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Social Security’s finances can be fixed through faster economic growth, says Donald Trump. Bing bing, bong bong bong, bing bing. No need for higher taxes or benefit cuts to assure solvency. As it currently projects out, by the way, Social Security will no longer be able to pay full benefits in less than 20 years.
But does Trump’s math work? Not really, according to modeling done by the Urban Institute’s Richard Johnson and Karen Smith. They assume better policy could boost GDP growth to 3.4%, the postwar average through 2007 vs. 2% since the end of the Great Recession. And their conclusion: “We find that such economic growth would in fact significantly improve Social Security’s long-run balance sheet, pushing back by three decades the date when the system could no longer pay full benefits, from 2035 to 2064.”
A few things to consider, however: First, faster economic growth merely delays the time of fiscal reckoning, and does not eliminate it. J&S: “Strong economic growth generates a lot of tax revenue for Social Security right away without immediately changing benefits. Over time, however, economic growth puts the system on the hook for much higher benefit payments. As the economy grows faster and people earn more, they eventually receive more Social Security benefits once they retire.”
Second, J&S assume all that faster GDP growth comes from faster productivity growth. That’s a big ask. When the US grew at 3.4% in the past, it was due to roughly 1.7% productivity growth and 1.7% labor force growth. Yet as the researchers note, “It’s going to be a lot harder to achieve that growth over the coming decades when the labor force is projected to increase only 0.5 percent a year.” So this time around, we may need productivity growth as high as 3% to make the SS numbers work — especially when official productivity growth during this recovery has been less than 1%.
Third, solvency alone does not solve the problem of Social Security needing to do a better of job for poorer seniors. AEI’s Andrew Biggs:
As a result of their short work histories, nearly one-fifth of the poorest quintile of retirees fail to even qualify for Social Security, and nearly one-third of those who do qualify receive a benefit below the poverty line. The poorest retirees can fall back on the Supplemental Security Income program, but this means-tested welfare plan also pays a sub-poverty-level benefit and effectively prohibits recipients from working their way out of poverty. The result is a poverty rate among the elderly of 10 percent, despite Social Security spending sufficient to pay every American over age 65 a benefit roughly 12 percent above the poverty threshold. This is a very expensive way to not protect against poverty.
In other words, even with improbably fast growth, Trump’s “plan” doesn’t ensure solvency or make Social Security work better for those who need it most. Really, then, not much of a plan at all.
View related content: Pethokoukis
L’Oréal’s Latest Beauty Secret: It’s Acting Like A Tech Company – FastCo |
Infants Can See Things That Adults Cannot – Smithsonian Mag |
College is the new cable bundle. Do students deserve a ‘Netflix’? – WaPo |
Manhattan Real Estate: What’s Next – RCM |
The average condo price in Manhattan has hit an astronomical $1,948,221 in the fourth quarter of 2015. In fact, Manhattan has experienced a 20-year stretch of nearly uninterrupted price increases. …
As has been the case for many U.S. cities, the supply of new housing in Manhattan is kept artificially low by various local zoning restrictions that control the height of new buildings and the population density in the area. The obvious beneficiaries of these restrictions are the current property owners. Low housing supply and high demand ensures that real estate investments continue to appreciate. …
Had you bought land in Manhattan in 1950, you would have earned a nearly zero real return (nominal return with inflation subtracted out) from holding this land for the next 34 years. Since then, land prices have increased and declined again. Between 1950 and 1993, investing in land would have produced a meager real return of 0.45% per year. However, starting in 1993 land values really take off and reach a peak in 2007. Manhattan land prices also fell when the nation-wide real estate bubble burst in 2007, but by 2014, they had rebounded to an even higher level. Had an investor purchased a plot of land in Manhattan in 1993, the investment would have risen by a factor of 28 in inflation-adjusted dollars, and the buyer would have realized a real annual return of 16.3% per year!
The EU’s €110bn problem: slow death of Schengen risks new crisis for Europe’s battered economies – The Telegraph |
Amazon opening book stores? Not so fast! – CNN Money |
India Has Blocked Facebook’s Free Basics Internet Service – FastCo |
NFL welcomes startup ideas for the future of football – Engadget |
The NFL has a pretty good track record of embracing technology. It’s actively encouraging the use of Microsoft’s Surface tablets for plays and is now experimenting with HoloLens as a way for fans to fully immerse themselves in the game from the comfort of their homes. Indeed, technology was part of the reason the organization was keen to have the Super Bowl in the Bay Area. “Silicon Valley is the heart of innovation,” said Roger Goodell, NFL’s Commissioner at the event. “That’s why we’re here.”
