May 16, 2011
Fortunately for Samuelson, his job as a columnist for the Washington Post doesn’t require him to know anything about income distribution among the elderly, even though according to his own claim, he has been writing about it for decades. Samuelson has another big push for means-testing of Social Security and Medicare, telling us how wealthy the elderly are.
Samuelson’s piece is full of comments that are either deliberately misleading or profoundly ignorant. For example, he tells readers:
“From 1959 to 2007, the proportion of the 65-plus population with incomes under the government’s poverty line ($12,968 for a couple in 2009) dropped from 35.2 percent to 9.7 percent, which was half the poverty rate for children under 18 (18 percent).”
It’s true that the elderly poverty rate has fallen from what had been very high levels to roughly the same rate as for the adult population as a whole. It’s not clear why Samuelson thinks it is appropriate to compare their poverty rate to that of children. Would he also compare the poverty rate for African Americans to the poverty rate for children to tell us that it’s not that bad?
Furthermore, there are serious questions about the methodology for calculating poverty among the elderly. The methodology designed by the National Academy of Sciences shows the poverty rate for the elderly is about 10 percent (@1.1 percentage point) higher than for the prime age adult population.
Samuelson also quotes a government report telling us that:
“Most older people are enjoying greater prosperity than any previous generation.”
This would actually be true of any age group, at least before the recession. Per capita income is growing at roughly a 2.0 percent annual rate. It has nearly doubled since 1980. Even with substantial upward redistribution, most people at most points in the income distribution have seen some gains over this period.
Most importantly, if Samuelson did know anything about income distribution among the elderly he would know that means-testing of Social Security and Medicare is not likely to save much money unless the intention is to take benefits away from middle-income people. The problem is that the portion of the benefits going to the wealthy (as opposed to the portion of income) is not very large.
Means-testing cannot be a cliff where everyone earning over some amount (e.g. $100k or $200k) gets zero. It has to involve a phase out. Unless these phase outs start at incomes around $40k (Samuelson’s definition of wealthy?) and are very steep, they will not save much more than they would cost to administer.
Fortunately for Samuelson, his job does not require him to know anything about income distribution among the elderly.
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