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Medicare and Social Security: Have and have-nots

Post by TNT Editorial Board / The News Tribune on Nov. 14, 2011 at 7:52 pm with 3 Comments »
November 14, 2011 4:17 pm

This editorial will appear in tomorrow’s print edition.

A new report on the wealth gap between young and old Americans adds another argument for trimming Medicare and Social Security spending as Congress attempts to control its runaway spending.

After rummaging through reams of federal data, the Pew Research Center documented an immense and growing financial disparity between citizens older than 65 and citizens younger than 35.

The most startling number in the study had to do with net worth: A typical household headed someone of retirement age now has 47 times the wealth than a household headed by someone 35 or younger.

That’s apparently the largest gap ever. According to the center, it has doubled since 2005 and increased fivefold over the last 25 years.

That’s not the key issue, though. Older people in general are bound to possess more than younger people, who have only begun accumulating possessions and equity in their homes.

In fact, real estate alone is the chief factor in the net worth disparity: Americans who got into their first homes long before the housing bubble popped have seen their equity expand, while those who bought houses during the bubble have seen much of theirs evaporate.

The important gap lies elsewhere, in income and poverty. Since 1967, poverty in younger households has jumped from 12 percent to 22 percent. In older households, it has fallen from 33 percent to 11 percent.

Factor in the better off, and income has grown for both groups – but more steeply for older Americans. Since 1967, older households have more than doubled their incomes, while younger households have seen theirs increase by 27 percent.

Hurray for the elderly. It’s a good thing that they are more comfortable and that Social Security has succeeded in pulling so many out of poverty.

What isn’t a good thing is that poorer, younger households – many with children – are seeing some of their wages siphoned off unnecessarily to the elderly via Social Security and Medicare.

Social Security is the lesser problem; it is a simple, honest system of money-in and money-out. But its baseline benefits are partly indexed to wage inflation rather than the cost of living. Given that poorer, younger Americans are footing much of the bill, it’s hard to see why this sweetener should be built into Social Security checks.

Medicare is the big culprit – a siphon that leaks at every joint. It is rife with wasteful spending and lax accountability. It often pays for expensive procedures – such as colonoscopies and prostate cancer screening for people over 75 – that deliver little improvement in health and quality of life. Sometimes these procedures actually endanger patients.

A collective scream goes up any time Medicare and Social Security are mentioned as possible sources of savings. But federal deficits can’t be brought under control without tightening these entitlements. And in terms of simple fairness, it’s impossible to justify picking the pockets of the have-nots to perpetuate largess that the haves don’t really need.

Leave a comment Comments → 3
  1. Realistically, we’ll never cut social security or medicare “right now”. Current seniors who are very well off right now will not live to see any type of social security reform come into affect, and they would fight like hell to prevent any cuts. Democrats have no appetite to cut Social Security/Medicare and Republicans rely on the elderly as an important constituency. So any cuts that are enacted won’t take place until later on down the road. So the younger generation right now, the same generation that has endured wage cuts and layoffs due to the recession, whose future wages have been stunted by the recession, the generation that will not have access to the pensions the old generation was blessed with, the generation that can’t afford to save for retirement, my generation, the younger generation. We’re the ones who are going to have to bear the brunt of the Social Security and Medicare cuts. I’m sorry, my generation has been robbed enough. If you want to fix Social Security, lift the “cap” on taxable wages and tax ALL wages and capital gains with the social security tax, that alone would solve social securities insolvency. Right now, those who make more than 106K a year (or only pay Capital Gains taxes) don’t have to pay Social Security taxes on all their income.

  2. elderjustice2010 says:

    “What isn’t a good thing is that poorer, younger households – many with children – are seeing some of their wages SIPHONED off unnecessarily to the elderly via Social Security and Medicare.”

    Interestingly enough we’re worried about money being siphoned off yet we are not concerned about prominent Democratic politician in Tacoma Pierce County stealing money from their elder including drawing down their investments, so they can get money, changing beneficiaries so their elder can go on medicaid. The state and federal government will now have to pick up the huge tab for such crimes against the elderly, like elder exploitation.

    But this does not concern our law enforcement in Pierce County nor our elected leaders. In fact those that abused the elder are laughing at the fact that they have all the political connections to avoid prosecution and have plotted to get rid of a judge who heard the case.

    So when we talk about SIPHONING off senior’s money let us not forget the massive crimes of financial exploitation committed against our elders without any prosecution.

    Another elder will live off the State to protect a politician.

  3. derekyoung says:

    I think it’s far worse that young people are expected to absorb monstrous cuts to investments our parents generation enjoyed, like education and infrastructure. Meanwhile leaders of the GOP promise to end what’s left of the safety net. Even their grand plan to save Medicare for seniors, authored by the very serious Paul Ryan, ended it for younger workers.

    But when Obama proposed common sense savings to the same system, these same “very serious people” went berzerk, calling it Death Panels.

    None of this would be necessary were it not for the massive tax cuts enacted by the Bush administration. To date, Social Security and Medicare have not added anything to the deficit. Their accounts have actually accrued huge surpluses now invested in Treasuries. If we’re to say that these investments are worthless, then our nation has already defaulted.

    It’s not entitlements that are bankrupting us. It’s the deification of supposed “job creators” who we dare not upset with sensible regulations and taxes our grandparents generation put in place. Nevermind that the growth and jobs promised by Mr. Laffer and his acolytes never came. We just have to take it on faith that continued savaging of the budget will convince these new gods to bless us with jobs.

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