Financial despair, addiction and the rise of suicide in white America – The Guardian |
Lowney lives in Butte, Montana, where local officials see the Princeton study’s findings reflected in their community but struggle to explain them. The state has the highest rate of suicide in the US at nearly twice the national average and rising – up 7.3% in 2014. Those most likely to kill themselves are 45 to 65 years old.“What’s been lacking in our town is an explanation for why this demographic in particular has been dying by suicide,” said Karen Sullivan, health director for Butte and the surrounding county, Silver Bow. “We want to take a look at what we’ve got going on in Butte. Is it economic in nature? Is it middle-aged white people discontented with where they landed in life? Is it isolation? A lack of a social network? Is it drug and alcohol issues? What do we have going on?”
View related content: Pethokoukis
There’s now a website, Twitter account, and Facebook page devoted to “advocacy of the artificial intelligence known as Watson to run for President of The United States of America.”
I mean, I get it. Wouldn’t it be great if our politicians could dispassionately review the evidence and pick which ideas and policies are best? And since humans can’t do that so well, obviously, maybe machine intelligence could. From the site:
Watson will be able to analyze trends in employment, markets, interest rates, education, poverty, crime, taxes, and policy to assess what actions are most suitable to accelerate investment in the nation’s future.
Of course this assumes the ethics and evidence and trade-offs for optimal public policy are clear. But that aside, it seems that the “Watson 2016 Foundation” really doesn’t need even a primitive AI since it has already chosen which policies are best, all by its carbon-based-life-form lonesome. Among the preferred polices of the “Watson 2016 Foundation”: “Single-payer national health care, free university level education, legalizing and regulating personal recreational drug use … shift bulk of electrical generation to solar, wind, hydroelectric, and wave farm … a minimum-wage that meets a reasonable cost of living.”
Hey, this almost sounds like the “Watson 2016 Foundation” pretty much cut-and-pasted the guts of the Bernie Sanders progressive policy agenda. (This does not surprise me since some leftists these days dreamily hope that AI can efficiently perform the sort of economic central planning that communist humans never quite could. And still can’t.)
What would be left for Watson do, exactly? Even weirder, the evidence supposedly supporting the above policies — such as “free college” for instance — is hardly clear. Watson may be pretty smart, but as for the “Watson 2016 Foundation” … I dunno. And just to push this concept a bit further, isn’t “Watson for President” really “IBM for President”?
How much will ‘free college’ cost? New study suggests colleges respond to more financial aid by increasing tuition
Here’s how steep the rise in college costs has been over recent decades: If tuition and fees — net of aid — had risen only as fast as skyrocketing healthcare costs had from 1987 through 2010, they would have increased to $8,700 from $6,600. Now that’s plenty as it is. Instead, however, they hit $10,300, according to the new working paper “Accounting for the Rise in College Tuition” by Grey Gordon and Aaron Hedlund.
But what explains surging costs? One explanation is that the increase in the returns to college has driven up demand for a college degree. Another is that rising productivity growth in the economy overall pushes up wages and increases cost pressure in service sectors like education and healthcare that aren’t sharing in that productivity growth. As the paper explains, “To cope, these industries increase their relative price and pass the higher costs onto consumers.”
Then there’s the “Bennett Hypothesis,” referring to a 1987 New York Times op-ed when then Secretary of Education William Bennett asserted “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions.”
Good call by Bennett, according to Gordon and Hedlund:
With all factors present, net tuition increases from $6,100 to $12,559 [and] the demand shocks — which consist mostly of changes in financial aid — account for the lion’s share of the higher tuition. … These results accord strongly with the Bennett hypothesis, which asserts that colleges respond to expansions of financial aid by increasing tuition. In fact, the tuition response completely crowds out any additional enrollment that the financial aid expansion would otherwise induce, resulting instead in an enrollment decline from 33% to 27% in the new equilibrium with only demand shocks. Furthermore, the students who do enroll take out $6,876 in loans compared to $4,663 in the initial steady state. The college, in turn, uses these funds to finance an increase of investment expenditures from $21,550 to $27,338 and to enhance the quality of the student body. In particular, the average ability of graduates increases by 4 percentage points. Lastly, the model predicts that demand shocks in isolation generate a surge in the default rate from 17% to 32%. Essentially, demand shocks lead to higher college costs and more debt, and in the absence of higher labor market returns, more loan default inevitably occurs.
