1 00:00:04,840 --> 00:00:08,639 Speaker 1: On this episode of New World, Americans and the elected 2 00:00:08,640 --> 00:00:12,920 Speaker 1: officials who represent them are worried about retirement. Many fear 3 00:00:12,960 --> 00:00:17,960 Speaker 1: a retirement crisis of inadequate savings and incomes as the 4 00:00:18,079 --> 00:00:23,439 Speaker 1: US population ages in the real retirement crisis. While almost 5 00:00:23,480 --> 00:00:26,600 Speaker 1: everything you know about the US retirement system is wrong, 6 00:00:27,040 --> 00:00:32,280 Speaker 1: Andrew Biggs provides economic insights and hard data to explain 7 00:00:32,280 --> 00:00:36,919 Speaker 1: to America's retirement savings situation. He argues the US retirement 8 00:00:36,960 --> 00:00:40,640 Speaker 1: system compares well to those of other developed countries. In fact, 9 00:00:41,120 --> 00:00:45,080 Speaker 1: the typical US senior is among the richest in the world. 10 00:00:45,479 --> 00:00:49,680 Speaker 1: The retirement savings gap is overwhelmingly due to government's not 11 00:00:49,840 --> 00:00:55,200 Speaker 1: funding benefits they promised. I'm really pleased to welcome my guests, 12 00:00:55,480 --> 00:00:59,040 Speaker 1: Andrew Biggs. He is a Senior Fellow at the American 13 00:00:59,160 --> 00:01:04,080 Speaker 1: Enterprise Institute, where he studies social security reform, state and 14 00:01:04,160 --> 00:01:09,000 Speaker 1: local government pensions, and public sector pay and benefits. Before 15 00:01:09,080 --> 00:01:13,080 Speaker 1: joining AI, he was the Principal Deputy Commissioner of the 16 00:01:13,120 --> 00:01:18,600 Speaker 1: Social Security Administration, where he oversaw the Social Security Administration's 17 00:01:18,640 --> 00:01:35,919 Speaker 1: policy research efforts. Andrew, welcome, and thank you for joining 18 00:01:35,920 --> 00:01:36,720 Speaker 1: me on Newtsworld. 19 00:01:37,080 --> 00:01:39,039 Speaker 2: Oh, thank you very much for having me. Happy to 20 00:01:39,040 --> 00:01:39,399 Speaker 2: be here. 21 00:01:40,120 --> 00:01:43,000 Speaker 1: What drew you into what I guess now is over 22 00:01:43,080 --> 00:01:46,080 Speaker 1: twenty years of work on social security? What attracted you 23 00:01:46,600 --> 00:01:47,520 Speaker 1: to taking this on. 24 00:01:48,560 --> 00:01:51,440 Speaker 2: I was out of grad school, I was working in Washington, 25 00:01:51,480 --> 00:01:54,680 Speaker 2: d C. And I started thinking about going back to 26 00:01:54,840 --> 00:01:58,080 Speaker 2: kind of more research or hinted areas. I remember at 27 00:01:58,080 --> 00:01:59,720 Speaker 2: the time people were saying, well, do you want to 28 00:01:59,720 --> 00:02:01,360 Speaker 2: work on taxes or do you want to work on 29 00:02:01,400 --> 00:02:03,920 Speaker 2: social security? And it just struck me. Soci security it 30 00:02:03,920 --> 00:02:06,440 Speaker 2: was some more interesting in the two issues. It lets 31 00:02:06,440 --> 00:02:08,880 Speaker 2: you be a generalist, I mean, just speaking as a researcher. 32 00:02:08,919 --> 00:02:12,120 Speaker 2: It lets you be a generalist while actually having a 33 00:02:12,200 --> 00:02:16,640 Speaker 2: chosen profession. Social scurity is so large. It covers every 34 00:02:16,720 --> 00:02:20,040 Speaker 2: area of government, every part of people's lives, and so 35 00:02:20,160 --> 00:02:22,200 Speaker 2: it just gives you an opportunity to look at a 36 00:02:22,240 --> 00:02:25,760 Speaker 2: whole variety of different areas. And twenty five years later, 37 00:02:25,919 --> 00:02:28,160 Speaker 2: believe it or not, I'm still working on it. It's 38 00:02:28,200 --> 00:02:30,919 Speaker 2: just been a fascinating issue to work on throughout my career. 