Sunday, January 31, 2021

Please make it stop

This is Joseph

From the Washington Post:

Meanwhile, the inexorable arithmetic of dollars times demography has taken us past the point of no return. It’s no longer possible to say that, by starting now, we can avert massive, and massively unfair, changes in the promises we have made, or that current beneficiaries have nothing to worry about. That line was crossed even before the emergency budget blowout of 2020 added trillions to the debt tab we will dump on younger generations.

 Honestly, how do we even address this one? First, national debt includes investment (like purchasing a house) and debt used to increase investment can actually improve the long term fiscal outlook of the nation. Second, there is not a shortage of resources to pay for social security. Before you call this an question of all of the programs, note this piece:

A start on mitigation would be for the Social Security Administration to begin including in beneficiary bulletins a disclosure that, starting soon, the system cannot fulfill all of its commitments. The disclosure could then provide sample calculations of the amount of savings a given recipient will need to replace those expected payments under alternative scenarios.

This is not a "Medicare only" concern. But are we really, as a nation, incapable of generating enough wealth to pay social security benefits? By 2035 (somewhat of a demographic local peak), these benefits are projected to rise from 5% of GDP to 6.1% of GDP. But there is room for large tax cuts apparently, such as TCJA. Note that we could cover this entire gap by (for example) raising taxes to the levels of France or Germany. 

This is not to say that there are not risks in budget deficits. But these risks are just as real for tax cuts as they are for entitlement expenses. Similarly, the idea that you should never increase taxes is bonkers, but rather that this needs to be balanced. You could find the difference by dropping military spending to UK levels, for example, and still have revenue to spare. Or follow Matt Yglesias on the road to One Billion Americans, and drop the cost as a % of a much larger GDP. 

There are lots of decisions that can be made. Why are the retirement security programs always the first things on the chopping block? Because it looks like a declaration of values rather than a financial necessity. 

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