Indeed, the single most important factor — one driving 40% of the tuition jump — is the expansion in borrowing limits:
To grasp the magnitude of the change in borrowing capacity, first note that real aggregate borrowing limits increased by 56% between 1987 and 2010, from $26,200 to $40,800 in 2010 dollars. Second, the re-authorization of the Higher Education Act in 1992 introduced a major change along the extensive margin by establishing an unsubsidized loan program. We also find that increased grant aid contributes 17% to the rise in tuition, which mirrors the 18% impact of the higher college earnings premium. Our model also suggests that financial aid increases tuition at the bottom of the tuition distribution more so than it does at the top. These results give credence to the Bennett hypothesis.
So what would happen to college spending if college were “free,” as some on the left now advocate? More money would equal more spending but not necessarily more value to students. And as my colleague Andrew Kelly notes, strained public budgets could lead to shortages rather than increased access. Of course, just increase funding further, right? But how much more? The Bernie Sanders “free college” plan would already cost some $70 billion a year as a starting point. Kelly:
Of course, “free” college isn’t really free. The Democrats’ approach shifts costs without necessarily lowering them. Transferring costs away from students onto taxpayers would lower tuition prices while allowing schools to continue operating under their current wasteful cost structures. An influx of new funding might actually lead them to pay less attention to cost-effectiveness than they do now. If everybody is receiving tuition on the taxpayer dime, schools don’t have to worry that students will flee to a lower-cost option. … Ultimately, though, price is less important than value: what students get in return for their time and money. Shifting costs from students to taxpayers is not the same as making higher education more cost-effective.
While federal funds, price caps, and rules can bring public-tuition costs down temporarily, they will have a harder time improving quality and cost-effectiveness. Doing that will require addressing the wasteful spending and disappointing results that have been the consequence of current higher-education policy, which has provided easy money and demanded little or no accountability. Not only will free college fail to solve these problems, it may well create new ones. Providing a free public option might actually diminish some students’ chances of finishing a degree. Tuition caps might result in rationing, not increased enrollment. And imposing new federal rules would sap the system of what little creative energy and innovation do exist.
View related content: Pethokoukis
The uber-loneliness of the sharing economy driver – The Guardian | “UberPeople.net is a rudimentary and extremely popular message board for Uber drivers that serves as a sort of public water cooler. … [The founder of UberPeople.net] continued, ‘Uber is neither ‘rideshare’ nor the ‘sharing economy’. It’s the modern face of capitalism.'”
Unleashing the Global Competitiveness of the US – RCM | “We now lag behind all countries except the U.K. in gross fixed capital formation as a percentage of GDP for the period 2007-2014.”
The Gender Wage Gap: Extent, Trends, and Explanations – NBER | “By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top.”
Use of Crispr gene editing on human embryos approved in UK – CW |
What Does It Mean to Be a ‘Real Progressive’? – The Atlantic |
A Pope and a Russian Orthodox Patriarch Will Meet for First Time Since They Schismed in 1054 – Slate |
Should biologists stop grouping us by race? – Stat News |
Yudell and his colleagues, including an anthropologist and a sociologist, are asking the National Academy of Sciences to convene a panel to recommend ways to categorize people more precisely than by race. Research journals, they say, should discourage use of racial categories in studies that analyze genetic and other biological or medical data, substituting more precise groupings such as ancestry or population — Kurdish or Basque, for example, or Filipino, or Japanese, or Ito. …
A fair-size contingent of biologists disagree. They agree that race is imperfect, but say it is a useful way to group people.
Entitled Millennial Workers of the World, Unite! – NY Mag |
A frustrated sense of entitlement is the soil from which all political action grows. … From the standpoint of a manager tasked with enforcing the prevailing norms of the American workplace, entitled millennials are indeed a scourge. But from the perspective of society as a whole, Generation Y’s unparalleled entitlement may actually be desirable. Few would deny that the entitlement felt by the Freedom Riders or suffragettes ultimately redounded to their nation’s benefit. The question, then, is whether the realization of millennials’ workplace demands — via organized political struggle — would improve or degrade American life.
Wealthy rentiers and salaried corporate executives may be vaguely unsympathetic groups, but they do not constitute the bulk of rich Americans. In particular, Piketty underestimates the importance of entrepreneurs and business owners. … In 2010, self-employed business owners account for an astonishing 70 percent of the wealth of the top 0.1 percent. If we look at top earnings rather than top wealth, self-employed business owners accounted for around 50 percent of the total earnings of the top 0.1 percent.