39 00:02:31,520 --> 00:02:34,680 Speaker 1: When you work on something for a quarter century, I'm curious, 40 00:02:35,080 --> 00:02:38,480 Speaker 1: how have your views changed during that period. 41 00:02:38,840 --> 00:02:42,040 Speaker 2: That's a very good question, I'd say, in two ways. 42 00:02:42,320 --> 00:02:45,320 Speaker 2: On social scarity, specifically, when I came into the issue, 43 00:02:45,360 --> 00:02:48,200 Speaker 2: I was working at the Cato Institute, a very libertarian 44 00:02:48,240 --> 00:02:50,359 Speaker 2: think tank, and that was the time when the sort 45 00:02:50,360 --> 00:02:54,040 Speaker 2: of social security privatization movement was very active, and I 46 00:02:54,120 --> 00:02:56,480 Speaker 2: was active in that, and I think that was a 47 00:02:56,560 --> 00:02:59,200 Speaker 2: very interesting time and it sort of had to play 48 00:02:59,240 --> 00:03:02,919 Speaker 2: out at the same time. When I look back at it, 49 00:03:03,040 --> 00:03:05,960 Speaker 2: I think I worked on the Jorge W. Bush reforms 50 00:03:05,960 --> 00:03:08,160 Speaker 2: in two thousand and five. I think it might have 51 00:03:08,200 --> 00:03:10,160 Speaker 2: been better if we had tried to cut a deal 52 00:03:10,400 --> 00:03:14,200 Speaker 2: then rather than wait, since every day ten thousand baby 53 00:03:14,240 --> 00:03:18,839 Speaker 2: boomers shift from becoming workers paying into the system who 54 00:03:18,840 --> 00:03:22,280 Speaker 2: care about taxes, to beneficiaries collecting from it, who care 55 00:03:22,360 --> 00:03:25,200 Speaker 2: much more about benefits. But over that time I also 56 00:03:25,320 --> 00:03:27,679 Speaker 2: learned a lot more about how well the US retirement 57 00:03:27,720 --> 00:03:30,000 Speaker 2: systems work. If you'd asked me twenty years ago, are 58 00:03:30,040 --> 00:03:32,399 Speaker 2: Americans saving enough for retirement? I would have said no, 59 00:03:32,960 --> 00:03:35,640 Speaker 2: because that's what you read the newspaper all the time. 60 00:03:36,400 --> 00:03:39,280 Speaker 2: Later on, I started getting much more deeply into that issue, 61 00:03:39,320 --> 00:03:42,160 Speaker 2: and you discovered, you know, Americans and the US retirement 62 00:03:42,240 --> 00:03:45,839 Speaker 2: system are really doing very well. That plays into how 63 00:03:45,880 --> 00:03:49,440 Speaker 2: you think about social security reform. If Americans weren't saving 64 00:03:49,520 --> 00:03:52,320 Speaker 2: for retirement on their own, then any cuts to so 65 00:03:52,480 --> 00:03:55,200 Speaker 2: security I think will be hard to justify. But when 66 00:03:55,200 --> 00:03:58,760 Speaker 2: Americans retirement savings are at record levels and poverty and 67 00:03:58,800 --> 00:04:00,920 Speaker 2: old age is at record low, you could start thinking 68 00:04:00,920 --> 00:04:02,720 Speaker 2: about things a little bit differently. 69 00:04:03,000 --> 00:04:06,440 Speaker 1: Given what may be the objective fact. There was a 70 00:04:06,520 --> 00:04:11,280 Speaker 1: survey done in twenty twenty three where eighty nine percent 71 00:04:12,080 --> 00:04:16,120 Speaker 1: of the American people agreed that there is a retirement 72 00:04:16,160 --> 00:04:17,040 Speaker 1: savings crisis. 