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Social Security and Medicare: Fun With Numbers Time

CEPR, Dean Baker, November 27, 2023 

The whole subsidy to retiree story is a diversion from the many important issues facing the country. Even the core idea, that we don’t adequately support the young because we give too much to the elderly is wrong.

As a Thanksgiving present to readers, Washington Post columnist Catherine Rampell decided to tell us again how old-timers are robbing from our children with their generous Social Security and Medicare benefits. This is always a popular theme at the WaPo, especially around the holiday season.

The story is infuriating for four reasons:

  • Even by the calculations highlighted in the piece, Social Security is not a big subsidy to retirees,
  • Medicare appears to be a large subsidy only because our healthcare system is so inefficient,
  • What counts as a government payment, as opposed to a market outcome, is arbitrary, and
  • We pass on a whole society to our children, focusing on these programs to the neglect of the larger social and physical environment is close to absurd.

Social Security

The Social Security program has always been reasonably well-funded, even as slower growth and the upward redistribution of income over the last five decades have hurt the program’s finances. It is now projected to face a shortfall in a bit over a decade, but the gap between scheduled benefits and taxes is not exceptionally large, as calculated by Gene Steurele and Karen Smith, Rampell’s source.

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