Monday, January 24, 2011

Beginning with Social Security...

So, after I've identified the problem, I feel as though I should at least present a plausible solution. Not that my solution should be THE solution, but maybe it will begin a conversation about the effectiveness of different policies toward reaching our goal of not only bringing down the deficit but also fostering sustainable (operative word) economic growth. And please don't think of me as a policy expert. I've studied social and economic policy, but the Ph.D. and a lifetime of experience are conspicuously absent from my resume, so I can't be starting from a much better position than anyone else reading this blog. But I hope you aren't looking to me for answers anyway... at least not exclusively. I hope you are looking to me and that guy, and that elderly lady over there, not to mention her 20-something grandson who is just beginning to make his way through this crazy world. We all have something to contribute, and the combination of our genuine efforts at working with each other toward a common goal cannot help but be greater than the sum of their individual parts. That's what democracy is all about; keep that in mind.

What should be done? I think the Deficit Commission report was a good start, but something has to come out of it, and it has to begin with the big boys: Medicare, Medicaid, and especially Social Security. There have been many suggestions for better efficiency with these programs, and all of them should be looked at. In the case of Social Security, age of eligibility changes should be looked at and, ultimately, enacted. 65 was a good age when the program began. Now it is a significant drain on the fund and should be increased to a graduated rate between 67 and 70 (25% benefit at 67, 50% at 68, 75% at 69, and full at 70). This will help to keep the fund from depleting as quickly as it is expected to. Also, a person's benefit should be tied to how much the person (or beneficiary) paid into the fund. For retirees who are in danger of running out of benefits, a separate safety net insurance fund will be set up, collected from a small companion tax that will be collected along with the Social Security tax from every worker. For example, a person's benefit would be determined by a 4% tax on wages, and an extra 1% will be collected as a broader safety net fund for those who outlive their benefits. Finally, a significant tax benefit should be set up for any retiree who denies the Social Security benefit. If you are well-off enough that you don't need the benefit and you have enough integrity to voluntarily give it up for the good of the system, you should be compensated in some significant way. A large tax break on your estate or other assets would be appropriate.

I'm not too familiar with the arguments for privatizing Social Security. I can imagine that it would be just like a 401(k) in the way that it would be a voluntary contribution rather than a mandatory tax. I don't see this as being a very sustainable solution. Except in times of economic pressure, we as a nation are not very good at saving money. A private retirement fund is no different. I can imagine that the structure that I proposed in the previous paragraph would be more conducive to a privatization than the way we currently do it, but I can't really imagine it having anywhere near the broad social benefit that it does now.

Well, it's obvious that this little experimental conversation starter of mine will end up taking several posts. I'm not about to overwhelm you (and myself) by trying to put all of my ideas here. We'll start with Social Security and move on to other policies soon. Now it's your turn to tell me what you think. Please take these as suggestions and not dictatorial decrees. Please give reasons why these policies would be beneficial and why they would be detrimental. Please stay away from cliches. And most of all, please be civil. I'll consider deleting any comment that doesn't follow these rules. Thanks.

Okay... give me your thoughts.

Saturday, January 22, 2011

Entitlements, Politics, and Debt... Oh My!

If you are not concerned about the national debt, you should be. A recent analysis by the Government Accountability Office shows exactly why. Scary stuff! 2020 is less than 10 short years away, and 2040 isn't that far off either. It's easy to become dismayed or, worse yet, complacent in the face of such staggering numbers and need for change. How do we reverse course?

It is pretty predictable how politicians on each side will react to this report. Those on the right will attack Medicaid and the reckless spending of the past 2 years. There will be no mention from them of the spending that has exceeded our willingness to tax since the early 1980s, and there will certainly be no willingness to add taxes now... or ever again! They will be less than vague when describing how to reduce that interest payment, and, of course, they wouldn't touch Social Security or Medicare with a 50-foot pole. Those on the left are so afraid of losing even more of their jobs in 2012 and beyond that they don't want to touch any of it. They'll lose any influence with the largest group of voters if they touch Social Security and Medicare, and they'll lose their base if they touch Medicaid. They'll discuss the balooning interest by saying some of the same vague comments about the debt that their rivals on the right will say. They'll mention the reckless spending of the Bush Administration and conveniently leave out the past couple of years, and they'll indicate the need to raise taxes... not now, but at some point in the future.