73 00:04:17,960 --> 00:04:21,080 Speaker 2: The survey data on the so called retirement crisis are 74 00:04:21,160 --> 00:04:25,480 Speaker 2: very interesting. Almost every survey you conduct. If you ask 75 00:04:25,520 --> 00:04:28,680 Speaker 2: Americans is there a retirement crisis, they will say yes, 76 00:04:29,160 --> 00:04:31,599 Speaker 2: and the one you cited is the evidence of that. 77 00:04:32,000 --> 00:04:36,320 Speaker 2: At the same time, if you ask retirees themselves if 78 00:04:36,320 --> 00:04:40,400 Speaker 2: they would describe their own financial situations, is a crisis, 79 00:04:40,800 --> 00:04:43,920 Speaker 2: as a survey by Vanguard did several years ago, only 80 00:04:44,000 --> 00:04:48,200 Speaker 2: four percent of seniors say yes. Similarly, when the Federal 81 00:04:48,200 --> 00:04:51,640 Speaker 2: Reserve asks seniors, are you finding it difficult to get 82 00:04:51,720 --> 00:04:55,600 Speaker 2: by again, it was only about four percent. And today's 83 00:04:55,600 --> 00:04:58,120 Speaker 2: workers are saving much more for retirement than people did 84 00:04:58,120 --> 00:05:00,960 Speaker 2: in the past. That's not equivocal and the data so 85 00:05:01,120 --> 00:05:03,800 Speaker 2: it is really a perception. I had a chapter, you know, 86 00:05:03,920 --> 00:05:07,360 Speaker 2: a retirement crisis for thee but not for me. There's 87 00:05:07,440 --> 00:05:11,280 Speaker 2: a huge split in how Americans view the whole retirement 88 00:05:11,360 --> 00:05:14,800 Speaker 2: system versus how they view their own retirement savings. 89 00:05:15,360 --> 00:05:20,320 Speaker 1: Why then, do you have this split between a general 90 00:05:20,360 --> 00:05:24,160 Speaker 1: sense that it's a huge problem, we probably can't fix it, 91 00:05:24,520 --> 00:05:26,800 Speaker 1: or the political cost of fixing it will be huge, 92 00:05:27,320 --> 00:05:30,400 Speaker 1: versus the individual who's saying, well, you know, I'm actually 93 00:05:30,760 --> 00:05:31,480 Speaker 1: pretty well off. 94 00:05:32,360 --> 00:05:35,560 Speaker 2: Well, there's a substantive reason why people worry about retirement. 95 00:05:35,600 --> 00:05:38,440 Speaker 2: If you're a thirty five year old saying, Okay, I'm 96 00:05:38,440 --> 00:05:41,960 Speaker 2: really kind of getting started now saving for retirement, what 97 00:05:42,040 --> 00:05:44,320 Speaker 2: do I have to think about? Because I want to 98 00:05:44,320 --> 00:05:47,520 Speaker 2: be able to maintain my pre retirement standard living once 99 00:05:47,560 --> 00:05:50,000 Speaker 2: I retire. You have to know, okay, what kind of 100 00:05:50,040 --> 00:05:51,960 Speaker 2: standard of living are I going to have in my fifties. 101 00:05:52,000 --> 00:05:55,080 Speaker 2: That's hard to predict. You have to know the rate 102 00:05:55,120 --> 00:05:57,440 Speaker 2: of return on the investments you're going to make. That's 103 00:05:57,440 --> 00:06:00,320 Speaker 2: hard to predict. You want to know how long you're 104 00:06:00,360 --> 00:06:02,919 Speaker 2: going to live, and that's hard to predict. So you 105 00:06:02,920 --> 00:06:04,760 Speaker 2: have a lot of things that are really very difficult. 