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Home Publications Blogs Beat the Press Robert Samuelson Is Too Lazy to Look Up Income Data for the Elderly

Robert Samuelson Is Too Lazy to Look Up Income Data for the Elderly

Monday, 16 May 2011 04:11

Fortunately for Samuelson, his job as a columnist for the Washington Post doesn't require him to know anything about income distribution among the elderly, even though according to his own claim, he has been writing about it for decades. Samuelson has another big push for means-testing of Social Security and Medicare, telling us how wealthy the elderly are.

Samuelson's piece is full of comments that are either deliberately misleading or profoundly ignorant. For example, he tells readers:

"From 1959 to 2007, the proportion of the 65-plus population with incomes under the government’s poverty line ($12,968 for a couple in 2009) dropped from 35.2 percent to 9.7 percent, which was half the poverty rate for children under 18 (18 percent)."

It's true that the elderly poverty rate has fallen from what had been very high levels to roughly the same rate as for the adult population as a whole. It's not clear why Samuelson thinks it is appropriate to compare their poverty rate to that of children. Would he also compare the poverty rate for African Americans to the poverty rate for children to tell us that it's not that bad?

Furthermore, there are serious questions about the methodology for calculating poverty among the elderly. The methodology designed by the National Academy of Sciences shows the poverty rate for the elderly is about 10 percent (@1.1 percentage point) higher than for the prime age adult population.

Samuelson also quotes a government report telling us that:

"Most older people are enjoying greater prosperity than any previous generation."

This would actually be true of any age group, at least before the recession. Per capita income is growing at roughly a 2.0 percent annual rate. It has nearly doubled since 1980. Even with substantial upward redistribution, most people at most points in the income distribution have seen some gains over this period.

Most importantly, if Samuelson did know anything about income distribution among the elderly he would know that means-testing of Social Security and Medicare is not likely to save much money unless the intention is to take benefits away from middle-income people. The problem is that the portion of the benefits going to the wealthy (as opposed to the portion of income) is not very large.

Means-testing cannot be a cliff where everyone earning over some amount (e.g. $100k or $200k) gets zero. It has to involve a phase out. Unless these phase outs start at incomes around $40k (Samuelson's definition of wealthy?) and are very steep, they will not save much more than they would cost to administer.

Fortunately for Samuelson, his job does not require him to know anything about income distribution among the elderly.

Comments (11)Add Comment
Elderly Have Sunk Costs - Children Face Avoidable Costs, Low-rated comment [Show]
Poor (?) Neocomrade Samuelson!
written by JHM, May 16, 2011 6:00
Imagine getting dumped on like that, when all you are really tryin' to do is make sure nobody starts means-testing the rich!

Happy days.
written by par4, May 16, 2011 8:26
...per capita income has doubled since 1980... I thought wages have been stagnant for that long. What has been the rate of decline in the value of the dollar and the rate of inflation?
written by skeptonomist, May 16, 2011 8:45
Blue-collar workers are not doing better now than they ever did - their real income hit a peak around 1973:


Wages have increased since around 1990, but are still nowhere near what they were 40 years ago.
Wages had grown steadily for 100 years before the 1960's and 1970's. The drastic change at that time is one of the central facts of modern economics. The timing of this change is brought even more clearly by comparing wages with GDP and corporate profits:


This change was not brought about by Ronald Reagan or George W. Bush. Shouldn't economists give some thought to the the cause of this reversal?
To Easy On Samuelson
written by Larry Signor, May 16, 2011 10:17
Samuelson is not just lazy, he is disingenuous. This from an NBER review http://www.nber.org/aginghealt...10466.html of NBER Working Paper 10466http://www.nber.org/papers/w10466 by researchers Gary Engelhardt and Jonathan Gruber:

"The authors draw several interesting conclusions from their analysis of aggregate trends. First, when poverty is measured relative to median non-elderly income rather than relative to the official poverty line, the decline in elderly poverty ended in the early 1980s. Income inequality has increased markedly since then among the elderly and non-elderly alike. Second, poverty rates are strongly cyclical - rising during recessions and falling during economic expansions - for the non-elderly but not for the elderly, highlighting the protective effect of Social Security. Third, decreases in elderly poverty over time have been similar across age groups but larger for married couples than for other groups."
written by jm, May 16, 2011 10:50
The real agenda behind means-testing is to turn Social Security into something that can be called a welfare program, rather than the insurance program it is today.

