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The New York Times today has an article by John Leland that offers a little reality check on all of the clueless establishment talk about raising the retirement age.

As Atrios and others have noted, it is a welcome corrective to a very lopsided debate.  However, there was one paraphrased quote from a Social Security "reformer"/opponent/privatizer in the article that got me wondering.  

Here's the passage from the NYT piece:

Workers like Mr. Hartley present a conundrum for a Social Security overhaul, said Eugene Steuerle, a fellow at the Urban Institute, who favors raising the retirement age. People are living longer, and providing "old age" benefits to them when they are relatively young and healthy, he said, makes less available to them when they are older and frailer.

While most of the article implicitly pushes back on this "young and healthy" line from Steuerle (amusing side note: "Steuer" in German means "tax"), it was that sneaked-in line about "people are living longer" that caught my attention.  It passes by almost without question, as though the great crisis of the system is this unexpected increase in longevity, and because of this development in the average American lifespan, cuts must regrettably be made.  But is this true?  

As informed Americans are aware, the last major change to Social Security happened in 1983, when the Greenspan Commission (yes, that Greenspan) recommended a number of changes to payroll tax rates and other formulas.  Congress passed the bill, Ronald Reagan signed the tax increase into law, and as we now know, the resultant surpluses were used to cover up the deficits created by military spending and tax cuts for the rich.

That was 1983.  And now we're allegedly in another crisis because "people are living longer"?  Were actuaries so dumb in 1983 that they could not foresee a gradual increase lifespan and factor it into any proposed solution?  

The 1983 Commission report is online at the SSA website.  If you click on section K, then click on "Tables of Historical Data," and go to Table 12, you will see for yourself what the 1983 commission predicted regarding lifespan.

Actually, you can see from the table that they developed three sets of predictions that were based on the rate of longevity increase: slow, intermediate, and fast.  If you look at the report's Introduction, you will see that the Commission based its recommendations on the "intermediate" set (Alternatives II-A and II-B).

So the 1983 predictions must have been WAY off, to put the system in such a crisis, right?  Not so.  In 1983, this is what the Commission predicted the American lifespan to be in 2005:  

Male 73.2, Female 81.4

And remember, payroll tax increases and other adjustments were made on the basis of this projection.  And now, here is the actual 2005 figure, from the Census website:

Male 74.9, Female 79.9

For a 22-year-old prediction, I'd say that's pretty good.  The men are living 1.7 years longer than projected, and the women 1.5 years fewer.  

What to take away from this?  The next time somone says, "people are living longer and taking more money out of the Social Security system," you have a ready reply.  Government actuaries weren't dumb in 1983, and the Greenspan Commission based its tax recommendations on a longevity prediction that has proved largely accurate.  In other words, we have been paying payroll taxes for a generation based on the assumption that lifespans would increase by the amount that they, in fact,  have.

And then you must say:  there is no Social Security crisis. There is an income tax/military spending crisis, and Social Security has been used to cover it up.  Don't let the cover-up become permanent.

Originally posted to darkmatter on Mon Sep 13, 2010 at 08:21 PM PDT.

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Comment Preferences

    •  Nice diary! Tipped and Rec'd (0+ / 0-)

      Those predictions are amazingly accurate!

      In the future obesity will lower the age of mortality - but some of them go on disability before they reach retirement age. Don't disability payments come from SS funds? I wonder what effect that will have.

      In a democracy, everyone is a politician. ~ Ehren Watada

      by Lefty Mama on Mon Sep 13, 2010 at 11:12:30 PM PDT

      [ Parent ]

  •  Thanks. very informative. (5+ / 0-)

    One more stone in an avalanche of facts proving that this Social Security "crisis" is nothing more than a scheme to further decimate the New Deal.

    To younger folks reading this: Don't let them scam you. "There won't be anything left for me anyway" is only true if you are conned into believing it.

    To keep our faces turned toward change, and behave as free spirits in the presence of fate, that is strength undefeatable--Helen Keller

    by kareylou on Mon Sep 13, 2010 at 08:28:40 PM PDT

  •  The real driver is productivity (0+ / 0-)

    Another issue here, in my opinion, is the whole idea of governments figuring out how to handle financial obligations that will come due more than 20 years in the future is really in its infancy.

    We think the idea of the government promising to pay us Social Security benefits in 40 years is pretty ordinary, but I wonder how many governments that had a monetary system anything like ours have lasted for 40 years.

