Latest Cato Research on Social Security https://www.cato.org/ en Ignoring Social Security Paints False Wealth Inequality Picture https://www.cato.org/blog/ignoring-social-security-paints-false-wealth-inequality-picture Ryan Bourne <p>My <a href="https://www.cato.org/publications/policy-analysis/exploring-wealth-inequality">recent paper with Chris Edwards</a> concluded that studies estimating wealth inequality without accounting for Social Security would both exaggerate the level of inequality and overestimate its increases since the 1980s.</p> <p>We realized that increasing amounts of wealth for the bottom 90 percent had become tied up in Social Security claims over the past three decades. And <a href="https://www.cato.org/blog/government-expansion-increases-wealth-inequality">a&nbsp;host of evidence</a> suggests that redistributive programs, such as Social Security, actively crowd out private saving among those on modest incomes.</p> <p>By reducing the incentive and ability for lower paid workers to save (not least because of payroll taxes), Social Security widens marketable wealth inequality, which has been the focus of most inequality studies. Perversely, critics of current levels of marketable wealth inequality then use these calculations ignoring Social Security as justification for increasing the generosity of transfer programs such as&nbsp;Social Security, that would iwiden their preferred wealth inequality metrics further.</p> <p>A new study <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3546668">from University of Pennsylvania economists</a> adds empirical blast to our intuition. Whereas the oft‐​cited work of Thomas Piketty et al restricts wealth inequality statistics to the distribution of marketable assets, this new study estimates the present value of Social Security wealth too, before assigning it across the wealth distribution.</p> <p>Its conclusions are striking. Adjusting for Social Security wealth not only substantially reduces the level of wealth apparently “held” by the top 1&nbsp;percent and top 10 percent, it completely changes the trend since 1989:</p> <blockquote><p>Our most conservative estimates suggest that between 1989 and 2016 the top 10% share [of wealth] declined by 3&nbsp;percentage points and the top 1% share increased only slightly by 1.2 percentage points. This differs drastically from recent work that excludes Social Security and finds the top 10% and 1% shares rose by over 10 percentage points over this period.</p> </blockquote> <p>Why does including Social Security wealth have such a&nbsp;dramatic effect? Well, first, because the implied wealth is large, at around 42 percent of marketable wealth today. But, second, because Social Security wealth has increased over three‐​fold between 1989 and 2016, due to expansions of the program, a&nbsp;fall in real interest rates, and population aging, which means the share of workers near the peak of their Social Security wealth (just before retirement) is larger. As a&nbsp;result, in 2016 Social Security represented 57.7 percent of all wealth held by the bottom 90 percent by net wealth, up from 14.2 percent in 1989.</p> <p>As the study makes clear, there is no convincing rationale for excluding Social Security from studies of wealth concentration. But doing so exaggerates both wealth inequality levels and its increases over the last three decades. If some academics still contest that marketable wealth inequality alone tells us something interesting, then they must also acknowledge that Social Security’s existence widens that measure.</p> <p>Strangely, those who consider marketable wealth inequality a&nbsp;huge problem do not often advocate abolishing Social Security to narrow it. In fact, the opposite. So do they really care as much about wealth inequality as their rhetoric suggests?</p> Wed, 04 Mar 2020 18:13:09 -0500 Ryan Bourne https://www.cato.org/blog/ignoring-social-security-paints-false-wealth-inequality-picture Michael D. Tanner’s social security research is cited on The Larry Elder Show https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanners-social-security-research-cited-larry-elder-0 Tue, 03 Dec 2019 10:25:14 -0500 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanners-social-security-research-cited-larry-elder-0 Merck v. U.S. Dept. of Health & Human Services https://www.cato.org/publications/legal-briefs/merck-v-us-dept-health-human-services Sean Marotta, Kirti Datla, Ilya Shapiro, Dennis Garcia <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Pharmaceutical companies rely on direct‐​to‐​consumer advertisements to reach potential customers and extoll the benefits of their medications. This type of “commercial speech” enjoys protection under the First Amendment, though not to the same degree as other forms of expression.&nbsp;<em>Merck v. HHS</em>&nbsp;tests the limits of the federal government’s ability to control and compel commercial speech.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Several drug manufacturers and a&nbsp;professional organization of advertisers, whose businesses are affected by a&nbsp;Department of Health and Human Services rule requiring direct‐​to‐​consumer television ads to include a&nbsp;disclosure of the wholesale price of the advertised drugs, sued to block the rule. This rule was promulgated through the Centers for Medicare and Medicaid Services and justified under the power given HHS by the Social Security Act to issue rules “necessary to the efficient administration” of those programs—on the theory that the disclosures would result in lower prices for Medicare and Medicaid recipients. This regulation requires the wholesale acquisition cost of a&nbsp;30‐​day supply of any advertised drug to be featured on any TV ad.</p> <p>Part of the freedom of speech, however, is the right not to speak against one’s will. In particular the notion of being forced to read from a&nbsp;state‐​drafted script against one’s beliefs or interests is anathema to the founding conception of discourse in a&nbsp;free society. In the field of commercial speech, there is only a&nbsp;narrow allowance for compelled speech to ensure that consumers are not misinformed or mislead in their purchasing decisions—in other words, to prevent the fraud that isn’t protected by the First Amendment. The price‐​disclosure regulation threatens to widen this exception so far as to allow the government to use compelled speech as a&nbsp;substitute for regulation, in this case regulating drug prices themselves.</p> <p>The district court held that mandating disclosure of wholesale drug prices exceeds the agency’s rulemaking authority under the Social Security Act. Now on appeal, the government is again attempting to defend its regulation as not violating the First Amendment.</p> <p>Cato has filed an amicus brief supporting the challengers in the U.S. Court of Appeals for the D.C. Circuit. We argue that accepting the government’s First Amendment arguments would stretch the jurisprudence allowing greater regulation of commercial speech farther than ever before and encourage compelled speech as a&nbsp;convenient alternative to normal regulation. If HHS prevails, agencies may decide it’s better to force private parties to act as government mouthpieces, instead of expending their own resources and political capital to further regulatory aims.</p> </div> Tue, 19 Nov 2019 15:40:11 -0500 Sean Marotta, Kirti Datla, Ilya Shapiro, Dennis Garcia https://www.cato.org/publications/legal-briefs/merck-v-us-dept-health-human-services Welfare State Causes Wealth Inequality—Euro Experience https://www.cato.org/blog/welfare-state-causes-wealth-inequality-euro-experience Chris Edwards <p>Democrats running for president are condemning wealth inequality while calling for an increase in social spending. But expanding social spending would magnify wealth inequality, not reduce it, because it would displace private wealth accumulation by lower‐ and middle‐​income households.</p> <p>Evidence comes from <a href="https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1847.en.pdf?13d96a943c5000b2a83cf8b9d3653605">a study</a> by Pirmin Fessler and Martin Schurz for the European Central Bank. The authors explore the relationship between government social spending and wealth distribution in 13 European countries using a survey database of 62,000 households. The database contains household balance sheet information.</p> <p>Regression analyses by the authors confirm that “the degree of welfare state spending across countries is negatively correlated with household net wealth. These findings suggest that social services provided by the state are substitutes for private wealth accumulation and partly explain observed differences in levels of household net wealth across European countries.”</p> <p>The authors <a href="https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1847.en.pdf?13d96a943c5000b2a83cf8b9d3653605">found</a> that the “measured inequality of wealth is higher in countries with a relatively more developed welfare state.” Why is this the case?</p> <blockquote><p>The substitution effect of welfare state expenditures with regard to private wealth holdings is significant along the full net wealth distribution, but is relatively lower at higher levels of net wealth. Given an increase in welfare state expenditure, the percentage decrease in net wealth of poorer households is relatively stronger than for households in the upper part of the wealth distribution. This finding implies that given an increase of welfare state expenditure, wealth inequality measured by standard relative inequality measures, such as the Gini coefficient, will increase.</p> </blockquote> <p>Fessler and Schurz found, for example, that Austria, France, Germany, and the Netherlands have high social spending and low private wealth holdings by less well‐​off households. But other countries such as Luxembourg and Spain have lower social spending and higher private wealth holdings by less well‐​off households.</p> <p>The relationship can be seen in this figure, which is their plot of social spending compared to the wealth of households at the 25th percentile (from the bottom) of each nation’s wealth distribution.