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Writing Off The Elderly

Dr. Paul Craig Roberts

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June 15, 2012

When neoconservatives, politicians, and high ranking military officers speak of a 30-year war against terrorism, there is no discussion about its affordability or whether the one significant attack (September 11, 2001) that is attributed, perhaps incorrectly, to Muslim terrorists justifies an open-ended war against a dozen countries. There is no discussion of the burden on future generations of the massive increase in the public debt in order to finance today’s wars.

Affordability and intergenerational burdens are topics reserved for the discussion of Social Security. Conservatives and libertarians constantly assert that Social Security is unaffordable and decry the intergenerational basis for Social Security retirement.

This is an ideological argument that overlooks that Social Security is a pact between generations. The working generations provide retirement incomes for the elderly and in turn are provided retirement incomes by succeeding generations…

In other words, it is incorrect to describe Social Security as the elderly using the political system to steal from the young.

…For example, the retirement age is being extended from 65 to 67, and the switch from a real cost of living adjustment to a substitution-based consumer price index results in the erosion of the real value of Social Security benefits, which was the reason for the switch. Up to 85% of Social Security benefits are now subject to income tax if the recipient has earnings or other retirement income above a minimum amount. The taxation of Social Security was another way that the political system reneged on the promised benefits.

In addition, during the 1980s Alan Greenspan and David Stockman accelerated the phase-in of payroll tax increases that the Carter administration had enacted. By causing the payroll tax to rise before it was needed to finance benefits, more than $2 trillion has been collected than was paid out in benefits. The government spent the earmarked payroll tax revenues (leaving non-marketable IOUs in their place) on other things, such as the wars of the 21st century. As none of this $2 trillion reached retirees, the real “theft” from those of working age was committed by Greenspan and Stockman for the benefit of other spending programs.

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