How to Control Runaway Entitlement Spending

At the Becker-Posner blog, Richard Posner offers some ideas for amending the entitlements programs that are “threatening the long-term solvency of the federal government”:

Which leads me to the first of the only two practical ideas that occur to me for slowing the increase in entitlement expenditures relative to the size of the economy: a shift in emphasis in medical research from length of life to ability to live independently. Independent living means living without home care (whether by relatives, thus taking time from them that they could use more productively in other activities, including paid employment, or by paid care—paid by the government in many cases) and being able—and wanting—to work. Independent living can be fostered by focusing medical research on problems of vision, musculoskeletal problems (which impair mobility), obesity, and dementia, in preference to research on curing and preventing cancer, heart disease, and stroke. 

My second proposal is to means-test social security and Medicare. About 7 percent of American households have incomes above $150,000. Most of these people are not wealthy (even people with incomes of $250,000, which places them in the top 1.5 percent of the household income distribution, are not wealthy by modern standards), but they are comfortable. They can afford to finance their retirement through savings, and to buy decent health insurance. In my opinion they should not be eligible to receive either social security or Medicare benefits. Taking them off the social security and Medicare rolls would produce an immediate substantial savings in federal entitlements expenditures.

Becker’s ideas for the same problem are a bit less radical.

Leave A Comment

Comments are moderated and generally will be posted if they are on-topic and not abusive.



View All Comments »
  1. Matt K says:

    Hidden due to low comment rating. Click here to see.

    Disliked! Like or Dislike: Thumb up 9 Thumb down 16
  2. Tracy says:

    The main problem with taking them off the social security and medicare rolls would be that this is their money that they have put into the system. This is their money. If after they reach a certain wage and would like to opt out that would be one thing. Then have options as to how to deal with the money that they have put in to the system. Maybe receive a smaller lump sum payment of what they have put in, like the lottery, for early payment.

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 8
    • Enter your name... says:

      This is NOT “their money”. This is tax money that they are required to pay no matter what, and their taxes were used to pay for someone else’s retirement. This notion of having made “contributions” to an “insurance” or “savings” program is mere publicity intended (deliberately) to deceive voters and ensure the political future of the program.

      See for what FDR said about his design.

      Hot debate. What do you think? Thumb up 26 Thumb down 22
    • pawnman says:

      We’re always willing to take money away from the rich and give it to the poor…the poor are a much larger voting block.

      Well-loved. Like or Dislike: Thumb up 5 Thumb down 0
  3. Scott says:

    “They can afford to finance their retirement through savings”? So someone who worked hard to save for their future should take a hit on the Social Security benefit that they’ve paid into, because the guy next door chose to go to Europe every Summer and buy a new Vette instead of save like a responsible adult? Wow, what a great message to send: “We think it’s great that you achieved financial independence, but because you sacrificed, we’re going to take money from your pocket and reallocate it to the guy who chose not to save”. Wonderful idea.

    Well-loved. Like or Dislike: Thumb up 89 Thumb down 11
    • Joe j says:

      Standard Dem party line, punish the successful reward your base. As long as there is other peoples money to spend, people fall for it.

      Well-loved. Like or Dislike: Thumb up 44 Thumb down 32
    • Enter your name... says:

      Actually, the proposal is to stop their Social Security check if their ANNUAL INCOME (not savings) is in the top 7% of all workers.

      This will mean two things:

      * No “retirement” checks for people who are actively working at extremely well-paid jobs. They’re not “retired”, after all.

      * No retirement checks for people whose realized, taxable income from investments is so high that their investments out-earn 93% of workers. This means that you have a couple million dollars in investments—*not* counting increased value in your home or farmland, retained earnings from your small business, etc., because those are unrealized gains in assets and aren’t “income”.

      And, yeah, the rest of us might say that if you’ve got literally millions of dollars in the stock market, then you don’t need to get a mere $30,000 a year from the public coffers. You can afford to wait a couple of years until your assets have shrunk down to just, say, a couple of million dollars, plus your house and farm and cars and antique collection and whatever other non-taxable assets you have.

      Well-loved. Like or Dislike: Thumb up 34 Thumb down 19
      • Voice of Reason says:

        I know that the wealthy are faceless and are easy targets when it comes time to balance the budget, but just remember that Social Security and Medicare are supposed to be self funded programs that are supposed to basically be forced savings programs. As in, you get out of it what you put in. Why are people who make millions off of investments entitled to social security checks? Because for years, they and their employers set aside chunks of their paychecks because the government told them to. Now you want to say that they’re not entitled to that money because the government couldn’t manage its programs?