And this from economist Larry Summers:
His is a theory of accumulation by the fortunate, but what is striking — and you certainly see it out here [in Silicon Valley] in particularly dramatic form — is how dynamic the process of wealth accumulation is. Forbes looked in 2012 at its 1982 Forbes 400 and found that less than 10 percent of those who were on the 1982 Forbes 400 were still part of the 2012 Forbes 400.
My preference is for the inequality debate to focus a) on high-end cronyist looters and b) on raising incomes and mobility for those at or toward the bottom. Or are entrepreneur billionaires, which America is really great at generating, a big problem?
Update: One more chart, this from Forbes showing the changes in how the Forbes 400 fortunes were made over the past three decades, especially at the extremes. The magazine gives each member a score on a scale from 1 (blue) to 10 (red) — “a 1 indicating the fortune was completely inherited, while a 10 was for a Horatio Alger-esque journey.” And this chart shows the 1s and 10s switching places. It amplifies the Summers quote from above:
Not bad at all. The January jobs report — 115,000 net new payrolls, 4.9% unemployment rate — contained lots of good news: the lowest jobless rate since February 2008, a higher labor force participation rate, a higher employment rate, and average hourly earnings up 2.5% from a year earlier with the monthly jump the best since July 2009.
It’s also worth nothing that using the new jobs data, the Atlanta Fed upgraded its first-quarter GDPNow model forecast to 2.2% from 1.2% — a good sign that the US economy is not about to sink into recession after that zero-handle fourth quarter. And this from John Silvia of Wells Fargo: ” … growth in the residential and nonresidential construction sectors remains evident in the 18,000 gain in construction jobs last month. These gains represent solid trends supporting continued economic growth and certainly do not signal recession.”
Not everything was great: job gains far short of 185,000 expectations (though averaging 231,000 the past three months), U-6 unemployment-underemployment rate unchanged at 9.9%, long-term unemployment worsened, labor force participation and employment rate still way below pre-recession levels, wages gains short of what you would expect to see in a full-throttle economy. Particularly vexing for Barclays was job weakness in the service sector.
So where is the US labor market right now, a month into 2016? How far from full employment, if we are not there already? Do we “still have a very long way to go,” as Bernie Sanders said in last night’s Democratic presidential debate?
A recent Goldman Sachs report made some good points on this. The bank’s economic team noted, for instance, how population aging and prolonged unemployment after a recession can affect the “unemployment gap”– the difference between the actual unemployment rate and the estimated structural rate. You can’t just look at what employment and participation rates were in 2007 — almost a decade ago! — and wait for a reversion. GS’s estimate of remaining slack:
Our 4.7% structural rate estimate implies that the headline unemployment rate—currently at 5%—indicates 0.3pp of slack. Based on our method for estimating the additional slack represented by the participation gap and the elevated number of involuntary part-time workers, we estimate that total labor market slack currently amounts to about 1.3% of the labor force. This represents a decline of 1.3pp from our estimate of 2.6% total slack one year ago. (Alternatively, our 4.7% structural rate estimate for U3 implies a structural rate of roughly 8.7% for the more familiar U6 indicator, implying a current U6 gap of 1.2pp.)
Our findings suggest that it is misleading to think of the labor market as having already reached full employment and make the current below-target rate of inflation less puzzling than it might at first appear. If inflation remains below the target for an extended period of time and the unemployment rate continues to decline, we suspect that the FOMC might reduce its estimate of the structural rate somewhat further. Such a change would increase the committee’s implicit estimate of the unemployment gap and would naturally have dovish implications. Even so, the impressive momentum of recent employment growth suggests that we will likely return to roughly full employment even as measured by broader measures of slack by year-end, supporting the case for continued gradual policy normalization this year.
Gettin’ there, America. But no reason for Washington to continue to ignore the need for pro-growth policy on taxes, regulation, public investment, and targeted job market interventions by government. Would like the Fed to pause as well.
View related content: Pethokoukis
Influenza tackles fans whose teams make it to the Super Bowl – Cornell University |
A Cornell economist and his colleagues have found the geographical areas that have an NFL team advance to the Super Bowl had an 18 percent spike in flu-related deaths among people above the age of 65. “The mechanism that’s driving this is the increased socialization that happens as a result of the team being successful,” says Nicholas Sanders, a newly hired assistant professor of economics in the Department of Policy Analysis and Management at Cornell. …
But the researchers found no change in influenza mortality in cities that hosted the Super Bowl. That could be for several reasons, Sanders said, including because the influx of travelers may prompt locals to avoid going out on the town. Another factor could be the host city’s location; the Super Bowl is frequently held in southern cities, where flu transmission rates are generally lower.
