Tax and spend; Americans need (more) help, boost Social Security benefits

2013

Here is what Senator Elizabeth Warren said in a recent speech promoting the idea of raising taxes and Social Security benefits.

“A generation ago, middle-class families were able to put away enough money during their working years to make it through their later years with dignity. On average, they saved about 11% of their take home pay while working. Many paid off their homes, got rid of all their debts, and retired with strong pensions from their employers. And where pensions, savings, and investments fell short, they could rely on Social Security to make up the difference.”

The fact is “strong pensions” were never a source of income for the majority of Americans. (Note 1)

Now let’s look at a generation ago and beyond for Sen Warren. Past generations didn’t have to get rid of their debt because they didn’t use debt, they bought what they could afford without plastic or the home equity ATM. They saved because they had learned their lesson from the Great Depression. They paid off their homes because they lived in their homes for a lifetime not moving every five years to add more square footage or another bathroom or walk-in closet (a what?). Actually they didn’t need more space because they didn’t accumulate more stuff and what they had fit nicely in a normal closet. The house they did own they could afford because their lenders weren’t strong armed by the government to give anyone breathing a mortgage.

They could live on one income with a spouse at home actually raising the children and didn’t have time to blame teachers and institutions for the failure of their children’s education. Children were born to married couples. Along came the sixties and our enlightened liberals convinced women they were not fulfilled in the home, but rather their value was in careers and everything changed. The result is that now women have to work because the generation so drove up the prices of homes they are unaffordable to most single earner homes. The result is the household has been redefined to the point of destruction. According to a Huffington Post blog, “as of 2011, a full 62 percent of women age 20 to 24 who gave birth in the previous 12 months weren’t married, according to the just released Census report,” over 50% of births in the US are to single women. And it gets worse ( Note 2)

And about that 11% saving, prior generations saved first and then figured out what was left to spend. This generation not only does the opposite, but also spends more than it has to spend without debt.

So given what recent generations have done to the family unit, to prudent spending and saving and fiscal priorities, it’s quite clear the top problem we must deal with is raising Social Security benefits by raising taxes on the people who aren’t saving, paying off their mortgages or getting rid of debt. Gee, that all makes sense to me. 😳

The progressive mind is a scary thing. It has the ability to flash right by the causes of a problem while creating a solution for the result in an endless quest to actually solve nothing. You know, like a fifty-year war on poverty. In this case boosting the Social Security benefit by $60 a month wipes out irresponsible behavior for generations to come. These academic types need to get out more, look around and see how people are spending money and setting their fiscal priorities.

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(Note 1) Huffington Post. From 1980 through 2008, the proportion of private wage and salary workers participating in DB pension plans fell from 38 percent to 20 percent (Bureau of Labor Statistics 2008; Department of Labor 2002). Why? Well there are two major reasons; first a myriad of federal laws and regulations and second a changed work environment away from industrial type job for life jobs. More mobile workers benefited less and less from defined benefit benefits based on long periods of service.

(Note 2)
** From 2006-2010 55 percent of women had cohabited by age 25.
** 40 percent of couples living together for the first time got married within three years; that means 60 percent did not.
** Nearly one in five women got pregnant during the first year of living together.
** 23 percent of recent births among women aged 15-44 occurred while living with someone they weren’t married to — up from 14 percent in 2002.

Where did the other 77 percent of the women go when they had their babies? My guess is they went home to their parents, where they likely rely on family to help care for and pay for their children.

AARP bears out my suspicions. Two years ago, it reported that 4.9 million children under 18 in America — 7 percent — live in grandparent-headed households. That was an increase from 4.5 million ten years earlier. At the time, many blamed it on the economy forcing adult children and their families to move home. But 20 percent of those kids — almost a million — had neither parent living in the household and the grandparents were completely responsible for their basic needs.