</p> <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="804226f8-e215-44c2-baba-d45598ed0f16" data-langcode="en" class="embedded-entity"> <img srcset="/sites/cato.org/files/styles/pubs/public/2019-10/fessler.png?itok=n5Z7U4p8 1x, /sites/cato.org/files/styles/pubs_2x/public/2019-10/fessler.png?itok=6pFAVO3r 1.5x" width="700" height="504" src="/sites/cato.org/files/styles/pubs/public/2019-10/fessler.png?itok=n5Z7U4p8" alt="s" typeof="Image" class="component-image" /></div> <p>The authors note that their results are in line with the displacement, or crowding out, effects found in other statistical studies, such as economist Martin Feldstein’s work showing that Social Security substantially displaces private saving for retirement in the United States.</p> <p>Data <a href="https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html">from Credit Suisse</a> confirm that some nations with large welfare states have high wealth inequality. The bank <a href="https://economics.uwo.ca/people/davies_docs/credit-suisse-global-wealth-report-2014.pdf">points to</a> Denmark, Norway, and Sweden:</p> <blockquote><p>strong social security programs—good public pensions, free higher education or generous student loans, unemployment and health insurance—can greatly reduce the need for personal financial assets, as Domeij and Klein (2002) found for public pensions in Sweden. Public housing programs can do the same for real assets. This is one explanation for the high level of wealth inequality we identify in Denmark, Norway and Sweden: the top groups continue to accumulate for business and investment purposes, while the middle and lower classes have a less pressing need for personal saving than in many other countries.</p> </blockquote> <p>The bottom line for America is that expanding programs such as Social Security and Medicare will increase wealth inequality—the opposite effect Warren and Sanders may hope for. A better approach would be to cut the size of government and transition the nation to a leaner array of social programs based on personal savings accounts.</p> Fri, 18 Oct 2019 10:28:10 -0400 Chris Edwards https://www.cato.org/blog/welfare-state-causes-wealth-inequality-euro-experience Veronique de Rugy discusses Elizabeth Warren’s social security plan on American Radio Journal https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-elizabeth-warrens-social-security Sat, 21 Sep 2019 10:39:25 -0400 Veronique de Rugy https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-elizabeth-warrens-social-security Michael D. Tanner discusses social security reform on WWL’s First News with Tommy Tucker https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-security-reform-wwls-first-0 Tue, 09 Jul 2019 10:45:00 -0400 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-security-reform-wwls-first-0 Michael D. Tanner discusses Social Security funds facing insolvency by 2035 on WRVA’s Richmond’s Morning News with John Reid https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-security-funds-facing-insolvency Wed, 24 Apr 2019 12:24:00 -0400 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-security-funds-facing-insolvency Government Mandated, State‐​Run Auto‐​IRAs Can Cause Real Harm https://www.cato.org/blog/government-mandated-state-run-auto-iras-can-cause-real-harm Aaron Yelowitz <p>A number of states have recently enacted employer mandates that force companies who don’t offer retirement plans to enroll their workers in a&nbsp;state‐​run, auto‐​IRA plan. Oregon’s program – known as OregonSaves – is the oldest and most established. By mid‐​2020, <a href="https://www.oregon.gov/retire/SiteAssets/Pages/Newsroom/2018%20OregonSaves%20Annual%20Report%20FINAL.pdf">Oregon’s</a> mandate will cover all companies; it currently covers companies with twenty or more workers. <br><br /> <br> One myth – perpetuated by the <a href="https://www.nelp.org/blog/claims-auto-iras-will-backfire-dont-hold-water/">National Employment Law Project</a> – is that state mandates expand opportunity to retirement savings, especially for low‐​income workers. They don’t. OregonSaves initially defaults worker contributions into a&nbsp;conservative <a href="https://www.ssga.com/cash/funds/SSIXX/fund_overview_SSIXX.html">capital preservation fund</a> before redirecting contributions to a&nbsp;life‐​cycle fund once balances exceed $1,000. Since inception in 2004, the capital preservation fund has offered a&nbsp;paltry nominal return of 1.52% (essentially an inflation‐​adjusted return of 0%). OregonSaves also assesses an administrative fee of <a href="https://saver.oregonsaves.com/home/program-details.html">100 basis points</a> (that is, 1%) regardless of investment choices, further diminishing this return. This set‐​up isn’t really an opportunity for Oregon workers, because they already have access to Roth IRAs and investments with a&nbsp;more beneficial set‐​up. A&nbsp;25‐​year‐​old worker might actively choose <a href="https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/315793851">a&nbsp;life cycle fund</a> with no minimums for initial investment or additional contributions, along with administrative fees of 75 basis points, significantly lower than OregonSaves. Choosing an index fund that tracks the <a href="https://fundresearch.fidelity.com/mutual-funds/summary/315911750">S&amp;P 500</a> could have administrative fees as low as 1.5 basis points. Without mandating Oregon employers to enroll their workers, OregonSaves would struggle to compete in a&nbsp;vibrant marketplace with many inexpensive alternatives for retirement contributions. <br><br /> <br> If government mandates don’t improve access to retirement plans, why have the program? The real reason is that the programs increase participation through inertia; simply put, many workers are asleep at the wheel. Many workers don’t take active steps to plan for retirement regardless of how a&nbsp;program is designed. If the default choice is to actively enroll, many workers won’t participate. If the default choice is automatic enrollment with an opt‐​out option, many workers do participate. Oregon’s 28% opt‐​out rate is relatively high, highlighting some of the problems of the program’s design. Among those enrolled, fully 93% of participants stick with the specified contribution rate and an astonishing 79% of all fund balances are invested in the capital preservation fund. Almost all remaining balances are invested in target date funds, likely for workers who have exceeded the $1,000 contribution. <br><br /> <br> Worker inertia is real, meaning that design choices like opting in or out, asset classes and contribution rates are likely to stick. The one‐​size‐​fits‐​all design of OregonSaves can cause real harm for many workers, an issue I&nbsp;explored with my colleagues in a&nbsp;new study for <a href="https://jor.iijournals.com/content/6/2/27">Journal of Retirement</a>. If OregonSaves were adopted nationally, 24.2 million workers aged 25–64 would initially be opted‐​in. Approximately 33% of affected workers carry high‐​interest credit card debt, with balances averaging nearly $5,500. Around 15% of affected workers struggle to meet basic needs like paying rent or utility bills. Workers in these situations come out ahead by paying down debt or meeting basic needs, and siphoning off 5% of their paycheck will likely worsen their overall financial situation. <br><br /> <br> Financial planning websites consistently emphasize paying off revolving high‐​interest debt before saving for retirement (unless a&nbsp;company offers a&nbsp;match rate), yet auto‐​IRAs fail to take these investment lessons into account. <a href="https://www.nelp.org/blog/claims-auto-iras-will-backfire-dont-hold-water/">Advocates for government mandates</a> emphasize the benefits of compounding for assets in an IRA, while curiously ignoring the reality that unpaid debt compounds in the exact same manner! At an 18% interest rate, an unpaid $5,500 credit card debt would mushroom to $28,800&nbsp;in ten years. The same amount of money directed towards OregonSaves might accumulate to $12,900 under rosy assumptions about investment returns. Ultimately, our study shows a&nbsp;significant number of workers are in situations like this, and auto‐​IRAs would do more harm than good for them.</p> Fri, 22 Mar 2019 12:58:00 -0400 Aaron Yelowitz https://www.cato.org/blog/government-mandated-state-run-auto-iras-can-cause-real-harm Michael D. Tanner’s social security research is cited on The Larry Elder Show https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanners-social-security-research-cited-larry-elder-show Tue, 19 Mar 2019 11:39:00 -0400 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanners-social-security-research-cited-larry-elder-show Results from the 2018 Libertarianism vs. Conservatism Post‐​Debate Survey https://www.cato.org/blog/results-2018-libertarianism-vs-conservatism-post-debate-survey Emily Ekins <p>As part of a yearly summer tradition, the Heritage Foundation and Cato Institute <a href="https://www.heritage.org/event/libertarianism-vs-conservatism" target="_blank">co-host a debate</a> in which interns at both think tanks debate whether conservatism or libertarianism is a better ideology. Following this year’s debate, the Cato Institute conducted a post-debate survey of attendees to ask who they thought won the debate and what they believe about a variety of public policy and philosophical issues. The post-debate survey offers a unique opportunity to examine how young leaders in the conservative and libertarian movements approach deep philosophical questions that may be inaccessible to a general audience.&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="ff12631a-94ce-41c5-958d-96fe0640bab2" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="d9211b8a-90e7-403c-a4ea-d77159fc5e40" data-type="interactive" data-title="2018 Intern Debate Survey"></div> //--&gt; </div> </div> <p>Despite agreement on domestic economic issues and free trade, the survey finds striking differences between conservative and libertarian  attitudes about Donald Trump, immigration, transgender pronouns, government’s response to opioid addiction, police, defense spending and national security, domestic surveillance, and religion. The survey also went further than just asking about policy and used Jordan Peterson’s <a href="https://www.youtube.com/watch?v=Nyw4rTywyY0">12 principles for a 21<sup>st</sup> century conservatism</a> to examine the underlying philosophical differences between libertarian and conservative millennials. &#13;<br /> &#13;</p> <p><em>Full LvCDebate Attendee Survey results found <a href="https://object.cato.org/sites/cato.org/files/wp-content/uploads/toplines_2018interndebateexistsurvey.pdf">here</a></em>&#13;<br /> &#13;<br /><strong>Trump and </strong><strong>Partisan Loyalties</strong> &#13;<br /> &#13;<br /> Libertarian and Conservative attendees have starkly different views of President Donald Trump. While 91% of conservative attendees approve of Trump’s job performance, 69% of libertarian attendees disapprove of Trump. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="18f5d354-7613-44bd-9bd6-90b7346223f0" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="95c6f5cc-8d13-45b3-b5b1-89b079e1ae51" data-type="interactive" data-title="1_Trump Approval"></div> //--&gt; </div> </div> <p>Eighty-four percent (84%) of young conservative attendees identify as Republicans and that number increases to 99% once independent-leaning Republicans are included. Libertarian millennial attendees are far less partisan: only 19% initially identify as Republicans while 76% don’t believe either the Republican or Democratic parties represent them. However, if libertarian independents had to pick, 60% would lean Republican. Thus, both groups are more aligned with the Republican rather than Democratic Party, but libertarians are far less committed partisans. &#13;<br /> &#13;<br /><strong>Young Libertarians and Conservatives Have Different Policy Priorities</strong> &#13;<br /> &#13;<br /> When asked to select the top three issues most important to them personally, libertarians and conservatives have different issue priorities. Conservatives are about 30 points more likely than libertarians to place greater weight on abortion (41% vs. 11%) and family values (31% vs. 4%) and are about 20 points more likely to emphasize national security (35% vs. 18%) and civil society (23% vs. 5%). &#13;<br /> &#13;<br /> Libertarian attendees on the other hand are about 20 points more likely than conservatives to prioritize criminal justice issues (24% vs. 2%), regulation (28% vs. 8%), government spending (37% vs. 22%), and free speech (47% vs. 34%). &#13;<br /> &#13;<br /> Both libertarians and conservatives agree that taxes (25% vs. 24%), welfare state issues (14% vs. 16%), and immigration (24% vs. 20%) are top priorities. Similarly, both groups say policy related to housing, transportation, the environment, unions, and paid leave are not their top priorities (&lt;5%).&#13;<br /> &#13;</p> <div class="responsive-embed"></div><p><strong>Conservatives Say Political Life Should be Based on Judeo-Christian Principles</strong> &#13;<br /> &#13;<br /> Nearly 9 in 10 conservative attendees (87%) believe that “political life in this country should be based on Judeo-Christian principles,” while 13% believe it should not. Conversely, 70% of libertarian attendees believe that these religious principles should not be the basis of American political life, 30% believe it should be. &#13;<br /> &#13;<br /> Part of the reason for this may be that conservatives are far more likely to attend church regularly (59% vs. 16%) and to believe people need to be raised with religion to learn good values (84% vs. 41%). Furthermore, conservatives also believe government has a role to play in promoting traditional values (83% vs. 9%). While libertarians are more likely to see value in religious teaching for children they do not extend such a role to government.  &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="ebcb846b-0619-4556-8228-02d3b1104c67" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="69453c33-d11e-4213-864a-cfca99727a12" data-type="interactive" data-title="ReligiousValues"></div> //--&gt; </div> </div> <p><strong>Libertarians Want More Immigration, Conservatives Want to Keep It the Same or Decrease It</strong> &#13;<br /> &#13;<br /> Young libertarian attendees have a more open and permissive view of immigration while conservatives take a more restrictive approach—from the border wall, citizenship for illegal immigrants, sanctuary cities, legal immigration procedures, and the Muslims travel ban.   &#13;<br /> &#13;<br /> Strong majorities of conservatives favor building a large wall along the U.S.-Mexican border (74%), oppose sanctuary cities (94%), and support deportation of illegal immigrants (55%). &#13;<br /> &#13;<br /> In the opposite direction, strong majorities of libertarians oppose a border wall (86%), support sanctuary cities (58%), and favor citizenship for unauthorized immigrants (59%).&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="d03cc70b-6679-481a-b91b-d8e063ca5e19" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="4eb070b6-0e0b-471e-96a9-db4cf199cb9d" data-type="interactive" data-title="Border Wall"></div> //--&gt; </div> </div> <p>Even when it comes to legal immigration processes, 74% of libertarians want to increase the number of immigrants legally allowed to enter the US, compared to 28% of conservatives. Instead a plurality of conservatives (43%) would rather keep legal immigration flows the same and nearly a third (29%) would decrease it. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="3632ca98-3b8b-40c4-9da9-6d4523ee2ce7" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="f8e8cb5a-0667-4b14-957f-ee9d7d5325c2" data-type="interactive" data-title="Number of Legal Immigrants"></div> //--&gt; </div> </div> <p>Both libertarian and conservative attendees oppose a temporary travel ban on Muslims entering the United States; however, libertarians are nearly 40 points more opposed (89% vs. 51%). &#13;<br /> &#13;<br /> Given the divide between young libertarians' and conservatives' views of immigration, it's perhaps unsurprising that conservatives are nearly twice as likely (80% vs. 44%) as libertarians to agree that “Western civilization is at risk of losing its identity.”  &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="644910be-88a4-4ce5-a3f0-d0ea6294ac4b" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="b736fa0e-eef1-471e-aafa-6fdf4414682a" data-type="interactive" data-title="Western Civilization"></div> //--&gt; </div> </div> <p><strong>Libertarians Say U.S. Foreign Policy Causes Instability and Chaos</strong> &#13;<br /> &#13;<br /> Young libertarians and conservatives have dramatically different evaluations of the impact of U.S. foreign policy. Nearly 9 in 10 (86%) libertarians believe American foreign policy “does more to promote instability and chaos.” In stark contrast, 82% of conservatives believe American foreign policy “does more to promote peace and stability” in the world. Few questions polarize libertarians and conservatives more than the impact of U.S. foreign policy.  &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="109a1796-95ca-43d5-9da0-24dd09712fc0" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="11005223-373f-4963-83f0-af955e60d33c" data-type="interactive" data-title="Impact of U.S. Foreign Policy"></div> //--&gt; </div> </div> <p>This might explain why 60% of libertarians think the U.S. should leave Afghanistan “now,” and 93% say at least within the next five years. In contrast, a plurality (40%) of conservatives say the U.S. should stay in Afghanistan for “as long as it takes,” while 31% say the U.S. should leave in the next five years, and only 25% think we ought to withdraw troops immediately. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="1434c769-d722-48b8-b9e6-a41455da5f99" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="1716e35a-2666-42bc-9b82-a40a82d19dd9" data-type="interactive" data-title="Involvement in Afghanistan"></div> //--&gt; </div> </div> <p><strong>What Pronouns </strong><strong>Do You Prefer?</strong> &#13;<br /> &#13;<br /> Libertarians and conservatives are also diametrically opposed on the use of transgender pronouns. While three-fourths (75%) of libertarians use a transgender person’s preferred gender pronouns, three-fourths (73%) of conservatives say they use the pronouns corresponding with the transgender person’s biological sex. &#13;<br /> &#13;<br /> These results are consistent with the fact that a majority (52%) of conservatives do not think society should “do more ensure LGBT people feel fully accepted in society,” 20% have no opinion, and 27% think society does have this obligation. Instead, a majority (55%) of libertarians think society does need to do more to ensure LGBT people feel accepted, while 24% have no opinion, and 22% disagree. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="01efae60-3ca8-455c-8310-b98166477dd2" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="ed76e06b-462f-44a2-a8e5-087b3f38e066" data-type="interactive" data-title="Gender Pronouns"></div> //--&gt; </div> </div> <p><strong>Conservatives Want Government </strong><strong>To Do Something about Opioids</strong> &#13;<br /> &#13;<br /> Nearly three fourths (71%) of conservatives agree that government needs to "do more" to combat prescription painkiller addiction, while 14% think it should not. However, nearly 6 in 10 (59%) of libertarians think government should not do more to address opioid addiction, while 25% think it should. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="55d7355b-3be0-4782-b88d-2a012bfc1683" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="3ceb6989-5cb9-4c4e-8141-934e19de9919" data-type="interactive" data-title="Opioid Crisis"></div> //--&gt; </div> </div> <p><strong>Conservatives and Libertarians Disagree About Police Misconduct</strong> &#13;<br /> &#13;<br /> Conservatives and libertarians are divided in their perceptions of police misconduct with <a href="https://www.usatoday.com/story/opinion/policing/2017/04/20/why-liberals-and-conservatives-disagree-police-column/97827888/">conservatives more apt to defend and libertarians more skeptical of police</a>. Eight in ten (80%) young conservative attendees believe that that police only use lethal force when necessary. Conversely, 77% of libertarians instead think that the police are too quick to use lethal force.&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="d68431bd-1a36-462f-aa1b-ada8f71d3cd1" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="0dea4cfa-3321-453b-a615-66a69617cb36" data-type="interactive" data-title="Police Use of Lethal Force"></div> //--&gt; </div> </div> <p><strong>Conservatives Support Domestic Surveillance, Libertarians Overwhelmingly Opposed</strong> &#13;<br /> &#13;<br /> A slim majority (54%) of conservative millennials approve of the government’s collection of telephone and internet data as part of anti-terrorism efforts while 46% oppose. However, libertarian attendees are overwhelmingly opposed with 93% who disapprove including 75% who strongly disapprove. Only 7% support such a program. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="c2464201-581d-4b27-b40d-52dd328bdd5f" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="059fece5-a412-4209-bf93-a9af26761282" data-type="interactive" data-title="V2_Collection of Telephone Data"></div> //--&gt; </div> </div> <p><strong>Young Conservatives and Libertarians Agree About Economics and Free Trade</strong> &#13;<br /> &#13;<br /> Despite the many aforementioned differences, the young conservative and libertarian attendees agree that smaller government is better, that we shouldn’t tax the wealthy more than we already are to raise revenue for more social programs, and that the costs of free trade to some domestic industries is outweighed by the benefits to consumers.  &#13;<br /> &#13;<br /> Furthermore, nearly 100% of both groups say they prefer a smaller government providing fewer services with low taxes over a larger government with more services and high taxes (96% vs. 97%). Similarly, overwhelming majorities of young libertarians (91%) and conservatives (88%) oppose raising taxes on households earning more than $250,000 a year. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="cc2adc93-d15f-4a1f-9020-99bd096df934" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="9ce7eadf-c996-4e76-b7e8-deaeb4f2b4e0" data-type="interactive" data-title="Size of Government"></div> //--&gt; </div> </div> <p>Despite President Trump’s persistent criticism of free trade deals, strong majorities of conservatives (75%) and libertarians (94%) agree “free trade must be allowed, even if domestic industries are hurt by foreign competition.” A quarter (25%) of conservatives and 6% of libertarian attendees think “trade restrictions should be used to protect domestic industries.” &#13;<br /> &#13;<br /><strong>Young Libertarians and Conservatives Tolerant of Free Speech and Political Expression</strong> &#13;<br /> &#13;<br /> Another area in which young libertarians and conservatives largely agree is that people should be allowed to express their political opinions publicly. Majorities of both libertarian (91%) and conservative attendees (58%) also believe that NFL players who refuse to stand for the national anthem should <em>not</em> be fired. Even still, libertarians are more than 30 points more likely to say the athletes shouldn’t be fired. Similarly, majorities of both libertarians (95%) and conservatives (58%) oppose a law banning flag burning, even still, libertarians are nearly 40 points more opposed.&#13;<br /> &#13;<br /><strong>Understanding the Differences</strong><strong> between Conservatives and Libertarians</strong> &#13;<br /> &#13;<br /> Why do libertarians and conservatives agree on economics but disagree so vehemently on matters of immigration, national security, police, drugs, and LGBT issues? To explore the underlying philosophical differences between conservatives and libertarians, we asked attendees to evaluate a series of statements about tradition, order, change, social conformity, responsibility, and loyalty. Several of these statements come from University of Toronto professor Jordan Peterson’s 12 proposed principles for a 21<sup>st</sup> century conservatism, several others were written by the survey author.<a name="_ednref1" href="#_edn1" id="_ednref1">[i]</a> &#13;<br /> &#13;<br /> Libertarians and conservatives think about change and the importance of social order differently. Fully 88% of conservatives agree that “radical change should be viewed with suspicion, particularly in a time of radical change.” About half that—43%—of libertarian attendees agree with that statement while nearly as many (42%) disagree. Instead, nearly two-thirds (65%) of libertarians agree that “social change and disruption, even if they’re chaotic, are necessary to improve human happiness.” Only a quarter (24%) of conservative attendees agree that sometimes disruption and chaos are necessary for human flourishing.&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="e6ff8cc2-2a46-4ad6-9ab0-b23ce4598a4f" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="65dfe8d4-69c7-4853-9346-7cee02dbe5a1" data-type="interactive" data-title="Improve Human Happiness"></div> //--&gt; </div> </div> <p>Libertarians are more likely than conservatives to reject the “wisdom of the ages” idea that longstanding social norms are more likely to be correct. Conservatives are more likely to believe that social institutions and norms that have withstood the test of time have revealed truth given their longevity. A strong majority of conservative attendees (69%) agree that “we should judge our political system in comparison to other actual political systems and not to a hypothetical ideal.” Instead a plurality (45%) of libertarians disagree with this statement while 38% agree with it. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="a8ba39e5-d4c7-4d1c-a6cb-d59d2caed07f" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="f6eaa798-2bcf-4647-9830-1a7b1b26c310" data-type="interactive" data-title="Political System"></div> //--&gt; </div> </div> <p>Those who judge our system relative to a hypothetical ideal would be more comfortable with changing our political institutions to conform with a hypothetical—and thus untested—idea of a better future. However, those more cautious of change would be skeptical of transforming deeply rooted longstanding political institutions, that they view have withstood the test of time, into something untested.&#13;<br /> &#13;<br /> In a similar vein, 67% of libertarian attendees disagree that “it is better to do what everyone has always done unless you have an extraordinarily valid reason not to,” while only 13% agree. Instead, a plurality (42%) of conservatives agree with this statement, 32% neither agree nor disagree and 25% disagree.  &#13;<br /> &#13;<br /> In a consistent pattern, nearly 9 in 10 (89%) of conservatives agree that “intact heterosexual two-parent families constitute the necessary bedrock for a stable polity,” including 73% who strongly agree with this statement. Libertarian attendees are split on this idea with 47% who agree and 40% who disagree. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="86a6d559-d6f1-4531-bad0-2b837f37c0ad" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="25a9e521-6bd1-44ef-99ad-bdc6b632e31a" data-type="interactive" data-title="Rule 8 Wisdom of Ages"></div> //--&gt; </div> </div> <p>Conservatives are more likely to emphasize social conformity as a useful and necessary tool for a properly functioning society. Libertarians tend to be skeptical. Nearly 9 in 10 (86%) of conservative attendees agree that it is “just and right to demand some sacrifice of individual impulse and idiosyncrasy so that society can function properly.” Libertarians are about 50 points less likely to agree (37%). Instead half (49%) disagree that people ought to curtail their own idiosyncrasies to get along in society and 14% have mixed feelings.&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="9aacf7e7-e709-4e75-bf76-2813902a85ba" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="eaf88974-b939-4915-8d13-70aeec5186d4" data-type="interactive" data-title="Rule 2 Social Conformity"></div> //--&gt; </div> </div> <p>One reason why conservatives may expect greater social conformity from others is that they are far more likely to believe there is a “right way” to do things. If one believes there is a hierarchy of proper and effective behaviors it’s clear why one would expect others to get with the program.  Nearly 8 in 10 conservative attendees (78%) agree “there is always a right way to do things.” In contrast, a slim majority (51%) of libertarian attendees disagree that there is always a right way to do things. Ostensibly, libertarians tend to believe there could be several or even many equally effective ways of doing things.&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="676ffc4d-474c-4de7-adc5-a31db5fd8206" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="6b75caa4-822a-4496-87ce-919ee104ebab" data-type="interactive" data-title="Right Way to Do Things"></div> //--&gt; </div> </div> <p>Libertarians may de-prioritize social conformity because they tend to believe that flexible social norms are necessary to allow people to discover better ways of doing things. Even if they believe there is one right way, perhaps society hasn’t yet figured out what that right way is. Thus, 86% of libertarian millennial attendees agree that “we should keep social norms and laws flexible to allow people to discover better ways of doing things.” Only 33% of conservative attendees agree; instead a plurality disagree (44%) with that sentiment. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="fa5e3683-c1d7-4b5f-942a-f9ada2f3fafb" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="dad3d5a8-1dec-4b39-b426-474eb75ef9ea" data-type="interactive" data-title="Rule 9 Radical Change"></div> //--&gt; </div> </div> <p>Conservative attendees largely agree that “it is more noble to teach young people about responsibilities than about rights.” This is a hard statement to evaluate because many would say both are equally important. Nevertheless, when asked to choose, two-thirds (66%) of conservatives emphasize teaching young people about their responsibilities over informing people of their rights. Libertarians are divided with a plurality (45%) who disagree that teaching responsibilities should come before teaching about rights and 38% who agree.&#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="f3282bb6-b12b-4e26-acdf-8b94f1205a93" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="a9ed9eb3-c180-4bef-9c82-0460bfe1e10d" data-type="interactive" data-title="Responsibility v Rights"></div> //--&gt; </div> </div> <p>Do young people love America? If they do, do they love it because it’s home, because of its history, because of the ideals it aspires to embody? What if America ceased living up to those ideals, would they still want to live here? Nearly two-thirds (61%) of young libertarians say no, “if another country better embodied the ideals of America” they would “want to move to that country” instead. Conversely, a majority (55%) of conservatives disagree, they would stay in America anyway. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="31a636fc-e00a-4b41-8dfa-0e27d6a8a5d9" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="7acd72c7-ce56-408f-a195-7765130d552e" data-type="interactive" data-title="America"></div> //--&gt; </div> </div> <p>Instead, conservatives place greater emphasis on community, which may be one reason they wouldn’t want to leave the country if another country better embodied American ideals. Even though both conservatives (100%) and libertarians (89%) agree that “it’s important for people to have community,” 82% of conservatives “strongly agree” with this statement compared to 51% of libertarians—a 31-point difference. &#13;<br /> &#13;<br /> Despite these divisions, young libertarians supported several principles Peterson articulated for conservatives—on matters of liberty and just deserts. In fact, libertarians were far more likely to agree that “the government, local and distant, should leave people to their own devices as much as possible.” Although overwhelming majorities of young conservatives (83%) and libertarians (98%) agree, libertarians are 53 points more likely to “strongly agree” (83% vs. 30%) than conservatives. &#13;<br /> &#13;</p> <p> </p><div data-embed-button="embed" data-entity-embed-display="view_mode:media.blog_post" data-entity-type="media" data-entity-uuid="abf20094-0f35-49c9-a6b0-f5310c4cedfa" data-langcode="und" class="embedded-entity"> <div class="embed embed--infogram js-embed js-embed--infogram"> <div class="infogram-embed" data-id="0452d00f-ad72-4145-a69c-bc5614176ccb" data-type="interactive" data-title="Liberty"></div> //--&gt; </div> </div> <p>Both libertarian and conservative attendees also overwhelmingly endorse the idea of proportional justice that people should reap the benefits of their hard work. Over 9 in 10 libertarians and conservatives agree that “citizens have the inalienable right to benefit from the result of their own honest labor.” &#13;<br /> &#13;<br /><strong>Who Won the Intern Debate?</strong> &#13;<br /> &#13;<br /> Who won the intern debate depends on whom you ask. Among conservative attendees: 94% said the conservative team won and 6% said the libertarian team won. Among libertarian millennial attendees, 54% said the libertarians won while 46% said the conservatives won. Among the moderates, liberals, and progressives in the audience, 58% felt the conservative team won and 42% thought the libertarians won. &#13;<br /> &#13;<br /><strong>Summary</strong> &#13;<br /> &#13;<br /> Many observers have assumed that libertarians and conservatives come from essentially the same branch of the political tree, or that one is simply a more stringent version of the other. However, the survey finds striking differences between the two groups in policy beliefs undergirded by different assumptions and philosophical worldviews. This survey of politically engaged young conservatives and libertarians highlights the commonalities as well as conflicts between the two groups and portends the political conflicts of the future.&#13;<br /> &#13;<br /><em>Full LvCDebate Attendee Survey results found <a href="https://object.cato.org/sites/cato.org/files/wp-content/uploads/toplines_2018interndebateexistsurvey.pdf">here</a></em>&#13;</p> <div>&#13;<br /> &#13; <hr /><div id="edn1">&#13;<br /> &#13;<br /><a name="_edn1" href="#_ednref1" id="_edn1">[i]</a> Several of Peterson’s principles were re-worded for use in the survey. Although Peterson has said he doesn’t personally identify as conservative, when asked to speak to a conservative group he offered up twelve principles he thought conservatives could be for rather than against. &#13;<br /> &#13; </div> <p>&#13; </p> </div> <p></p> Tue, 21 Aug 2018 13:23:00 -0400 Emily Ekins https://www.cato.org/blog/results-2018-libertarianism-vs-conservatism-post-debate-survey The New Target for Paid Family Leave Boosters: Social Security https://www.cato.org/multimedia/cato-daily-podcast/new-target-paid-family-leave-boosters-social-security Charles Blahous, Vanessa Brown Calder, Caleb O. Brown <p>Proposals to turn Social Security into a&nbsp;bank for families wishing to take time off to care for new kids are flawed along a&nbsp;number of dimensions. Charles Blahous and Vanessa Brown Calder comment.</p> Thu, 09 Aug 2018 03:00:00 -0400 Charles Blahous, Vanessa Brown Calder, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/new-target-paid-family-leave-boosters-social-security Appraising MAGAnomics after 500 Days https://www.cato.org/blog/appraising-maganomics-after-500-days Thomas A. Firey <p>A few weeks ago, President Trump surpassed his 500th day in office. That’s a&nbsp;good vantage point to appraise his economic policies to Make American Great Again. <br><br /> <br> Over at the <a href="https://www.econlib.org/">Library of Economics and Liberty</a>’s <a href="https://www.econlib.org/econlog/">Econlog</a>, <a href="https://www.econlib.org/maganomics-a-500-day-appraisal/">I&nbsp;offer my assessment</a>. It’s not good. <br><br /> <br> This may seem surprising, given current economic conditions. But economic policy isn’t merely about the current moment, but predominantly about improving economic conditions long‐​term. Aside from a&nbsp;couple of provisions in the December 2017 tax law, President Trump has done precious little in that regard and much to harm the economy long‐​term, from borrow‐​and‐​spend fiscal policy, to disastrous trade and immigration policies, to disinterest in serious regulatory reform, to his refusal to face the country’s dreary long‐​term fiscal challenges. <br><br /> <br> From my conclusion: <br> </p> <blockquote><p>MAGAnomics appears to be little more than an impulsive dislike of free trade and immigration, a&nbsp;hazy desire for less regulation, disinterest in (or perhaps a&nbsp;lack courage to face) the nation’s long‐​term fiscal problems, and a&nbsp;desire to temporarily lower taxes without making the hard choices necessary to fiscally balance those cuts and make them enduring. In other words, MAGAnomics is a&nbsp;slogan supporting a&nbsp;few weak and many harmful initiatives, not a&nbsp;serious collection of policies thoughtfully designed to strengthen the nation’s economic health.</p> </blockquote> <p>Take a&nbsp;look and see if you agree.</p> Thu, 19 Jul 2018 14:34:00 -0400 Thomas A. Firey https://www.cato.org/blog/appraising-maganomics-after-500-days Michael D. Tanner discusses the entitlement crisis on John Carlson Show https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-entitlement-crisis-john-carlson-show Fri, 15 Jun 2018 11:50:00 -0400 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-entitlement-crisis-john-carlson-show America’s Entitlement Crisis Just Keeps Growing https://www.cato.org/publications/commentary/americas-entitlement-crisis-just-keeps-growing Michael D. Tanner <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>One problem with living in times as interesting as these is that important news often gets lost amid the swirl of rapidly changing events. If you blinked last week, you may have missed the latest report from the trustees of the Social Security and Medicare systems. But for the sake of our children and grandchildren, not to mention the country’s economic future, America’s looming entitlements crisis is worth paying attention to.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Start with Social Security. This year, the system’s trustees pegged its official “insolvency” date at 2034, the same as in last year’s report. Unfortunately for those under age 51, of course, we are now a&nbsp;year closer to that date than we were a&nbsp;year ago. And unless something changes dramatically between now and then, current law will require benefits to be slashed by 21 percent at that point.</p> <p>But focusing on that top‐​line number badly understates Social Security’s real problems. Since 2009, Social Security has taken in less in taxes than it pays out in benefits. It has been using “attributed” interest to maintain a&nbsp;positive balance. But this year, benefits exceeded both taxes and interest, meaning that Social Security had to dip into the principal of the Social Security Trust Fund for the first time.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>A new government report suggests that Social Security and Medicare are in even worse shape than you thought.</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Of course, all of this is merely a&nbsp;bookkeeping fiction. The Social Security Trust Fund is not — and never has been — an asset that can be used to pay benefits. Instead, it is an accounting measure of how much money Social Security can draw from general revenues. Since the government doesn’t have any extra cash socked away — you may have noticed that we are running a $21 trillion debt — any Social Security shortfall only adds to the growing tide of red ink.</p> <p>Overall, the trustees report that Social Security’s total unfunded liabilities now exceed $37 trillion, on a&nbsp;discounted‐​present‐​value basis over the infinite horizon.</p> <p>And that’s the&nbsp;<em>good</em>&nbsp;news. Medicare is in even worse shape. This year’s trustees’ report estimates that the health‐​care program for seniors will hit technical insolvency by 2026, three years sooner than last year’s estimate. The program’s worsening financial condition is traced to “higher‐​than‐​anticipated spending in 2017, legislation that increases hospital spending,” and higher payments to private Medicare Advantage plans. Congress also repealed the Independent Payment Advisory Board (IPAB), an Obamacare provision that would have limited provider reimbursements.</p> <p>Again, as with Social Security, focus on technical insolvency understates Medicare’s negative impact on the federal budget because of its reliance on Trust Fund accounting. In actuality, Medicare has been running a&nbsp;cash‐​flow deficit for decades.</p> <p>The trustees’ report does estimate that Medicare’s finances will eventually improve — though not in our lifetimes — but only because it assumes savings built into the rapidly unraveling Affordable Care Act. If those savings fail to materialize (witness the repeal of IPAB), the program’s long‐​term liabilities could easily exceed $50 trillion or more.</p> <p>The report also makes clear that there can be no long‐​term reduction in the national debt without addressing these massive entitlement programs. Social Security now costs nearly $1 trillion per year, and Medicare more than $700 billion. Those two programs alone account for some 40 percent of all federal spending. Congress can and should slash away at discretionary spending all it wants, but without entitlement reform, the debt will continue to grow.