    If the kids we're having today are good, hard-working, reasonably well-educated, loving kids who grow up in a world that permits them to have decent, productive jobs, then somehow they'll figure out how to provide for retirees. The solution may not be exactly what we would put in a policy paper, but chances are the people who work out the deal in 2050 will be OK with it.

    If the kids we're having grow up to be shiftless, ignorant cyberaddicts in a world where the roads have crumbled so much and the sea levels have risen so much that the kinds of jobs that we think of as jobs have disappeared, then our children won't have any way to take care of us very well, no matter what promises the government made.

    •  Wait a minute. (2+ / 0-)
      Recommended by:
      Spoc42, CMikkelson

      I paid 15% of my wage for 25 years into SS.

      And whatever the percentage was for 22 years before that.

      On a promise that I would receive retirement benefits.

      I get here, and they want to cut them?

      I also paid into Medicare for most of those years.


      And, because wages were so low back then, and being a woman I was grossly underpaid, I only qualify for a little under $700/month anyway.  For the rest of my life.

      Hell, my electric bill was $236 last month!

      Governments don't give a crap about people.  We've been deluded all these years.

      •  Rates (1+ / 0-)
        Recommended by:

        15% includes Social Security and Medicare(Pt A). Social Security by itself is 12.4%.

        Just as an exercise, what rate do you think your children will have to pay to support you in your retirement?

        •  The dependency ratio is about (0+ / 0-)

          5 workers per retiree today and could be about 3 workers per retiree in 2050, so, assuming I use half as much stuff when I'm retired as a working person does, the working-age folks could end up handing over about 15% (one-sixth -- 1 over (3 divided by 0.5)) for my Social Security benefits.

          Medicare would be extra. Assuming there's strict rationing of medical care, maybe Medicare would eat up about 5% to 10% of a typical worker's production. So, the total burden of supporting a 2050 retiree like me might be about 20% to 25% of the worker's production.

          I think what these figures really mean is that, assuming that we muddle through and somehow avoid Mad Max-like catastrophes, I'll probably muddle through as a retiree. I won't get to enjoy the 30 years of cruises and casinos that a lot of current retirees seem to enjoy, but I won't really end up living in a cardboard box on the sidewalk. I'll have a shabby little apartment carved out of a repurposed McMansion and spend my days sipping happy juice and hanging out in virtual reality universes.

          With a little luck, productivity will improve quite a bit between now and 2050, so (assuming we deal with the environmental/end of the world issues), both the 2050 workers and 2050 retirees like me could end up having a fairly high, pleasant quality of life, even though the percentages look worse than they do today.

          But, if we get the environmental thing wrong, maybe Soylent Green will turn out not to be fiction.

          •  Numbers are off. (0+ / 0-)

            So now we are at 3 workers per beneficiary (which includes retired and disabled workers and certain survivors and dependents). And by 2030 or so we will have fallen to 2 workers per beneficiary, and that ratio will hold stable (declining slowly as longevity increases)for quite a while so long as there are no dramatic shifts in birth rates.

            I am not sure why you are trying to do this off the top of your head. Go read the trustees report. Or the summary. The number you want is in there.


            •  The report I cite used 2000 numbers, but it (0+ / 0-)

              sounds as if the trustees are using a different definition of dependency ratio than the author I cited did. Maybe the trustees use actual workers and my author used working-age population.

              Regardless: the absolute numbers aren't that important; what's important is the change in the numbers over time. The trustees and the person I quote both seem to be saying the ratio might be about 60% to maybe 80% worse. In our current world, if that ratio chang occurred overnight, we'd muddle uncomfortably through.

              Retirees wouldn't starve, but they wouldn't get the standard of living they'd expected.

              If the environment changed and food were much more expensive, maybe we'd see a fair amount of starvation.

              If we had a big dependency ratio shift and the economy were like what it was in 1996, maybe no one would even notice the shift.

      •  Even Republicans wouldn't dare cut the benefits (0+ / 0-)

        of current retirees, except in very devious ways. They probably will "phase in changes" over time for people like me who are pretty far from retirement.

        But, anyhow: one of the huge problems with the Daily Kos mindset is that we tend to assume as a given that the government can make things happen just by passing a law.

        Sure, on paper, the government can fiddle with a bunch of paper to make it look on that paper as if it's given us what it's promised to give us when we retire.

        But whether I have an apartment, a nursing home bed, bagels, cream cheese, coffee, DVDs, adequate 2050-era entertainment devices and services, dry land that has not yet fallen into the ocean, etc. in 2050 will depend, in the long run, on the supply of the stuff I want, the number of people who are competing with me for what I want, and any regulatory, societal or psychological barriers that somehow interfere with efforts to make deals.

