Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Why the rich want to raise the retirement age

If you're the CEO of Goldman Sachs — if you have a job that you love, a job that makes you so much money you could build a Scrooge McDuck room where you could swim through a pile of gold coins wearing only a topcoat — then you should perhaps think twice before saying this:

"You can look at the history of these things, and Social Security wasn't devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed. Maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained."

That's Lloyd Blankfein, chief executive of Goldman Sachs, talking to CBS. And he's not saying anything that people, particularly wealthier people with desk jobs, don't say all the time in Washington and New York. So I don't want to just pick on him. But the cavalier endorsement of raising the retirement age by people who really love their jobs, who make so much money they barely pay Social Security taxes, and who are, actuarially speaking, ensured a long and healthy life, drives me nuts. If you want to talk about cutting Social Security, talk about cutting it. It's a reasonable point of view. You're allowed to hold it.

But cutting Social Security is unpopular, and people don't like to talk about it. So folks who want to cut the program have instead settled on an elliptical argument about life expectancy. Social Security, they say, was designed at a time when Americans didn't live quite so long. And so raising the retirement age isn't a "cut." It's a restoration of the program's original purpose. It doesn't hurt anything or anyone.

The idea that we've all gained so many years of life simply isn't true. Some of us have gained in life expectancy, of course. Since 1977, the life expectancy of male workers retiring at age 65 has risen six years in the top half of the income distribution. But if you are in the bottom half of the income distribution, you've gained 1.3 years.

If you're wealthy, you have many more years to enjoy Social Security. But if you're not, you don't. And so making it so people who aren't wealthy have to wait longer to use Social Security is a particularly cruel and regressive way to cut the program.

Do you know at what age most people actually begin taking Social Security? Sixty-five is what most people think. That's the law's standard retirement age. But that's wrong. Most people begin taking Social Security benefits at 62, which is as early as the law allows.

When they do that, it means they get smaller benefits over their lifetime. We penalize them for taking it early, but they do it anyway. They do it because they don't want to spend their whole lives at that job. Unlike many folks in finance or in the U.S. Senate or writing for the nation's op-ed pages, they don't want to work till they drop.

As Peter Diamond, the Nobel laureate economist and Social Security expert, told Dylan Matthews:

"What do we know about the people who retire at 62? On average, shorter life expectancy and lower earnings than people retiring at later ages. If anyone stood up and said, 'Instead of doing uniform across-the-board cuts, let's make them a little worse for people who have shorter life expectancies and lower earnings,' they'd be laughed at. Anything that reduces benefits is going to hurt everybody. It's going to hit people with short life expectancies, it's going to hit people with high life expectancies. But we should not make it worse for those retiring earliest."

That's what's galling about this easy argument. The people who make it, the pundits and the senators and the CEOs, they'll never feel it. They don't want to retire at age 65, and they don't have short life expectancies, and they're not mainly relying on Social Security for their retirement income. They are bravely advocating a cut they'll never feel.

Do you know what they would feel? Social Security taxes don't apply to income over $110,000. In 2011, Blankfein's total compensation was $16.1 million. That means he paid Social Security taxes on less than 1 percent of his compensation.

If we lifted that cap, if we made all income subject to payroll taxes, the Congressional Budget Office estimates that it would do three times as much to solve Social Security's shortfall as raising the retirement age to 70. In fact, it would, in one fell swoop, close Social Security's solvency gap for 75 years.

That may or may not be the right way to close Social Security's shortfall, but somehow it rarely gets mentioned by the folks who think they're being courageous when they talk about raising a retirement age they'll never notice.

I don't mean to pick on Blankfein. But he and all these folks who like to talk about raising the Social Security retirement age as if it's a no-brainer need to think harder about why they've settled on the cut to Social Security that will concentrate its pain on people who haven't fully shared in the remarkable increase in life expectancy, who don't make much money and who don't love going to their jobs every day.

© 2012 Washington Post

Why the rich want to raise the retirement age 12/01/12 [Last modified: Wednesday, November 28, 2012 5:21pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Washington Post.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Restaurant review: Let the food and outstanding cocktails at CW's Gin Joint transport you back to the 1920s

    Food & Dining

    TAMPA

    Maybe it's the twinkling chandeliers. All skajillion of them. Or maybe it is the rhythmic syncopation of ice cubes in shiny shakers. It could be the old-timey metal dessert cart with its silver cloches and chafing dishes, or else the chummy-but-menacing tuxedoed guy at the door who gives you the once-over …

  2. Video gives animated tour of new Pier District

    Local Government

    Eager to see what the new Pier District will look like? A new animated video takes you on a bird's eye and close-up tour of the $76 million waterfront attraction.

  3. Restaurant review: 1895 Kitchen Bar Market needs to do a lot more to stand out in downtown Tampa

    Food & Dining

    TAMPA

    Just a block away from CW's Gin Joint, the folks at Urban Juice Co. have retooled, taking the historic Franklin building, one of the city's oldest, erected in 1895, and re-envisioning it in September as 1895 Kitchen-Bar-Market, a "Southern comfort bar and kitchen" concept where the cocktails are fueled by …

  4. Is Gilbert Gottfried really that annoying in real life?

    Stage

    A new documentary about comedian Gilbert Gottfried reveals someone more mild-mannered than his stage persona, married with children, verging on dull.

  5. Reasons elusive as Pinellas EMS demand skyrockets

    Public Safety

    When the fire chief asked if anyone in the room had fallen before, a few in the gray- and white-haired crowd raised their hands.