106 00:06:04,880 --> 00:06:07,960 Speaker 2: So it's understandable that people are worried about it when 107 00:06:08,000 --> 00:06:10,359 Speaker 2: on top of that, you have I don't want to 108 00:06:10,360 --> 00:06:12,640 Speaker 2: call it a conspiracy, but what I'll say is nobody 109 00:06:12,720 --> 00:06:16,919 Speaker 2: has the incentive to tell Americans the truth, which is 110 00:06:16,920 --> 00:06:19,400 Speaker 2: that our retirement system is working pretty well. You know, 111 00:06:19,480 --> 00:06:21,720 Speaker 2: if you're in the financial industry, you know, what is 112 00:06:21,760 --> 00:06:23,520 Speaker 2: the chance that they are going to tell you you're 113 00:06:23,560 --> 00:06:26,240 Speaker 2: saving too much for retirement. They have a product to 114 00:06:26,279 --> 00:06:29,359 Speaker 2: sell and they want to keep you buying it. Likewise, 115 00:06:29,520 --> 00:06:32,679 Speaker 2: the media, are you going to click on an article 116 00:06:32,839 --> 00:06:35,760 Speaker 2: titled you know, retirement crisis coming? Or are you click? 117 00:06:35,839 --> 00:06:39,320 Speaker 2: Americans doing okay? So they have an incentive. You know, 118 00:06:39,400 --> 00:06:41,520 Speaker 2: they say if it leads, it leads, So they have 119 00:06:41,560 --> 00:06:43,760 Speaker 2: an incentive to gend things up. And finally, in a 120 00:06:43,839 --> 00:06:47,960 Speaker 2: political realm, there are people whose philosophical views and I'll 121 00:06:47,960 --> 00:06:50,880 Speaker 2: call it philosophical views because they're not really based in evidence, 122 00:06:51,200 --> 00:06:55,280 Speaker 2: but they just really doubt that people buy themselves can 123 00:06:55,320 --> 00:06:58,760 Speaker 2: make these sorts of decisions. They don't trust private industry, 124 00:06:59,000 --> 00:07:01,680 Speaker 2: and they would like to see it expanded role for government, 125 00:07:01,800 --> 00:07:05,359 Speaker 2: make social security bigger, and so forth. So once again, 126 00:07:05,640 --> 00:07:07,880 Speaker 2: they're not going to tell you the good news. I 127 00:07:07,880 --> 00:07:10,880 Speaker 2: have no incentive either way, This is purely an academic interest. 128 00:07:11,040 --> 00:07:15,320 Speaker 2: For me, it really is surprising that people who know 129 00:07:15,520 --> 00:07:18,440 Speaker 2: better will still use the scare language to try to 130 00:07:18,520 --> 00:07:19,280 Speaker 2: motivate people. 131 00:07:20,120 --> 00:07:23,240 Speaker 1: In an article you wrote called We're going about Social 132 00:07:23,240 --> 00:07:26,680 Speaker 1: Security Reform the wrong Way, you make a strong case 133 00:07:27,600 --> 00:07:30,040 Speaker 1: that the very language, the very way we talk about 134 00:07:30,040 --> 00:07:33,320 Speaker 1: it makes it hard for us to really work our 135 00:07:33,320 --> 00:07:35,960 Speaker 1: way through what we need to be doing. Could you 136 00:07:36,040 --> 00:07:36,760 Speaker 1: expand on that. 137 00:07:37,600 --> 00:07:41,040 Speaker 2: Well, when you think about, say social security policy, think 138 00:07:41,040 --> 00:07:44,640 Speaker 2: about almost any other thing the government does, many other 139 00:07:44,720 --> 00:07:46,880 Speaker 2: policy issues. What you want to say is how do 140 00:07:46,960 --> 00:07:50,920 Speaker 2: we make this government policy or government program work better 141 00:07:51,080 --> 00:07:53,880 Speaker 2: at lower costs. So you're thinking about how the program works. 