        Thumb up 3 Thumb down 0
    • Travis says:

      This same savings penalty already applies to “need-based” college grants and loans, at least it did to my wife’s parents when she went to college.
      It’s a dumb idea, to be sure. The “progressive taxation” alternative is to get rid of the upper income limit for SS tax but keep the cap on benefits. That way, you can plan for that trip to Europe and know that you’ll get something in SS when you retire.
      To be perfectly frank, though, my wife and I have been saving like there won’t be any SS when we retire, so hopefully we can still take that eating tour of Italy when we retire.

      Thumb up 2 Thumb down 0
  4. Brian C Briody says:

    If the government hadn’t been taking Social Security from my paycheck and an equal amount my employer for the last 35 years I could have enough (with my own retirement savings) to pay for my own retirement (and much more comfortably than getting a negative return on Social Security). Either get me a time machine or pay me what I am owed. They already want to tax me on income that I have already paid income taxes on when they pay out on Social Security.

    Well-loved. Like or Dislike: Thumb up 63 Thumb down 7
  5. Iser says:

    Your second proposal will become law. Social Security is not a retirement plan. Government is not capable of running a successful pension fund. They like bashing wall street but I feel more comfortable with my 401k than with my Social Security.

    Well-loved. Like or Dislike: Thumb up 19 Thumb down 6
    • prakash says:

      how did your 401K do in 2008-09? secure isn’t it.

      Thumb up 0 Thumb down 3
      • miko says:

        if you didn’t touch your 401K since 2007, your wayyyyyyyyyyyy in the money….

        Thumb up 2 Thumb down 0
      • Bob says:

        And it’s recovered well past that in the 09-13 timeframe. If you kept contributing to it, those contributions have about doubled or more. I can choose any 2-3 year time frame to counteract any 2-3 year time frame you choose.

        Thumb up 1 Thumb down 0
  6. Szlachta says:

    These are bad ideas in so many levels it’s hard to know where to begin. 150k combined salary in Los Angeles, while raising kids, paying for the high costs of living (we cannot afford to own our own home anywhere near where we live now) and living a very modest lifestyle, is not at all a large amount of money. We could never retire with our current income and savings. It’s also important to note that not everyone maintains the same income year over year. We both make substantially less than we did 10 years ago working in the same professions.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 7
    • Enter your name... says:

      People on Social Security aren’t usually raising kids, and so have none of those expenses. They also often qualify for subsidized housing for seniors. Couples often discover that one car is enough when nobody needs to get to work, and that they don’t need to spend so much on clothes (no “professional” wardrobe) or food (lunch is cheaper at home than at a restaurant or deli shop). Taxes are down, too, since their taxable income is lower. Except for healthcare, everything costs less for retirees.

      Thumb up 10 Thumb down 8
      • James says:

        However, most of that (except the subsidized housing) also applies to single, kidless, non-retired me. Even in the days when I physically went to work (instead of telecommuting), I often biked, packed my own lunch, and wore jeans & t-shirt.

        Point here is that living costs can differ a lot, depending on where you live, what you work at, and other choices. Social Security has been sold on the premise that what you get out is going to depend on how much you’ve put in. Nor do I think it’s at all reasonable to expext those people who have put in a lot over their working lives to suddenly give up their expectations.

        As others have said, this is nothing more than the standard leftist ‘punish the successful for daring to excel’ cant.

        Well-loved. Like or Dislike: Thumb up 18 Thumb down 7
  7. James says:

    We already know how to do #1: eat less, exercise more. The problem is that most people refuse to do it, and when confronted with evidence, come up with all sorts of excuses. See e.g. Maria Kang.

    Well-loved. Like or Dislike: Thumb up 11 Thumb down 3
  8. Don says:

    Terrible ideas. We already have plenty of medical literature that shows a lifetime of exercise, fitness, and healthy eating prevents most obesity, musculoskeletal problems, heart disease, stroke, and several cancers. Instead invest the money towards exercise incentive programs, making healthier food more available and recognizable, and healthy urban redevelopment.
    If an individual and employer pay into SSI and Medicare their entire career, they most certainly deserve to cash out their investment! The upper class already contributes more than they get back in these programs.

    Well-loved. Like or Dislike: Thumb up 28 Thumb down 1