Bad-Faith Statistics

I’m just back from a pleasant week away, and was planning on saying something about the EU debt crisis, but it’s still ripening on the vine – or in this case, more a fuse than a vine.  In my assessment, that fuse will sputter on until 2014, when all the moral, political and fiscal bills will come due, so I’ll have probably lots more to say before then.  Meanwhile, some of the statistics being tossed about by columnists like Robert Samuelson on the Washington “Fiscal Cliff” topic are so egregiously bad-faith that I have to tut-tut about them immediately.  By bad-faith, I mean statistics that are deliberately misused by someone who should know better to present a picture opposite to what they actually portray.  And Samuelson, an economist, should know better.  He’s not by himself, by any means, and not all the misrepresenters are conservatives.  But his blatancy stands out.

First, he portrays himself as presenting an even-handed analysis of the role of Social Security.  Maintaining that benefits should be cut, he presents the arguments against doing so as “shortsighted”.  He notes that a principal argument is that most of the elderly are poor, presenting statistics that, to the contrary in his view, 25.9 percent have family income over $75,000, 19.4 percent have income from $50,000 to $74,999, and 18.8 percent have income from $35,000 to$49,999.  He “forgets” to note that adds up to 64.1 percent, meaning 35.9 percent have family incomes below $35,000 and 54.7 percent of the elderly have family income below $50,000.  The median family income in the U.S. is about $52,000 and the family poverty level is about $20,000.  So over half the elderly live with incomes below the national median income, and the majority of those are more than halfway down to the poverty level. That of course argues directly the opposite of Samuelson’s view.  The elderly are not in general affluent.  It should be noted, by the way, that until Social Security began paying benefits 60 years ago, over half the elderly lived below the poverty line, so there has been substantial improvement.  And that benefits the whole nation, something Samuelson seems also to “forget.”

Samuelson then argues that Social Security benefits are not truly “earned” because payroll taxes are used to pay benefits to others, not the worker who paid the taxes.  But Social Security is a form of casualty insurance, which, like all insurance, uses current premium payments to pay benefits to those who have had losses, in this case the loss of income from retirement. Samuelson’s argument is like saying that insurance benefits, after years of paying premiums, are not really “earned” and should be cuttable at will by insurance companies.  I doubt he would regard his own insurance that way.

The Social Security issues arise in the first place because we, as a society, have not come to terms with how we should treat the elderly.  Are they only discards from the labor pool, no longer productive but still, regrettably a “cost of doing business”, or are they honorable fellow members who have done their duty over many years in many ways and deserve a full place at the table?  In the latter view, the economic statistics would show the elderly as having essentially the same median income and poverty rate as the population in general.  The fundamental sticking point is that we continue to deal with the problems and issues of the elderly as only employment related, when they are beyond the time of inclusion in individual employers’ labor pools.  Social Security and Medicare are regarded by employers essentially as unfortunate externalities, which because benefits come after the employment period, only weigh employers down without benefitting them.  But the elderly contribute, and have long contributed, to society in many ways, not just through employment.

We need, as other nations already have, to look at decoupling Medicare and Social Security from individual employment – to regard retirement and health provision as obligations of the whole society.  Though it has immense dangers of its own, perhaps we should consider funding Social Security and Medicare from the General Fund via an income tax or VAT.

We have to deal with the Fiscal Cliff without sacrificing the elderly poor among us.  We all shall be elderly (more and more so according to the demographers), and some shall always be in need. But we are more than just a “cost of doing business.”  Shakespeare put in Cardinal Wolsey’s mouth the lament, “If I had served my God as I have served my king, he would not, in my old age, have left me naked to mine enemies.” We as a society are better than that, but we threaten to behave just as callously whenever the subject of taxes is raised. By coming to terms with the real social value of our elderly, perhaps we could reach societal statistics we can cite without shame.