Our plan addresses the long-term fiscal imbalance while promoting limited government and economic growth. The plan fundamentally reforms the tax code while aggressively cutting federal spending to hold down the debt.
Who you compare yourself with says a lot about who you want to be. A common talking point from the Left regarding the generosity of Social Security benefits isn't entirely honest, but more important, it's indicative of the broader views of American liberals.
Unless budget hawks can generate a more productive answer from citizens, we are in serious trouble.
Public sector pensions are not discretionary government spending, which can be reduced to maintain affordability. They are deferred pay earned as part of a legally binding contract of employment, and their true cost should be properly measured.
Some states have maintained balanced or near-balanced budgets through the financial crisis, while others have run significant deficits. Some have responsibly funded their pensions even during difficult times, while others have fallen back on borrowing and accounting tricks. The differences arise from how hard different states were hit by the recession and how hard their elected officials worked to address their budget problems.
Federal workers receive both a wage premium and a benefits premium over similar private workers. State and local workers see a wage penalty, but the penalty is usually more than made up for in higher benefits.
Only in Washington would it seem novel that stakeholders should have a reason to care if taxpayers' health dollars are well spent.
Many fights on public-sector pay are yet to come in states around the country. Taxpayers and their advocates need to be ready to counter poor studies and false claims about government pay.
Statement before the District of Columbia City Council Committee on Government Operations and the Environment
April 4, 2011
Washington D.C. can be a leader in public pension accounting reform and provide an example for municipal plans across the country-some of which are in dire condition-of how such reforms can serve to guarantee a stable pension system for municipal workers.
Policymakers should not wait any longer to address the growing fiscal crisis in this country. Responsible reform of Medicare is a major component of any plan to place the country back on a sustainable fiscal path.
Reports that undercount public-sector pension benefits, omit retiree health coverage and ignore job security do not accurately represent public-sector compensation.
According to historical data and a long record of academic research, successfully addressing the fiscal gap requires fiscal retrenchment on the expenditure side.
We should reduce Social Security benefits for middle- and high-income earners to encourage more working and saving—and free up the government to focus on the daunting challenges of Medicare and Medicaid.
The best strategy is to quickly end the squabbling over the budget that should have been passed for fiscal 2011 and then have House Republicans introduce a 2012 budget that lays out their vision.
Public pension accounting standards encourage state and local governments to promise too much, fund too little and take too much risk with their investments.
Total job package for Wisconsin public employees tops that of public workers by 10% and in some cases even more.
Federal employees on average receive greater compensation than these individuals could receive in the private sector.
Discussion on how entitlements and possible reform will shape our future.
In the end, overcompensation for public employees isn't just about collective bargaining; it's simply that the public sector is different from the private sector.
Many government employees are paid up to 30 percent more than those in the private sector.
Although federal workers earn higher wages and benefits than comparable private workers, the state-local situation is more complicated.
When using the "human capital model" to compare federal workers with workers in the private sector, it is easy to see that federal worker are consistently overcompensated.
Because the GASB’s proposals ignore government's contingent liability to pay plan benefits should assets fall short, they omit the full value of plan liabilities and contradict the GASB's own standard of "interperiod equity."
Trying to put an estimated value on job security when comparing federal jobs to private-sector jobs.
Is the overpaid federal worker really just a myth? Not according to academic research.
Former Social Security Administration official Andrew G. Biggs explains what spending cuts mean for the future of the program.
When a benefit liability must be paid with 100 percent certainty, a plan should be considered "fully funded" only when it is capable of paying it with 100 percent certainty. Market valuation satisfies this criterion, while current accounting standards do not.
The experience of twenty-one countries over thirty-seven years yields a simple truth: cutting spending works, and raising taxes does not.
This paper discusses specific proposals for reducing the United States' deficit that draw on the lessons from past fiscal consolidations.
Given the declining share of retirement income provided by Social Security and traditional defined benefit pensions, individuals must take a more active role in their retirement saving decisions. The potential for confusion regarding the presentation of estimated Social Security benefits could complicate this process.
Social Security pays women a higher average ratio of lifetime benefits to lifetime taxes than men. But that doesn't mean Social Security gives women an incentive to stay in the labor force. In fact, it does the opposite.
Every worker will be asked to make sacrifices as governments put their fiscal houses in order. Private-sector workers should be confident they are treated the same as public-sector workers.
The rapid growth of Disability Insurance does not appear to be from a true rise in disabling illness, but rather from policies that increased the subjectivity of the disability screening process.
Gradually raising the early retirement age for Social Security from sixty-two to sixty-five would be a formidable solution to the long-term federal budget shortfalls by boosting the economy and federal tax revenues.
