirement years decrease by 2.95 in order for the retirement years of the wealthier retiree to increase by the same number, all because the wealthy retiree took steps to improve his life expectancy that the poorer retiree was not in a position to take.
So, raising the retirement age isn't some sort of practical compromise we need to accept in order to balance the budget. It's stealing retirement years from poor people and giving those stolen retirement years to rich people. It's dishonest, unethical, mean-spirited and wrong.
A few months back, Paul Krugman stated that janitors shouldn't have to work longer before retiring because lawyers are llving longer. As usual, he was spot on.