Overwhelmingly Americans have spoken: No cuts to Social Security and Medicare. But the so-called “Americans for Prosperity” and the politicians they own, persist in their mantra that Social Security and Medicare “must” be sacrificed. What to do? Enter the so-called MSM to pull the propagandize strings. Last week, MSNBC, ABC, and other news outlets were all over a supposed indicator in growing inequality. Among the gems pitched:
While the rich get richer and poor get poorer, the widening income gap may also be boosting wealth advisory businesses. The age-based wealth gap skyrocketed 47:1 in 2009 compared to 10:1 in 1984, Pew Research Center announced on Monday. Households led by an adult ages 65 or older had median net worth of $170,494 in 2009, compared to $120,457 in 1984, adjusted to 2010 dollars, for a gain of 42 percent. Households headed by an adult under the age of 35 had median net worth of $3,662 in 2009, compared with $11,521 in 1984: a decline of 68 percent.
The point here is to wedge the generations, to make young people angry and resentful at those supposedly horrible, “greedy geezers.” Instead of supporting a country which cares about both the young and the old, AFP uses the circular firing squad approach to getting everyone to want to destroy each other. It’s sick.
There are numerous reasons for our economic woes (and you know what they are), but that concoction is, well, bull. There is growing inequality, all right, but seniors are not the reason for it. Indeed older Americans have been devastated by the economy and are the least likely to ever find work again.
So what explains this supposed “wealth”? (Please follow below the fold.)
Is it at least partly an artifact of the growth of on-your-ownership in pensions? The 1980s saw the growth in IRAs, 403bs and other instruments for personal savings, which enticed people to save (even a little) tax deferred, not tax-free. When the bill comes due all of the growth is taxed as income. But never mind. It is “terrible” that an average senior apparently has been thrifty, given up extravagances, and done what they were supposed to do-save so their expenses could be paid for and they would be less of a burden on their loved ones. Note that this supposedly huge nest egg has to last a decade, or decades. Average life expectancies have risen (as we are told nearly every day). Now it is somehow evil to have saved enough to (maybe) stay alive? Let’s talk about the realities of saving.
Most young people have little savings. When one is raising kids it is even more difficult to save. At every step the world, it seems, throws curves. But for most responsible people, even those of modest means, once kids are grown, it is possible to save something. Even a little. Each month. The corporation doesn’t like that. So, the corporate state must persuade everyone else that seniors are evil, hoarders even. Listen to the news. It is everywhere. Republicans say awful things about seniors. Candidates run on screwing/stiffing seniors. Why? Especially when the narrative above is one more way to lie with statistics.
The numbers above are one way to lie with statistics. What is average is often raised by extreme outliers, as in the very wealthy. So the typical senior has nowhere near the savings indicated. The median and mode rarely reveal as high a glimpse of what is typical as the mean or “average.”
But hypothetically let’s ask, “What if every senior had that much?” What would be wrong with a lifetime of savings to offset extreme expenses in old age. And believe me there are such. Would not the seniors be doing what they were supposed to do. And note, over an entire lifetime, that amount of savings represents a very modest amount each year. As a supplement to Social Security, people with that much money still would not have all that much to spend each year. But it might help them buy medicine not covered by Social Security and the premiums for Medicare and Medicare Part D. A senior would be able to buy an annuity to add between $10 k and 20k per year (depending on the term) to their average Social Security pension of $12,000 a year (minus the Medicare premium). WOW: $22k, maybe a little more. It’s not that much in these inflationary times, especially as groceries and health care costs escalate and interest is at the floor.
Another Explanation for Findings
But what if that net worth is in the homes they have owned for 40-50 years and PAID FOR? How terrible is that? Remember, they did what they were supposed to do. They paid their mortgage, usually over 30 years. And their so-called “wealth” grew, except that it may not have. Unless the housing crisis abates, most older person’s “wealth” (which is in their homes) will take another hit.
Incidentally, I wrote the above before Dean Baker’s article appeared today: which said:
The austerity gang seeking cuts to Social Security and Medicare has been vigorously promoting the myth that the elderly are an especially affluent and privileged group. Their argument is that because of their relative affluence, cuts to the programs upon which they depend is a simple matter of fairness. There were two reports released last week that call this view into question.
The first was a report from the Census Bureau that used a new experimental poverty index. This index differed from the official measure in several ways; most importantly it includes the value of government non-cash benefits, like food stamps. It also adjusts for differences in costs by area and takes account of differences in health spending by age.
Using a more appropriate and accurate measure, the gap considerably lessened, Indeed, seniors do not fare well at all. Baker also thinks most of this “wealth” is home equity. But were it otherwise the hypothetical senior might be able to buy an annuity which would only increase his or her income by about $10k a month by Baker’s computation.
But the rich fat cats on the so-called super Committee try to figure out how to stiff seniors while figuring out how they can protect, or even enlarge, their own tax cuts. “There’s a logic here,” says Baker, “and it ain’t pretty.”