The social kind introduced a social security system that made taxpayer-funded income available to workers if they retired at age 65 or older. This was combined with a tax on the earnings of employed persons that was supposed to finance the incomes to retirees. The purpose of the system was partly to get older workers out of the labor force so that more of the then scarce jobs would become available to younger workers.At the beginning, this system was not expensive since retirement payments were not generous, life expectancy tirement incomes have risen greatly, partly due to highly generous adjustments for increases in the cost of living. In addition, the average person who retires at now lives for about 19 years, because life has increased greatly.An even larger source of the increased cost to taxpayers of benefits provided to older persons is thend 1/3rd of the federal budget. These shares will rise greatly during the next couple of decades unless major reforms are introduced into these programs.This expebnciv modal of lives high properties,.One obvious reform would be to raise the age of eligibility for both social security income and Medicare benefits. It is surprising that while life expectancy of older persons has been growing rather rapidly for the past several decad sically demanding, actual retirement ages have declined from the 1930s. The average age of retirement is now under because a significant fraction of men and women when workers first become eligible to receive social security retirement benefits.In light of the increase in life expectancy after age 65 and the decline in physically demanding jobs, it would be reasonable for the eligibility age for social security. The average age of retirement from the labor force for Japanese males is already only a little below 70, which shows that much higher retirement ages is feasible. Persons who are physically or mentally incapable of working would then opt for disability status. This is a rapidly growing category in most developed countries, despite the increase in physical and mental health of older persons, because of a weakening of qualifying standards. With more flexible labor markets for the elderly, such as reducing the fear of companies that they will be sued for discrimination against older workers, . Similarly, an increase in retirement age to 70 would security taxes since workers would be employed for several additional years. Therefore, such increases in age of eligibility for social security benefits would go a long way toward solving the looming social security financial “crisis”.Once a later age of retirement was introduced, it would be much easier to raise the age of eligibility for Medicare benefits. The great majority of older workers would be covered by their employers’ health insurance plans, and would continue to receive the health benefits provided by these plans. Coverage of workers in their later 60s would add to the cost of company plans, but not by extraordinary amounts since medical spending by the average person between 65-70 (in good part under Medicare) is only a little more than 10% greater than that of persons aged 60-65. Moreover, spending on health care by older persons is lower under private plans than under Medicare because the greater deductions and co-pays in private plans induce individuals to economize more on their medical spending.The savings in public health care spending from a higher age of of eligibility for Medicare and social security benefits would not be as large a fraction of Medicare spending as of spending on social security since per capita spending on medical care gets much larger as people get into their 70s and 80s. Still, it would make a sizable dent in Medicare spending.Higher ages of eligibility for social security and Medicare benefits alone would not solve the looming entitlement budgetary crisis. However, they would make big contributions toward the solution without requiring radical changes in the level of benefits received by eligible personsIn principle, as Becker shows, increasing the eligibility ages for these costly federal entitlement programs would substantially reduce the federal deficit. But the size of the reduction would depend on the behavioral consequences, a complex and uncertain issue. For example, many people undoubtedly will increase the amount of private health insurance that they carry and also increase their savings for retirement. Most of these additional benefits will probably be provided by employers, resulting in an offsetting reduction in wages. Since fringe benefits receive favorable tax treatment, such a shift reduces federal tax revenues, increasing the federal deficit. Furthermore, more people will apply for social security disability benefits (the effect, if the application is successful, is that the applicant receives social security benefits before he reaches eligibility age) and receive them; in addition, the legal and other administrative expenses of obtaining such benefits are much greater than the expenses of obtaining social security at the age of eligibility. Other people who lose eligibility if the eligibility age is raised will be able to substitute Medicaid, another costly entitlements program although less generous than Medicare and funded only one-half by the federal government (the other half is funded by the states). And because people between the ages of 65 and 70 are on average healthier than those who are older, the savings to the Medicare program from an increase in the eligibility age will not be proportionate to the number of persons who become ineligible as a result of the increase. Becker mentions that one impetus to the creation of the social security program back in the 1930s was to create more job opportunities for young people. I think that that is or should be a concern today. In a society in technological flux, like ours, an age-top-heavy work force may be an impediment to economic growth. There is also considerable youth unemployment today. Although this is not the occasion on which to explore the issue of “structural unemployment,” I think it is at least arguable that automation, outsourcing, international competition, and changes in management practices may be shrinking the labor market. The more competition in labor markets the better for the economy, but the age discrimination laws shield older workers, to an extent anyway, from the competition of younger ones.I say “older” I have in mind not middle-aged men and women, but people in their late sixties who would be incentivized by the increase in eligibility ages to retire later. Another problem with obtaining substantial economies from increasing eligibility ages is that of the phase-in period for the increases. In order not to upset people’s expectations (upon