The larger paycheck (sans Social Security taxes) puts more money in a worker's pocket, and the ripple effects begin. Workers spend their extra money—helping revive our local and national economies.
But policymakers fear a pause would be a risk to Social Security's trust fund. They're mistaken as they don't account for certain demographic trends and fail to recognize the psychological importance of going back to work.
Returning to work changes a person in many positive ways. They're no longer on the couch, binge-watching movies or playing video games at all hours. Life becomes more organized and the alarm clock returns to help. Instead of living inside one's head all day, they might meet former workmates or make new friends. In short, they become re-socialized into mainstream American life.
Even after the pause ends, the expected economic growth will increase employment. While a repeat of January's ultra-low unemployment numbers is unrealistic, this doesn't mean the pause is trivial. The pause will help people become "attached to the workplace". Thus, post-pause, more workers will be paying Social Security taxes than otherwise.
Turning to demographics, there are hard truths indicating why Social Security likely will be paying out less in future retirement benefits than had been expected.
First, many Americans are obese. According to the Centers for Disease Control, the prevalence of obesity in American adults rose from 30.5% in 1999-2000 to 42.4% in 2017-2018.
That increase is bad, but what's worse is the uptick in "severe" or morbid obesity, from 4.7% in 1999-2000 to an astonishing 9.2% in 2017-2018. It seems America is on track to a 10% adult morbid obesity rate in the near future. The National Institutes of Health found that morbid obesity shortened a person's lifespan by 14 years.
Do the math. In 2018, the average American male life expectancy was 76 years, with 81 years for women. For morbidly obese men, it's an endpoint at 62 years; this is Social Security's "early retirement" age (with reduced benefits). A morbidly obese man who doesn't take "early retirement" benefits probably will receive zero retirement benefits.
For a morbidly obese woman, her endpoint is at 67 years. She could receive reduced benefits starting at age 62; demographics indicate she'll have five years of benefits. However, if she waits until she's past her 66th birthday to claim her full benefits, it's a gamble whether she'll live long enough to receive them.
Taken together, the severity of obesity rates in America leads to a reduced payout from the Social Security Trust Fund.
In another demographic issue, the CDC states that 67,367 Americans died of drug overdoses in 2018. Many of these deaths involved people younger than age 54. Between 1999 and 2018, nearly 450,000 people have died due to an opioid overdose, including fentanyl overdoses.
While 2018 saw a small decline (4.6%) in overdose deaths, it's easy to foresee how 2020 data will show a spike upwards, as many people reach for illegal drugs to get through the COVID-19 lockdowns and shutdowns.
Simply put, the dead do not receive Social Security benefits. If a younger person dies due to an overdose, it means they will never receive a retirement benefit. If a senior on benefits dies, it means they had received a lower than average cumulative benefit, due to their shortened lifespan.
Finally, we have the fact of how the nation's elderly population makes up a disproportionate number of COVID-19 fatalities.
In New York state (as of June 11) for the age group 60-69, COVID fatalities were 4,769. For those aged 70-79, the number jumps to 6,356. For those aged 80 and older, the number is 9,694.
Remember those average life expectancy numbers? By the time America is finished with COVID-19, watch for another reduction in life expectancy as our old-old population shrinks. And we know shorter life expectancies mean lower payouts from the Social Security Trust Fund.
Bottom line: Instead of spending another trillion dollars on "stimulus checks", there's a better way to help Americans. By pausing Social Security taxes, Americans will enjoy major psychological and economic upsides, with a low downside risk. And it is low, considering how negative health trends will result in a reduced demand for Social Security retirement benefits.
The message to D.C.'s solons: No more stimulus checks! Just hit the pause button now so Americans can go back to work. The Social Security Trust Fund will survive.
------------------------
Joanne Butler is a senior economics fellow at the Caesar Rodney Institute of Delaware. H/T Issues & Insights.
Tags: Joanne Butler, Issues & Insights, A Better Stimulus, Pausing Social Security Taxes To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service and "Like" Facebook Page - Thanks!
Source
No comments:
Post a Comment