Twitter Nerd-Fight Reveals a Long, Bizarre Scientific Feud – Wired |
On Chips and Microchips: What digital technology can teach us about our food problems – PS | ” Not surprisingly, fast food and digital applications speak persuasively to a primal urge, promising as they do to ease us through the day with miraculous short cuts and life hacks that never cease to wow us with their novelty.”
What if Twitter Died? – Techpinions |
Will AI-Powered Hedge Funds Outsmart the Market? – MIT Tech Review |
Key And Peele To Livestream ‘Sports Commentary’ During An ‘Upcoming Sports Game’ That They Can’t Name – Techdirt |
The Rise of Wealth Therapy – Bloomberg | “The discomfort of peering over the wealth gap—as well as insecurities about how money can change people and affect relationships, especially in the wake of the financial crisis—helps explain why affluent people are turning to therapy to discuss their First World problems in private and why banks are incorporating wealth therapy into services for high-net-worth families.”
Is Pope Francis Anti-Modern? – Nautilus |
Descriptions of Laudato Si’ as “anti-science” or “anti-progress” are particularly striking, since so many self-described progressives, representatives of the scientific community, and environmentalists have warmly welcomed the recent encyclical in the hope that it would motivate action on climate change. …
However, what the pontiff truly rejects in this encyclical is not modernity (much less science) but a particular modern philosophy about the relationship between modernity, science, and technology — what Pope Francis calls the “technocratic paradigm.” Indeed, the import of the papal encyclical is not to cast Christianity as anti-modern but to provide new — though, in fact, ancient — moral guidance for addressing our modern challenges.
Look, this isn’t me talking, it’s economic consultancy IHS Global Insight: “The current expansion, the 12th expansion since 1945, is the weakest of the 12. One reason: abysmal productivity growth. Over 1947-2007, labor productivity growth averaged 2.3%. Since 2010, it has averaged just under 0.5%. The difference between 2.5% and 0.5% growth matters a lot. … If growth is 2.3%, the pie doubles every 31 years. If growth is 0.5%, the pie doubles every 144 years.”
Get used to it, say some techo-pessimists like economist Robert Gordon. The iPhone ain’t bean bag, but it ain’t electrification, either. The really great inventions, Gordon concludes, have already been invented. Then again, perhaps IHS is correct when it notes the view that government statisticians are “not measuring output accurately … [and are] are understating the value of new products.”
So maybe the economy is doing better than we think. And maybe the future is brighter than Gordon guesses. Tyler Cowen in his review of Gordon’s new book, “The Rise and Fall of American Growth”:
Ultimately, Gordon’s argument for why productivity won’t grow quickly in the future is simply that he can’t think of what might create those gains. Yet it seems obvious that no single individual, not even the most talented entrepreneur, can predict much of the future in this way.
Consider just a few technological breakthroughs we could witness in the coming years, only a small number of which Gordon even mentions: significant new ways to treat mental health, such as better antidepressants; strong and effective but nonaddictive painkillers; artificial intelligence and smart software that could eliminate many of the most boring, repetitive jobs; genetic engineering; and the use of modified smartphones for medical monitoring and diagnosis. I can’t predict when such breakthroughs will actually happen. .. It’s also worth remembering that many past advances came as complete surprises. Although the advents of automobiles, spaceships, and robots were widely anticipated, few foretold the arrival of x-rays, radio, lasers, superconductors, nuclear energy, quantum mechanics, or transistors. No one knows what the transistor of the future will be, but we should be careful not to infer too much from our own limited imaginations.
Even during Gordon’s special century of 1870–1970, progress was not evenly distributed. There were pauses, such as much of the 1920s and 1930s, between some especially fruitful periods. Some pauses in advancement today should therefore not be alarming. Gordon himself admits that information technology was producing some truly significant advances as recently as the late 1990s and the very early years of this century. Given that economic growth and technological progress are uneven, there may well be bumps on the road when it comes to using computers to significantly improve human well-being. Surveying the array of human talent in Silicon Valley, the advances that have taken place to date, and the possible potential uses for new items such as smartphones, it is difficult to accept Gordon’s assertion that information technology has run its course. It seems much more likely that significant growth still lies ahead.
