Jimmy Carter appointed as Fed Chair the biggest inflation hawk that institution had ever seen. Volcker told Carter personally that he would essentially engineer a deep recession in order to reduce inflation expectations, and despite all the criticism leveled at Carter, he never once questioned the process or tried to undermine the Fed's independence. Carter was the anti-Nixon/Trump who sacrificed his reputation for the longer term stability of the country. And to whom do Americans attribute this legacy, Reagan. After all, that's when things started to improve.
I don't blame politicians for trolling the electorate. We get who we deserve.
Tyler Cowan talked about this on Bari Weiss’ podcast once. His version of the story is quite different though - that both Regan and Carter did the right of backing Volcker to do what needed to be done.
Right, but neither Carter nor the Democratic party benefited from it. In order to reduce inflation that he inherited (it wasn't his fault that the US was particularly vulnerable to energy price shocks, or that Boomers were creating a giant lending boom), he had to appoint and support a Fed Chair who would undertake unprecedentedly strict monetary policy. And because the fruits of that policy wouldn't materialize during his term, his presidency is viewed as this sort of failed experience. My intent wasn't to diminish Reagan's involvement.
Counterfactually though, if Carter had won re-election, he would have gotten credit.
Just like counterfactually if Volcker’s policies took a couple extra years to materialize, Regan’s backing of Volcker would have helped his Democratic successor instead of him.
Totally agree. And I would throw H.W. Bush in there too, for going back on his word not to cut taxes in order to maintain fiscal responsibility. Both one term presidents because they behaved like adults.
Yeah, but the important thing is that Carter didn't argue with him and tell him he couldn't fix inflation because a recession would kill Carter's chance of reelection. Trump would have gone to any lengths to stop Volcker.
Scott Sumner doesn't claim Reagan took any part in Volcker's change to monetarism.
"Nixon tried statism (or socialism, if you want to troll the Sanders/AOC supporters). Then Carter tried Keynesianism. They all failed. Then Reagan tried monetarism. He succeeded."
"Populism retains the portion of the agenda that appeals to the public while getting rid of the less palatable parts, and declares itself morally superior for “taking on the elites.” It’s the ideology of you can eat ice cream all the time and never get fat."
Great observation here. As I have noted, this is core to every radical ideology; they present themselves as having simple, downright obvious, solutions to problems that involve no trade offs whatsoever. People buy into these idealogues, totally unaware of the complexity of the issues and trade offs that underlie them.
Predictable result of mass democracy. The average working man earning a paycheck cannot be expected to sit down and seriously research and think through these things, even if he had the intellectual capacity to do so with any degree of effectiveness.
"JD Vance, and think he genuinely wants to do the right thing for the country. I don’t believe he’s consciously trying to mislead voters." - Vance is a pathetic hypocrite. He is intelligent enough to know Trump lost in 2020 but he dumbs himself down to play to the MAGA crowd. Morons like Boebert and MTG probably do actually believe TFG but Cruz, Gaetz, Hawley appear to have a high enough IQ to know better but Vance and his ilk play the part well. How did we ever get to this? A country that is close to sending folks to Mars but has a sizeable segment that pays fealty to a deranged clown.
While I do agree that we desperately need to slow entitlement growth, I think saying that seniors are the richest demographic is misleading. Yes, they have the highest median net worth, but many have greatly diminished earning power, and a 4% drawdown on the median $400k household net worth yields $16k/year, below the poverty line for a two-person household.
Depending on job, many people can continue working into their 70s, supplementing retirement savings, but beyond 75 or so, that share falls off quickly.
I'm inclined to agree. The elderly is not the demographic that experiences the least poverty, 40 and 50 year olds are the best off among age brackets. And old people already put in their time, we all want to be able to look forward to an easy retirement.
The privilege no one is discussing is silver-top privilege. Society worships the elderly, seen most acutely in the COVID era. Young people's education and careers were disrupted for years just so gramps could live a few more weeks (literally a few more weeks statistically). This sick way of thinking needs to change.
Actually what you are describing is Asian society. In China, if a self driving car has to decide between serving left to run over a child or swerving right to run over an elderly person, they would choose for the child to die. No one in America would make that decision.
THAT was not the problem. Rather the PH establishment did not (and did not appear even to be trying) to give individual ad political decision-makers the information and tools with which THEY could decide how much of what kinds of NPI were cost effective, however the QALY of different age and demographic groups are valued. How much good did closing schools or restricting international air travel do ANYBODY?
All that you want to kill grandma people wanted no one to die from COVID, especially the elderly. Completely unrealistic and socially destructive and valued the elderly over everyone else. PH officials were also affected by public sentiment (left leaning at least) and PH officials are also part of the silver privilege problem. Fauci is no spring chicken either.
