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national politics & policies

It Is and It Isn’t

At least once a month the same hoary “meme” lands in my social media feed, an incensed objection to calling Social Security benefits “entitlements”: Why, Social Security isn’t an entitlement, it’s an earned benefit! We’ve been paying for it all our lives!

This old chestnut is a sad indicator that American education isn’t up to snuff and an even sadder indicator that people are especially confused about the country’s biggest wealth transfer program.

An “entitlement” is something one is owed. We are entitled to Social Security benefits, it is said, because we are forced to pay into the fund. That’s why it’s called an “entitlement program.” 

That being said, it sadly isn’t. Social Security has never been run soundly as a pension fund. From the beginning, and by design, politicians have used it as a way to buy votes, but — in typical politician fashion — they have lied about it. 

But the Supreme Court hasn’t. That body has made it quite clear that Social Security is not an entitlement program, but a mere “welfare” program, subject to the whims and wiles of tax-​and-​spend politicians.

Because of the lies and evasions, American voters remain perennially confused, and get very uncomfortable when the insolvency issue is brought up. Hence the issue’s long status as the “third rail” of American politics, with the frontrunners in the current presidential race each accusing the other of seeking to touch that rail.

Nevertheless, Eric Boehm notes at Reason, a few Republican challengers now talk about a major overhaul. Chris Christie wants means testing; Nikki Haley wants to raise the retirement age. Vivek Ramaswamy says we must act sooner rather than later, but Tim Scott said seniors shouldn’t take any cuts — which Boehm notes misses the true nature of the problem. 

So, is the GOP finally getting serious?

I wouldn’t bet my retirement on it.

This is Common Sense. I’m Paul Jacob.


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media and media people national politics & policies tax policy

Decreases & Increases & Krugman

Social Security was never designed for sustainability. The “Ponzi” element was there at the beginning: early recipients received HUGE benefits over their contributions, but as the population matured, that ratio of what working taxpayers put in compared to what they received in benefits decreased

Further, because there never was a “lock box” much less any investment of funds — it was always a transfer scheme — as the system matured it hit the point of financial default. Back in the 80s this was fixed by raising the taxes on working people.

And then the kicker: with the rate of reproduction in the U.S. falling like Sisyphus’s rolling stone, the ratio of taxpayers to subsidized retirees went in the wrong direction. The folks assigned to keep track of the system’s finances predict that a major insolvency moment occurs about a decade from now, a few years ahead of earlier predictions.

So what does Nobel-​winning economist Paul Krugman, of The New York Times opinion page, advise?

While we fret about the devastation that benefit cuts and tax hikes would cause, Reason’s Eric Boehm notes that Krugman doesn’t think the cuts are necessary. “First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.”

Hope over reason! And the progressive’s blithe acceptance of always-​increasing tax burdens.

Serious people should confront facts … and avoid Krugman.

This is Common Sense. I’m Paul Jacob.


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general freedom international affairs too much government

The Population Implosion

At the risk of turning Common Sense with Paul Jacob into Common Sense About Elon Musk, consider the second best thing about Musk’s Twitter preoccupation: his own tweets.

“At risk of stating the obvious, unless something changes to cause the birth rate to exceed the death rate, Japan will eventually cease to exist,” Musk posted on Saturday. “This would be a great loss for the world.”

A very significant observation, at odds with so much of the Official Narrative of Approved Subjects and Opinions.

Recognizing that depopulation is the big problem for the developed nations of the world, not over-​population rubs up against most of what we’ve been told for years.

But it’s true.

Japan is not alone, here, in showing a demographic collapse. It’s merely the most advanced in population decline. Russia is in a bad way, and many European countries’ native populations are in zero population growth. The United States, too, is growing only because of immigration, legal and illegal.

Behind the numbers, though, is a disturbing reality: the instability of our welfare state policies. In America, and in most advanced nations, government-​run social pension programs require a growing population to properly service. Yet, Social Security, by removing the need to have children as a natural safety net (where we beget offspring to help take care of us in old age), actually disincentivizes the population growth that might make the system sustainable.

 Elon Musk did not offer a fix. But by pointing to a very real problem, he’s done us a great service, speaking simple truth instead of propaganda.

This is Common Sense. I’m Paul Jacob.


