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Social Security
A Category Archive (135 entries)
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May 11, 2009
Economics of Health Care
Arnold Kling
Andrew Biggs writes, Over the next 30 years, population aging is our main entitlements problem and it makes sense to seek solutions that are based on the problem we have, not the problem we want to have. Beyond 30 years,... MORE
March 20, 2009
Social Security
David Henderson
Among the guidelines the IRS issued yesterday was allowing investors to claim their losses from a Ponzi scheme as a theft loss rather than a capital loss, a personal casualty loss or a personal theft loss. This is from here.... MORE
January 23, 2009
Cross-country Comparisons
Arnold Kling
Jagadeesh Gokhale writes, By 2020, the average EU country will need to raise the tax rate to 55 percent of national income to pay promised benefits. In other words, their Social Security systems are in worse shape than ours.... MORE
November 4, 2008
Social Security
Arnold Kling
Robert Solow writes, It is plausible that a state-run universal social insurance system would be better able than a private company to detect and prevent exploitation of the system by malingerers. Maybe success would depend on the creation of a... MORE
September 11, 2008
Social Security
Arnold Kling
Continuing our discussion, Felix Salmon doesn't think so. And yes, Uncle Sam will always be able to borrow. That's what "risk-free rate of return" means. Is it possible to conceive of scenarios where the US defaults? Yes -- but under... MORE
September 10, 2008
Social Security
Arnold Kling
Felix Salmon writes, the obligations of the [Social Security] trust fund aren't tangible obligations fungible with other government debt. But at the same time they are obligations: they oblige the government to issue debt in the future, insofar as its... MORE
August 18, 2008
Social Security
Arnold Kling
John B. Shoven and Gopi Shah Goda touch the third rail. the Normal Retirement Age for Social Security in 2004 would have to be at least 71 (using lowest number in the table) and more likely 73 or 74 (using... MORE
August 17, 2008
Social Security
Arnold Kling
Andrew Biggs writes, First, Sen. Obama says, "Social Security has lifted millions of seniors and their families out of poverty. Without it, nearly 50 percent of seniors would live below the poverty line." This is a common talking point, but... MORE
August 13, 2008
Social Security
Arnold Kling
Andrew Biggs writes, Over the next twenty years, fully 60 percent of total entitlement spending increases will stem from population aging. It is not until 2045 that per-capita health care spending growth becomes the majority factor. (See figure 3, which... MORE
July 10, 2008
Social Security
Arnold Kling
Roger Lowenstein writes, But none of G.M.’s management miscues was so damaging to its long-term fate as the rich pensions and health care that robbed General Motors of its financial flexibility and, ultimately, of its cash. Whether General Motors was... MORE
July 3, 2008
Fiscal Policy
Arnold Kling
From the Congressional Budget Office: How would the economy be affected if the projected rise in primary spending under CBO’s alternative fiscal scenario (from about 18 percent of GDP in 2007 to about 35 percent in 2082) was financed entirely... MORE
May 30, 2008
Energy, Environment, Resources
Arnold Kling
Megan McArdle writes, Certainly, the long-term economic outlook is extremely uncertain, but I’m not sure what “who knows!” is a better answer to cumulatively worsening climate problems than to cumulatively worsening fiscal problems. Her point is that ignoring climate change... MORE
May 29, 2008
Fiscal Policy
Arnold Kling
From a web site put together by Congressman Paul Ryan, It is a real plan, with real proposals, real numbers to back them, and real legislation to implement it. Based on the analysis of government actuaries, this plan is projected... MORE
April 25, 2008
Social Security
Arnold Kling
Some numbers from the proposed Budget for 2009 for the Federal government. I try to divide non-security spending crudely into necessary spending (courts, justice, Treasury, the mysterious "other" mandatory spending) and "worthy causes" (things that are really discretionary). Update: Figures... MORE
January 28, 2008
Social Security
Bryan Caplan
People who are freaking out about the rise in the dependency ratio will normally point to the fact that the ratio of retirees to the working-age population is going to sharply rise. The following graph, taken from Social Security Administration... MORE
January 25, 2008
Social Security
Bryan Caplan
Most economists will tell you that the real problem with Social Security is demography. (Here's William Poole). The fraction of people over 65 will keep rising, implying a growing dependency ratio. The problem is that this is only the ratio... MORE
February 2, 2007
Social Security
Arnold Kling