Unilateral austerity in a two-party system is stupid. You cut debt by 2 trillion, the Democrats will just win back control of the government in two, four, or six years and then use the "savings" to spend that money on student loan forgiveness, green new deal, etc. Whereas unfunded tax cuts, by inflating the debt, somewhat limit future Democratic spending, since they can't borrow an infinite amount.
Missing from this article is anything about how you're going to build a political coalition for this, which is kind of important as you can't do anything without getting elected first. If you think you can pursue these kinds of policies with the current Republican electorate, look into why Kentucky has a Democratic governor. You're going to lose a lot of old people and working-class people, who are you going to gain?
There's two distinct ways to think about politics. In one, a politician is expected to pursue the best policies for all citizens of his country. In another, a politician is expected to pursue the best interests of his voters and not concern himself too much with those who didn't vote for him. You can see the latter attitude as "mean" or "spiteful," an attempt to "punish" those on the other team. You can also imagine that politician saying "those on the other team, you have a party of your own, you have representatives and you can go to them with your complaints." When I look at the relationship between corporations and the Republican Party, with the former showing absolutely no appreciation for the latter going to bat to cut their taxes, I don't see "principled, responsible leadership." I see the GOP as a bunch of weak beta orbiters.
And anyway, this whole conversation will likely be made irrelevant by AGI.
Here's an option: reject the modern political chaos resulting from our two political parties seeing each other as enemies. For two hundred years the various political factions were able to work together and collaborate. Now one party says that they would rather die than negotiate with the other side. It didn't used to be this way.
Good point about Bevin's defeat in Kentucky. Austerity is a loser, even in an R+16 state.
This basically captures the tradeoffs for the Republicans that I highlighted in my comment. I still suppose the calculus is different for Democrats because:
1. Their coalition is younger, so they're net beneficiaries of a reduction of wealth transfers from young to old (I would guess this is even more true with means testing).
2. I expect that the Dems' political dominance will grow which gives them more sense of ownership and more breathing room to at least consider the possibility of going out of their way to avert a national disaster. Doesn't mean they have to, but the incentives and psychology are at least a little different from the GOP, which exists in a general pervading sense of imminent doom, every trend in the world going against it.
This is true for most Democrats, but occasionally some of the wonkier and more farsighted ones occasionally try to do something to ameliorate it. For example, I recall there being a budget surplus during the Clinton years and he suggested using it to "save Social Security" during his State of the Union address.
Yeah, Clinton's Democratic party was nothing like today's, and that one still failed to do anything. If Republicans can't get serious about the issue, there's just less than zero chance Democrats can. I am sure some Democrats are smart enough to know that there is a problem. That does not mean, at all, that they are capable of doing anything about it politically.
One way the Democratic Party secures dominance for the next few decades is by further increasing its dominance of the managerial class, educated whites, etc. Which I do think might make the party wonkier. And honestly, it already IS the wonkier party. In the Evil Party vs. Stupid Party formulation that's more true today than ever, Evil Party is naturally the one with a better grasp of arithmetic.
I also think the Democrats' psychology could change some as their dominant position becomes clearer. The Trump win confused things because of the unprecedented scope of the popular/electoral split in 2016 (a feat I'm skeptical we'll live to see repeated), and because they hate and fear Trump more than they've ever hated or feared anything in their lives. If the Democrats had held uninterrupted control of the White House since 2008, which is what the popular vote tells us, they would be less paranoid.
I wonder sometimes whether economic circumstances that make seniors more dependent on their families would not go a decent way toward fixing the infertility culture. People who know that their children will be the ones providing for them may be more inclined to treat their children better, who in turn won't be given the message that they (the children) themselves are an enraging burden, and be more inclined to pursue family life. I've met a lot of people my age and younger whose parents treated them poorly, and they internalize that frustration and believe not only that they are deficient but that starting a family is pure emotional cost with little benefit.
What is WRONG with "just raise taxes" to pay for social insurance programs like SS, Medicare, Medicaid, unemployment insurance (and a Child Tax Credit) if the taxes are broad based and on consumption like a VAT?
RH is just wrong that closing the social insurance deficit would mean reducing the American standard of living unless that means reducing consumption. The effect of a lower deficit, given the Fed's inflation target would be to shift resources to investment.
[BTW, many of the items on RH's list are good ideas regardless of their budget effects; the improve incentives and so are real income increasing.]
Inflation has already severely curtailed buying power in the past three years. A 20% VAT will be similar to another 20% rise in inflation, ergo another 20% reduction in buying power.
No tax is ever a "net positive", except to those who work in government and their beneficiaries. A 20% VAT will make items 20% more expensive, which will decrease consumption which will shrink the economy, decrease employment, and decrease tax revenue.
