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The wealth baseline never shifts

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Here’s yet another essay about how Americans have to work longer into old age so that we can “afford” Social Security and Medicare.

When President Franklin D. Roosevelt signed Social Security into law in 1935, the age to qualify for Old-Age, Survivors and Disability Insurance was 65. Back then, most of those at that age were poor and lacked health insurance. And many jobs were more physically demanding. When benefits were first paid in 1940, 46 percent of adult males couldn’t even make it to 65, and for those who did, the average additional life expectancy was less than 13 years. For women, it was not a lot better.

Today many 65-year-olds are healthy enough to live independently, play golf or pickleball daily and travel far and wide. Picture the vigorous contestants, age 60 to 75, on the new television dating show “The Golden Bachelor.” Every contestant older than 70 is retired, as are some as young as 60. “Here’s to Social Security!” one grateful contestant exults. Indeed!

It’s true that people on average are living about seven years longer after age 65 than they did when Social Security was created. That’s a significant difference.

Here’s another significant difference:

Per capita GDP in constant dollars.

1935: $8,313

2022: $65,414

Why is there never even any acknowledgement in these sorts of articles that America is almost unimaginably wealthier than it was when the first national social insurance programs were first created, approximately one Biden unit ago?

I mean you don’t have to go back anywhere close to that far to make this point either: Since the last major tweaking of Social Security during the Reagan presidency, per capita GDP has doubled. It has tripled since the end of the baby boom. How is it that discussions of what we can afford to do for the elderly, the poor, the disabled etc. never take this into account? If your annual income were to suddenly double or triple, which is what we’ve seen happen to the wealth of the nation over the last 40 and 60 years respectively, it would be extremely odd to keep talking about what you could “afford” without taking that into account.

Yes the Social Security and Medicare systems need to be updated to reflect changing demographics, but it’s remarkable the extent to which discussions of what we can afford as a nation never even gesture at this part of the equation.

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