142 00:07:54,360 --> 00:07:57,920 Speaker 2: With social security policy, you're thinking almost entirely about the 143 00:07:58,080 --> 00:08:01,840 Speaker 2: solvency of the Social Security prom And people are choosing 144 00:08:01,840 --> 00:08:04,280 Speaker 2: from a list of items. We can raise the retirement age, 145 00:08:04,320 --> 00:08:07,200 Speaker 2: we can reduce costs to living adjustments, we can increase 146 00:08:07,240 --> 00:08:10,920 Speaker 2: the payroll tax, we can reduce benefits. And they're piecing 147 00:08:11,000 --> 00:08:14,720 Speaker 2: these pieces of a puzzle together in such a way 148 00:08:14,760 --> 00:08:17,840 Speaker 2: that they hope they get to seventy five here actual 149 00:08:18,000 --> 00:08:20,800 Speaker 2: heal balance or whatever measure they're trying to get to. 150 00:08:21,240 --> 00:08:23,320 Speaker 2: And I argue that's just the wrong way to think 151 00:08:23,360 --> 00:08:27,240 Speaker 2: about it. It's unproductive because it assumes that the social 152 00:08:27,240 --> 00:08:31,200 Speaker 2: security program is working perfectly, with the one exception that 153 00:08:31,360 --> 00:08:34,240 Speaker 2: it is out of financial balance. But what are the 154 00:08:34,320 --> 00:08:38,280 Speaker 2: chances that a program that was devised in nineteen thirty five, 155 00:08:39,080 --> 00:08:42,040 Speaker 2: when literally fifty percent of seniors we're living in poverty 156 00:08:42,480 --> 00:08:47,160 Speaker 2: is the right structure for a program for twenty thirty 157 00:08:47,200 --> 00:08:50,520 Speaker 2: five and beyond when not fifty percent of seniors are 158 00:08:50,559 --> 00:08:52,760 Speaker 2: in poverty but six and a half percent, when we 159 00:08:52,880 --> 00:08:55,280 Speaker 2: have four to one case, we have the Internet, we 160 00:08:55,360 --> 00:08:59,280 Speaker 2: have all these innovations. If you were inventing social security today, 161 00:08:59,280 --> 00:09:02,360 Speaker 2: you would think about it much differently. So, coming out 162 00:09:02,360 --> 00:09:05,720 Speaker 2: of the failure of the attempted Bush Social Secure reforms 163 00:09:05,720 --> 00:09:08,160 Speaker 2: in two thousand and five, I really thought it was 164 00:09:08,280 --> 00:09:10,800 Speaker 2: worthwhile to go at SOI Secure reform from a blank 165 00:09:10,880 --> 00:09:13,320 Speaker 2: slate approach and say, what would be the kind of 166 00:09:13,400 --> 00:09:17,160 Speaker 2: program we would devise for somebody who's entering the workforce today, 167 00:09:17,200 --> 00:09:20,520 Speaker 2: who might retire forty years later. What would that program 168 00:09:20,600 --> 00:09:23,600 Speaker 2: look like? And so what we should think about that is, Okay, 169 00:09:23,600 --> 00:09:26,520 Speaker 2: how do we get from here to there? Not how 170 00:09:26,520 --> 00:09:29,600 Speaker 2: do we patch together this system which is underfunded by 171 00:09:29,600 --> 00:09:32,559 Speaker 2: twenty six trillion dollars. Now, obviously we have to fix 172 00:09:32,600 --> 00:09:37,200 Speaker 2: the solvency issue, but thinking more broadly about the Social 173 00:09:37,200 --> 00:09:40,600 Speaker 2: Security program, what we need for what it does, opens 174 00:09:40,679 --> 00:09:44,840 Speaker 2: up opportunities. Just as an example, a high income couple 175 00:09:45,000 --> 00:09:48,440 Speaker 2: retiring today can receive almost one hundred thousand dollars in 176 00:09:48,480 --> 00:09:53,160 Speaker 2: Social security benefits. That's two to three times higher than 177 00:09:53,200 --> 00:09:55,720 Speaker 2: what they would receive if they were in Canada or 178 00:09:55,760 --> 00:09:59,559 Speaker 2: the UK, or Australia or New Zealand. Nobody would invent 179 00:09:59,600 --> 00:10:02,080 Speaker 2: a pro today that pays one