</p> <p>It is long past time to face facts: We have lied to our kids. Social Security and Medicare cannot pay for all the future benefits that we have promised them — and until we admit that, we’ll continue down the road to national fiscal ruin.</p> </div> Wed, 13 Jun 2018 08:32:00 -0400 Michael D. Tanner https://www.cato.org/publications/commentary/americas-entitlement-crisis-just-keeps-growing Michael D. Tanner discusses social security reform on WWL’s First News with Tommy Tucker https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-security-reform-wwls-first-news Mon, 09 Apr 2018 11:21:00 -0400 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-security-reform-wwls-first-news The Trouble with Paid Family Leave https://www.cato.org/multimedia/cato-daily-podcast/trouble-paid-family-leave Vanessa Brown Calder, Caleb O. Brown <p>What can we learn from other countries with mandated paid family leave? Why do so many prominent Republicans view the idea as a&nbsp;conservative one? Vanessa Brown Calder comments.</p> Mon, 19 Mar 2018 16:25:00 -0400 Vanessa Brown Calder, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/trouble-paid-family-leave California’s Pension Woes Exacerbated by Politics https://www.cato.org/blog/californias-pension-woes-exacerbated-politics Ike Brannon <p>California governor Jerry Brown has been taking a victory lap of sorts after putting forth a budget for fiscal year 2019 that would include a <a href="https://protect-us.mimecast.com/s/tj27CrkVZmHRrOjuNyWt6?domain=wsj.com">$6 billion surplus</a>, a remarkable turnaround for a state that hemorrhaged red ink in the wake of the great recession.&#13;<br /> &#13;<br /> Of course, much of that surplus arrived via a hefty tax increase, as well as a surfeit of revenue resulting from the stock market boom via capital gains taxes, so attributing this turnaround to fiscal probity might be taking things a bit far.&#13;<br /> &#13;<br /> However, Governor Brown does get credit for at least temporarily righting what seemed to be a sinking ship. What’s more, he seems to realize that this surplus can easily disappear, and he has warned his potential successors to resist spending that surplus. What Brown is fully aware of is that even the most spectacular stock market increase is not enough to erase the state's most pressing financial problem—namely, its underfunded government pension.&#13;<br /> &#13;<br /> Currently, it has enough money set aside to cover just <a href="https://protect-us.mimecast.com/s/iAQ7Cv2Lq8hnEZghySETL?domain=sacbee.com">68%</a> of its future obligations—certainly far from the most indebted state (that would be my own state of Illinois), but still low enough to dismiss any notion that future stock market growth can remedy the problem.&#13;<br /> &#13;<br /> Despite this, the California Public Employees Retirement System, or CalPERS, has put politics ahead of achieving a high rate of return by insisting that the boards of the companies it invests in adhere to various social and environmental practices.&#13;<br /> &#13;<br /> It's nonsense, of course, and it amounts to little more than an extension of politics into a realm that doesn't have room for it.&#13;<br /> &#13;</p> <p>The problem is that these environmental and social constraints inevitably bring with them a lower rate of return—regardless of what CalPERS and other advocates say to the contrary. And these lower returns will only hasten the day when the state's taxpayers—or, failing that, federal taxpayers—will be on the hook to cover California's pension deficit.&#13;<br /> &#13;<br /> A few of the state's politicians seem to be aware of the conundrum this places on California citizens: A Democratic state senator recently <a href="https://protect-us.mimecast.com/s/TP_aCwp79KcEvnQCQ8yHZ?domain=ai-cio.com">offered</a> a bill that would allow new state employees to opt out of the state pension plan and simply participate in a defined contribution plan. The state university system already allows newly hired professors to opt out—a recognition that a defined benefit plan does not work well for a peripatetic workforce like academics.&#13;<br /> &#13;<br /> Ultimately, moving to a defined contribution plan might make sense from a long-term sustainability perspective, but transitioning to such a system for everyone would require someone (namely, current taxpayers and state workers) to cover promises already made to current and future state retirees while new employees build up their own retirement balances. In short, someone’s going to be left holding the bag in the ponzi scheme that is a pay-as-you-go public pension plan.&#13;<br /> &#13;<br /> That's a tricky path to navigate: Utah did such a thing for its new employees with a much smaller per-capita shortfall, accomplishing it by making those new employees fork over a portion of their income to cover promised benefits. It <a href="https://protect-us.mimecast.com/s/m0KqCxkLq2H5Lj0UAfAn-?domain=papers.ssrn.com">is not clear</a> even that will be sufficient for the state.&#13;<br /> &#13;<br /> California will need every dime it can get its hands on to fund its pension shortcomings, and with the country's highest income tax rate it probably can’t raise personal income taxes too much higher. Governor Brown <a href="https://protect-us.mimecast.com/s/OppaCyP2l9TP73WUkomtc?domain=sacbee.com">has commented</a> that the state's retirees should expect a benefit reduction the next time there's a recession but most people think any reductions in promised benefits are precluded by the state's constitution.&#13;<br /> &#13;<br /> At some point a future governor of California will need to figure out how the state’s going to cope with having billions in promised benefits and insufficient money set aside to keep those promises. That calculus will be much easier if CalPERS doesn’t accept a lower rate of return in exchange for dubious political chits.</p> <p></p> Wed, 07 Mar 2018 16:01:00 -0500 Ike Brannon https://www.cato.org/blog/californias-pension-woes-exacerbated-politics Support Parental Leave by Saving Not Spending https://www.cato.org/blog/support-parental-leave-saving-not-spending Chris Edwards <p>Some conservative writers are proposing to raid Social Security for the costs of a new parental leave program. Proponents are selling it as a sort-of free lunch. <a href="http://pdf.iwf.org/budget-neutral_approach_parental_leave_PF18.pdf">The plan</a> would be “self financing” says the IWF’s Kristin Shapiro because “new parents would agree to defer their collection of Social Security benefits upon retirement for the period of time necessary to offset the cost of their parental benefits.”&#13;<br /> &#13;<br /> But Social Security is not a savings program with a pool of assets to draw on. If the government starts mailing checks to millions of new parents, the only “financing” would be more federal borrowing. What Shapiro <a href="http://pdf.iwf.org/budget-neutral_approach_parental_leave_PF18.pdf">calls</a> $7 billion a year in “parental benefits” would be $7 billion more in government spending. What Shapiro calls “self financing” would be more government debt.&#13;<br /> &#13;<br /> In theory, the government would delay retirement handouts for participating individuals three decades down to the road. But, if enacted, lobby groups and politicians would get to work undoing those future savings. And if this sort of accounting trick is used for spending on parental leave, then the flood gates would be opened for Social Security spending on home purchases, job training, and other trendy causes.&#13;<br /> &#13;<br /> What ever happened to personal saving? Humans can look ahead and plan, and they have been doing so since the beginning of time. Personal saving is the most powerful financing tool. But the more the government hands out benefits—for retirement, health care, unemployment, parental leave, and many other things—the more it undermines the innate and responsible saving incentive. The more the nanny state spends, the more it sabotages a culture of savings and the practical ability to save as taxes rise.&#13;<br /> &#13;<br /> Young people thinking about having children should start setting aside some of their paychecks. Young people should be taught that kids are expensive, and they should plan accordingly. Alas, personal responsibility and saving are not the starting points for most policy discussions these days.</p> <p>Put aside parental leave, and think about farm programs. The government spends $20 billion a year to cushion farmers from fluctuations in prices and crop yields. It apparently never occurs to policymakers that farmers should be using their own savings to level out their consumption over time. When corn prices are high, they should be saving the extra profits. When corn prices are low, they can withdraw. Wouldn’t that be easier than writing thousands of pages of farm legislation and extracting $20 billion a year from taxpayers?&#13;<br /> &#13;<br /> At the bottom of Shapiro’s piece, it says the IWF believes that women are “better served by greater economic freedom” than “big government.” Thus, for parental leave, the focus should be on personal responsibility and savings rather than big government spending.&#13;<br /> &#13;<br /> Part of the solution is to cut taxes on saving and make saving simpler, as Ryan Bourne and I <a href="https://object.cato.org/sites/cato.org/files/pubs/pdf/tbb-77-update-2.pdf">discuss in our study on Universal Savings Accounts (USAs)</a>. The tax code includes numerous savings vehicles for retirement, but all savings are beneficial. USAs would facilitate personal savings to cover health care, education, parental leave, and many other costs. If Americans had larger pools of savings, they would be more self-sufficient and less dependent on government.&#13;<br /> &#13;<br /> When thinking about policy reforms, the first goal should be to increase the self-sufficiency of Americans and reduce today’s overreliance on government. USAs would not solve every problem, but they would allow Americans to better prepare for their own financial challenges.&#13;<br /> &#13;<br /> Vanessa Brown Calder critiques the paid leave proposals <a href="http://thehill.com/blogs/congress-blog/labor/374929-republicans-are-negotiating-the-terms-of-surrender-on-paid-leave">here</a> and <a href="https://www.cato.org/blog/problems-republican-proposal-paid-leave">here</a>.