I get what Richard is saying about populism being important to push back against COVID insanity, but I have trouble feeling good about it because it seems pretty clear to me that populists turned out to be right about that because of dumb luck, not because their instincts were right. I think that even if COVID NPIs had been massively effective and saved huge amounts of lives, they still would have experienced populist resistance. Populists weren't rationally concluding that NPIs weren't worth it, they were pushing back against them because of perverse antisocial contrarianism. They just happened to get lucky that NPIs really were ineffective. The continued populist resistance to COVID vaccines, which actually are effective, strengthens my view.
I doubt that if the government had specifically mandated N95 and other medical-grade masks and had emphasized that regular cloth masks don't cut it, that populists would have fallen in line and accepted the mask mandates.
Agreed because those mandates would face massive compliance issues in terms of expense, discomfort and difficulty in wearing for long periods of time, difficulty communicating and they need to be fitted and properly worn to work. Also they weren’t part of the pre-COVID pandemic playbook and policy.
Or my favorite from Biden in September 2021, the "pandemic of the unvaccinated." How did that turn out? Breakthrough cases became the norm. I'm still angry no one paid any price whatsoever for their COVID maximalism.
Why not wait till entitlements are “insolvent” under their funding mechanisms before addressing them? As I understand the programs, benefits will fall without congressional action. Then, benefits proponents will have to get legislation passed. So, they’ll need republican votes. Republicans might even control a chamber at that point. Also, to prevent the automatic benefit cut, proponents will have to raise taxes, which will make the costs more real to the public.
I don’t see any upside to handing the issue preemptively. Procedurally, reformers would need to assemble a legislative coalition. And, for reform, the upside is currently abstract. But cuts are real. So, ryanism seems futile and bad, to me.
Letting things get to that point would risk damaging the US's creditworthiness and have a destabilizing effect on its privileged position in international financial markets.
I would agree with you that means testing would be unreasonable if FICA deductions didn't have a cap. Currently it is ~$160k slated to rise to ~$168k in 2024. High income earners (me included) essentially pay a lower and lower percentage of their income for the same return. So as a tax, it is a regressive one. The common argument here is that we 'pay into our account so we deserve all the benefits' fails because at this point most SSN recipients receive much more than they paid in plus the program has been expanded to the point that many classes of recipients exist that have never paid in at all or have paid in very little. So, we could reasonably call Social Security an age & disability based welfare program and through that lens perhaps get back to its original purpose of being a safety net for the poor elderly and structure it to reflect the current reality of longer lifespans. It was never intended to be a program to provide a comfortable lifestyle for those who fail to prepare -- the politicians just sold it that way.
Social Security is not regressive for higher earners. Higher earners get less money as a percentage of their income. People forget that social security benefits are based on your lifetime income. I remember reading an article years ago that laid out that those making $0-$40,000 get more in benefits than they pay in, those making $40,000-$80,000 get roughly the same amount in benefits as they pay in and those over $80,000 get less than they pay. Those figures are vague recollections but I'm sure there is someone in these comments who can give the correct figures.
This analysis misses the root cause of the problem: A rapidly increasing dysgenic, lower IQ, darkening population in America, one that hoovers up more and more redistribution. Blacks, browns, and illegals consume the overwhelming majority of healthcare costs (with their obesity and chronic illnesses) and the bulk of all forms of welfare (no matter what euphemistic names you give them). Since the New Deal, adjusted for inflation, we have redistributed $70T to them. Redistribution leads to the low IQ having more children, and the high IQ having fewer. And this is indeed what is happening, at an EXPONENTIAL RATE. One doesn't need a PhD in mathematics to come up a conclusion: The Great Replacement will bankrupt America.
The suggestions by Hanania and others are jerry rigs, akin to plugging holes in Hoover Dam with your fingers. They will not work. Only a solution that will reverse the Great Replacement will work, and there is only one of those: Privatized Eugenics to sterilize the underclass. https://childfreebc.com/candidates/ - free market & voluntary. If we want to save the US economy, reducing the huge #'s of net negatives in the country must be done.
Use $5 donation voucher: 5freecbc1 -- to try it out, no registration needed. Donate & share. Save the West.
The Flynn Effect is a measurement anomaly that has been explained thoroughly, e.g. https://www.amren.com/news/2021/04/the-flynn-effect-intelligence/. Putting aside an academic debate about this, if you think, empirically, by looking around us, that people in the USA are getting overall smarter... then I have a bridge in New York I'd like to sell you.
You’ve come to the same conclusion I came to long ago - that social security is going to have to be cut for those who have other sources of retirement funding. But I think you and I place the blame in different places.
Social security was originally intended to be retirement savings plan. The government would take money out of your paycheck, invest it, and then you’d get it back during retirement, avoiding the situation where some people didn’t save for retirement and ended up destitute or dependent on relatives or public assistance. Only of course it didn’t work that way because the government soon realized it could spend that money, and how to pay future retirees was a problem for future politicians to solve.