Jason Furman writes Indexing benefit levels for longevity, the retirement age, or the payroll tax rate goes in the right direction – delivering larger adjustments as people live longer – but only captures a small part of the uncertainty about... MORE
January 31, 2007
Social Security
Arnold Kling
Elizabeth M. Caucutt, Thomas F. Cooley, and Nezih Guner write During the period from 1880 to 1940 pay-as-you-go social security systems emerged in most advanced economies. In this paper we describe a model economy in which demographics, technology, and social... MORE
January 22, 2007
Social Security
Arnold Kling
In an audio file, Russ Roberts interviews Greg Mankiw. Toward the end, Mankiw endorses raising the retirement age for entitlements--what I call the age of government dependency. Welcome to the yet un-named club! (not that Mankiw's membership is new). My... MORE
January 17, 2007
Social Security
Arnold Kling
Greg Mankiw crows that Robert Samuelson has joined the Pigou Club, calling for an energy tax. I would crow because Samuelson writes, Raise the eligibility ages for Social Security and Medicare gradually to 70 by 2029. At 65, people would... MORE
November 22, 2006
Social Security
Arnold Kling
A report by the Center for Strategic and International Studies says, The UN projects that the ratio of working-age adults (aged 15 to 64) to elderly (aged 65 and over) in the developed world will drop from 4.5 to 1... MORE
November 14, 2006
Social Security
Arnold Kling
Jagadeesh Gokhale writes, As reported by its trustees, Social Security's total imbalance has increased from $10.4 trillion in 2004 to $13.4 trillion in 2006 - a jump of $3.0 trillion in just two years. And Medicare's imbalance has grown from... MORE
October 12, 2006
Social Security
Arnold Kling
Chris Edwards and Jagadeesh Gokhale write, According to the Federal Reserve Board, state and local credit market debt has risen rapidly in recent years, from $313 billion in 2001 to $568 billion in 2005. But unfunded obligations from state and... MORE
September 20, 2006
Social Security
Arnold Kling
Jeremy Siegel writes, The reasons why retirees cannot turn their savings into consumption is because wealth can only be transformed into goods and services if they are sold to those willing to defer their consumption. In a modern economy, wealth... MORE
August 24, 2006
Social Security
Arnold Kling
Jane Galt takes on Malcolm Gladwell: he attributes pension problems to higher productivity, which allows manufacturers to make more stuff with fewer people, and thereby increases their dependency ratio. This is daft. Increasing productivity also increases profits, allowing companies to... MORE
July 15, 2006
Fiscal Policy
Arnold Kling
Laurence J. Kotlikoff writes, the U.S. government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments... MORE
June 19, 2006
Economics of Health Care
Arnold Kling
I had never heard of Jason Furman until today, when I encountered him twice. First, he shows up on Greg Mankiw's blog, where Greg touts this paper. In fact, if we turned our irrational health tax subsidies right-side up–by curbing... MORE
May 31, 2006
Social Security
Arnold Kling
I commend Greg Mankiw's op-ed in today's Wall Street Journal. Even a generous set of excerpts will leave out a lot of well-phrased analysis. let's start with a fact about which every serious policy analyst agrees: The government budget is... MORE
May 24, 2006
Social Security
Bryan Caplan
April 27, 2006
Social Security
Arnold Kling
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... MORE
March 20, 2006
Social Security
Arnold Kling
William Saletan writes, The point of Social Security was to subsidize those who couldn't work, not those who could. The program's founding document said it would support old people who were "dependent," "beyond the productive period" and "without means of... MORE
December 17, 2005
Social Security
Arnold Kling
Calculated Risk writes As a mental exercise, imagine if we eliminate SS spending and the SS payroll tax - what happens? The General Fund deficit stays exactly the same and we would need to address the significant General Fund shortfall.... MORE
December 16, 2005
Social Security
Arnold Kling
Calculated Risk writes, The debate should be focused on the two major issues: Health Care and the General Fund deficit. Without addressing those issues first, reforming Social Security is irrelevant. Even if one were to accept the premise that the... MORE
December 14, 2005
Social Security
Arnold Kling
Andrew Samwick writes The plan contains four primary elements: a gradual reduction in future benefits; an increase in the payroll tax cap; an increase in the retirement age; and the establishment of personal retirement accounts. The plan puts great emphasis... MORE
August 26, 2005
Social Security
Bryan Caplan
Arnold's post on Kotlikoff and Ferguson's proposals for Social Security and health care reform reminds me of a short exchange I had with Kotlikoff in grad school. (I was a Ph.D. student at Princeton, and he was our guest speaker).... MORE
