The tide may be turning against those who'd advocate cuts to Social Security — and Paul Krugman couldn't be happier.
In his latest column for the New York Times, Krugman celebrates the growing chorus in favor of expanding Social Security benefits and explains why America's looming retirement crisis makes an expansion such a good idea.
Before he gets there, however, he takes on two popular arguments against expansion. The first comes from those who say that life expectancy has gone up since Social Security was created, and the retirement age should go up too. Krugman notes that while life expectancy has increased, the uptick is among educated and affluent workers. For low-income and low-education laborers, life expectancy has actually decreased. "So this common argument amounts, in effect, to the notion that we can’t let janitors retire because lawyers are living longer," Krugman writes.
The second argument Krugman tackles, put forward recently by the Washington Post, is that the poverty rate for seniors is low — the implication being that they don't need further assistance, anyway. Krugman's response is to note that the official measurement of poverty among seniors is widely seen as flawed, and flawed in a way that underestimates levels of senior poverty. While many believe the poverty rate among seniors to be 9 percent, Krugman says it's more likely around 15 percent. And what's more, it's likely to increase in the years ahead as more struggling retirees enter the system.
But the biggest reason to expand Social Security, Krugman says, is the failure of 401(k)s. "At this point," Krugman writes, "it's clear that the shift to 401(k)s was a gigantic failure. Employers took advantage of the switch to surreptitiously cut benefits; investment returns have been far lower than workers were told to expect; and, to be fair, many people haven’t managed their money wisely."
As a result, we’re looking at a looming retirement crisis, with tens of millions of Americans facing a sharp decline in living standards at the end of their working lives. For many, the only thing protecting them from abject penury will be Social Security. Aren’t you glad we didn’t privatize the program?
So there’s a strong case for expanding, not contracting, Social Security. Yes, this would cost money, and it would require additional taxes — a suggestion that will horrify the fiscal scolds, who have been insisting that if we raise taxes at all, the proceeds must go to deficit reduction, not to making our lives better. But the fiscal scolds have been wrong about everything, and it’s time to start thinking outside their box.
Ultimately, he concludes, an expansion of Social Security is unlikely in the near-term. Nevertheless, Krugman writes, "it’s an idea that deserves to be on the table — and it’s a very good sign that it finally is."