The point is, people paid into this their entire careers with the promise that they would get social security later. The government took money that people should have otherwise saved and invested for their retirement, and now after they planned on getting that money back, the government is going to steal it. “I’ve never seen one argue that government should subsidize the lifestyles of the rich just because they happen to be old.” particularly rankled. Giving people back their retirement savings isn’t “subsidizing”, it’s giving people what they are actually owed.
I see no choice other than to phase out social security, starting by eliminating and reducing benefits for those who have other sources of savings/income, while still making everyone pay into it. But I admit it’s a bitter pill for my generation. I’m 50 and I’ve been paying into it for 34 years. My grandparents relied on it, and now my parents and in-laws do, so I know I have to keep paying. We can’t leave people destitute who were promised this money and can’t survive without it. But I also know I’ll likely never see a penny of it myself. I’m well-off enough and have enough saved that I won’t starve without it, but not so well-off that it won’t have a major impact on my quality of life during retirement. And that kind of makes me mad - basically the government stole my money and isn’t living up to their end of the bargain. And those who were responsible and saved for retirement are going to be told that all the sacrifices they made to do that don’t mean a thing, their money is being taken to pay people who didn’t save.
I agree it’s an issue that people are basically voting for what benefits them personally, rather than what’s actually responsible and best for the country, but I disagree with your conclusion that retirees who are receiving money that they worked hard for all their lives and that was promised to them are the bad guys here. Politicians who decided to spend other people’s retirement savings are the ones to blame.
My first thought is to say that that the GOP is older and hence even more of a gerontocracy than the Democrats. Per Pew, in 2020, 49% of Democrat voters were under 50, vs. 38% of Republicans. And the Democrats' under-50 percentage actually increased in 2020 vs. 2016 (a bunch of younger voters showed up to unseat Trump), while it decreased for the Republicans.
The fact that young voters hate Trump is a large part of the reason why his odds are lower in 2024 than polls indicate right now. The youngs don't love Biden and aren't focused on their hate for Trump right now, but when they get focused (with the help of social media and peer pressure), they'll presumably show up again and Biden will win easily.
So the push for reform is going to come from Democrats. The Democrats are also the dominant party in national elections for the foreseeable future, which means they naturally have a little more confidence when tackling unpopular issues. In a system where one party is structurally dominant, the dominant party naturally has more of a sense of ownership over the polity than the minority/insurgent party. Odds are we'll see another Democrat trifecta, the filibuster killed, within the next 10 years or so. It's tougher to shift the blame when something happens under a trifecta's watch. The odds of a Republican trifecta are much lower.
Republicans are operating under the understanding that national elections can only be won by the skin of their teeth. Trump managing the largest electoral vs. popular vote split in American history being case in point. The natural mentality of a minority coalition like this is that you only do unpopular things if they're super-popular with the base. The Republicans have concluded that Paul Ryan politics are a loser, and I think changing its mind will require a highly charismatic figure to try again with those ideas. It's not going to be anyone we've seen in a GOP primary in the last few decades.
I agree with the broad thrust of this article, but take issue with two points:
1. Even if it were politically feasible, a higher retirement age isn’t the solution people think it is. First, because the number of disability applications would skyrocket for 60 year olds if retirement benefits weren’t on the horizon for them. Do you talk to people that age? Many have bad backs, hips, and knees, which means they technically qualify for disability. With some technical exceptions, disability benefits comes from the same money jar as social security retirement benefits. Second, advancing medicine means people will be starting to live a lot longer soon. Raising retirement age by 5 years while extending lifespan by 15 means you gained nothing. (Perhaps extended lifespans also mean fewer disability applications, but still means the money jar runs out of money).
2. I’m not understanding why a statutory change to the funding of social security would cause economic shocks. We would fund benefits via debt, like we do with everything else. Maybe it kicks the van down the road for two decades, by which time Productivity gains from AI and genomics means a much higher tax base and the ability to pay off a large portion of US debt. If AI is half the economic revolution people think it is, there will be much GDP growth these next few decades.
1a. Applying for disability is big enough hurdle that it would still cut government expenses
1b. You can tie the increase to median lifespan to account for that. It would in fact be the optimal solution.
2. Because at some point share of interest payments as a percent of the budget becomes too big and we have to hyperinflate or cut expenses. The recent inflation wave was a direct result of overspending during COVID.
Jimmy Carter appointed as Fed Chair the biggest inflation hawk that institution had ever seen. Volcker told Carter personally that he would essentially engineer a deep recession in order to reduce inflation expectations, and despite all the criticism leveled at Carter, he never once questioned the process or tried to undermine the Fed's independence. Carter was the anti-Nixon/Trump who sacrificed his reputation for the longer term stability of the country. And to whom do Americans attribute this legacy, Reagan. After all, that's when things started to improve.
I don't blame politicians for trolling the electorate. We get who we deserve.
Has anyone written on this?
