March 30, 2014
Abby Huntsman, the daughter of Jon Huntsman, a millionaire and unsuccessful presidential candidate, seems determined to press the idea of cutting Social Security and Medicare, apparently unaware that people from her class have been doing the same for decades.
As I wrote in response to her previous diatribe, there is no way that paying for Social Security will have a major effect on the standard of living of people of Huntsman’s age. Even if we resolved the projected shortfalls entirely by raising the payroll tax, as opposed to raising the cap on income subject to the tax, apply revenue from other sources, or any reductions in benefits, the necessary tax increase would be less than 10 percent of projected average wage growth over the next three decades.
The far greater risk to the living standards to the people of Huntsman’s generation is the risk that we will continue to see the upward redistribution of income over the next three decades that we have seen over the last three decades. As a result of this upward redistribution of income, people like Ms. Huntsman’s father have benefited enormously, while most workers have seen little or none of the gains from economic growth. If this pattern continues then most people in Ms. Huntsman’s cohort will not fare well financially even if we eliminated their Social Security taxes altogether.
Huntsman points out that the burden from Medicare is far worse. This is due to the fact that health care costs per person in the United States are more than twice as high as the average for other wealthy countries, with nothing to show for it in terms of outcomes. This is why serious people focus on trying to bring our costs more in line with costs elsewhere in the world. This would likely come at the expense of doctors (who comprise one sixth of the richest one percent), drug companies, insurers, and other powerful interest groups who benefits from the waste in the health care system. (One simple method to reducing waste is to open up the sector to more trade.) The issue here is whether we look to reduce the quality of care received by seniors or whether we look to reduce the waste in the system that further enriches the rich.
Finally, anyone concerned about the plight of young people should be asking about global warming. Current trends in greenhouse gas emissions imply a world that will be suffering massive damage from global warming in two or three decades. Hundreds of millions of people will be facing risks to their livelihood and survival due to extreme weather, floods, and droughts. This will lead to large-scale social unrest in much of the world. That is likely to matter much more to most people of Abby Huntsman’s generation than the possibility that their Social Security tax rate may increase by one or two percentage points.