Arnold Kling  

Solving the Entitlement Problem

The Promise: See You Op... Macroeconomics Standing on One...

I claim that it is not hard.

The solution, as I have argued for several years, is to raise the age of government dependency for workers now in their 30's and 40's. This is a painless solution, because (a) it does not affect anyone who currently receives or is counting on government entitlements and (b) it does not really affect people now in their 30's and 40's.

...What I do not understand is this: what political constituency insists that today's young workers must be promised an unrealistically low age of government dependency? I do not know any young workers who are demanding it. I do not know any old workers for whom it should matter.

Future entitlement spending is a fiscal gun that is being held to our heads for no reason. With the stroke of a pen, we could get rid of the gun. Who are the interest groups that want to keep the gun to our heads, and why do they want it there?

Comments and Sharing

CATEGORIES: Social Security

COMMENTS (10 to date)
John Brothers writes:

Spot on, of course. I'm in my mid-thirties, and I am planning my retirement assuming 0 income from social security. This just seems prudent. If it does kick in, it's that much more money I will have to spend or leave for my kids, or use to fund an endowed chair at some prestigious university.

Anon writes:

I am 56 and have watched for years as just before
elections politicians got bipartisan-fever to add onto entitlements.
Boost benefit rates, add new benefits, add COLA...

How else would you describe the malformed drug benefit that was enacted before the 2004 elections with all the pain and expense of implementation scheduled AFTER 2004.

Name the politician(s) who will take something AWAY from a constituent he/she expects WOULD vote for him without at least simultaneously delivering some tasty new benefit.

Politicians are happy to take away stuff from groups they consider likely to vote for the other candidate.

ilsm writes:

The fiscal gun is discretionary spending remaining the same 35% of federal outlays as "entitlements" rise in the long term.

Entitlement surpluses are funding discretionary waste today that is not required to go to the financial markets to get the cash. That may not be relevant to raising the age for you young folks who make a living on discretionary spending and low interest rates to make up some growth the past few years.

Why in hell with no soviet union are we spending 50% of military outlays in the whole wide world should we retain the same % of GDP as in the cold war in 2070?

Lately Gen Schoomaker, who replaced Shinseki as more easily going along with Rumsfeld said we are spending on the DoD about as much as Americans spend on Christmas. We would be cheapskates not to send more money to Boeing than we spend on gifts and turkeys. Make sure Boeing gets the big turkey.

The fiscal gun is spreading pork with no real reason to spend the money.

Mike Linksvayer writes:

There's a loud if not large group that sees any reform that lowers SS spending as a giant step toward killing the entire program.

Plus, increasing the benefits age is racist.

(I agree that indexing to longevity -- preferably with benefits starting with above-average longevity for the cohort in question -- is an easy solution.)

(But I'd prefer to kill the whole program!)

Mike Linksvayer writes:

The other "easy" solution is means testing, which drives the first group I mention above crazy (they think SS needs to pay off the middle class to survive -- but does it need to pay off the upper class?) but works against favoring groups with that live longer.

I believe a little sanity -- phasing in means testing higher retirement age -- would make the program as a whole much harder to attack.

Randy writes:

Re; "Future entitlement spending is a fiscal gun that is being held to our heads for no reason. With the stroke of a pen, we could get rid of the gun."

Exactly. But the thing is, what cannot happen, will not happen. The US will not be bankrupt by entitlement programs because that cannot happen. What can happen is that politicians will use the issue to squeeze a few more dollars from taxpayers. And, of course, that can't happen either if we stop allowing politicians to make us feel guilty about problems that we did not create.

Robert Schwartz writes:


Quigly writes:

Bush republicans.

PatrickC writes:

Gee Arnold, thanks for thinking of the 30 & 40 year olds. Your solution is so easy, why hasn't it already happened?

I think we all can anticipate what would really happen if your recommendation was implemented:

1) no change in benefits for current retirees

2) minor changes in benefits for near to medium-term retirees (e.g. 45-60 year olds)

3) massive benefit cuts for anyone younger than, say 45 years old

4) no change in the taxes paid by 30 & 40 year olds

What a deal Arnold!! Sign me up! [note sarcasm]

JohnDewey writes:

Social security retirement age was already pushed back for everyone born after 1938. For those born after 1960 it's now age 67. Twenty-somethings didn't riot in the streets when this change was made in 1983.

"Spot on, of course. I'm in my mid-thirties, and I am planning my retirement assuming 0 income from social security."

Nearly everyone my age said the same thing 25 years ago. But as we all got closer to retirement, we changed our tune. What happens to a person after seeing 12% of earnings confiscated for decades to pay for parents' retirement? He starts to believe he's just as entitled to get something back as his parents were.

Comments for this entry have been closed
Return to top