</p> <p></p> Fri, 23 Feb 2018 17:03:00 -0500 Chris Edwards https://www.cato.org/blog/support-parental-leave-saving-not-spending Problems with Republican Proposal for Paid Leave https://www.cato.org/blog/problems-republican-proposal-paid-leave Vanessa Brown Calder <p>A new federal paid leave idea has been produced, promoted, and endorsed by individuals on the right. And now Republican legislators like Marco Rubio, Joni Ernst, and Mike Lee are getting behind it.&#13;<br /> &#13;<br /> Advocates propose using Social Security as a benefit bank for paid leave – the idea is that parents could withdraw Social Security benefits today if they defer collecting benefits later. Of course, if advocates want to provide paid leave, a better idea is cutting Social Security benefits and payroll taxes so new parents don’t have to ask the government for their money back.&#13;<br /> &#13;<br /> Still, it’s a clever idea and maybe the least-bad proposal for federal paid leave. But that does not mean the Social Security paid family leave (SS PFL) proposal is a good idea on its own merit. As described in <em><a href="http://thehill.com/blogs/congress-blog/labor/374929-republicans-are-negotiating-the-terms-of-surrender-on-paid-leave">The Hill</a> </em>yesterday, government-provided paid leave has harmful consequences and is not politically supported. &#13;<br /> &#13;<br /> Setting that aside, Social Security is a program with an assortment of problems, and allowing beneficiaries to borrow against future benefits does not improve the current model. Given how integral Social Security is to the current proposal, it’s worth a reminder just how deep those issues run.</p> <p>First, Social Security will shortly be insolvent. Due to Social Security’s structure and demographic trends which include an increase in life expectancy, a decrease in fertility rates, and slowing wage growth, the value of Social Security’s obligations is estimated to exceed the value of its taxes in present value by $8.6 trillion over the next 75 years. (And no, providing paid parental leave and other parental benefits <a href="https://protect-us.mimecast.com/s/sjQnCmZNRYFy2MOH38CCL?domain=ifstudies.org">won’t change fertility trends</a> meaningfully.)&#13;<br /> &#13;<br /> In short, there are increasingly more retirees collecting benefits for every worker paying for them. To illustrate, in 1950 there were 12 people older than 65 for every 100 people of working age. By 2050, there are expected to be 35 people older than 65 for every 100 people of working age.&#13;<br /> &#13;<br /> This makes Social Security unsupportable in its current form. The program is already running a cashflow deficit and in trouble financially. Indeed, the Social Security Administration (SSA) projects the present-value of Social Security's unfunded financial obligation is equal to <a href="https://www.ssa.gov/oact/tr/2016/VI_F_infinite.html">$32.1 trillion</a> through the infinite time horizon. &#13;<br /> &#13;<br /> How will adding SS PFL change that? AEI's Andrew Biggs says that in the long-run the SS PFL proposal is budget neutral. But in the short-run, the proposal increases Social Security’s financial obligations, thereby hastening Social Security’s decline toward insolvency. It would be one thing if Social Security was based on personal savings accounts and the proposal allowed people access to their savings more flexibly. But Social Security has no pool of savings, so the proposal means going deeper into debt to provide parental benefits. &#13;<br /> &#13;<br /> The most generous argument is that the SS PFL proposal does everyone a favor, because it forces lawmakers to grapple with Social Security’s problems sooner than they would otherwise. What will that reform look like? If historical precedent is any indication, it will involve increasing taxes and perhaps reducing benefits.&#13;<br /> &#13;<br /> Social Security taxes have already grown substantially over Social Security's lifetime: from a payroll tax of 2 percent at its inception in 1937 to a tax of 12.4 percent today. Indeed, during Social Security’s most recent reform in 1983, taxes were raised in a variety of ways. Recent proposals for reforming Social Security have also suggested expanding taxes to pay for the program.&#13;<br /> &#13;<br /> Of course, benefits have also been reduced in past reforms. But with more obligations to more interest groups (parents, the sick, etc.) under a new version of the program, it will be increasingly difficult to reduce benefits because more groups will be impacted by cuts. &#13;<br /> &#13;<br /> It seems that an underlying premise of the SS PFL proposal is that nothing major can be done to reform Social Security in the short-term anyway, so let’s enjoy the ride down. Another underlying premise is that Democrats will eventually get their way on paid leave, so let’s preempt it and give them what they want.&#13;<br /> &#13;<br /> Unfortunately for advocates, the current proposal is <a href="http://thehill.com/blogs/congress-blog/labor/372827-republican-paid-leave-proposal-woefully-inadequate">not what Democrats want</a>, and it’s unlikely they’ll be satisfied. The SS PFL proposal conveniently leaves the door wide open to provision of more generous benefits in the future.&#13;<br /> &#13;<br /> In the meantime, Republicans will have conceded substantial ground, hastened Social Security's decline, and legitimized the provision of paid parental leave at the federal level.  If history is any indication, more taxes will be part of the solution.&#13;<br /> &#13;<br />  </p> <p></p> Thu, 22 Feb 2018 16:33:00 -0500 Vanessa Brown Calder https://www.cato.org/blog/problems-republican-proposal-paid-leave Republicans Are Negotiating the Terms of Surrender on Paid Leave https://www.cato.org/publications/commentary/republicans-are-negotiating-terms-surrender-paid-leave Vanessa Brown Calder <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>Republicans are currently negotiating the terms of their surrender on government‐​provided paid leave. During his State of the Union address earlier this year,&nbsp;President Trump&nbsp;asked Americans to “support working families by supporting paid family leave,” garnering cheerful applause from Speaker&nbsp;Paul Ryan&nbsp;(R‐​Wis.) and Vice President&nbsp;Mike Pence.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>Meanwhile, the right is proposing a&nbsp;new government‐​provided paid leave idea that uses the Social Security program as a&nbsp;benefit bank. The proposal has been backed by conservative intellectuals and organizations including the Independent Women’s Forum and the American Enterprise Institute.</p> <p>Why now? Historically a&nbsp;<a href="https://www.youtube.com/watch?v=hsKzTcEROXo" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.youtube.com/watch?v%3DhsKzTcEROXo&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNFwfJOxvewtR7SCEF2UppOHZSHfyA" target="_blank">Republican majority</a>&nbsp;<a href="https://www.govtrack.us/congress/votes/103-1993/s11" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.govtrack.us/congress/votes/103-1993/s11&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNHDR7Fd3dOV097O1QJlAkTzJJW4sg" target="_blank">has opposed</a>&nbsp;government leave proposals. And Americans should expect better negotiating from the party led by the negotiator‐​in‐​chief. After all, the first rule of negotiation is do not negotiate if you don’t have to.</p> <p>The GOP is in control of the House, Senate, and executive branch. And Republicans already passed a&nbsp;tax bill in December that includes $1 billion annually in tax credits to reward companies for providing paid leave.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>If government‐​provided paid leave is costly to women, isn’t politically popular with Republicans, and employers are already providing it in great numbers then why are Republicans capitulating?</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But perhaps Republicans have forgotten paid leave comes with costs. Economic research suggests women&nbsp;<u>pay for paid leave</u>. Depending on the policy formulation, that may be through wage reductions, a&nbsp;decline in promotions, or increases in unemployment. Either way, government paid leave is no panacea for working women.</p> <p>Paid leave proposals have a&nbsp;bad track record. In 1989 Larry Summers&nbsp;<a href="https://eml.berkeley.edu/~saez/course131/Summers89.pdf" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://eml.berkeley.edu/~saez/course131/Summers89.pdf&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNHP629ZXBp0ui-4eo2kI_QtwEsSwQ" target="_blank">wrote</a>&nbsp;about government‐​mandated paid leave, “There is no sense in which benefits become ‘free’ just because the government mandates employers offer them to workers.” And in 1994 Jonathan Gruber reported women’s wages were reduced to reflect the cost of benefit mandates. Gruber estimated that the shift in cost was around “the order of 100 percent.”&nbsp;</p> <p>Perhaps the consequences of current paid leave formulations will look different since they are government‐​provided rather than government‐​mandated. But there is no reason to think there won’t be trade‐​offs.</p> <p>Economists found expanding maternal benefits in Norway regressively redistributed “primarily to middle and upper income families” and raised taxes considerably in a&nbsp;<a href="http://www.nber.org/papers/w19595.pdf" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.nber.org/papers/w19595.pdf&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNHxpKSBTnBro6aVp8m0D51OjVVyrQ" target="_blank">well‐​designed study</a>&nbsp;circulated by National Bureau of Economic Research. Expanding paid leave had little impact on positive social outcomes including labor force participation in the short or long run, fertility, marriage, or divorce, according to the study’s authors.</p> <p>Norway isn’t alone. In Britain, maternity wage and job entitlements led fewer women to hold management positions and promotion‐​track jobs, according to research by economist Jenna Stearns. Maternity wage and job entitlements also&nbsp;<a href="http://economics.ucdavis.edu/events/papers/28Stearns.pdf" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://economics.ucdavis.edu/events/papers/28Stearns.pdf&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNG-CG8DGldyDJSzfzk3ubZ7ZOsaLw" target="_blank">apparently</a>&nbsp;“exacerbate[d] gender inequality among highly educated workers.”