Social Security: Why the Liberals Love it Too Much

Matt Yglesias has a nice column about the “indexing” debate—what formula should be used to adjust Social Security benefits in the face of inflation, basically saying that many liberals are getting upset over little:

The “question at hand” for Matt, of course, is the fact that the number of retirees is surging, and will continue to surge as the Baby Boom crowd lumbers through the Great Python of Life on its way to final excretion. As he points out, many liberals are arguing that “chain-type price indexing” is somehow the work of the devil, while the current system is somehow sacred. As Matt further points out, this issue is one that can be examined, debated, and decided on an empirical basis. So why aren’t supposedly “sane” liberals types agreeing to do just that?

Because most liberals don’t want a rational debate about what to do with Social Security—whether to increase the retirement age or to change in the indexing system, or both—because they’re afraid that any change will weaken support for the current system. There are many ways to game the current system, and liberals know this, but they don’t want to change it. They see Social Security, not as a retirement system, but as a stick with which to beat Republicans, a stick that has slain thousands. And they’re reluctant to give up that stick, because they’re afraid it’s the only one they’ve got. Americans no longer need Republicans to save them from communism. And now it looks like they may no longer need Democrats to save them from poverty. These days, we have an awful lot of politicians looking for work.

Afterwords
Matt doesn’t point out, as he could have, that the current indexing system is deliberately rigged to be “generous,” and that, in the past, it’s been goosed to be even more generous. In both the Reagan and the Obama Administrations, old folks have been given a boost even when the CPI didn’t justify an increase, simply because they were so used to getting one. And, again under Obama, when the CPI went down, there was, very unsurprisingly, no give back. Which means that the current indexing system has been juicing benefits ever since it was set up in the Nixon Administration, when Baby Boomers were pouring into the work force and providing the Social Security Administration with virtually unlimited amounts of cash.*

In this post, Matt doesn’t touch on an earlier debate over whether to increase the retirement age, denounced as “crazy” by many liberals. We won’t be saving money on health care! We’ll be losing money, because private health insurance is more costly than Medicare! It’s simple common sense! Except, of course, for the fact that if people work longer, they’ll be paying for their own health care themselves—they’ll be “making” rather than “taking,” as the Republicans like to say.

I’m sympathetic to the argument that people who’ve been standing on their feet for forty years to earn a living deserve to retire earlier than those of us who’ve been sitting down. Fortunately, there’s a way around that. According to the grouchy folks at the National Bureau of Economic Research, “The share of the U.S. population receiving Social Security Disability Insurance (DI) benefits has risen rapidly over the past two decades, from 2.2 percent of adults age 25 to 64 in 1985 to 4.1 percent in 2005.” They see this as a “crisis,” but I’m not so sure it is. I suspect that the people who make DI eligibility decisions are not sympathetic to the “if you can walk you can earn” line of capitalist bullshit analysis being pushed by the NBER crowd, few of whom, I suspect, have ever tightened a bolt, swung a hammer, or bused a table.