The Most Important Graph in the World

Wednesday, May 13, 2009

Get ready for the bipartisan attack on Social Security


Although this may seem pretty far afield for a locally focused blog, the noises indicating that the rich are getting close to the long-held dream of rolling back the key reform of the 20th Century in America, universal social pension and disability insurance has huge implications for Salem. As a government town with a disproportionately large disabled and needy population, cuts in Social Security will have an especially devastating impact on Salem.

The most important thing to watch as the debate cranks up is to see which assumptions are treated as givens and which givens are totally suppressed and ignored (like the use of different assumptions for economic growth depending on the desired outcome).

The chart above shows just how pessimistic projections are being used to justify rolling back benefits for working people, even while raising the cap on income subject to the social security withholding is never even whispered.

Robert Reich - Fifteen years ago, when I was a trustee of the Social Security and the Medicare trust funds (which meant, essentially, that I and a few others met periodically with the official actuary of the funds, received his report, asked a few questions, and signed some papers) both funds were supposedly in trouble. But as I learned, the timing and magnitude of the trouble depended a great deal on what assumptions the actuary used in his models. As I recall, he then assumed that the economy would grow by about 2.6 percent a year over the next seventy-five years. But go back into American history all the way to the Civil War -- including the Great Depression and the severe depressions of the late 19th century -- and the economy's average annual growth is closer to 3 percent. Use a 3 percent assumption and Social Security is flush for the next seventy-five years. . .

Even if you assume Social Security is a problem, it's not a big problem. Raise the ceiling slightly on yearly wages subject to Social Security payroll taxes (now a bit over $100,000), and the problem vanishes under harsher assumptions than I'd use about the future. President Obama suggested this in the campaign and stirred up a hornet's nest because this solution apparently dips too deeply into the middle class, which made him backtrack and begin talking about raising additional Social Security payroll taxes on people earning over $250,000. Social Security would also be in safe shape if it were slightly more means tested, or if the retirement age were raised just a bit. The main point is that Social Security is a tiny problem, as these things go. . .

Don't be confused by these alarms from the Social Security and Medicare trustees. Social Security is a tiny problem. Medicare is a terrible one, but the problem is not really Medicare; it's quickly rising health-care costs. Look more closely and the real problem isn't even health-care costs; it's a system that pushes up costs by rewarding inefficiency, causing unbelievable waste, pushing over-medication, providing inadequate prevention, over-using emergency rooms because many uninsured people can't afford regular doctor checkups, and spending billions on advertising and marketing seeking to enroll healthy people and avoid sick ones.

Cars are the problem, not the solution

From an online blatherfest about the car-free European town article linked here a few days ago, at least one of the participants (blatherers?) has it right:
No Half-Steps, No Cars
J.H. Crawford

J.H. Crawford is the author of “Carfree Cities” and “Carfree Design Manual.” He publishes Carfree.com.

Proof is essentially mathematical that car-free cities are possible in the modern world (as if the existence of Venice and Fes-al-Bali in Morocco were not sufficient proof enough). We can offer a high quality of life at a far lower cost to the Earth’s ecosystems. It would also save plenty of money.

The energy savings are large and come not just in motor fuel. Heating and cooling require much less energy because buildings share common walls. Much less water is required. Far more land is left untouched.

I support the New Urbanism but strongly prefer the pure car-free solution, as the advantages are even greater. Once the last car disappears from the street, it becomes a playground for people of all ages. This can be seen any day in Venice or Fes. Peace, safety and tranquility settle over the street, and a rich and vibrant social life takes the place of the stink, noise, and danger of cars.

Local shops and services are essential. Good public transport is required except in the small cities.

Rail systems offer the best service. Bikes will be important in most cases. Walking is the mainstay, and routine shops and services, including schools, must be within walking distance, say five minutes.

All of this requires moderately high density. Anyone who has visited Amsterdam, Copenhagen, Berlin, Madrid, Lisbon or Siena already knows what this feels like. Boston’s Beacon Hill and Back Bay neighborhoods could readily be made carfree. Washington Mews in Manhattan is a tiny slice of carfree life right in our midst.

Streets are quite narrow, buildings are about four stories tall, and, in the best practice, there is a large green courtyard in the heart of each block.

We don’t yet have car-free cities in North America. This is mainly a failure of imagination. Americans are so used to driving everywhere that the mere thought of being without a car is terrifying. But life without urban cars is not only possible, it is delightful.