</p> <p>But costs to women aren’t limited to international contexts. Research from the Journal of Contemporary Economic Policy indicates a&nbsp;statewide paid leave program in California also had&nbsp;<a href="http://onlinelibrary.wiley.com/wol1/doi/10.1111/coep.12102/full" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://onlinelibrary.wiley.com/wol1/doi/10.1111/coep.12102/full&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNEM7ZQBiU0tzFN9wwC3by3QK1SiVg" target="_blank">unanticipated</a>&nbsp;negative effects. The authors contend that program increased unemployment and unemployment duration for child‐​bearing age women.</p> <p>Setting the negative consequences aside, some Republicans rationalize their support for government‐​provided paid leave by telling themselves government‐​provided paid leave is inevitable and only government will provide it. But that isn’t correct.</p> <p>Public polling indicates government‐​provided paid leave is not popular. For example, a&nbsp;2017 Pew&nbsp;<a href="https://www.cato.org/blog/sorry-not-all-americans-want-government-paid-family-leave" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.cato.org/blog/sorry-not-all-americans-want-government-paid-family-leave&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNEgHuKQhfXgfsUSHWK63vMIXYg4Fw" target="_blank">poll</a>&nbsp;found that among those who support paid leave for mothers and fathers<em>,&nbsp;</em>just 14–15 percent think the federal government should pay for it. Seventy five&nbsp;percent of Americans surveyed in the Pew poll thought employers should foot the bill. And when asked, 67 percent of Republicans said employers should be able to make their own decision about whether or not to provide paid leave.</p> <p>Republicans are right to let business decide. More often than not, employers provide paid leave voluntarily. In a&nbsp;national study,&nbsp;<a href="http://www.nationalpartnership.org/issues/health/maternity/listening-to-mothers.html" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=http://www.nationalpartnership.org/issues/health/maternity/listening-to-mothers.html&amp;source=gmail&amp;ust=1519331328389000&amp;usg=AFQjCNH9z8jY417pMa9T9hgi3uHuE8dtEQ" target="_blank">63 percent</a>&nbsp;of working mothers said their employer provided paid maternity leave benefits. And privately‐​provided paid leave is best because it serves the same function as the government option, sans systemic penalties for women.</p> <p>So, if government‐​provided paid leave is costly to women, isn’t politically popular with Republicans, and employers are already providing it in great numbers then why are Republicans capitulating? Trump is extending paid leave as an olive branch, but there’s no reason to volunteer it now.</p> <p>Republicans’ historical position on paid leave is both scientifically and politically supported—they should hold their ground.</p> </div> Wed, 21 Feb 2018 15:51:00 -0500 Vanessa Brown Calder https://www.cato.org/publications/commentary/republicans-are-negotiating-terms-surrender-paid-leave James A. Dorn discusses stock market on KSRO’s Sonoma County’s Morning News https://www.cato.org/multimedia/media-highlights-radio/james-dorn-discusses-stock-market-vitality-ksros-sonoma-countys Fri, 09 Feb 2018 11:19:00 -0500 James A. Dorn https://www.cato.org/multimedia/media-highlights-radio/james-dorn-discusses-stock-market-vitality-ksros-sonoma-countys Michael D. Tanner discusses the social safety net in the U.S. on WWL’s First News with Tommy Tucker https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-safety-net-us-wwls-first-news Wed, 07 Feb 2018 09:49:00 -0500 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanner-discusses-social-safety-net-us-wwls-first-news Veronique de Rugy discusses “baby bonds” on NPR’s A1 https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-baby-bonds-nprs-a1 Wed, 10 Jan 2018 11:54:00 -0500 Veronique de Rugy https://www.cato.org/multimedia/media-highlights-radio/veronique-de-rugy-discusses-baby-bonds-nprs-a1 Michael F. Cannon discusses entitlement reform on WWL’s First News with Tommy Tucker https://www.cato.org/multimedia/media-highlights-radio/michael-f-cannon-discusses-entitlement-reform-wwls-first-news Tue, 02 Jan 2018 11:00:00 -0500 Michael F. Cannon https://www.cato.org/multimedia/media-highlights-radio/michael-f-cannon-discusses-entitlement-reform-wwls-first-news Entitlements Are out of Control https://www.cato.org/publications/commentary/entitlements-are-out-control Michael D. Tanner <div class="lead mb-3 spacer--nomargin--last-child text-default"> <p>While the White House was busy getting its latest Russia story straight, and congressional Republicans were inventing another new way to not pass health‐​care reform, few noticed the latest double‐​barreled dose of bad budgetary news. But anyone who cares about the long‐​term economic health of the country should be paying careful attention.</p> </div> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>First, the Congressional Budget Office reported that this year’s budget deficit will hit $693 billion. That’s $134 billion higher than the CBO predicted just six months ago, and $100 billion higher than last year’s shortfall. Under current baselines, deficits are soon expected to hit $1 trillion per year. All this deficit spending will add more than $10 trillion to the national debt over the next decade, bringing it to more than $30 trillion.</p> <p>Of course, those projections are based on current policies. President Trump has proposed deep cuts in domestic spending. Assuming the president gets everything he wants, the debt will increase to only $27 trillion. Hurray? Of course, after the health‐​care debacle, and given the president’s other distractions, does anyone really believe that all those cuts are going to happen?</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>If the GOP couldn’t slow the growth of Medicaid or reign in the program’s Obamacare expansion, how will it withstand the coming special‐​interest onslaught?</p> </div> </div> </aside> , <div class="mb-3 spacer--nomargin--last-child text-default"> <p>But as frightening as those numbers are, most budget observers know that the real problems come farther down the road, when the true cost of entitlement programs, Social Security, Medicare, and Medicaid kick in. (Before legions of outraged seniors attack, let me simply point out that “entitlement” is simply a&nbsp;budgetary term for programs that are not subject to annual appropriation.) And it is these programs that are responsible for the second dose of bad news.</p> <p>According to the <a href="https://www.ssa.gov/oact/tr/2017/tr2017.pdf" target="_blank">latest report of Social Security’s trustees</a>, the program’s unfunded future liabilities now exceed $34.2 trillion (in discounted present‐​value terms). True, the program can maintain technical solvency until 2034 (cold comfort to anyone 50 or younger today). But that number is largely an accounting fiction that assumes that the Social Security Trust Fund is an asset that can be used to pay benefits. In reality, of course, the Trust Fund is just a&nbsp;claim against general revenues. On the far more important cash‐​flow basis, Social Security is already spending more on benefits than it brings in through tax revenue.</p> <p>Big numbers like $34 trillion tend to make the eyes glaze over, so consider this: Restoring Social Security to permanent sustainable solvency would require immediately a&nbsp;roughly one‐​third increase in the payroll tax (or an equivalent in other taxes), or a&nbsp;permanent reduction in benefits for all current and future beneficiaries of about 25 percent.</p> <p>Meanwhile, Medicare is in even worse shape. For the record, the Trust Fund for Medicare Part A&nbsp;will be technically exhausted by 2029, but like Social Security, the program is already running a&nbsp;cash‐​flow deficit. The big Medicare shortfalls, however, will be in Part B&nbsp;and the prescription‐​drug program, both of which are funded largely out of general revenues. Taken as a&nbsp;whole, Medicare’s unfunded liabilities are nearly $49 trillion, a&nbsp;slight improvement from previous forecasts.</p> <p>Those projections may, however, be overly optimistic. They assume that Medicare’s rising costs will probably trigger automatic spending cuts through Obamacare’s Independent Payment Advisory Board (IPAB), starting next year. But those cuts, which almost exclusively fall on doctors and hospitals, are potentially devastating. In fact, <a href="https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2017.pdf" target="_blank">Medicare’s trustees warn in their report</a> that payments to doctors would “fall increasingly below providers’ costs.” As a&nbsp;result, as many as half the nation’s hospitals, 70 percent of skilled nursing facilities and more than 80 percent of home health agencies would be losing money. More and more doctors will be driven to abandon the program.</p> <p>Faced with cuts of this magnitude, Congress will almost certainly step in and block IPAB’s recommendations. Anticipating that the cuts will never actually occur, the trustees warn that “actual future costs for Medicare may exceed the projections shown in this report, possibly by substantial amounts.”</p> <p>All of this makes the Republican failure to repeal and replace Obamacare all the more dispiriting. If Republicans could not even slow the growth of Medicaid or rein in the program’s Obamacare expansion, how will they ever withstand the special‐​interest onslaught that will accompany any attempt to control entitlement costs? The dynamics are not going to change. The public will remain horrified at the thought of giving up any benefits, no matter how unrealistic those promises may be. Democrats will remain adamantly opposed to cutting a&nbsp;dime from any program. President Trump will remain distracted and disengaged (not to mention increasingly unpopular). Republicans will remain divided and afraid. Not exactly a&nbsp;recipe for success.</p> <p>Yet failure would be catastrophic. Set aside the immorality of burdening our children and grandchildren with this mountain of debt: We are poorer today because businesses, looking at the wave of future debt and the taxes that paying it would impose, are less likely to invest or expand. It is a&nbsp;death spiral of its own. Debt slows economic growth, which increases the debt, which slows growth, and so on.</p> <p>It’s time for a&nbsp;little adult leadership in Washington. We’re waiting … Crickets.</p> </div> Wed, 19 Jul 2017 09:39:00 -0400 Michael D. Tanner https://www.cato.org/publications/commentary/entitlements-are-out-control