        And, really, that's true whether we have a Marxist republic in 2050, perfectly pure free-market capitalism, or a robber baron mercantilist economy. The economic system we have might affect whether the coast has fallen into the ocean, whether the workers of 2050 are productive, how social welfare programs work, etc., but in the end, however much (or little) stuff there is in 2050, the economic quality of our lives will depend largely on how much stuff we want and how much of the stuff we like there is per typical person who wants the stuff we like.

        The government can't just wave away national poverty in 2050 if our country has gone to hell. If our country goes to hell between now and 2050, the typical 2050 retirement home may well be a cardboard box on the sidewalk, no matter how nice and progressive everyone tries to be.

        But, if our country is flourishing, chances are someone will help people like me out even if the country is run by Boehner clones.

  •  Worldwide push to raise retirement age! (1+ / 0-)
    Recommended by:

    Although, the US is the oldest to retire.

    All others have it better than we do.

    But China?  Who would have guessed they could retire so early?

    China may raise the retirement age in a bid to rein in the enormous welfare burden associated with a rapidly ageing society, state media has said.

    Although the legal retirement age in China is 60 for men and 55 for most women, many employees of state-owned enterprises have been allowed to retire in their 40s or 50s to make openings for new graduates and others.

    What?  Communist China is more fair to its elder workers than Democratic America?

    Don't hear that on the news.

    And France?

    The lower house of the French parliament approved on Friday night a proposal to raise the country's legal minimum retirement age from 60 to 62 by 2018.


    YLE reports that employers have also requested that the government discontinue income-related unemployment benefits for those who have been made redundant at 58 or later. This benefit has seen some employees able to claim early retirement prior to reaching the statutory retirement age and therefore claim early benefits before they reach 63. In their defence, unions claim that employers are themselves to blame for releasing older staff first.

    The EU, reading this made me roll my eyes and my stomach turn:

    The European Commission is suggesting that the retirement age in member states should be raised regularly so that on average across the EU not more than one third of adult life is spent in retirement.

    The commission paper, to be presented before the summer, notes that the real retirement age in the European Union is an average of just over 60 years,

    Aussies already raised theirs to 67.  Love this quote:

    "By the time I get to retire (previously 55, changed to 59, now 67) I'll be issued food stamps, paid for by myself, twice," Rock wrote.

    New Zealand.  Image everyone receiving 65% of the annual average wage?

    Superannuation in New Zealand is currently based on the “65 at 65” principle. That is, New Zealand super being paid to each eligible married couple at age 65 with the amount payable calculated as being 65% of the annual average wage.


    1880'S Chancelor Otto's program:

    The first old age social insurance programme was introduced in Germany in the 1880's by Chancellor Otto von Bismarck. When it was introduced the retirement age was set at 70 years of age, far above the average life expectancy of about 56 at the time.

    Bismarck's statisticians determined, on an actuarial basis, that 70 was the ideal age for establishing an inexpensive pension plan.

    It was inexpensive as many retirees would not live long enough to collect much money from their pension! In 1916 it was reduced to age 65 and this figure has become the benchmark for most countries in the western world.



  •  Excellent (1+ / 0-)
    Recommended by:

    A few more sources:

    Krugman:  Fun With Mortality Tables

    Much more to the point is the number of years people could expect to live after reaching 65: 14 years in 1950, 18.5 years now. Not so impressive a change, is it? And the retirement age is already 66 for my cohort, and scheduled to rise to 67 on current law.

    Oh, and by the way, rising life expectancy was built into Social Security planning from the beginning. The big surprise has, if anything, been stagnating life expectancy among less affluent Americans.

    Joan McCarter:

    That "population is getting older" bit is one of the Zombie Social Security lies that has become conventional wisdom. Here's Nancy Altman, in her book about the history of Social Security,  The Battle for Social Security: From FDR's Vision To Bush's Gamble:


    Related to issues about retirement age are questions about life expectancy. Many people are under the mistaken impression that Americans receive retirement benefits for considerably longer than they did when the program was created. The misconception results from looking at life expectancies from birth, which have changed dramatically because of the medical success achieved in conquering childhood diseases. But those numbers reflect changes in the numbers of those who survive to retirement, not what happens thereafter. The statistics regarding children distort the overall average ....