Raising the EEA may be one of the most effective options available for improving retirement-income security and would improve the federal budget in one year nearly as much as the recent health reform bill was projected to do over ten years.
Discrimination is not a major cause of overall male-female pay differences, and President Obama's deliberate disregard of the research crosses the line into policy malpractice.
The private sector has lost 2.5 million jobs since the Obama administration's stimulus bill was passed but the public sector has added 416,000 jobs over the same period, showing that private sector workers and their families are bearing the brunt of the recession while government workers enjoy federal largesse.
Ballooning costs for Social Security, Medicare, and Medicaid are leading the United States toward fiscal crisis.
If Americans prefer smaller government, why does it continue to grow?
The U.S. Social Security program is already among the most progressive in the world. Both liberal and conservative reformers would make it more so.
The Office of Personal Management and union officials implausibly claim that federal employees are paid just 78 cents on the dollar compared to private sector employees, but average compensation may actually be $14,000 above private sector compensation.
The government should focus on those things only government can do, such as the transfers to lifetime low earners that Social Security provides, and individuals and markets should do what they do best, which includes ordinary retirement saving for middle and high earners.
Social Security should be reoriented, to a degree at least, to focus more closely on its safety net and poverty protection elements.
The president's fiscal commission should recommend that social security be reformed with an increase in the retirement age, a progressive cut in benefits, and encouraging broader retirement savings outside of Social Security.
Government workers are a protected sector of people who are getting better pay and benefits and who are unfireable, creating a level of job security that does not incentivize the best performance for the taxpayer dollar.
Public pension benefits are a massive financing problem, but given that in most states accrued benefits are guaranteed either by legal precedents or state constitutions, they're a problem for everyone but the workers slated to receive them.
Public-sector pensions in New Jersey and other states completely ignore the risk and cost to taxpayers of investing in increasingly risky assets.
After adjusting for education and experience, federal workers have higher salaries than private workers in the same fields, and when factoring in their generous benefits packages, total compensation for federal workers could be nearly $14,000 per year more than for similar private workers.
Despite its philosophical and emotional appeal to liberal politicians, a straight-elimination of the payroll tax is not a practical solution to fixing Social Security's funding problems.
Taxes are already rising to record levels, with or without legislative changes, and it is not clear why they should rise any higher.
New Jersey's state pension plans are underfunded by almost $100 billion, and recent reforms do not do enough to correct the shortfall, as more state employees must be shifted to defined contribution plans and the growth in their benefits must be slowed.
Once all promised benefits are included, government employees at all levels--local, state, and federal—-receive significantly greater total compensation than private-sector workers.
An oddity due to the Cost of Living Adjustment to Social Security demonstrates the need for simplifying Social Security's structure.
A CBO projection shows that spending, not tax cuts, is the real driver of the future fiscal gap, greatly weakening the president's claims that the Bush tax cuts are the problem.
The logic of saving Social Security through immigration, which makes sense at first glance, falls apart when you inspect the details.
Current state pension accounting practices are inaccurate and outmoded; a more accurate accounting demonstrates that state pension funds are underfunded by more than six times the amount the plans report.
Social Security's mission remains constant but its structure must change with the times.
Entitlements traditionally have paid generous benefits--financed by affordable taxes--to the rich and poor alike, because the ratio of workers to beneficiaries has been high; those days are long gone.
Shortfalls in public pensions for state government employees are underestimated, with actual underfunding of more than $3 trillion.
President Barack Obama has signaled support for the idea to send additional checks to everyone receiving Social Security, Supplemental Security Income, and disabled veteran benefits, even though the deficit is expected to increase this year.
This AEI working paper presents an alternate approach to market valuation of public pension liabilities based upon options pricing methods.
Unless pension accounting rules are updated, taxpayers in New Jersey and around the country are in for a shock when the pension bill comes due.
For the first time by any administration in memory, the Obama budget forecast rejects the Medicare Trustees' projections for long-run health care cost growth. Why would the White House do this?
Without the dodgy accounting of "off balance sheet borrowing," the Reid Senate bill actually increases the non-Social Security/Medicare deficit by almost $250 billion.
Even though much of Americans' health care spending is wasted because tax breaks encourage overspending, current reform proposals do not correct these incentives.
The true effect of Senator Baucus's health care bill will likely be large increases in the deficit, not an $81 billion reduction.
By exposing more of Americans' incomes to payroll taxes, the Baucus bill increases the Social Security surpluses and makes the on-balance budget appear more balanced.
The inflation seniors experience is far more similar to that felt by other Americans than it is different.
Making a cost-of-living adjustment (COLA) to Social Security benefits might actually be detrimental to retirees, not helpful.
