In 1935, when Congress created Social Security, over half of American senior citizens lived in poverty. Today, less than 10 percent of the elderly live in poverty. According to economists Gary Engelhardt and Jonathan Gruber, a $1,000 increase in Social Security benefits reduces elderly poverty by 2 to 3 percentage points.
Americans need those checks now more than ever. Since the end of World War II, it’s never been harder to save for retirement. Jobs are disappearing. Wages are barely keeping up with inflation. Education and health care costs are soaring. Pension plans are becoming a thing of the past.
So it’s not hard to understand why 34 percent of Americans have nothing saved for retirement. Nor is it surprising that 54 percent of retirees say Social Security is a major source of their income — especially because 401(k) accounts only average $98,000, which amounts to $600 per month in retirement, well below the poverty line.
But Social Security is hardly a windfall.
The average retiree will earn $14,124 from the government this year. The poverty line is $10,830. Of the 30 industrialized nations, 24 are more generous to their retirees than the U.S.
And your leaders want to reduce Social Security benefits. Continue reading “Social Security Isn’t Lying to You. But Rick Perry Is.”
[If] the Treasury and Federal Reserve can create $13 trillion of public obligations — money — electronically on computer keyboards, there really is no Social Security problem at all, no Medicare shortfall, no inability of the American government to rebuild the nation’s infrastructure.
— Michael Hudson (University of Missouri, Kansas City)
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Whenever someone talks about making government smaller, he should be asked which of these big four [Social Security, Medicare, Medicaid, and defense] he proposes cutting, and how. If he responds with generalities, he’s faking it.
— Paul Krugman (Princeton University)
Sorry that I haven’t posted in a few days. I’ve made a few changes to the site, including a better title than “What to Read” for this and future posts. Enjoy!
- Kidney Brokers Flourish When Compensation to Potential Donors Is Illegal — Sally Satel – This is an easy way to save lives, and that kind of opportunity is rare. Let’s seize it.
- North Korea Says It’s Open to New Nuclear Talks — New York Times – Just because the NYT doesn’t think this is important enough to give more than a few paragraphs to doesn’t mean the President shouldn’t jump on the offer.
- American Health Care — Richard Posner – Becker’s original post, to which Posner replied, is worth a read, but Becker ignores the larger question that David Leonhardt pointed out about prostate cancer a few weeks ago: We can probably achieve just as good results with far less expensive treatments. Posner is right that it’s all about cost-benefit analysis. As indicated by Brownlee in a quote I used in my post on the issue, prostate cancer is one of the areas where we excel, yet we don’t do much better than the United Kingdom. Becker doesn’t mention a lot of other areas where we fall short, including infant mortality, medical errors, customer satisfaction, and yes, even waiting lines (ours are longer than France’s and the Netherlands’). And much of the reason that we make all the behavioral mistakes that Becker says (where he conveniently assigns the blame to us instead of the system) is because our doctors have a financial incentive to give us expensive treatments instead of inexpensive preventative advice. The beauty of “evidence-based medicine” is, if the procedures we use really are so effective at treating a particular disease, then the evidence will reflect that and doctors will be encouraged to use those procedures. The goal, remember, is to reduce unnecessary care, not treatments with a proven track record.
- Lessons from Sudan for Iraq — Ivan Eland – Bravo to Eland for voicing the solution that Iraq desperately needs!
- Health Care Premiums Run Amok — David Cutler – When reading estimates about how different proposals will affect you, be careful that they are not using the current premiums, or even inflation-adjusted premiums, as their baseline for the next decade. What matters is how the reform compares to what will happen if we do nothing, which is summarized neatly here by one of America’s best health economists.
- Jon Stewart: Trust a Comedian to Be Trusted with the Truth — Stuart Fischoff – All too often we don’t appreciate the role of great comedians in society, especially the ones who hold our media accountable. This is a well-deserved, keen analysis by Fischoff. Bravo!
- Kyrgyzstan: At the Crossroad of Empires, a Mouse Struts — New York Times – The key quote, “neither has publicly condemned the heavy-handed tactics of the Kyrgyz president, Kurmanbek Bakiyev, who easily won another term last week in an election that his opponents said was rigged,” was thrown in as an afterthought. We get all bent out of shape over Iran and Honduras, but don’t anyone dare say a word about Kyrgyzstan! We’ll let them get away with whatever they want, so long as we can use them for our military bases. And how do the citizens of the Middle East feel about that? I seem to recall a similar situation with Saudi Arabia leading to the emergence of a little group called Al Qaeda… And then we complain when reformers have trouble bringing democratic reform to these nations!
- Revealed: The Secret Evidence of Global Warming Bush Tried to Hide — The Guardian/UK (via Common Dreams) – Speaks for itself.
- Are They Allowed to Talk About Drug Patents at the Washington Post? — Dean Baker – Definitely worth consideration, especially given the history and economics of Big Pharma.
- The Bernanke Reappointment Tour — Calculated Risk – All good points, especially the last sentence. A lot of it depends on whom the President would replace him with. If it’s Larry Summers, then we had better root for Ben Bernanke. If it’s Janet Yellen, we might want to reconsider. Roubini is right, though, that Bernanke prevented the recession from becoming a depression, and that is no small feat.
- CBO Kills the President’s Medicare Commission Proposal — Keith Hennessey – Hennessey is missing the point. He is right to quote CBO language that criticizes IMAC, but the CBO is not saying IMAC is a bad idea. They are saying it should be even stronger and more powerful, which, if you understand the history and economics of health care, makes perfect sense. (I should also note, for example, that if IMAC only has power over Medicare and not private insurers, then we can expect hospitals to shift resources to milk private insurers as they did after the last major Medicare reimbursement change under Ronald Reagan.)
- The Good, and Bad, of Heart Care — David Leonhardt – Great example of the economics I describe in my latest post. Leonhardt is also a big fan of Brownlee’s Overtreated, which talks about stents and heart disease in much more detail.
Update: The New York Times has now expanded its article on North Korea. It seems the first draft was just a placeholder until they had time to write a full article. I take back my criticism and reiterate my plea to President Obama to seize this opportunity.