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national politics & policies responsibility too much government

The Problem with Public Accounts

President Trump’s promise not to cut one dime from Social Security and Medicare doesn’t square with the fiscal cliff these programs are headed for. To save the system, benefits must be cut, taxes must be raised, or both.

Or else replace the system.

No wonder, then, that John Stossel insists we “Fix Social Security Before It Goes Broke,” and rescues a decades-​old proposal: “private accounts,” which he says “would certainly pay retirees more than Social Security will ever pay.”

In Chile, where they have tried this, private accounts have worked out pretty well, contributing to the once-​impoverished country’s rise to “the richest country in Latin America.” 

Had the United States adopted such a system, at Social Security’s inception, the amount of capital flowing into projects big and small would have not merely prevented the stagflation of the Seventies and brought us almost unimaginable wealth, it might have turned political eyes towards accountability, prudence and stability.

But, because Social Security was set up as a Pay As We Go system, we paid … and the money went.

It got so messed up that by the 1980s Ronald Reagan charged Alan Greenspan with “fixing” it. That “fix” mainly meant increasing taxation. The decades of revenue surge over outflow was spent by Congress for war and handouts. And now we’re reaching a repeat of the late 1970s’ Social Security insolvency.

Meanwhile, Chilean leftists “hold street protests against private accounts,” Stosssel reminds us. “They’re angry because capitalists get a slice of the pie.”

Back in the USA, Democrats demand that more benefits be wrung from Social Security. Are they dead set on proving why socialism doesn’t work?

This is Common Sense. I’m Paul Jacob.

 


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Accountability moral hazard nannyism national politics & policies responsibility too much government

Population to Government, “Hello”

Government “central planning”? I’m against it.

But it’s socialism, fascism, and allied isms that I oppose. I’m not against “government planning.”

We could use some.

Take population. When government sets up complicated institutions, like Social Security or Medicare, those institutions must match the general trend of the number and make-​up of those served.

Or else fail spectacularly.

But as everyone knows, Social Security was set up when the population was growing, and expected to continue … at a positive rate. The whole logic of the system depended on population growth.

What if populations shrink?

The Center for Disease Control and Prevention (CDC) now reports that the general U.S. “fertility rate has dropped back to its all time low of 62.5 children per 1,000 American women ages 15 to 44 years,” informs science writer Ronald Bailey.

The “total fertility” rate is now “1.84 children over the course of an American woman’s lifetime.”

A steady-​state population replacement rate is thought to be 2.1 children per woman.

Trouble is, if your main institutions depend on population growth, and instead, population declines, things are liable to go catawampus.

No wonder European nations, which are undergoing even more startling negative population growth, flirt with allowing huge influxes of hard-​to-​assimilate refugees. At the back of governmental minds may be: how do we keep going?

Some of today’s social anxiety may have to do with this shift in population growth, and government strategy.

Before politicians try to plan a whole industry — like, say, “single-​payer” medical services — maybe they should learn how to arrange the existing government, to accommodate the direction society demonstrably wants to go.

This is Common Sense. I’m Paul is Jacob.


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Categories
Accountability folly government transparency moral hazard national politics & policies responsibility

Unfair Reform?

I am sure we all think it would be great, other things being equal, to try to make many of life’s unfairnesses less … problematic. But most grown-​ups understand (or used to) that “life isn’t fair” is a truism for a reason.

So when Republican presidential candidate Donald Trump criticized his competing GOP hopefuls for wanting to reform Social Security and other so-​called “entitlements,” I was unimpressed.

“Every Republican wants to do a big number on Social Security,” Trump said last year, referencing Medicare and Medicaid as well. “And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want to be cut.”

Not fair.

Well, yeah.

But the unfairness is not in fixing the system by raising retirement ages, etc. The real injustices lie in the past, with previous fixes and … “unfixes” — that put us in the fix we are currently in.

And not fixing it now will lead to further, more obvious “unfairness” in the future.

Trump is just avoiding responsibility. By not addressing the problem honestly, we do not make things or keep things fair. We make things worse.

Peter Suderman notes that Chris Christie’s endorsement of Trump, last week, puts the lie to the New Jersey governor’s much-​ballyhooed seriousness about entitlement reform.

Well, yeah.

But no major politician wants to handle it. For the problem shows how deep the unfairness runs in the American system.

That would require real leadership.

This is Common Sense. I’m Paul Jacob.


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