Tag: Lynn Parramore

Work Longer, Die Sooner! America’s Dire Need to Expand Social Security and Medicare

Mary Pat Campbell

Link: https://www.ineteconomics.org/perspectives/blog/work-longer-die-sooner-americas-dire-need-to-expand-social-security-and-medicare

Excerpt:

Are we all really living longer? Let’s first point out that Princeton economists Anne Case and Angus Deaton, noted for their research in health and economics, recently showed that many Americans are not, in fact, enjoying extended lives. As they stated in their own New York Times op-ed, those without college degrees are “scarred by death and a staggeringly shorter life span.” According to their investigation, the expected lifespan for this group has been falling since 2010. By 2021, people without college degrees were expected to live to about 75, nearly 8.5 years shorter than their college-educated counterparts.

Overall life expectancy in America dropped in 2020 and 2021, with increases in mortality across the leading causes of death and among all ages, not just due to COVID-19. In August 2022, data confirmed that Americans are dying younger across all demographics. Again, the U.S. is an outlier. It was one of two developed countries where life expectancy did not bounce back in the second year of the pandemic.

So the argument that everyone is living longer greatly stretches the truth—unless, of course, you happen to be rich: A Harvard study revealed that the wealthiest Americans enjoy a life expectancy over a decade longer than their poorest counterparts.

Could the idea that working into our seventies and beyond boosts our health and well-being hold true? Obviously, for those in physically demanding roles, such as construction or mining, prolonged work is likely to lead to a higher risk of injury, accidents, and wearing down health-wise. But what about everybody else? What if you have a desk job? Wouldn’t it be great to get out there, do something meaningful, and interact with people, too?

Perhaps it’s easy for people like Steuerle and Kramon to imagine older people working in secure, dignified positions that might offer health benefits into old age – after all, those are the types of positions they know best.

But the reality is different. Economist Teresa Ghilarducci, a professor at the New School for Social Research, focuses on the economic security of older workers and flaws in U.S. retirement systems in her new book, Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy. She calls those praising the health perks of working longer “oddballs” – those fortunate folks in cushy positions who have a lot of autonomy and purpose. Like lawmakers or tenured professors, for example.

Author(s): Lynn Parramore

Publication Date: 8 May 2024

Publication Site: Institute for New Economic Thinking

Can Baby Bonds Fight the Wealth Gap and Racial Inequality? Connecticut Aims to Find Out.

Mary Pat Campbell

Link: https://www.ineteconomics.org/perspectives/blog/can-baby-bonds-fight-the-wealth-gap-and-propel-racial-equality-connecticut-aims-to-find-out

Excerpt:

Connecticut has made history as the first state to implement a baby bonds program — fully funded for 12 years of babies.

The state will invest $3,200 for each baby covered by HUSKY, the state’s Medicaid program – that’s about 15,000 babies a year and a whopping 36% of the state’s children. Kids are automatically enrolled; no action is required. Upon reaching adulthood (18-30), participants can claim funds for specific wealth-and-opportunity-building purposes like higher education, a home purchase, or starting a business in the state. To receive the funds, they have to be Connecticut residents and need to complete a financial literacy course (hopefully not one funded by self-serving Wall Street firms). The initial $3,200 investment is anticipated to grow to $11,000 – $24,000, depending on when claims are filed.

Turning the idea of baby bonds into reality was a rocky road: the Democratic-led Connecticut General Assembly passed the bill in 2021, championed by former Democratic Treasurer Shawn Wooden. However, Governor Lamont and his team initially opposed the program’s funding, citing concerns over borrowing more than $50 million annually. Internal conflict heated up, as revealed in a January 2023 investigation by the Connecticut Mirror, exposing tensions between Wooden and the governor’s staff. Yet, following the publication, the situation took an unexpected turn. The program became a reality.

The sticking point of funding was solved by a plan to use a $393 million reserve fund established in 2019 during the restructuring of the state’s cash-strapped pension fund for municipal teachers. Originally designed to cover shortfalls in pension fund contributions, this reserve could be repurposed. To safeguard the pension system and meet ratings agencies’ requirements, a $12 million insurance policy was necessary, leaving approximately $381 million available for investment in the baby bonds program.

Author(s): Lynn Parramore

Publication Date: 27 Feb 2024

Publication Site: Institute for New Economic Thinking

Meet the Grinch Stealing the Future of Gen Y And Z

Mary Pat Campbell

Link: https://www.ineteconomics.org/perspectives/blog/meet-the-grinch-stealing-the-future-of-gen-y-and-z

Excerpt:

There’s one threat that gets far less attention, which has been impacting American workers since the 1970s: wages that just don’t keep up, despite increased productivity. Social Security was designed for wages that rise with inflation – but that’s not happening. In an interview with the Institute for New Economic Thinking, Eric Laursen, author of The People’s Pension: The Struggle to Defend Social Security Since Reagan, breaks down how the program works, why wage stagnation represents a mounting threat, and what can be done to strengthen and update the program for the 21stcentury.

Lynn Parramore: Social Security has been America’s most successful retirement program for the last 87 years. Yet the public is constantly hearing that the program is going to “run out of money.” Is that actually true? Can Social Security actually go bankrupt?

Eric Laursen: No, and the word bankrupt is just about a complete misnomer when it comes to Social Security. The program is funded by contributions that participants and their employers make through their paychecks. It’s also backed by a Trust Fund which is accumulated over time.

That Trust Fund is dwindling now, and it’s expected to run out of money in the early 2030s. But Social Security can’t actually go bankrupt. If the situation arises where there is not enough money either in the Trust Fund or coming through from contributions to fund current benefits, then those benefits can’t be paid, perhaps as much as 25%. In that case, Congress would be faced with a choice to either cut benefits or increase contributions.

There’s a lot of pressure from people who want to cut Social Security to do it now rather than waiting for that point in the future, because at that point, Congress would be under a lot of pressure to make good on what people have been promised.

….

LP: What would you do to make sure that Social Security is protected and remains strong? Does it need to be modernized in some ways to keep it effective?

EL: There are a number of things that can be done. One is to raise the cap. More of income beyond the $147,000 threshold needs to be taxed for payroll tax purposes. Another thing that can be done is passing the Social Security Expansion Act that Sanders, Elizabeth Warren, and others have backed. There is a special minimum benefit for Social Security recipients that’s aimed at keeping people who have really low incomes during their lifetimes above the poverty level, and that needs to be improved. That’s not asking a lot. It should be done.

You can also change the rules for wealthy people. One of the differences between now and 40 years ago is that people in the really high income brackets get much more of their income from investments, stock options, and other business holdings than they do from salaries and wages. We need to figure out a formula for applying the payroll tax to at least some of that investment income – like capital gains and so forth. Definitely, the CPI-E needs to be instituted. There should be an expansion of benefits across the board for Social Security benefits. We need the CPI-E at a base level that’s more reasonable. Another thing I think is important: one of the changes that happened in ’83 that was really bad was that Social Security survivor benefits were ended for children of deceased or disabled workers above the age of 18. It used to be that you could get those until 22 and they would help you to go to college. That was abolished. It would be a very good thing if that could be reinstated so that more people have some level of security to pursue higher education.

Author(s): Lynn Parramore

Publication Date: 20 Dec 2022

Publication Site: Institute for New Economic Thinking