Obviously, we have a problem. Two of our biggest programs are exploding, yet no one is willing to deal with them. Retirees are now taking more money out of the system than they ever put in... some twice as much... and we don't seem willing to raise the age of eligibility or have an income cap. Even taking a look at where to save money with Medicaid is suicide for the Democrats. Maybe our politicians should be more concerned about the country than their political careers. Or maybe the biggest problem is that no one seems to be able to have a civil and inteligent conversation about all of this. My wife just questioned me about it all and played devil's advocate, and all I did was get defensive about it. Why? Is it so hard for us to admit that other veiwpoints have their merits and that we don't know everything there is to know? Is it really that satisfying to us to demonize others just to get that intoxicating feeling of superiority?

The next 10 years are going to define who we have become as a civilization. Do we have any remaining ability to see beyond the paradigm of Red vs. Blue? Can we still solve our problems? We have to begin by talking, and we have to suppress that urge to come off as superior; that need to be right all of the time. For all of the politicians who have done the "right" thing in the past 50 years, things sure have gone wrong.

I've been one of the biggest proponents in the past for big government, at least when it comes to supporting those who are least able to support themselves. I have been an opponent of government's subsidization for large industries, such as oil, automobile, suburban housing, and agriculture. I still feel strongly about those things. But we've dug ourselves into such a deep hole from 60-some-odd years of fiscal and social policy that doing what I think is right will have to take a back seat to doing what is necessary. Don't get me wrong... I do not think at all that eliminating these programs and privatizing everything is what is sustainable, let alone necessary. But I do think that cuts to these programs, along with entitlements and highways and agricultural subsidies and the consideration of elevated tax rates on millionaires and billionaires, are necessary. Everything has to be on the table and debated on their merits. We no longer have the time to play political games.

My next post will describe what I think needs to be done to get things going in a sustainable direction, as well as what our fiscal and social philosophy should be when we emerge from this crisis. But do not think for a second that I am saying it can only be that way and that no other opinions matter. Think of it as the beginning of a conversation. We need a starting point, and apparently it needs to start outside of the Beltway. I'm not so self-involved that I believe it will start with me, but maybe I can influence someone that can start it.

This is a crisis; make no mistake about that. We've downplayed it and distracted ourselves from it for too long. It's time to put our asinine political games and arrogance aside. Let's talk!

Friday, January 14, 2011

A New Nation Demanded by a Generation?

News flash: Generation Yers don't want what has generally passed for the American Dream since the 1920s. So says a reporter from the bastion of conservative printed news, the Wall Street Journal (a Murdock media outlet, if you weren't aware).

This article, based on a study by the National Association of Home Builders, is hopeful in some ways and kind of disturbing in others. On the up-side, it says what everyone already knows: the children of Baby Boomers, who actually outnumber their parents (why does no one talk about this???), do not want any part of a car-dependent lifestyle. Developers have known this for a while now, which has spurred them to start building condos and other housing closer to walkable commercial centers. The New Urbanists, for many reasons outside of the preferences of the silent majority generation, have begun developing entire traditional neighborhoods consisting of not just housing, but commercial and civic centers. Recently, car companies began to catch on to this trend, too, as they expressed worry over whether Gen Yers would actually buy their products. I happen to think we will continue to buy cars, especially when they transition from gasoline usage, just not in the insane, almost addictive levels that previous generations have. Much fewer than the majority of families living in neighborhoods with full amenities within walking distance, including good transit, will need more than one (and definitely not more than two) cars. Maybe to survive GM and Ford will have to return to the public transit business that they killed in the first half of the 20th Century.