Tyler Cowan talked about this on Bari Weiss’ podcast once. His version of the story is quite different though - that both Regan and Carter did the right of backing Volcker to do what needed to be done.
Right, but neither Carter nor the Democratic party benefited from it. In order to reduce inflation that he inherited (it wasn't his fault that the US was particularly vulnerable to energy price shocks, or that Boomers were creating a giant lending boom), he had to appoint and support a Fed Chair who would undertake unprecedentedly strict monetary policy. And because the fruits of that policy wouldn't materialize during his term, his presidency is viewed as this sort of failed experience. My intent wasn't to diminish Reagan's involvement.
Counterfactually though, if Carter had won re-election, he would have gotten credit.
Just like counterfactually if Volcker’s policies took a couple extra years to materialize, Regan’s backing of Volcker would have helped his Democratic successor instead of him.
Not as a central topic, but it's mentioned quite a bit. Seemed like a good example of the unfortunate incentives facing political parties.
Totally agree. And I would throw H.W. Bush in there too, for going back on his word not to cut taxes in order to maintain fiscal responsibility. Both one term presidents because they behaved like adults.
Obviously it's supposed to say "raise taxes". My bad.
Volcker didn't succeed in actually breaking the back of inflation until Reagan. Scott Sumner has written on this.
https://www.econlib.org/three-failures-mmt-statism-keynesianism-and-a-monetarist-success/
Yeah, but the important thing is that Carter didn't argue with him and tell him he couldn't fix inflation because a recession would kill Carter's chance of reelection. Trump would have gone to any lengths to stop Volcker.
Scott Sumner doesn't claim Reagan took any part in Volcker's change to monetarism.
This is from the second paragraphs:
"Nixon tried statism (or socialism, if you want to troll the Sanders/AOC supporters). Then Carter tried Keynesianism. They all failed. Then Reagan tried monetarism. He succeeded."
"Populism retains the portion of the agenda that appeals to the public while getting rid of the less palatable parts, and declares itself morally superior for “taking on the elites.” It’s the ideology of you can eat ice cream all the time and never get fat."
Great observation here. As I have noted, this is core to every radical ideology; they present themselves as having simple, downright obvious, solutions to problems that involve no trade offs whatsoever. People buy into these idealogues, totally unaware of the complexity of the issues and trade offs that underlie them.
Predictable result of mass democracy. The average working man earning a paycheck cannot be expected to sit down and seriously research and think through these things, even if he had the intellectual capacity to do so with any degree of effectiveness.
BS. The progressives are a lying bunch of brain rotted lemmings
Progressivism begets lemmings.
"JD Vance, and think he genuinely wants to do the right thing for the country. I don’t believe he’s consciously trying to mislead voters." - Vance is a pathetic hypocrite. He is intelligent enough to know Trump lost in 2020 but he dumbs himself down to play to the MAGA crowd. Morons like Boebert and MTG probably do actually believe TFG but Cruz, Gaetz, Hawley appear to have a high enough IQ to know better but Vance and his ilk play the part well. How did we ever get to this? A country that is close to sending folks to Mars but has a sizeable segment that pays fealty to a deranged clown.
While I do agree that we desperately need to slow entitlement growth, I think saying that seniors are the richest demographic is misleading. Yes, they have the highest median net worth, but many have greatly diminished earning power, and a 4% drawdown on the median $400k household net worth yields $16k/year, below the poverty line for a two-person household.
Depending on job, many people can continue working into their 70s, supplementing retirement savings, but beyond 75 or so, that share falls off quickly.
I'm inclined to agree. The elderly is not the demographic that experiences the least poverty, 40 and 50 year olds are the best off among age brackets. And old people already put in their time, we all want to be able to look forward to an easy retirement.
The privilege no one is discussing is silver-top privilege. Society worships the elderly, seen most acutely in the COVID era. Young people's education and careers were disrupted for years just so gramps could live a few more weeks (literally a few more weeks statistically). This sick way of thinking needs to change.
Actually what you are describing is Asian society. In China, if a self driving car has to decide between serving left to run over a child or swerving right to run over an elderly person, they would choose for the child to die. No one in America would make that decision.
THAT was not the problem. Rather the PH establishment did not (and did not appear even to be trying) to give individual ad political decision-makers the information and tools with which THEY could decide how much of what kinds of NPI were cost effective, however the QALY of different age and demographic groups are valued. How much good did closing schools or restricting international air travel do ANYBODY?
All that you want to kill grandma people wanted no one to die from COVID, especially the elderly. Completely unrealistic and socially destructive and valued the elderly over everyone else. PH officials were also affected by public sentiment (left leaning at least) and PH officials are also part of the silver privilege problem. Fauci is no spring chicken either.
Unilateral austerity in a two-party system is stupid. You cut debt by 2 trillion, the Democrats will just win back control of the government in two, four, or six years and then use the "savings" to spend that money on student loan forgiveness, green new deal, etc. Whereas unfunded tax cuts, by inflating the debt, somewhat limit future Democratic spending, since they can't borrow an infinite amount.