With Social Security reconfigured as a "welfare program" in which the poor get a huge payoff while the middle class gets back an even smaller fraction of what it paid in, they will be able to demonize as they have all welfare programs. Then they can kill it.

Today, everyone pays in, and everyone gets back an amount proportional to what they paid in, plus some interest.

Means-testing is just another divide-and-conquer strategy by the far right.

Proportional ?
written by AndrewDover, May 16, 2011 11:31

Social security benefits are not proportional to taxes, they are skewed against higher incomes. See http://www.socialsecurity.gov/...rmula.html

"PIA will be the sum of:
(a) 90 percent of the first $749 of his/her average indexed monthly earnings, plus

(b) 32 percent of his/her average indexed monthly earnings over $749 and through $4,517, plus

(c) 15 percent of his/her average indexed monthly earnings over $4,517."

Full taxation of social security benefits is administratively cost-free, as progressive as the income tax, and won't substantially affect those who rely on social security for all of their income.

Dean's paper assumes that implementing "means testing" will cost as much as evaluating disabilities:

"Currently, administrative costs for Social Security are very low, just over 0.6 percent of the benefits paid out each year for the retirement portion of the program. Administering a means test would raise these costs substantially. By comparison, the administrative costs of the disability portion of the program, which requires extensive review of applicants’ eligibility, are equal to 2.3 percent of the program’s benefits payments. If the cost of administering a means test for the retirement program raised its expense ratio to the same level as the disability program, then it would eliminate most and possibly all of the savings from a means test applied to affluent elderly."

Dean, why would changing the tax code result in 2.3% administrative costs?
written by Bloix, May 16, 2011 11:40
"It's not clear why Samuelson thinks it is appropriate to compare their poverty rate to that of children."

The reason is obvious. There's a standard right-wing form of argument - these are like pattern arguments, adabtable for various circumstances - which goes something like this:
1) the left has identified social problem A and wants the government to do something about it.
2) But social problem B is a much more serious problem! and we're not doing anything about B!
3) Therefore we should not do anything about A.

You can spin this argument out in greater detail by adding charges of hypocrisy or fecklessness(e.g., saying you want to fix A while B is staring you in the face is the height of fiscal irresponsibility! Much better to do nothing about A and B, both!)

Here, Samuelson is making a sketch of the argument, but actually in a stronger form, something like this:

1) We have solved the social problem of old age poverty!
2) Indeed, we have done such a good job with old age poverty that child poverty is now a more serious social problem.
3) Therefore, we should take steps so that old age poverty will once again be as serious as child poverty.
Means testing
written by Lord, May 16, 2011 4:26
means many things. Income taxwise it would be administratively free but also raise next to nothing. A more complex approach has to take into account wealth as well as income and would be extremely taxing. Another approach some have suggested is reducing it in proportion to lifetime earning above some threshold which SSA already tracks rather than income or wealth. This would not be administratively costly but it may not save much either. It would be more fair to those who saved on their own though.
written by jhand, May 16, 2011 5:34
A few months ago, in a similar vein, Samuelson did a takedown on public education, arguing that math and reading scores had not improved much over an approximate 20-year period. The table that he used as a reference showed that, overall, average scores remained the same; however, he neglected to point out that the same tables showed significant gains for Black and Hispanic students. Of course the overall scoring average would not have changed much due to the increased number of minorities measured in the table--a group that had started out significantly behind the white population's scores. Sammy chose to ignore the positive news in order to beat up public schools with data that was essentially meaningless. I don't think the guy knows a whole lot about anything.
Robert Samuelson is a Douche Bag
written by Sherparick, May 17, 2011 8:15
And the real agenda is that taxes on the rich must be cut more. All hail our Galtian Overlords.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.