hundred thousand dollars a 180 00:10:02,120 --> 00:10:04,120 Speaker 2: year at high income retire is they can just save 181 00:10:04,200 --> 00:10:07,720 Speaker 2: more on their own. But by the creep of the program, 182 00:10:07,760 --> 00:10:10,199 Speaker 2: where it's all on an autopilot, we're not thinking about it. 183 00:10:10,320 --> 00:10:13,240 Speaker 2: That's where we got So what we should be thinking 184 00:10:13,240 --> 00:10:15,240 Speaker 2: about is not simply what do we have to do 185 00:10:15,320 --> 00:10:18,280 Speaker 2: to people's benefits to make the system solving? But should 186 00:10:18,280 --> 00:10:20,360 Speaker 2: we be paying that kind of money to people who 187 00:10:20,400 --> 00:10:22,559 Speaker 2: clearly don't need it. It doesn't mean slashing that of 188 00:10:22,600 --> 00:10:25,160 Speaker 2: it's today. It just means looking over the long term, 189 00:10:25,400 --> 00:10:28,280 Speaker 2: do we want to refocus this program in a different way. 190 00:10:28,720 --> 00:10:32,760 Speaker 2: So it's thinking beyond this solvency box and just treating 191 00:10:32,800 --> 00:10:35,760 Speaker 2: social security as any other program. We want it to work, 192 00:10:36,040 --> 00:10:38,920 Speaker 2: we don't want to have it with excessive costs. 193 00:10:39,280 --> 00:10:44,679 Speaker 1: Wouldn't anything like that lead to almost automatic attack by 194 00:10:44,720 --> 00:10:47,080 Speaker 1: AARP unquestionable. 195 00:10:47,400 --> 00:10:50,640 Speaker 2: One thing I remember back from the two thousand and 196 00:10:50,640 --> 00:10:53,079 Speaker 2: five experience in the Bush White House, I remember talking 197 00:10:53,120 --> 00:10:57,560 Speaker 2: to somebody about the legislative strategy for Social Security Reform, 198 00:10:57,640 --> 00:10:59,720 Speaker 2: which at the time I was very much a numbers 199 00:10:59,720 --> 00:11:02,360 Speaker 2: crime so I was not in charge of that, but 200 00:11:02,480 --> 00:11:05,400 Speaker 2: at the time AARP was the eight hundred pound gorilla. 201 00:11:05,840 --> 00:11:08,120 Speaker 2: And what I suggested to them is you either have 202 00:11:08,320 --> 00:11:12,000 Speaker 2: to beat AARP, debate them and defeat them, or you 203 00:11:12,000 --> 00:11:13,920 Speaker 2: have to figure out what kind of deal you have 204 00:11:14,040 --> 00:11:16,120 Speaker 2: to make with them in order to get something to pass. 205 00:11:16,720 --> 00:11:19,680 Speaker 2: And the Bush strategy just did neither of those things. 206 00:11:19,720 --> 00:11:21,440 Speaker 2: I think that was part of the failure. You just 207 00:11:21,440 --> 00:11:24,200 Speaker 2: had to decide what you were going to do. In 208 00:11:24,240 --> 00:11:26,720 Speaker 2: literally anything you do on this you are going to 209 00:11:26,720 --> 00:11:29,600 Speaker 2: be open to attack. You know, even if you cut 210 00:11:29,600 --> 00:11:33,439 Speaker 2: benefits by a penny for the highest income retire ARP 211 00:11:33,600 --> 00:11:35,000 Speaker 2: is going to say something. You know, they are the 212 00:11:35,120 --> 00:11:38,000 Speaker 2: union for old people. You just have to be open 213 00:11:38,080 --> 00:11:42,840 Speaker 2: to that. The only way you can avoid criticism by 214 00:11:43,559 --> 00:11:46,000 Speaker 2: ARP and groups twitched to us are well to the 215 00:11:46,080 --> 00:11:48,840 Speaker 2: left of ARP and social security would be simply to 216 00:11:48,840 --> 00:11:52,160 Speaker 2: surrender to them. So I think