Raise the Retirement Age or Find Jobs for Youths?
By DAVID BROOKS AND GAIL COLLINS
In The Conversation, David Brooks and Gail Collins talk between columns every Wednesday.Tags:
David Brooks: Yes, that’s true. I’m going to merge it with the American Academy of Arts and Sciences annual award show. We’re going to give awards for Best Supporting Theologian in a Musical Role. It’s going to be co-hosted by Britney Spears and Elie Wiesel.
Gail Collins: In one of your first blog posts you mentioned all the time you spend speaking at colleges. For some reason lately I’ve had a number of chances to talk to older groups. I think this is why I’ve become fascinated with the pension issue. People are terrified out there.
David Brooks: Yes, I know. But it’s the young that should be terrified. Nobody is going to touch benefits for people who are 50 or over. But college kids today are going to find that when it comes time for them to retire, there’s nothing left but a big mountain of debt. I’ve asked them about this and it turns out they’re never going to get old because, like, that’s so far away.
Pushing the retirement age to 67 is too high; unless I missed the bulletin on surging employer demand for 64-year-old trainees.
But about those of us who do: the rule of thumb is that in retirement, people need a combination of Social Security benefits, pension, savings, etc. equal to 70 percent of what they made during their working years. Never totally understood the math. I guess the economists presume we spend 30 percent of our income on go-to-work requirements, like lunch and nice ties.
Nicholas Kamm/Agence France-Presse — Getty ImagesA jobs sign outside the U.S. Chamber of Commerce building in Washington.Gail Collins: Maybe that’s because the elderly people answering the surveys retired when people still got fixed pensions. Now the first generation of 401(k) folks are retiring and almost all of them are finding they don’t have enough savings.
David Brooks: I guess I’d like to draw some class distinctions here. Upper-middle-class baby boomers have had a sweet ride. They experienced the stock market gains and the real estate market gains of the 1980 to 2007 period. This is one of the best wealth creation periods in the history of humanity, even after the downs of the last few years. If these people aren’t ready for retirement they have nobody to blame but themselves. On the other hand, you’ve got working-class families who have suffered from the hollowing out of the manufacturing sector and the rest. They were educated for one economy and now find themselves living in another. These are the people who deserve sympathy and support.
Gail Collins: I agree. Too bad our politicians are channeling all the angst into retiree versus retiree hysteria.
David Brooks: I guess I’m fixated on the fact that we now have a giant redistribution machine from young families to affluent elders, which we call Medicare and Social Security. Somehow, we’ve got to reverse the money flow. The best way is means testing. The affluent elderly have to pay more in taxes and have their benefits cut. The alternative is national bankruptcy.
Gail Collins: I’ve been trying to think of a way we can all come together. One proposition for today — we need to agree as a country on an appropriate retirement age. I vote for 65. Social Security is already pushing up to 67, which I think is too high. Unless I missed the bulletin on surging employer demand for 64-year-old trainees.
If it is not the affluent elderly who see their benefits cut, then it is going to be classrooms. I choose the former.
Gail Collins: I choose getting the affluent before they become elderly and raising the cap on the payroll tax.
Also let me point out that a consensus on 65 as the national retirement norm would keep a lot of public employees working longer. Especially firefighters and police officers who could move on to less stressful assignments when they got older, like fire safety inspections and desk work.
David Brooks: I do think people in those jobs should be working longer. When the system was designed, people were dying at 67 or so. They enjoyed just a year or so of public retirement benefits. Now people are living to 82, commonly, and so they are living off the system for nearly two decades.
Gail Collins: I know you want to raise the retirement age beyond 67 to save the younger generation some of the financial burden. But I think the best thing we can do for the 20-somethings is to make some room for them in the job market. As it stands, more and more are on their seventh unpaid internship waiting for their grandparents to get out of the way.
David Brooks: Interestingly, that was the argument F.D.R. used to create Social Security in the first place. I’m not sure the young are looking for the same jobs as 60-somethings anymore. But I guess I come back to my core point: Who pays? The government is spending unsustainable amounts of money. Some benefits have to be reduced. I vote for health care for the affluent elderly, and other benefits.
In closing let me cite one of the non-Times columnists I admire most, Robert Samuelson of Newsweek and The Washington Post. His recent column, “Social Security is Middle Class Welfare” pretty well lays out the issue. In a time of fiscal restraint, we’re paying benefits we can’t afford to some people, at the upper end of the income scale, who don’t need it.
Gail Collins: Well, this subject is clearly going to require a lot of conversing. But for now, all your overachieving has left me so exhausted that I’m going to take a couple of weeks off, while you relax on a bracing book tour. See you at the end of the month, David.
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239 Readers' Comments
But let's remember, these programs at this time still pay for themselves, so it's a stretch to say that they need to be cut RIGHT NOW to close the deficit. That's utter bull.
Eradication.
Cut the benefits off completely. Now.
Cut the taxes completely. Now.
This country is already bankrupt. The main issue before us is whether we address it ourselves, voluntarily, or whether we have it addressed for us by the financial markets, in the form of national default, massive interest rate hikes and hyperinflation.