Social Security
Arnold Kling
Niall Ferguson and Laurence J. Kotlikoff, writing in The New Republic (subscription required), propose to tackle the fiscal mess three ways. First, they suggest replacing existing Federal taxes (personal income, corporate income, payroll, and estate) with a consumption tax that... MORE
August 15, 2005
Social Security
Arnold Kling
Kyle Markley writes, Social Security should be a voluntary program. Every individual should have the right to opt out, without any restrictions on eligibility and without any requirement to justify their decision. ...Would individuals who opt out be reimbursed for... MORE
July 5, 2005
Social Security
Arnold Kling
Allan Sloan praises General Motors. the company traded that implicit pension obligation for explicit debt with an interest rate of 7.5 percent and an average maturity of 19 years... GM says that without the big 2003 deal, it would have... MORE
May 26, 2005
Social Security
Arnold Kling
Bruce Bartlett says it is. He refers to Congressional testimony by Eugene Steuerle, who said, Increase the early and normal retirement ages. We should do this even if there were no long-term imbalance and even if all the saving were... MORE
April 18, 2005
Social Security
Arnold Kling
The latest issue of Economists' Voice is devoted to Social Security. Note the dates on the articles--some of them are not new. Barbara Bergmann writes, What raising Social Security taxes in advance of higher spending on benefits does is to... MORE
April 4, 2005
Social Security
Arnold Kling
In this essay, I write Imagine that Social Security had been structured to phase out, so that only those workers now over the age of 30 are required to be in the system. Under this assumed scenario, workers under age... MORE
March 30, 2005
Social Security
Arnold Kling
Michael Boskin writes, First, we should switch from wage indexing to price indexing, but raise benefits more rapidly for those with low earnings. This would eliminate most of the long-term insolvency, but do so in a manner that leads to... MORE
March 29, 2005
Social Security
Arnold Kling
Robert Barro writes, A serious analysis with asking why we have Social Security. If we were not so used to it, we would find it odd for the government to collect money from young workers and give it to the... MORE
March 24, 2005
Social Security
Arnold Kling
How big? So-o-o-o-o big. Ask the Concord Coalition. If added to the rates needed for Social Security, the implied payroll tax rate necessary to cover the future costs of both Social Security and Medicare would be 32 percent in 2040... MORE
March 19, 2005
Social Security
Arnold Kling
The Washington Post had a story about a new paper by Robert Shiller, which can be found here. He says that the recommended "life cycle account," which mixes stocks and bonds in proportions that change as one gets closer to... MORE
March 16, 2005
Politics and Economics
Arnold Kling
Bryan's post on the doubtful empirical usefulness of social intransitivity is probably right. Nonetheless, suppose that on Social Security there are three political viewpoints--Democratic, Republican, and nonpartisan--and three policy options--status quo, private accounts, and fiscal medicine. By fiscal medicine, I... MORE
February 24, 2005
Social Security
Arnold Kling
In this essay, I take off on "actuarial scoring" of Social Security plans. In fact, at a 3 percent real interest rate, it would be irrational for me to switch to using personal accounts! I have some of my portfolio... MORE
February 23, 2005
Social Security
Bryan Caplan
Yesterday's Washington Post had a fascinating history of proposals for Social Security privatization. Admittedly, it's probably more fascinating to me than to most people, because I know most of the people mentioned in the article! Some highlights: Twenty-five years ago,... MORE
February 16, 2005
Social Security
Arnold Kling
Tyler Cowen writes, Why might you think that the elderly deserve a greater share of resources in society? Here are some options... 2. The relevant political alternative is lower marginal tax rates for the well-to-do. Transfer resources to anyone but... MORE
February 8, 2005
Social Security
Arnold Kling
I did not take away much from the first day of Cato's Social Security Bash. I guess my views on the subject are pretty well settled, so that for me the session served to illuminate what other folks are worried... MORE
February 4, 2005
Social Security
Arnold Kling
This briefing on the Administration's proposals for Social Security personal accounts cleared up a number of issues, such as the way that accounts would be administered and the type of investment options available. In both cases, the Federal Employees' Thrift... MORE
January 31, 2005
Social Security
Arnold Kling
Brad DeLong proposes 1. Shift responsibility for maintaining actuarial balance off of the Congress and onto the Social Security Administration--have it gradually raise (and lower) the retirement age or the benefit-rule bend points in order to keep the system in... MORE
