Of course, I’d still raise the top rate high enough to make Buzzcut freak out, so there’s that too…

For someone who doesn’t trust historians or the CDC, you pick some strange researchers. Feldstein is a far right winger who was instrumental in W’s SS “privatation” scheme. Even though he’s a highly thought of theoretical economist, he’s not much on the practical side. If privatization had happened before the crash virtually nobody would have retirement savings. Have any more mainstream or liberal economists bought his theory?

Again, I think we ask different questions. Would an economy twice as big but with twice as many poor be an improvement?Where would those increased savings go that would be as secure as SS — Citi accounts, Bernie M, General Motors stock? What is the role of society in providing security for its citizens?

Where’s the fun in that?

If I am not mistaken, this is the paper. As with everything the NBER publishes, it is not a free download.

As you can see from the abstract, Socialist Insecurity is bad because it lowers the savings rate significantly.

Feldstein would probably say that raising the retirement age and taxing benefits isn’t enough reform. He’d be more for privatizing the system along the lines of 401(k)s, which would be very expensive to transition to (you have to pay current benefits out of borrowing).

I’ve got no problems with any of these ideas. The gradual increase in the retirement age is underway, currently going up to 67. It could certainly go higher. Early retirement is a tool to get boomers out of the workforce to let younger workers advance, but also a boondoggle. I assume you’re not one of those who complain that the route to advancement is blocked? And if SS is taxed within the regular graduated tax levels so the very poor don’t get hit, why not?

I leave arguing about the size of the economy to the economists.

If I were going to make some changes, I’d start with gradually taking the retirement age up to 70, and eliminate the early retirement option. I’d also make SS benefits 100% taxable, which would be much more effective than Swordsman’s proposal of eliminting the benefits of the top 1% (which would save very little money).

The biggest problem with SS is that it is a huge deadweaght loss around the neck of the economy. The economy would be much larger if SS had never existed. Martin Feldstein had a NBER paper in the ’90s showing that the deadweight loss just from 1980 to about 1995 was 1/3 of GDP. It is conceivable, just doing a back of the envelope calculation, that the economy could have been twice as large as it is today if SS had never existed.

Seeing as how it is productivity growth, not SS, that has improved the living conditions of the elderly since 1937, you really have to wonder if even the elderly would be better off without SS, although the costs to transition to a different program would be huge. They’d make Obama look like Scrooge in comparison.

Every other Wednesday I deliver Meals on Wheels. Most of my “clients” are disabled and would probably be homeless without SSD (Social Security for the disabled). Some of them are in motorized wheelchairs and on oxygen. Several are younger than me. Every few months someone dies. A few years ago I had a different route which was mostly old folks, and most of them lived solely on Social Security. Most of them couldn’t have physically worked any more either.

My mother, who’s in Assisted Living with Alzheimers, is working class and had a full time office job until she was 82. Social Security pays about half of her rent. She’s in a wheelchair and couldn’t live with us unless we moved into a one level house and had full time live-in help. I suppose she could have invested the same amount of money herself as she paid to SS, but she never really understood what a stock was.

When Social Security came into being in the 1930’s, most people had no retirement and to be old mostly meant to be poor. Of course, much of the middle class had been wiped out by the Depression.

My understanding is that Social Security isn’t really in trouble, Medicare is, and they get lumped together. When Lyndon Johnson lumped Social Security into the general fund he did the country a great disservice. (No, I don’t believe everything bad started with Reagan.)

How about bouncing the top 1% off the system entirely? Let’s face reality, Bill Gates does not require social security.