Missing from this article is anything about how you're going to build a political coalition for this, which is kind of important as you can't do anything without getting elected first. If you think you can pursue these kinds of policies with the current Republican electorate, look into why Kentucky has a Democratic governor. You're going to lose a lot of old people and working-class people, who are you going to gain?
There's two distinct ways to think about politics. In one, a politician is expected to pursue the best policies for all citizens of his country. In another, a politician is expected to pursue the best interests of his voters and not concern himself too much with those who didn't vote for him. You can see the latter attitude as "mean" or "spiteful," an attempt to "punish" those on the other team. You can also imagine that politician saying "those on the other team, you have a party of your own, you have representatives and you can go to them with your complaints." When I look at the relationship between corporations and the Republican Party, with the former showing absolutely no appreciation for the latter going to bat to cut their taxes, I don't see "principled, responsible leadership." I see the GOP as a bunch of weak beta orbiters.
And anyway, this whole conversation will likely be made irrelevant by AGI.
Here's an option: reject the modern political chaos resulting from our two political parties seeing each other as enemies. For two hundred years the various political factions were able to work together and collaborate. Now one party says that they would rather die than negotiate with the other side. It didn't used to be this way.
Good point about Bevin's defeat in Kentucky. Austerity is a loser, even in an R+16 state.
This basically captures the tradeoffs for the Republicans that I highlighted in my comment. I still suppose the calculus is different for Democrats because:
1. Their coalition is younger, so they're net beneficiaries of a reduction of wealth transfers from young to old (I would guess this is even more true with means testing).
2. I expect that the Dems' political dominance will grow which gives them more sense of ownership and more breathing room to at least consider the possibility of going out of their way to avert a national disaster. Doesn't mean they have to, but the incentives and psychology are at least a little different from the GOP, which exists in a general pervading sense of imminent doom, every trend in the world going against it.
This isn't how Democrats think. Democrats simply deny the reality that entitlement spending will ever have consequences.
This is true for most Democrats, but occasionally some of the wonkier and more farsighted ones occasionally try to do something to ameliorate it. For example, I recall there being a budget surplus during the Clinton years and he suggested using it to "save Social Security" during his State of the Union address.
Yeah, Clinton's Democratic party was nothing like today's, and that one still failed to do anything. If Republicans can't get serious about the issue, there's just less than zero chance Democrats can. I am sure some Democrats are smart enough to know that there is a problem. That does not mean, at all, that they are capable of doing anything about it politically.
One way the Democratic Party secures dominance for the next few decades is by further increasing its dominance of the managerial class, educated whites, etc. Which I do think might make the party wonkier. And honestly, it already IS the wonkier party. In the Evil Party vs. Stupid Party formulation that's more true today than ever, Evil Party is naturally the one with a better grasp of arithmetic.
I also think the Democrats' psychology could change some as their dominant position becomes clearer. The Trump win confused things because of the unprecedented scope of the popular/electoral split in 2016 (a feat I'm skeptical we'll live to see repeated), and because they hate and fear Trump more than they've ever hated or feared anything in their lives. If the Democrats had held uninterrupted control of the White House since 2008, which is what the popular vote tells us, they would be less paranoid.
I wonder sometimes whether economic circumstances that make seniors more dependent on their families would not go a decent way toward fixing the infertility culture. People who know that their children will be the ones providing for them may be more inclined to treat their children better, who in turn won't be given the message that they (the children) themselves are an enraging burden, and be more inclined to pursue family life. I've met a lot of people my age and younger whose parents treated them poorly, and they internalize that frustration and believe not only that they are deficient but that starting a family is pure emotional cost with little benefit.
What is WRONG with "just raise taxes" to pay for social insurance programs like SS, Medicare, Medicaid, unemployment insurance (and a Child Tax Credit) if the taxes are broad based and on consumption like a VAT?
RH is just wrong that closing the social insurance deficit would mean reducing the American standard of living unless that means reducing consumption. The effect of a lower deficit, given the Fed's inflation target would be to shift resources to investment.
[BTW, many of the items on RH's list are good ideas regardless of their budget effects; the improve incentives and so are real income increasing.]
Inflation has already severely curtailed buying power in the past three years. A 20% VAT will be similar to another 20% rise in inflation, ergo another 20% reduction in buying power.
A VAT instead of a deficit would mean lower interest rates and greater investment in the future. Net positive.
No tax is ever a "net positive", except to those who work in government and their beneficiaries. A 20% VAT will make items 20% more expensive, which will decrease consumption which will shrink the economy, decrease employment, and decrease tax revenue.