For me, perhaps the most persuasive techno-optimist counter is that we are placing access to all accumulated human knowledge in an increasing number of human hands. All those billions of brains coming online. And if we can do a better job making sure the maximum number of those brains are operating in the political-economic systems — pro-innovation policy isn’t even optimal in the US — that allow human potential to be maximized, then we ain’t seen nothing yet. Again, we should assume the worst about US productivity and treat it like a crisis. Public policy should be view through the innovation lens, and its merits judged accordingly.
A few related writings:
Not much talk about the national debt during this GOP primary season. Oh, there’s the obligatory — passing — reference to it during speeches and debates, but little more. Indeed, GOP tax plans would make the debt much worse by trillions over the next decade and beyond.
Now maybe one reason there’s less debt talk is that budget deficits are way down, and the long-term fiscal outlook improved. On the latter front, the WSJ’s Grep Ip highlights a new study — co-authored by former CBO boss Doug Elmendorf — that forecasts the US debt-GDP ratio won’t hit 100% until 2032 vs. the CBO’s 2009 forecast of 2023. (Thank low interest rates and slower healthcare inflation for that.)
But maybe another reason Republicans aren’t talking about the debt is that it’s hard to do so without also talking about deep Medicare and Social Security reform. And while entitlement reform was a pretty hot topic early in the Obama presidency, passion on the right has waned. Reforming entitlements is out, defending them is in. As Donald Trump has put it: “Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want [it] to be cut.” Here’s WSJ columnist Holman Jenkins:
Mr. Trump is a political harbinger here of a new strand of populist Republicanism, largely empowered by ObamaCare, in which the “conservative” position is to defend the existing entitlement programs from a perceived threat posed by a new-style Obama coalition of handout seekers that includes the chronically unemployed, students, immigrants, minorities and women.
This political rationale was emerging in the 2012 Obama- Mitt Romney race, though not yet fully formed. It surfaced again in the 2013 tea party fight over the debt limit, a Kabuki play that allegedly threatened national default. The Kabuki was driven, recall, by the demand of Mr. Cruz and other tea party types that ObamaCare be “defunded.” … The tea party animus toward ObamaCare is something different: Implicitly, such means-tested new entitlements that benefit working-age folks and people (read minorities) who typically vote Democrat are viewed as a threat to the traditional, universal, “earned,” middle-class retirement programs of Social Security and Medicare. … The unspoken tea party stance of defending the good old-fashioned entitlements of “real” Americans is increasingly, in dog-whistle terms, what differentiates one Republican from another.
Chris Christie, who went nowhere in Iowa, did himself no favor by dragging Social Security and Medicare into every debate, however much those programs need to be addressed. Marco Rubio was just as quick to modify any implication that Republicans therefore are entitlement reformers: “We are talking about reforms for future generations. Nothing has to change for current beneficiaries. My mother is on Medicare and Social Security. I’m against anything that’s bad for my mother.” Welcome to an important new fault line in our slow-growth, resource-constrained America. Though many of us believe the entitlement programs need to be reformed, success will come increasingly to Republicans who pose as “conservative” defenders of Social Security and Medicare.
In other words, government checks going to more likely GOP voters are “earned benefits,” those to Democratic voters, “welfare.” Medicare and Social Security good, Medicaid, Obamacare and income supports bad. Or as Jenkins phrased it in an earlier column: “The new ‘conservative’ position will be to defend Social Security and Medicare, those middle-class rewards for a life of hard work and tax-paying, against Mr. Obama’s vast expansion of the means-tested welfare state for working-age Americans.” Certainly not every Republican is totally buying into this. Rubio, for instance, does support sweeping Med-SocSec reform — though I don’t know how much he talks about it on the presidential campaign trail.
A few economic policy notes: First, the future projected cost growth of middle-class entitlements will need to be reduced.
Second, a GOP Obamacare replacement plan may not spend as much as Obamacare is projected to, but it will spend more than than a return to the pre-Obamacare status quo. The 2017 Project has devised an ObamaCare alternative that would include refundable tax credits for individuals and the uninsured to buy private health insurance. The proposal would cost about a trillion bucks over ten years.
Third, the globalized, technologically advanced US economy might require a broader array of income supports than many GOPers now consider wise. AEI’s Charles Murray, a supporter of a government-guaranteed basic income — has argued thusly: “Massive government redistribution is an inevitable feature of advanced postindustrial societies.”