       For Social Security purposes, the correct question is not how many live to age 65, but rather how long those reaching age 65 live thereafter. Here the numbers are not as dramatic. In 1940, men who survived to age 65 had a remaining life expectancy of 12.7 years. Today, a 65 year old man can expect to live not quite three years longer than he might have in 1940, or 15.3 years beyond reaching age 65. For women, the comparable numbers are 14.7 years beyond age 65 in 1940; 19.6 years in 1990. [Emphasis added.]

    Morefrom Nancy Altman.

    •  demographics (1+ / 0-)
      Recommended by:

      First, the reason the cost of social security is escalating is because of birth rates. Very high in the baby boom followed by relatively low rates thereafter. As a society we will be going from 3 workers per retiree today to 2 workers per retiree by 2035. IN our pay as you go system each worker in the future will have to pay significantly more to support each retiree. Longevity increases slowly raise the costs thereafter, but that is not the chief driver.

      Second, people were living longer over the 2nd half of the 20th century, but they also retired earlier, so the expected period in retirement increased even more.
      Murray Gendell, "Older Workers: Increasing Their Labor Force Participation and Hours of Work," Monthly Labor Review, January 2008.

      Col A (1st)= median age at retirement
      Col B (2nd)= remaining life expect. at median age of retirement

            A      B
      Men   66.9  12.0
      Women 67.6  13.6

      Men   64.2 13.5
      Women 64.2 16.7

      Men 62.0 18.0
      Women 61.4 22.0

      men   61.6  19.0
      Women 60.5  23.1

      Third, what matters for us is not past improvements in mortality rates,  but what we can expect in the future. I think most experts think the current assumptions by Social Security are pessimistic and that future improvements in life expectancy after 65 are more likely to be the order of 1 year or more per decade.

      •  RE birth rate (0+ / 0-)

        If we did something about immigration, immigrants could help fill in the gap.

        •  Slows aging slightly but does not reverse (1+ / 0-)
          Recommended by:

          Immigration helps Social Security in two ways.

          (1)Immigrants usually enter the population at working ages, so they provide a boost to tax revenue. That impact dissipates as they in turn retire. Undocumented immigrants are much less likely to ever claim their benefits while most still pay payroll taxes, so there is also a positive financial impact. (I think it is a negative moral and civic impact to take these taxes--dedicated to providing pension income-- and give them nothing in return). Working ageg immigrants do not improve teh age structure of the population voe rth elong term. Actually they make it slightly older.

          (2) Immigrants in the US  tend to have more children than those native born. Not sure why that has to be, but now it is true. In fact there is some evidence that Mexican immigrants in the US have higher birth rates than Mexicans in Mexico. The increased fertility rates slow the aging of the population. However, the level of immigration needed to reverse the population aging due to the fall in fertility rates rates from 3 per woman to 2 per woman is massively higher than what we are currently experiencing. Realistically, immigration cannot reverse population aging.

  •  This really made me mad! (1+ / 0-)
    Recommended by:

    Via Atrios  WAPO propaganda

    Thanks for posting!

  •  Bullshit. The Issue is RETIREE Lifespan. (2+ / 0-)
    Recommended by:
    Lefty Mama, JesseCW

    "Average" lifespan included massive infant mortality at the time SS started.

    It has nothing to do with anything because those dead were never going to become workers in the first place!

    If you retired in the 1930's you could expect to live years into retirement, and that hasn't increased dramatically ever since.

    What we need for an informed discussion is the average WORKER lifespan between the 1930's and now.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Sep 13, 2010 at 09:35:17 PM PDT

    •  Try clicking on the links (0+ / 0-)

      Click on the link to Table 12, and you will see not only projections for lifespan at birth, you will also see projections for lifespan AT AGE 65.

      In 1983, government actuaries predicted that in 2005 the American post-65 lifespan would be:  Male 16.0, Female 21.4.

      Here is a link to a CDC document showing the actual 2005 post-65 lifespan.  What was it?  Male 17.2, Female 20.0.  So, as with total lifespan, the 1983 projections were a little over on the male side, a little under on the female side.  Because the small errors are in opposite directions, they mitigate each other.  So the projection used for the 1983 fix was essentially accurate.  Your claim to have identified the "real" problem with Social Security ("you forgot to factor out infant mortality!") is false.

      •  Births not deaths (0+ / 0-)

        As I stated above the aging the 1983 reforms were addressing had everything to do with birth rates, not grater life expectancy. The baby boom followed by baby bust meant we were going to age dramatically from 2008 to 2035.