I get what Richard is saying about populism being important to push back against COVID insanity, but I have trouble feeling good about it because it seems pretty clear to me that populists turned out to be right about that because of dumb luck, not because their instincts were right. I think that even if COVID NPIs had been massively effective and saved huge amounts of lives, they still would have experienced populist resistance. Populists weren't rationally concluding that NPIs weren't worth it, they were pushing back against them because of perverse antisocial contrarianism. They just happened to get lucky that NPIs really were ineffective. The continued populist resistance to COVID vaccines, which actually are effective, strengthens my view.
It wasn't dumb luck that a cotton mickey mouse mask over my 2 year old's mouth would not prevent transmission of a virus that is measured in microns.
People opposed mandatory COVID vaccines, not their existence or use.
I doubt that if the government had specifically mandated N95 and other medical-grade masks and had emphasized that regular cloth masks don't cut it, that populists would have fallen in line and accepted the mask mandates.
Agreed because those mandates would face massive compliance issues in terms of expense, discomfort and difficulty in wearing for long periods of time, difficulty communicating and they need to be fitted and properly worn to work. Also they weren’t part of the pre-COVID pandemic playbook and policy.
Or my favorite from Biden in September 2021, the "pandemic of the unvaccinated." How did that turn out? Breakthrough cases became the norm. I'm still angry no one paid any price whatsoever for their COVID maximalism.
Why not wait till entitlements are “insolvent” under their funding mechanisms before addressing them? As I understand the programs, benefits will fall without congressional action. Then, benefits proponents will have to get legislation passed. So, they’ll need republican votes. Republicans might even control a chamber at that point. Also, to prevent the automatic benefit cut, proponents will have to raise taxes, which will make the costs more real to the public.
I don’t see any upside to handing the issue preemptively. Procedurally, reformers would need to assemble a legislative coalition. And, for reform, the upside is currently abstract. But cuts are real. So, ryanism seems futile and bad, to me.
Letting things get to that point would risk damaging the US's creditworthiness and have a destabilizing effect on its privileged position in international financial markets.
Seriously. Let the hunk o' junk car crash before you call a wrecker. It won't be long now.
A means tested entitlement program is relevantly like a tax. Having peoples payouts decrease with greater earnings is basically just a tax.
I would agree with you that means testing would be unreasonable if FICA deductions didn't have a cap. Currently it is ~$160k slated to rise to ~$168k in 2024. High income earners (me included) essentially pay a lower and lower percentage of their income for the same return. So as a tax, it is a regressive one. The common argument here is that we 'pay into our account so we deserve all the benefits' fails because at this point most SSN recipients receive much more than they paid in plus the program has been expanded to the point that many classes of recipients exist that have never paid in at all or have paid in very little. So, we could reasonably call Social Security an age & disability based welfare program and through that lens perhaps get back to its original purpose of being a safety net for the poor elderly and structure it to reflect the current reality of longer lifespans. It was never intended to be a program to provide a comfortable lifestyle for those who fail to prepare -- the politicians just sold it that way.
Social Security is not regressive for higher earners. Higher earners get less money as a percentage of their income. People forget that social security benefits are based on your lifetime income. I remember reading an article years ago that laid out that those making $0-$40,000 get more in benefits than they pay in, those making $40,000-$80,000 get roughly the same amount in benefits as they pay in and those over $80,000 get less than they pay. Those figures are vague recollections but I'm sure there is someone in these comments who can give the correct figures.
This analysis misses the root cause of the problem: A rapidly increasing dysgenic, lower IQ, darkening population in America, one that hoovers up more and more redistribution. Blacks, browns, and illegals consume the overwhelming majority of healthcare costs (with their obesity and chronic illnesses) and the bulk of all forms of welfare (no matter what euphemistic names you give them). Since the New Deal, adjusted for inflation, we have redistributed $70T to them. Redistribution leads to the low IQ having more children, and the high IQ having fewer. And this is indeed what is happening, at an EXPONENTIAL RATE. One doesn't need a PhD in mathematics to come up a conclusion: The Great Replacement will bankrupt America.
The suggestions by Hanania and others are jerry rigs, akin to plugging holes in Hoover Dam with your fingers. They will not work. Only a solution that will reverse the Great Replacement will work, and there is only one of those: Privatized Eugenics to sterilize the underclass. https://childfreebc.com/candidates/ - free market & voluntary. If we want to save the US economy, reducing the huge #'s of net negatives in the country must be done.
Use $5 donation voucher: 5freecbc1 -- to try it out, no registration needed. Donate & share. Save the West.
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You obviously haven't heard of the Flynn Effect. IQ is going up, not down.
The Flynn Effect is a measurement anomaly that has been explained thoroughly, e.g. https://www.amren.com/news/2021/04/the-flynn-effect-intelligence/. Putting aside an academic debate about this, if you think, empirically, by looking around us, that people in the USA are getting overall smarter... then I have a bridge in New York I'd like to sell you.
