How to Avoid Thinking About a Better Retirement System

I suggested the other day that nobody would design Social Security the way it is if we were starting from scratch, and that it’s worth thinking not just about how to bring the program into long-term fiscal balance but about what we should want from a retirement system. I suggested, further, that what we would want for future workers and retirees is a system where middle-income and high-income earners received less from the government and saved more for themselves.

Left-wing economic commentator Dean Baker has responded, non-responsively, with six arguments that are either irrelevant, bad, or both. His points, paraphrased, in italics, and my responses afterward.

First: It’s not surprising that high earners get bigger Social Security checks than low earners, because the system is designed so that there is some relationship between what is paid in and what is paid out. Right: It’s not surprising to anyone who read the column, either, since I note that point. That doesn’t mean it makes sense to maintain far into the future a system that gives high earners benefits as extensive as the system projects, and it gives them much more than other countries’ systems do.

Second: Social Security has progressive elements. It replaces a higher proportion of low earners’ than of high earners’ income. True, not contradicted by anything I said, and not an argument against asking people in the top half of the income distribution to provide for a higher proportion of their retirement outside of the government system.

Third: “Contrary to what Ponnuru tells readers, [the program’s long-term shortfall] is mostly not an issue of living longer.” Baker is just making things up. I never said rising life expectancies are the main reason for the shortfall. The numbers he cites about increased life expectancies being concentrated among high earners, however, strengthen my case that a better-designed system would spend less on them.

Fourth: Social Security has a very high degree of administrative efficiency. How this touches anything I said is left unclear. Moving to a flatter benefit structure would hardly make the program less efficient. Whether the program is well-designed to achieve what we should want it to achieve is, in any case, a different question from its administrative efficiency.

Five: I’m participating in a Jeff Bezos–led plot to help rich people. By cutting the benefits of future rich people?

Six: Baker titles his post, “The Washington Post Says We Should Stop Paying Interest on Government Bonds Because It All Goes to the Rich.” He continues: “Of course, Jeff Bezos[’s] opinion section didn’t advocate a measure that would hurt his rich friends, it gave a version [of] this absurd argument as a reason to get rid of Social Security. It lent space to right-wing commentator Ramesh Ponnuru to tell people ‘Don’t Save Social Security.’”

Again, the most explicit policy advocacy in the column is for cutting benefits for future rich people, and I suggest raising benefits for the lowest earners to abolish poverty among senior citizens.

But what makes this passage from Baker particularly strange is: 1) I do want the federal government to make lower interest payments on debt! I don’t think debt-financed consumption is a good use of federal resources. 2) The reforms I’m talking about would have exactly this effect. The federal government would spend less than it is projected to spend on Social Security, borrow less money, and pay less interest.

Baker’s complaint about my column, in short, makes no sense from beginning to end.