January 27, 2005
Social Security
Arnold Kling
On the new pro-reform group blog, Kerry Kerstetter makes a case for incremental privatization. Allowing private control over retirement money that would otherwise go to the Social Security bureaucrats in DC is no different than what we have long had... MORE
January 23, 2005
Social Security
Arnold Kling
The Washington Post presents a wide range of viewpoints. Mark Weisbrot and Dean Baker write, The bottom line is that Social Security is more financially sound today than it has been throughout most of its 69-year history, according to Social... MORE
January 20, 2005
Social Security
Arnold Kling
Continuing to peruse Brad's reading list (see preceding post), I came across an article on the topic I raised in my Lifespan essay. The article is by Ronald Lee and Jonathan Skinner. We find that the prospects for longevity are... MORE
January 18, 2005
Social Security
Arnold Kling
The Wall Street Journal has posted one of their periodic Econoblogger Celebrity Death Match thingies. This one features yours truly and Max Sawicky, on the topic of Social Security Reforms. I'll use this forum to respond to some of Max's... MORE
Social Security
Arnold Kling
In this essay, I discuss the esoteric but important topic of longevity calculations. How do we calculate the longevity of a person born in, say, 1950? The analogy would be to look at how many people born that year died... MORE
January 15, 2005
Social Security
Arnold Kling
This article by Norma Cohen, which Paul Krugman and others think is very important, strikes me as proving too much. Cohen writes, Britain's experiment with substituting private savings accounts for a portion of state benefits has been a failure. A... MORE
January 14, 2005
Social Security
Arnold Kling
Bill Sterling argues that the debate is long overdue. If there was a substantive debate on wage indexation in 1976 it seems to have been entirely an inside-the-beltway affair. Fearing to step on the dreaded third rail, President Ford ignored... MORE
January 10, 2005
Social Security
Arnold Kling
I have an essay that looks at recent writing by Brad DeLong and Paul Krugman. To economists, raising the retirement age is the obvious fix for a system that otherwise faces an ever-declining ratio of workers to retirees. Unfortunately, it... MORE
Social Security
Arnold Kling
I recommend David Warsh's coverage of this year's American Economics Association meetings, which just concluded. Among other things, he mentions Martin Feldstein's Presidential Address, Rethinking Social Insurance. Feldstein writes, The impetus for broader social insurance reform comes from the recognition... MORE
January 6, 2005
Social Security
Arnold Kling
The Democratic National Committee accused the Bush Administration of trying to cut Social Security benefits by shifting to price indexing from wage indexing. I suggest that the administration should plead guilty. Future benefits that are promised under the current system... MORE
January 5, 2005
Social Security
Arnold Kling
National Review's Bruce Bartlett and New York Times columnist Paul Krugman appear to be singing from the same song sheet on Social Security. Bartlett writes, It is not clear what is driving the urgency of Social Security reform. It is... MORE
December 29, 2004
Social Security
Arnold Kling
William Sterling writes, Price indexation should save the government trillions of dollars in the long run because of the magic of compound interest. Wage growth has historically outpaced consumer price inflation by about 1.1% per annum. That means that the... MORE
Social Security
Arnold Kling
Nobel Laureate Edward Prescott thinks that we need mandatory saving to solve a time inconsistency problem. The reason we need to have mandatory retirement accounts is not because people are irrational, but precisely because they are perfectly rational -- they... MORE
December 26, 2004
Social Security
Arnold Kling
Here is the crux of the issue in Kinsley's argument: if [privatization] contemplates reducing Social Security payments proportionally to the reduction in taxes -- and counting on people to make up the difference with their new investments -- people will... MORE
December 24, 2004
Social Security
Arnold Kling
Now that President Bush is proposing to reform Social Security, opponents are arguing that there is no crisis. They might wish to read Laurence Kotlikoff. continuing to ignore the problem will simply let more generations, particularly older ones off the... MORE
December 19, 2004
Social Security
Arnold Kling
In a research paper, John Karl Scholz says that over 80 percent of households are saving at least as much as is optimal. However, much of their result is based on counting Social Security wealth in their analysis. Private net... MORE
December 17, 2004
Social Security
Arnold Kling