You’ve come to the same conclusion I came to long ago - that social security is going to have to be cut for those who have other sources of retirement funding. But I think you and I place the blame in different places.
Social security was originally intended to be retirement savings plan. The government would take money out of your paycheck, invest it, and then you’d get it back during retirement, avoiding the situation where some people didn’t save for retirement and ended up destitute or dependent on relatives or public assistance. Only of course it didn’t work that way because the government soon realized it could spend that money, and how to pay future retirees was a problem for future politicians to solve.
The point is, people paid into this their entire careers with the promise that they would get social security later. The government took money that people should have otherwise saved and invested for their retirement, and now after they planned on getting that money back, the government is going to steal it. “I’ve never seen one argue that government should subsidize the lifestyles of the rich just because they happen to be old.” particularly rankled. Giving people back their retirement savings isn’t “subsidizing”, it’s giving people what they are actually owed.
I see no choice other than to phase out social security, starting by eliminating and reducing benefits for those who have other sources of savings/income, while still making everyone pay into it. But I admit it’s a bitter pill for my generation. I’m 50 and I’ve been paying into it for 34 years. My grandparents relied on it, and now my parents and in-laws do, so I know I have to keep paying. We can’t leave people destitute who were promised this money and can’t survive without it. But I also know I’ll likely never see a penny of it myself. I’m well-off enough and have enough saved that I won’t starve without it, but not so well-off that it won’t have a major impact on my quality of life during retirement. And that kind of makes me mad - basically the government stole my money and isn’t living up to their end of the bargain. And those who were responsible and saved for retirement are going to be told that all the sacrifices they made to do that don’t mean a thing, their money is being taken to pay people who didn’t save.
I agree it’s an issue that people are basically voting for what benefits them personally, rather than what’s actually responsible and best for the country, but I disagree with your conclusion that retirees who are receiving money that they worked hard for all their lives and that was promised to them are the bad guys here. Politicians who decided to spend other people’s retirement savings are the ones to blame.
My first thought is to say that that the GOP is older and hence even more of a gerontocracy than the Democrats. Per Pew, in 2020, 49% of Democrat voters were under 50, vs. 38% of Republicans. And the Democrats' under-50 percentage actually increased in 2020 vs. 2016 (a bunch of younger voters showed up to unseat Trump), while it decreased for the Republicans.
The fact that young voters hate Trump is a large part of the reason why his odds are lower in 2024 than polls indicate right now. The youngs don't love Biden and aren't focused on their hate for Trump right now, but when they get focused (with the help of social media and peer pressure), they'll presumably show up again and Biden will win easily.
So the push for reform is going to come from Democrats. The Democrats are also the dominant party in national elections for the foreseeable future, which means they naturally have a little more confidence when tackling unpopular issues. In a system where one party is structurally dominant, the dominant party naturally has more of a sense of ownership over the polity than the minority/insurgent party. Odds are we'll see another Democrat trifecta, the filibuster killed, within the next 10 years or so. It's tougher to shift the blame when something happens under a trifecta's watch. The odds of a Republican trifecta are much lower.
Republicans are operating under the understanding that national elections can only be won by the skin of their teeth. Trump managing the largest electoral vs. popular vote split in American history being case in point. The natural mentality of a minority coalition like this is that you only do unpopular things if they're super-popular with the base. The Republicans have concluded that Paul Ryan politics are a loser, and I think changing its mind will require a highly charismatic figure to try again with those ideas. It's not going to be anyone we've seen in a GOP primary in the last few decades.
I agree with the broad thrust of this article, but take issue with two points:
1. Even if it were politically feasible, a higher retirement age isn’t the solution people think it is. First, because the number of disability applications would skyrocket for 60 year olds if retirement benefits weren’t on the horizon for them. Do you talk to people that age? Many have bad backs, hips, and knees, which means they technically qualify for disability. With some technical exceptions, disability benefits comes from the same money jar as social security retirement benefits. Second, advancing medicine means people will be starting to live a lot longer soon. Raising retirement age by 5 years while extending lifespan by 15 means you gained nothing. (Perhaps extended lifespans also mean fewer disability applications, but still means the money jar runs out of money).
2. I’m not understanding why a statutory change to the funding of social security would cause economic shocks. We would fund benefits via debt, like we do with everything else. Maybe it kicks the van down the road for two decades, by which time Productivity gains from AI and genomics means a much higher tax base and the ability to pay off a large portion of US debt. If AI is half the economic revolution people think it is, there will be much GDP growth these next few decades.
1a. Applying for disability is big enough hurdle that it would still cut government expenses
1b. You can tie the increase to median lifespan to account for that. It would in fact be the optimal solution.
2. Because at some point share of interest payments as a percent of the budget becomes too big and we have to hyperinflate or cut expenses. The recent inflation wave was a direct result of overspending during COVID.
Very good roundup, but let’s rein in the use of “reign…”