It is time for Congress to adjust the Social Security benefit formula to make sure that neither unintended windfalls nor penalties take place.
Despite all the hype, the health-insurance industry's profit margins remain modest.
Democrats and their allies in the press are complaining about unruly members of the public yelling their opposition to the Obama administration's health plans--but they seem to forget how their own side acts when confronted with a policy it opposes.
Some public pension plans want to hide the truth from taxpayers.
Social Security is the largest spending program of the federal government, the largest tax paid by most workers, and the largest source of income for most retirees. It also faces a significant long-term funding challenge.
The unpredictability of Social Security benefits is just as big a problem for retirement planning as stock losses in a 401(k). Here is how policymakers can address it.
The official scorekeeper for any health reform proposed in Congress has stated the reforms proposed by the administration could increase costs. What to do? Shoot the messenger.
Outrage about the absence this year of a cost-of-living adjustment for Social Security recipients is based on ignorance of the system.
Social Security's costs relative to its tax base will rise by 26 percent over the next two decades. It is badly in need of reform.
The recession has taken a toll on Social Security's finances.
One reform to extend working years and enhance income security in retirement would be to reduce or eliminate the payroll tax for individuals above a given age.
How would personal Social Security accounts have fared in the current market?
The Left's new narrative on entitlements relies on statistical sleight of hand.
The fight for survival by automakers has made them unlikely proponents of government-controlled health care.
The federal government’s long-term budget could bring about a financial crisis that surpasses the current one.
A vital federal program is about to put millions of American pensions at risk.
Just because people are dissatisfied with the Social Security system does not mean they are ready for private accounts.
Progress on fixing the major entitlement programs is possible if the Obama administration works in good faith with congressional Republicans and outside stakeholders.
Many people have recently pointed to the safety and security of Social Security relative to 401(k) plans.
While policymakers should work to strengthen Social Security and private pension savings, talk of a crisis in retirement income preparedness appears premature.
Despite the market turmoil of the past year, personal accounts are still not a bad option to include in Social Security reform.
How Obama’s proposed changes to Social Security take aim at Franklin D. Roosevelt’s vision for retirement security.
Social Security and Medicare face significant funding shortfalls, but solutions are often hampered byideology.
Individuals with lower lifetime earnings receive better treatment on average from Social Security, but lifetime earnings area weak predictor of how any one person will be treated by the program.
Recent polling indicates that Americans think workers should have the option to drop out of Social Security but that few people would actually choose to exercise that option if allowed.
Throughout Social Security's history, benefit adequacy has been balanced with equity.
Social Security Insurance eligibility requirements make it more difficult for beneficiaries to work or save.
How much would a payroll tax cut stimulate the economy? Not very much.
Social Security can accomplish intergenerational risk sharing in theory, but maybe not in practice.
Even with the stock market collapse of the past two months, retirees under a hypothetical personal-account model wouldhave significantly increased their totalSocial Securitybenefits.
AEI Online
October 28, 2008
What does the turbulent stock market tell us about Social Security personal accounts?
Barack Obama'stax credit amounts to a radical change in the system.
There are some interesting pension developments in Argentina that shed some light on Social Security policy in the United States.
This article illustrates replacement rates using four measures of preretirement earnings.
What does the turbulent stock market tell us about Social Security personal accounts?
Senator Obama has a component of his tax plan that would introduce significant progressivity into the tax side of Social Security.
Given how most information pertaining to the two presidential candidates' tax plans is presented in the press, it is all but impossible to say much about either fairness or efficiency.
The Congressional Budget Office's report on Social Security financing differs somewhat from the Social Security Trustees'.
A misguided op-ed exaggerates the projected poverty of senior citizens without Social Security.
The retirement of the baby boomers and aging of the population will put pressure on Social Security's finances.
AEI Online
August 8, 2008
While rising health care spending is indeed a pressing issue, discounting population aging leaves out half the problem and ignores half the potential solutions.
Retirees need better information about the Social Security earnings test, and policymakers should consider whether the earnings test makes sense at all.
This paper examines policies to index Social Security taxes or benefits to changes in the ratio of workers to beneficiaries, allowing for auto-correction for changing demographic factors.
By delaying claiming Social Security benefits, a worker effectively "purchases" more of the Social Security annuity.
Bracket creep--the failure of tax brackets to keep pace with rising incomes--means that tax revenues will rise, tax cut or no.
An inflation gap means you may get more than you think--even if benefits are cut. It is a "good" glitch, but it needs fixing.
AEI Online
March 26, 2008
Until recently, Barack Obama was surprisingly responsible regarding Social Security, but he now plans to fix the system's problems exclusively with higher taxes.
Obama has recently changed his plan for dealing with the Social Security deficit.
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