Paul Krugman makes a generous concession to privatization supporters. For the record, I don't think giving financial corporations a huge windfall is the main motive for privatization; it's mostly an ideological thing. I don't recall MIT having a course in... MORE
December 15, 2004
Social Security
Arnold Kling
In response to this post by Michael Kinsley, I wrote this. Michael Kinsley is correct to be skeptical that privatization will generate a bonus large enough to eliminate the gap between the promises made to future recipients and the likely... MORE
December 10, 2004
Social Security
Arnold Kling
In this essay, I wonder why the Left and the Right do not reverse their positions on Social Security privatization. However, there is one important difference between keeping Social Security as it is and switching to privatization. Under the current... MORE
December 2, 2004
Social Security
Arnold Kling
Responding to a comment on the previous post, I write, Suppose that your house has a very dilapidated roof. The next big winter storm is likely to cause huge damage unless it is repaired. So you borrow $20,000 and fix... MORE
December 1, 2004
Social Security
Arnold Kling
The New York Times has two relevant op-eds. John Kasich writes, benefits are growing faster than inflation. First-time Social Security benefits are now tied to wage growth, and wages are rising faster than prices. The result: over the next 75... MORE
November 21, 2004
Social Security
Arnold Kling
Lawrence Kotlikoff has a long description in today's Boston Globe. One way to make up for the loss in revenue from privatization as well as cover the existing revenue shortfall is dramatically but gradually to cut Social Security benefits. Such... MORE
November 14, 2004
Social Security
Arnold Kling
Tyler Cowen writes, First, how much can our government force people to save in the first place? You can make them lock up funds in an account, but they can respond by borrowing more on their credit cards, taking out... MORE
November 12, 2004
Social Security
Arnold Kling
2004 Nobel Laureate Edward Prescott does not care for paternalism. let's begin by dismissing the notion that individual savings plans are somehow dangerous to U.S. citizens. Some politicians have vilified the idea of giving investment freedom to citizens, arguing that... MORE
November 10, 2004
Fiscal Policy
Arnold Kling
Laurence J. Kotlikoff proposes to replace the payroll tax with a sales tax. replacing the payroll tax with a sales tax is the same as (a) eliminating the payroll tax ceiling, (b) taxing wealth at the payroll tax rate, and... MORE
November 8, 2004
Social Security
Arnold Kling
It's Tyler Cowen vs. John Irons at the Wall Street Journal on line. (WARNING: the WSJ to override the article with a new article, which means that the link will not take you to the social security debate) [Cowen:] Social... MORE
November 1, 2004
Social Security
Arnold Kling
UPDATE: I thought this was more recent, but it's an older column that Winterspeak pointed to. Still worth reading. Jeffrey A. Miron and Kevin M. Murphy write, privatization has no effect on the solvency of the Trust Fund; it reduces... MORE
October 27, 2004
Social Security
Arnold Kling
My latest essay on Social Security says, The transition cost myth is one of four Social Security misconceptions that I want to address here. The others are the misconception that Social Security is a pension, the misconception that the Baby... MORE
October 18, 2004
Social Security
Arnold Kling
Tyler Cowen points to the Bruce Webb comment on Brad DeLong's post on Social Security. Webb says, in part If privatization will work, it won't be necessary. If privatization will be necessary it won't work. And exactly no one has... MORE
October 15, 2004
Social Security
Arnold Kling
Jagadeesh Gokhale and Kent Summers. point out that for entitlement programs, "pay as you go" is actually bad Budget policy. Pay-as-you-go in this context usually implies benefit increases -- for which retirees obviously don't pay -- and tax increases for... MORE
October 5, 2004
Social Security
Arnold Kling
In this essay, I argue that because people live longer and consume more health care, we should be saving more. Suppose that 50 years ago the expectation for a 45-year-old man was that he would live to age 70, and... MORE
October 1, 2004
Social Security
Arnold Kling
Brad DeLong endorses privatized Social Security, if what you mean by that is forced savings. Too many households are myopic: they do not save enough. Households resist increases in Social Security taxes--they see no link between the taxes and their... MORE
September 27, 2004
Social Security
Arnold Kling
Don Lloyd decries the accounting approach to Social Security. The common flaw in all of the proposed remedies above is that they focus on dollars and money. This is too narrow and ignores the fact that the primary end goal... MORE
September 22, 2004
Social Security
Arnold Kling