I also like that developers are starting to nix home designs that include huge master bathtubs (can save a surprising amount of square footage there), more than one living room, and, if there are fewer cars, garages. What I was disappointed to learn about... though I'm not especially surprised... was the continual focus on designing the social areas of the house around the TV. Look, I've watched my fair share of TV in my lifetime (though not much recently), and I don't have a problem with the existence of TV or video games; but the whole culture of it has become ridiculous. Do we really have nothing better to do with our lives? If not, then maybe we should question what kind of story we're writing for ourselves (to borrow a concept from Donald Miller). I'm a big proponent of community-building and encouraging social interaction between people. Sorry, but TV and video games produce the opposite of these qualities.

But, I guess it's better to watch a lot of TV in a vital, mixed-use community where venturing out into the public realm (not surrounded by a ton of steel and glass) is more common than vegging in front of the tube in the burbs, where it's probably the most exciting thing you would have to do anyway. Oh, and by the way, if you think it is only the Gen Yers that want the walkable, functional, and social communities (if not in an urban environment, then at least in a suburb that is economically self-sustaining), then you are wrong by a mile. My own graduate research showed that as much as 90% of people (young and old, urbanite and suburbanite, rich and poor) prefer to live in these types of walkable communities. At the moment, most of what is offered is car paradise... but it looks like some much needed change is on the way.

Wednesday, January 5, 2011

Can Transit Really Work in the Burbs? Two Australians Without Much Foresight Think So

So apparently some academics in Australia think that they've solved the problem of how to offer effective and efficient public transit to the suburbs. The common understanding among planners is that transit won't really thrive in outer suburbs because the densities are too low, thus making large, clunky buses and rail lines generally ineffective. These two blokes think such reasoning is rubbish. They're brilliant plan:

"The keys to increasing public transport use in outer suburbs are more frequent buses, running at least every 10-15 minutes, and not just in peak hour; better co-ordination with rail services; more convenient transfers; and fares that allow free transfers between modes."

http://www.theage.come.au/victoria/transport-study-derails-thinking-on-outer-suburbs-20110104-19f3c.html

Genius! With this masterful opus of innovative transportation policy, we can finally put aside the old debate and do what we like doing best in English culture: have our cake and eat it too. We can live in large houses on large lots in maze-like suburban pods out in the middle of nowhere and still keep the world from running out of oil by taking efficient and easy mass transit right from our neighborhoods to anywhere we want in our sprawling regions. Sounds almost too good to be true, but if they say so...

Oh, wait! There are a couple of catches to this grand vision. First, there's the problem that communities built for cars (and only cars), such as pretty much all outer suburbs are, how many residents are likely to take public transit when it is just so much easier and faster (yes, still faster, despite the more frequent buses) to drive? I'm going to step out on a limb and say: very few. One big reason for this: many people who live in suburbia wouldn't be caught dead on a bus or railcar. I don't mean to stereotype, but there are a lot of truths in stereotypes, and the truth here is this: if you love your suburbia, you probably also love your car to the point that taking even the most convenient public transit would be unthinkable.

Even if gas prices went through the roof (which they will sooner or later), this still wouldn't work. No matter how pricey gas will become, it will still not be worth it for people to spend 15-20 minutes on a bus to go 3 or 4 miles. Insanely high gas prices will do one of two things: make people move inward, where transit is more efficient and accepable; or the car companies will scramble to mass produce affordable electric cars, which will kill all efforts at expanding transit to outer suburbs for at least another 50 to 100 years.

Then there's the problem that we seem to be running into a lot lately: how in the world do you pay for extremely frequent, interconnected, and "free" (there's that word again!) transit service to miles and miles of cookiecutter-ness, with minimum lot sizes of 1/2 acre or more, without either raising taxes to levels that suburbanites don't want to pay or increasing fares to levels that no one, regardless of affinity toward transit, can afford. The obvious answer is: you can't. If this were possible, it would be happening somewhere outside of places like Toronto and New York, where people aren't so tax-averse. I can't help but assume that these two professors didn't think about cost or politics when they formed their elegant theory.

Sorry, chums, but I don't buy it! You can't make anything, let alone transit, to operate efficiently in the suburbs, the universe's pinnacle achievement of inefficiency, just like you can't fit a square peg in a round hole. Sure, you can sand down the edges and pretend it belongs in there, but it still doesn't really fit. Outer suburbs and efficient public transit don't mix. Period.