There is an interesting Op Ed in the NY Times today titled "Get Radical: Raise Social Security". Radical indeed. The author, a Mr. Thomas Geoghegan, who once dreamed of being a pension lawyer (rent seeking much...), claims that the U.S. social security system is vastly underfunded compared to most developing countries and that we owe it to our elderly to raise the payouts by raising taxes. I disagree with him 100%, which is no surprise, but what is surprising is how poor his argument is.
He claims that 34% of Americans have nothing saved for retirement. Ok, maybe so, but what age groups do these 34% come from? Is this 34% of Americans over the age of 50, which would make this a relevant statistic, or is this 34% of all Americans, in which case 75% of the 34% may be under the age of 40, giving them 20 plus years to save money for retirement, or at least accumulate more than a $1. He doesn't say, but my guess is that it is closer to the latter case, in which case the statistic is irrelevant.
Mr. Geoghegan also thinks that we should fund occasional nights out on the town for the elderly, as if this is the moral thing to do. Well I don't consider buying elderly people bottles of Jim Beam to be particularly patriotic nor a duty of mine, but he is welcome to spend his money to fund a happy hour for all of the retirees in his neighborhood if he likes.
Mr. Geoghegan then states this fantastic non sequitur:
"The most paralyzing half-truth in this country is that people hate taxes. People are willing to pay taxes that they spend on themselves. Two-thirds of those surveyed in a CBS/New York Times poll in January were willing to pay more taxes to save Social Security at its modest level. To “save” it, most of us don’t need to pay. We could lift the cap on high earners, the 6 percent of workers who make over $106,800 a year."
So he cites a survey showing that 66% of Americans are willing to pay more taxes to save Social Security as an example of spending money on themselves, and then immediately follows it with a claim that in fact most of those people wouldn't even have to pay more taxes to save Social Security since we could just tax the "high" earners. So he thinks people would willingly pay more taxes, but lucky for them the rich can just pick up the tab. Huh? Methinks that the people who said yes to paying more taxes were thinking the same thing as Mr. Geoghegan "sure, put more tax dollars towards Social Security, as long as those damn rich people pay for it, of which I am not a part of".
In the next couple of lines, he says:
"If earnings above the cap were subject to the payroll tax with no increase in benefits to high earners, there would be no deficit in the Social Security trust fund in 2037, as projected."
So by his own argument the people paying extra taxes aren't receiving any of the extra benefits. Yet he cited a survey showing that people are willing to pay extra taxes if the taxes benefit themselves as supporting evidence for his plan. And this guy is a lawyer?
I should have known not to expect much from a piece that starts with "As a labor lawyer...."