the key component for 217 00:11:52,360 --> 00:11:54,840 Speaker 2: me in the book is that when we think about 218 00:11:54,920 --> 00:11:57,680 Speaker 2: social security, we need to speak to Americans in English, 219 00:11:57,920 --> 00:12:02,080 Speaker 2: not in sort of actual al numbers. It's very tempting 220 00:12:02,120 --> 00:12:05,160 Speaker 2: to just jump into how the social security benefit formula 221 00:12:05,280 --> 00:12:07,360 Speaker 2: works and things like that. We just have to think 222 00:12:07,400 --> 00:12:10,040 Speaker 2: conceptually about what we want to do. And you know, 223 00:12:10,080 --> 00:12:13,000 Speaker 2: it's very easy to say we should have some minimum 224 00:12:13,000 --> 00:12:16,160 Speaker 2: benefit to keep retirees out of poverty. You know, we're 225 00:12:16,200 --> 00:12:18,960 Speaker 2: a rich country. There's not very many poor retirees. That's 226 00:12:19,000 --> 00:12:22,520 Speaker 2: something we can do to give people confidence to make 227 00:12:22,559 --> 00:12:25,560 Speaker 2: the sacrifices that are involved with reform social scurity, say 228 00:12:25,600 --> 00:12:28,440 Speaker 2: doesn't have a minimum benefit. On the other hand, it 229 00:12:28,480 --> 00:12:30,839 Speaker 2: doesn't really make sense to be paying on hundred thousand 230 00:12:30,880 --> 00:12:33,400 Speaker 2: dollars a year to two high income retirees. You know, 231 00:12:33,480 --> 00:12:36,040 Speaker 2: nobody else does that. There's no policy purpose for it. 232 00:12:36,559 --> 00:12:40,880 Speaker 2: That's speaking in English. Often discussions about social security are 233 00:12:41,040 --> 00:12:44,680 Speaker 2: just in this actuarial mumbo jumbo of the Bend points 234 00:12:44,679 --> 00:12:48,920 Speaker 2: to the benefit formulas or the CPI W versus chain CPI, 235 00:12:49,200 --> 00:12:51,640 Speaker 2: things that just don't make any sense to people. It 236 00:12:51,679 --> 00:12:54,480 Speaker 2: doesn't mean we lie to people. It means you convert 237 00:12:54,520 --> 00:12:57,560 Speaker 2: it to English to terms they can understand, and I 238 00:12:57,559 --> 00:12:59,480 Speaker 2: think that makes for a more compelling argument. 239 00:13:16,480 --> 00:13:19,360 Speaker 1: Let's say we do nothing. At what point is there 240 00:13:19,400 --> 00:13:20,079 Speaker 1: a crisis? 241 00:13:20,800 --> 00:13:24,199 Speaker 2: Well, right now, the Social Care Trust Fund is projected 242 00:13:24,200 --> 00:13:26,680 Speaker 2: to run out in the year twenty thirty two. In 243 00:13:26,800 --> 00:13:30,400 Speaker 2: last year, Social Caurity Trustees report they predicted it would 244 00:13:30,440 --> 00:13:33,480 Speaker 2: last until twenty thirty four. But Congress actually passed two 245 00:13:33,559 --> 00:13:37,040 Speaker 2: bills this past year which made the insolvency happen sooner, 246 00:13:37,440 --> 00:13:40,240 Speaker 2: which is the opposite of what we'd want. But in 247 00:13:40,280 --> 00:13:43,040 Speaker 2: twenty thirty two, when the trust fund runs out, Social 248 00:13:43,120 --> 00:13:45,880 Speaker 2: Carey is still collecting a lot of money, over trillion 249 00:13:45,920 --> 00:13:48,800 Speaker 2: dollars a year in taxes. So the trust fund running 250 00:13:48,800 --> 00:13:51,160 Speaker 2: out does not mean your benefits are zero it out, 251 00:13:51,559 --> 00:13:55,040 Speaker 2: but under law it means the program could only pay 252 00:13:55,080 --> 00:13:58,600 Speaker 2: out benefits equal to what it collects