According to Thomas Saving, an economist who is one of the trustees of Social Security and Medicare, we are already taking money from general revenue to fund the deficits in those programs. This year, for the first time in recent... MORE
September 14, 2004
Social Security
Arnold Kling
The Washington Post adds up the cost of President Bush's campaign proposals. They include this: An estimate from the Social Security actuary's office, included in the 2001 report of a Social Security commission appointed by Bush, put the cost of... MORE
September 8, 2004
Social Security
Arnold Kling
Robert J. Samuelson writes, The central distributional issue of our time is not between rich and poor. It is between retirees and non-retirees. In fiscal 2003, Social Security and Medicare cost $744 billion. All federal retirement and disability programs now... MORE
September 3, 2004
Economics of Health Care
Arnold Kling
In my latest essay, I look at the specifics of the President Bush's economic proposals. Overall, I am afraid that the President's concept of the "ownership society" owes more to David Brooks than it does to Stephen Bainbridge. But the... MORE
August 16, 2004
Growth: Causal Factors
Arnold Kling
Whoever is writing the lead editorials for the Washington Post (I suspect Sebastian Mallaby) on economic policy issues in this year's election is providing pieces that are highly educational. Today's editorial is called The Growth Mystery. we don't know how... MORE
August 3, 2004
Economics of Health Care
Arnold Kling
I argue that on domestic policy, President Bush should focus on Social Security and health care. Our existing system was designed when reaching the age of 65 meant that your active life was probably over, and you were likely to... MORE
July 12, 2004
Labor Market
Arnold Kling
The OECD looks at total hours worked in its member countries. The performance of US labour markets also looks quite strong when assessed in terms of hours worked per capita, a more comprehensive measure of “labour utilisation” than the employment... MORE
June 20, 2004
Social Security
Arnold Kling
Aubrey de Grey reviews a Brookings volume on the economics of increased longevity. Aubrey has a more optimistic vision than the authors. rejuvenation research...will anticipate and remedy the life-threatening degenerative changes appearing at newly achieved ages with ever-increasing efficacy and... MORE
June 10, 2004
Social Security
Arnold Kling
Are annuities appropriate for the elderly? The Securities and Exchange Commission and the National Association of Securities Dealers say not necessarily. The SEC also today issued an alert to remind investors that variable annuities are not suitable for all consumers,... MORE
May 21, 2004
Social Security
Arnold Kling
The International Economy Magazine collects twenty opinions on the issue of demographic change in one issue. For example, Michael Boskin writes, The United States is in far better shape to deal with these issues than the bulk of the developed... MORE
April 29, 2004
Social Security
Arnold Kling
In this essay, I examine at length Peter Diamond's arguments for Social Security as it exists currently. An excerpt: I doubt that elderly people who maintain their assets in lump sum format rather than as annuities are as irrational as... MORE
April 19, 2004
Fiscal Policy
Arnold Kling
In his New York Times column last week, Jeffrey Madrick referred to the work of Peter Lindert on the ability of countries to grow in spite of welfare state distortions. Lindert's argument can be found in Why the Welfare State... MORE
April 13, 2004
Social Security
Arnold Kling
In the March 2004 issue of the the American Economic Review, Peter Diamond defends the structure of Social Security. (I cannot find the article on the web, unfortunately.) He argues that in the absence of Social Security, individuals would save... MORE
April 5, 2004
Social Security
Arnold Kling
Zimran ("Winterspeak") Ahmed points to a survey article by The Economist of issues raised by the aging of the population. This survey will argue that the promises governments have made to people retiring today are too large to be met... MORE
March 11, 2004
Fiscal Policy
Arnold Kling
In the essay I referred to in my previous post, I also write A President who has only added to future entitlement obligations ought to be judged as having acted to increase taxes. To call this Administration a tax cutter... MORE
March 4, 2004
Social Security
Arnold Kling
In this essay, I argue that Congress treats economists the way the Inquisition treated heretics. Why do the Inquisitors have it in for economists? Ultimately, politicians tell the people what we want to hear. They think that we want to... MORE
February 26, 2004
Social Security
Arnold Kling
Federal Reserve Chairman Alan Greenspan tries taking on some sacred cows. In a logical assessment of the Social Security's future financial condition, he suggested ways to curtail the growth in future benefits. The response was predictable Sen. Arlen Specter, R-Pa.,... MORE