The Silents and Boomers have had two bites at the apple, so to speak; they've had their retirements paid for, and without having to do so themselves. Where is the generational justice ?
Xers, Millennials---the time to strike back is NOW !!! End this evil system ! NOW !!
1. Continue Social Security as a government guaranteed minimum pension.
2. Add a mandatory requirement to put X% of earnings plus X% employer match into a non-Social Security pension plan, with full portability. Individual could choose plan and provider, with default choice being an inflation-protected annuity.
3. Convince people to live within their means.
It's like the Republican/Conservative solution for high unemployment: War!
In the end this effects productivity across the economy. You have people staying in positions which demand high productivity long after their interest and drive to perform has begun to fade, not that the older generation doesn't have much to offer by way of knowledge and experience. FDR was right, a strong retirement program, however it is structured, is necessary to keep people moving up and out of the active work force allowing the younger generation to break in.
So have this conversation, please!, but also please do not simplify the discussion beyond reason. We are a bright people and such toss off ideas are neither useful or interesting.
I'm insulted as well by Mr. Brooks' contention that baby boomers should be well off because Wall Street has done a great job during their lifetime. The fact is, as a young single mom, I was barely making ends meet when returns were great and interest rates were astronomically high. My Depression era parents did very well, retiring when their savings reaped 15-20 percent. Today, I have saved pretty well - but my money earns no interest. We certainly don't need rich white men lecturing us on Social Security. Social Security is not bankrupting this country, Mr. Brooks, the top 1% is.
I am 60 years old. I would gladly quit the job I am in if I could have Medicare coverage now. The only reason I am still working is because of medical benefits. If we had Medicare for all there would be far more employment freedom, far more job creation, and a far better life for all. I would gladly pay up to $400 more a month in taxes to pay for this.
It's insane to think that the rich receiving more will ever do any good. It is so obvious. Lower income wages need to be drastically raised, while CEOs and other wealthy workers need to pay more in taxes and take wage cuts. Yeah, they won't do it, they'll spend millions to stop it, and the republicans won't allow it, but it it the way to fix things, if you truly want them fixed, which I doubt. If a much larger group had disposable income, this would stimulate spending greatly, unlike just giving rich people more, which does nothing but drain resources from the economy.
We might become a better nation because of it. And certainly less likely to send our young to die in foreign lands.
I'm also amazed at how disorganized and ill-informed our politics and administration appear to be. It doesn't take a rocket scientist to figure out that cutting in one place simply pushes the economic cost to another place. Tax increases are called for on those in the upper incomes (Wall Street big bucks winners, anybody) and tax loopholes for Corporations who somehow manage to shelter earnings outside the country is another. And for Main Street, we need jobs and salaries that will in fact cover the cost of living. Whatever we do, it will be risky and painful. In the meantime, all this budget cutting rhetoric skirts the real complexity of our current situation. Revenue is the only answer. Without upping taxes and providing jobs, the cutting as it is discussed now is just a game of smoke and mirrors.
And, please, let's dismiss that tired canard that Social Security it welfare. You know better than that, both of you! It's a form of insurance. Some people live to collect for many years. However, there are many people who die before they see a cent from Social Security. Does anyone ever question where their premium payments went?
This is a problem that can be solved by the simple expedient of eliminating the cap. No one except the wealthy would be affected, and the amount deducted from their plump paychecks would amount to less than pocket change for most. And by what logic do we subject the wages of the lower and middle class to this tax, but not income in excess of $106,000? It's ridiculous!
What's even more ridiculous is how little-known this "cap" is, especially among young people, for whom it is most important. But that's changing. Keep getting the word out, and who knows what might happen?
The simple math is that my generation (30-something) and my kids will have to pay more in taxes to get the same, or less government services. Paying pensions and health benefits crowds out paying for other government services, such as new roads or new textbooks.
As a simple example, this year, I will pay 5% more in school taxes in an excellent school district. However, 80% of those new taxes will go to pay retiree pensions and health benefits. That means only 20% will go to educate the kids in school now. As pension and health care costs rise, even less of our future tax increases will reach the class-room.
I love our teachers, but supporting a 55-year old retired teacher for 30 more years makes absolutely no sense.
Emotion may drive our reasoning, as David clearly points out in his new book, but the math is the math. Love does not magically turn $1 into $2.
Social Security is perhaps the only government program that makes money for the government. It is not in the red! In fairness the cap on Social Security taxes should be raised so that everyone pays the same percent of income. The idea that the wealthy should pay a smaller percentage than everyone else is crazy.
If I could have found a job I wanted to do, I would have kept working regardless of salary. But, for example, working for a company that persuaded poor people to pay big bucks to start and maintain web sites that were identical literally to thousands of other web sites in the hope of selling the same goods that everyone else was selling, I didn't want to be involved in that kind of rip-off.
In a fair playing field, I felt eminently qualified for many great jobs. I was an experienced editor and computer tech. But the playing field wasn't fair for me, so I decided to stop working. And I'm pretty happy now -- but I'm not contributing as much as I could have to the American economy. Sorry about that.
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