which many of their employment, savings, and insurance decisions may have been based) too drastically, proposals for increasing the eligibility ages for social security and Medicare invariably provide for a gradual phase-in of the higher eligibility ages. The phase-in for increasing the eligibility age for full social security benefits from 65 to 67, a change in law that was enacted in 1983, spans the period 2000 to 2022—thus taking 39 years from enactment to completion, with no changes in the ears. A faster track to a lower deficit would be a reduction in social security and Medicare benefits immediately for affluent persons. Unless the phase-in period is enormously long, in which event increasing eligibility ages would not be considered worthwhile, increasing those ages is unlikely to be politically feasible. Middle-aged people will think they are being “forced” to work at a time of their life when they will be “entitled” to be enjoying retirement. That is, people expect life to get better over time. Raising eligibility ages, especially for Medicare, because it is so generously open-ended, will be widely interpreted as telling people that life is not going to get better over time—because most elderly people don’t want to work. Despite the problems I have emphasized, raising the eligibility ages for social security and Medicare deserves serious consideration. But perhaps equal or greater emphasis should be given to other ways of reducing the cost of these entitlement programs, such as measures, comparable those of employers and health insurance companies, to increase the incentives of hospitals and doctors that provide Medicare services to economize, as by eliminating redundant treatments and excessive screening for low-probability health problems. The Affordable Health Act tries to do this, and in addition the reduction in Medicare reimbursement that the Act mandates will put pressure on the providers to economize. Offsetting this increase in costs has been the sizable growth in financial gains from getting at least 4 years of higher education , and other dimensions that I will not discuss). The earnings of the average person with at least this much education have grown during past 30 years from being about higher than those of the average high school graduate to being over 80% higher.
This sizable growth in this earnings advantage implies that This year college education has remained a good deal for the average student. Indeed, it has even become a better deal. By that I mean that the average lifetime financial gain from going to a 4-year college program has grown significantly, even after subtracting the increase in net tuition, and that the rate of return on such an education has not decreased over time.Some critics of higher education have mentioned the growth in the unemployment of men and women with a higher education during the financial crisis and recession. The unemployment rate of persons with a bachelor’s degree or higher has grown, from about 2% in 2008 to just under 4% at the end of 2012. However, its growth has been less than that of persons with lesser education. For example, the unemployment rate of high school graduates grew from 5% in 2008 to over 10% in 2010, and fell back to 8.3% by end of 2012. In fact, the unemployment rate of persons with at least a bachelor’s degree is even now less than were the unemployment rates of persons with lesser education before the crisis struck.Persons with less than four years of college do not earn much more than high school graduates, and their unemployment rates are only a little lower than that of high school graduates. Therefore, starting but dropping out of college is not a good deal financially. Yet about half of all men and women who start college fail to get a 4-year bachelor degree, and that is a real problem.The Transportation Secretary and other government officials have claimed on television that government cutbacks would have catastrophic effect on airline travel, various other government programs, and overall employment if no deal with Congress is reached prior to March 1 when the so-called “sequester” starts. At that time, a series of cuts in government spending will automatically begin according to a schedule laid out over a year ago. Although the set of agency cuts in spending mandated by the sequester is far from the best way to cut federal spending, as I discuss later, a few calculations show that in the aggregate the spending cuts will not have disastrous consequences. The Congressional Budget Office estimates that if the sequester goes into effect, actual federal spending, which lags appropriations, would decline by about $44 billion over the next seven months. Budget authorizations would decrease by about double that amount, to $85 billion, in the fiscal year ending in September. That is a huge amount of money to you and me, but even the authorized cuts are only a little over 2% of the projected federal budget during this fiscal year. Officially, government spending would continue to be cut for several years under the sequester plan, but no one expects the plan to Various other activities of the government can be done much better by the private sector without government subsidies, such as production of ethanol, fossil fuels, and alternative energy sources, such as solar and wind power. It also suggest scaling back some of the welfare programs that expanded rapidly during past few years, programs that contributed greatly to the sharp decline in the labor force of lower skilled and younger workers (see Casey Mulligan, The The sequester-mandated cuts in spending exclude social security and Medicaid, and requires senseless cuts in Medicare. In light of the greater health and life expectancy of older Americans, one effective way to cut spending on social security and Medicare would be to raise the eligibility age gradually over the next decade to Additional savings on Medicare can also be achieved if a voucher program replaced the current system. The richer elderly should get smaller vouchers, and everyone should beallowed to top up their vouchers with private spending, presumably most of that covered by private insurance. Some economists have argued that the mandated cuts in government spending are particularly inappropriate at this time since the US is not fully recovered from the financial crisis. Since reduced government spending illion over the next seven months only this is not likely to have a major effect on the economy, even without any replacement of reduced government spending by greater private investment and other spending. The $85 billion decline in appropriations would be more disrupting, but still would not amount to a lot, especially since the private sector appears to be .
Tecnices
No comments:
Post a Comment