An extreme position does not become less extreme just because someone can put forward one that’s even more extreme. Massacring 100 children doesn’t become a moderate position just because someone is advocating killing 200 children.
This is how we should view the line being pushed by “moderate” voices that we have to deal with the $40 trillion debt with both spending cuts and tax hikes. The reality is that, apart from the military and Homeland Security, there is little fat in spending to be cut, as even Elon Musk inadvertently acknowledged. Insofar as we have a deficit problem, the issue is on the tax side, as can be easily shown. The rich have been taking an ever-larger share of national income over the last half-century, and they don’t feel like paying taxes on their winnings.
The major media outlets, which are all controlled by rich people, are pretending to be moderate by saying that we need to both raise taxes and cut spending. But there is nothing moderate about saying that we have to cut programs like Social Security, Medicare, and Medicaid because Republicans have given big tax breaks to their campaign contributors.
Republicans pushed these tax cuts, knowing they would increase the deficit, but did not make any corresponding cuts in spending because the cuts would be incredibly unpopular. Now they are using their control over the media to insist that these cuts are now absolutely necessary to offset all the lost tax revenue from tax cuts put in place by Reagan, Bush II, and Trump.
The Jeff Bezos-owned Washington Post gave us a great example of this fake moderate position in its editorial, “To get the national debt under control, start with the retirement state.” The piece makes its case by taking the example of a two-earner couple, with average earnings of $100,000 a year. It shows that the couple, turning 65 in 2025, can expect lifetime Social Security benefits of $739k compared with tax contributions of just $597k. A couple with the same income retiring in 2045 can expect lifetime benefits of $987k compared to tax contributions of $735k.
After laying out this disparity for Social Security (it has a similar story for Medicare, which I’ll come to), it then makes an argument for reducing Social Security for high-income people. This is three-card Monte level deception.
If the idea is that we should reduce the benefits of high-income workers, honest people would look at the relative taxes and benefits for high-income workers. Social Security is explicitly designed to have a progressive payback structure, which means that relatively moderate-income workers, like the ones highlighted in the WaPo editorial, have higher paybacks relative to their taxes.
If the editors were interested in doing an apples- to-apples comparison, here’s what the picture would look like. (This is taken from the exact same source.)
As can be seen, high-income people pay considerably more in taxes than they get back in benefits. For a high-income woman retiring in 2025, the gap is $263k. For a high-income man, the gap is $336k. (The gap is larger for men than women because their life expectancy is shorter.) For a high-income woman retiring in 2045, the gap is $259k. For a high-income man, the gap is $346k.
If the point is to make an argument for reducing the benefits of high-income retirees, then show the taxes and benefits for high-income retirees. No one disputes that Social Security looks like a pretty good deal for more moderate-income retirees, but these people don’t typically have much income in retirement. I guess Jeff Bezos’ paper would have been too embarrassed to argue that we have to reduce the average monthly Social Security benefit of $2,071.
The Post’s editorial makes the push that while cutting Social Security, we should expect people to be more reliant on private 401(k)s. In addition to increasing risk, this is also enormously inefficient. Private 401(k)s cost more than 40 times as much to administer per dollar of benefits as Social Security. It is understandable that Mr. Bezos would be happy to see more money going to his rich friends in the financial industry, but most of us would rather see the money going to ordinary workers.
Medicare Benefits: Big Bucks to Hospitals and Drug Companies Are Not Benefits to Workers
The Post’s graphs do show a huge imbalance between the taxes paid out for Medicare and the cost of the benefits received. This is also deceptive.
In the United States, we pay almost twice as much per person for healthcare as the average for other wealthy countries. This is not because we get more or better healthcare. Our life expectancy ranks near the bottom for wealthy countries.
The big bucks for healthcare go to the income of drug companies, insurers, hospitals, medical equipment makers, and doctors. In each case, we pay two times as much, or more, than people in other wealthy countries. A paper that was not answerable to one of the richest people in the world would suggest bringing our payments in line with the rest of the world. But instead, the WaPo wants to beat up on the country’s retirees.
No one should be confused: cutting Social Security and Medicare benefits to reduce the deficit is not a moderate position. It’s one that attacks hundreds of millions of ordinary workers to avoid taxing the rich or reducing waste in our health care system. That is extreme, but the rich media owners pushing this position will do everything they can to convince us they are being fair and balanced.
When economic growth is well below what investors need from their wealth managers, the investors have to extract from everyone else. The Post is suggesting another device when all the others, and there are hundreds, can no longer deliver the expected returns. Robbery in daylight and broadcast via an oligarch’s transmitter.
Cutting benefits for higher income recipients reduces support for the programs without saving much money.
As Jared Bernstein showed in https://econjared.substack.com/p/tax-cuts-or-spending-increases-which without the Bush and Trump tax cuts the budget deficit and debt level would be fine.