        The slowdown in the improvement in female life expectancy has been explained as a residual of smoking patterns. Men had a similar pattern about a generation earlier corresponding to their earlier adoption of the behavior

  •  Don't tell us there is no crisis (0+ / 0-)

    It is projected in 2035 that the trust fund will be all used up and that the gov will have to cut the benefits to 70% of their current values.

    Military spending has nothing to do with this crisis in fact since the trust fund money earns interest on its treasury bonds our debt has increased the value of the trust fund

    •  I believe the latest estimate (1+ / 0-)
      Recommended by:
      Lefty Mama

      is 78% of projected benefits, which would still be more than current benefits because of inflation adjustment.

      The problem is that the people who will be retiring around and after 2035 aren't having enough kids - projections from the original Social Security plan and the revisions in 1983 allowed for changes in life expectancy, and the 1983 modifications allowed for the size of the baby boomer generation. What neither allowed for was declining birth rates.

      If you want Social Security funded 100% after 2035, have more kids or raise more SS taxes, like eliminating the current wage cap which benefits the wealthy. I personally don't think we need to increase the birth rate.

      If you're not part of the solution, you're part of the administration.

      by badger on Mon Sep 13, 2010 at 09:57:29 PM PDT

      [ Parent ]

    •  That was a lot of major errors for (0+ / 0-)

      one comment.

      In 2037, we'll only be able to pay 78% of benefits if we do nothing between now and then.

      That is not a "crisis" and seriously does not required any paniced running around in circles.

      We cannot afford to maintain our insane and unprecedent levels of military spending, and provide for our citizens.  

      The money to pay the bonds in the trust fund has to come from somewhere.

      Ask the CPC why they're not trying to defund the Catfood Commission.

      by JesseCW on Mon Sep 13, 2010 at 10:30:12 PM PDT

      [ Parent ]

    •  That would be fine and dandy (0+ / 0-)

      if we were paying that interest. We aren't. We are only issuing more paper to pay that interest and dig the hole deeper.

      Some people have short memories

      by lenzy1000 on Tue Sep 14, 2010 at 05:48:26 AM PDT

      [ Parent ]

  •  Average lifespan? (0+ / 0-)

    Let's break it down a little. Hmmm. Rich people live longer (on average) than poor people. Non-smokers live longer than smokers. Whites live longer than blacks.

    I think it's only fair to collect FICA at a higher rate from rich white non-smokers. /snark

    "Where it is a duty to worship the sun it is pretty sure to be a crime to examine the laws of heat." - John, Viscount Morley

    by Dbug on Mon Sep 13, 2010 at 09:55:29 PM PDT

    •  forgot gender (0+ / 0-)

      Black women live longer than white men.

      Just saying.

      •  Good point (0+ / 0-)

        Women live longer than men. They also get paid, like what, about 78 cents for every dollar a man makes? If we're gonna charge extra for living longer, women should get paid even less!

        What were they thinking, with their not dying and their being a drag on the safety net?

        "Where it is a duty to worship the sun it is pretty sure to be a crime to examine the laws of heat." - John, Viscount Morley

        by Dbug on Tue Sep 14, 2010 at 05:07:40 AM PDT

        [ Parent ]

  •  Misreading Steuerle (0+ / 0-)

    This post misrepresents Gene Steuerle's position. He is neither an opponent of Social Security nor a privatizer. Why not just look him up if you are gonna slander him. He works at the Urban InsTitute.

    Basically he is saying we need to shift the distribution of benefits from those who are relatively young  (in their early 60's) to those who are older and depend much more heavily on Social Security (those in their 80's).

    So the retirement age is not really about solvency for him, but about equity, as he sees it. He is an advocate for increasing benefits in other ways too.

  •  This is excellent info (0+ / 0-)

    to have at hand.  I get into these discussions every now and then.  I was in my early 30s at the time that SS fix was done, too young to take it very seriously.  Now that I'm 60, it makes a huge difference to me whether the money is there and if I'll be able to get it.  

    What's painful to me is the number of people who've been collecting it for years who seem to think that making me or those younger wait longer to collect is a good idea.  I understand the urge to protect themselves, but the rest of us paid in, too, and have a right to expect the govt. to live up to its promises.  Changing the rules midstream is cruel.

    -7.62, -7.28 "Hold fast to dreams, for if dreams die, life is a broken winged bird that cannot fly." -Langston Hughes

    by luckylizard on Tue Sep 14, 2010 at 07:18:54 AM PDT

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