February 18, 2004
Social Security
Arnold Kling
Michael Tanner of the Cato Institute has a proposal for weaning young workers off of the Social Security system. workers who chose the individual account option would receive a bond in recognition of their past contributions to Social Security. That... MORE
February 9, 2004
Social Security
Arnold Kling
The 2004 Economic Report of the President also discusses Social Security. One issue is measuring the Social Security shortfall. Most economists reject the so-called "actuarial shortfall" as a measure. One alternative is the Gokhale-Smetters present value estimate. The 2004 Economic... MORE
February 4, 2004
Social Security
Arnold Kling
I have a new essay that argues that we over-estimate the value of collective benefits. Contrary to my training as an economist, I believe that at least some of the preference that workers have for in-kind benefits reflects flat-out irrationality.... MORE
January 21, 2004
Social Security
Arnold Kling
In this piece, I argue that the "transition cost" argument against privatizing Social Security is bogus. I also make my usual case against what I call the Stock Market Scenario. Finally, I conclude by saying that privatization is the ultimate... MORE
December 16, 2003
Social Security
Arnold Kling
Because the stock market figures into most Social Security privatization plans, the Social Security Administration commissioned economists to estimate long-run returns from stocks. This analysis is three years old, but since I've brought up the issue on several occasions it... MORE
December 2, 2003
Social Security
Arnold Kling
The Social Security Administration has evaluated a proposal by Peter Ferrara for private social security accounts. This plan would establish voluntary, progressive individual accounts for workers who are under age 55 on January 1, 2005 and would provide for a... MORE
October 30, 2003
Social Security
Arnold Kling
Many interesting comments on my suggestion that science could bail out social security. First, Andrew writes, Social Security pays retirees a benefit based on their pre-retirement wages, targeting a 'replacement rate' rather than a real benefit level. If GDP grows... MORE
October 29, 2003
Growth: Consequences
Arnold Kling
In an essay called Will Science Save Social Security?, I write, Overall, if events play out over the next quarter century as the technology optimists predict, then GDP will be so astronomical that the costs of Social Security and Medicare... MORE
Social Security
Arnold Kling
The aging of Europe is not a problem, according to Dominic Standish. On present trends of rising productivity, employing the same number of people in 2040 as now would produce over double the amount of wealth we currently have to... MORE
October 17, 2003
International Trade
Arnold Kling
In this essay, I argue that economists face an uphill battle in dealing with populist beliefs about international trade, entitlements, and consumption versus saving. In my view, international trade is only one aspect of the overall phenomenon of Progress and... MORE
October 13, 2003
Social Security
Arnold Kling
Steve Verdon points to a speech by Laurence Kotlikoff with a plan for saving Social Security and Medicare. The Personal Security System 1. The accrual of additional Social Security retirement (OAI) benefits is eliminated. 2. Current retirees and current workers... MORE
September 29, 2003
Income Distribution
Arnold Kling
In an essay called Bleeding-Heart Libertarianism, I sketch a system for using a consumption tax with a negative-income-tax feature to replace government-provided health care, education, and income security. Does the bleeding-heart libertarian approach seem harsh? Actually, the Welfare State is... MORE
September 16, 2003
Economics of Education
Arnold Kling
John Hawkins' interview of Milton Friedman touches on many subjects. Friedman is not terribly worried about Social Security. we're a very strong country, lots of able people, lots of active entrepreneurs, and so the Social Security system will be a... MORE
September 13, 2003
Social Security
Arnold Kling
The Congressional Budget Office provides an analysis of the long-term Budget outlook. The projections also assume for analytical purposes that aggregate federal revenues will level out at 19 percent of GDP in 2020, reflecting the higher end of the range... MORE
July 31, 2003
Social Security
Arnold Kling
In testimony before the House Budget Committee, William Gale of the Brookings Institution says, there is another big part of the problem: namely, the sunsets that are in the tax code. If all of those sunsets were removed, revenue would... MORE
July 21, 2003
Social Security
Arnold Kling
'Jane Galt' links to a paper that was notorious before it was released. Some news outlets reported that the measures of fiscal imbalance created by Jagadeesh Gokhale and Kent Smetters were suppressed by the Bush OMB department because they showed... MORE
July 18, 2003
Social Security
Arnold Kling
Will deferred taxes on IRA's and similar savings plans save the Federal Budget, as a recent draft paper by Michael Boskin seemed to suggest? Not according to William G. Gale , Alan J. Auerbach , and Peter Orszag. Boskin's projections... MORE
July 7, 2003
Social Security
Arnold Kling
Here is Peter Ferrara's comeback to me on Social Security privatization and stock market scenarios. The views advanced by Kling, however, are not peculiar to him. They reflect what personal account reformers are calling these days the "pain caucus" approach... MORE
June 29, 2003
Social Security
Arnold Kling
Last year, Stanley Fischer discussed Australia's Social Security system. He found several aspects to be admirable. Australia has already undertaken the key pension system reforms that most of the rest of the industrialized world is now struggling with. The World... MORE
June 19, 2003
Social Security
Arnold Kling
Asymmetrical Information points to a paper by Michael Boskin. Roughly $400 billion a year is contributed to various tax-deferred saving vehicles, and the amount is likely to grow with nominal income growth and the increased limits on tax-deferred contributions recently... MORE
June 12, 2003
Social Security
Arnold Kling
Peter Ferrara claims that Social Security could be gradually privatized and the future deficit eliminated without reducing benefits. This is a free lunch of staggering dimensions. Among other things, it relies on the following assumption. The long-term real rate of... MORE
May 28, 2003
Social Security
Arnold Kling
Two recent opinion pieces discuss the French ritual of strikes in May. The Wall Street Journal writes, Four workers financed each pensioner in 1960 and two in 2000. By 2020 the ratio will be one-to-one. Mr. Raffarin has told the... MORE
May 19, 2003
Social Security
Arnold Kling
Steven Nyce and Syl Schieber analyze the likelihood that the size of the labor force will start to decline in many developed countries. It now appears that many of the developed economies will experience periods in which the numbers of... MORE
May 5, 2003
Fiscal Policy
Arnold Kling
A proposal from former Labor Secretary Robert Reich: The best and the fastest way to get more money into the pockets of people who are likely to spend it quickly is to cut the taxes of average working people. Most... MORE
April 29, 2003
Fiscal Policy
Arnold Kling
Jonathan Rauch has a nice summary of the issues in the Budget debate. The economists note that if tax cuts are paid for through higher deficits instead of lower spending, the government borrows back from the economy the capital that... MORE
March 22, 2003
Social Security
Arnold Kling
I want to follow up on the attempt by the Center for Budget and Policy Priorities to compare the future bulge in entitlement spending to the Bush tax cut--see this thread. The CBPP was able to shrink the gap between... MORE
March 21, 2003
Social Security
Arnold Kling
[Update: Bernard Yomtov convinced me that the CBPP did not make the error I suggested below. Instead, the way that they accomplished the swindle is explained in this post.] As a share of GDP, increases in future Medicare and Social... MORE
March 16, 2003
Social Security
Arnold Kling
David Warsh gives one of the more sober overviews of the debate over tax cuts, the deficit, and Social Security. There are two basic issues in US tax policy — the question of the size of government and the health... MORE
February 25, 2003
Social Security
Arnold Kling
My choice for last week's comment of the week generated a lot of comments! It refers to this article by Milton Friedman, who describes a conceptual scheme for transitioning out of Social Security. Based on the comments, I can tell... MORE
February 19, 2003
Social Security
Arnold Kling
Because the comments that people are submitting here are unusually good, I think I'll feature at least one every week. This week's "comment of the week" is from Jim Glass on the Deficit Argument IV thread. He links to an... MORE
February 13, 2003
Social Security
Arnold Kling
Hal Varian gives a clear account of the concern with long-term deficits. A recent study by the economists Alan J. Auerbach, William G. Gale, Peter R. Orszag and Samara R. Potter, "Budget Blues: The Fiscal Outlook and Options for Reform,"... MORE
February 12, 2003
Macroeconomics
Arnold Kling
Columnist Robert J. Samuelson describes the Budget debate as each side trying to embarrass the other, without ever confronting the truly important budget issues What both sides are trying to avoid discussing, according to Samuelson, is the anomalous structure of... MORE
February 6, 2003
Social Security
Arnold Kling
Liberal and conservative economists are not as far apart on the issues of fiscal policy as it might first appear. Both sides share a concern that government growth could outstrip GDP growth. The position of liberal economists on the U.S.... MORE
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