in taxes. That 253 00:13:58,640 --> 00:14:02,640 Speaker 2: would mean that benefits to drop by around twenty four percent. Now, 254 00:14:02,679 --> 00:14:05,520 Speaker 2: it doesn't mean necessarily you'd have to have an across 255 00:14:05,559 --> 00:14:08,200 Speaker 2: the board benefit cut of twenty four percent. A lot 256 00:14:08,240 --> 00:14:10,760 Speaker 2: of people think that, and that would throw millions of 257 00:14:10,800 --> 00:14:13,800 Speaker 2: seniors into poverty. I think the president or the administration 258 00:14:13,800 --> 00:14:16,760 Speaker 2: of the time would have some discretion, but the default 259 00:14:16,840 --> 00:14:19,400 Speaker 2: position in when the trust fund runs out is you 260 00:14:19,440 --> 00:14:23,040 Speaker 2: cut benefits. Now, I don't think that's going to happen, 261 00:14:23,600 --> 00:14:27,400 Speaker 2: but to avoid cutting benefits, if Congress says we just 262 00:14:27,520 --> 00:14:31,160 Speaker 2: want to keep paying full benefits for everybody, and we're 263 00:14:31,200 --> 00:14:34,280 Speaker 2: to raise taxes to do it, that would be the 264 00:14:34,440 --> 00:14:37,960 Speaker 2: largest peacetime tax increase in US history, about one and 265 00:14:37,960 --> 00:14:41,760 Speaker 2: a half percent of GDP. Alternately, you know, nobody likes 266 00:14:41,800 --> 00:14:45,040 Speaker 2: to raise taxes, so ultimately they could just borrow the money. 267 00:14:45,080 --> 00:14:47,320 Speaker 2: But when we think about the size of the debt, 268 00:14:47,520 --> 00:14:50,560 Speaker 2: and when you think of the dynamics of financial markets, 269 00:14:51,160 --> 00:14:55,160 Speaker 2: you can borrow until financial markets lose confidence in your 270 00:14:55,200 --> 00:14:57,760 Speaker 2: ability to repay. It could be any sort of trigger 271 00:14:57,800 --> 00:15:01,400 Speaker 2: event which causes that loss of confidence. Personally, think the 272 00:15:01,440 --> 00:15:05,960 Speaker 2: federal government announcing as policy that our strategy for funding 273 00:15:06,000 --> 00:15:09,680 Speaker 2: our biggest programs to borrow money we can't possibly repay 274 00:15:10,000 --> 00:15:12,920 Speaker 2: might be the trigger. So we face a number of 275 00:15:13,280 --> 00:15:17,960 Speaker 2: very unpleasant choices, and the habit, the pattern for most 276 00:15:18,000 --> 00:15:20,800 Speaker 2: of the past forty years has been simply to cover 277 00:15:20,880 --> 00:15:23,280 Speaker 2: our ears, cover our eyes, and kick the can down 278 00:15:23,320 --> 00:15:25,760 Speaker 2: for the next congress. But we're running out of time 279 00:15:25,800 --> 00:15:26,120 Speaker 2: to do that. 280 00:15:26,920 --> 00:15:31,280 Speaker 1: The nature of polemics is to avoid anything painful for 281 00:15:31,320 --> 00:15:35,240 Speaker 1: as long as possible. So I'm hearing you say that 282 00:15:37,080 --> 00:15:39,960 Speaker 1: probably not in twenty eight, but certainly by thirty two, 283 00:15:40,240 --> 00:15:43,840 Speaker 1: the presidential campaign may well be centered around this question. 284 00:15:44,800 --> 00:15:48,040 Speaker 2: I think so young. Even for now, President Trump will 285 00:15:48,080 --> 00:15:51,840 Speaker 2: be out of office before this insolvency happens. So again, 286 00:15:51,880 --> 00:15:54,720 Speaker 2: the incentives are just not to focus on it. But 287 00:15:54,880 --> 00:15:58,880 Speaker 2: you're having the senators who will be elected this year 288 00:15:59,000 --> 00:16:01,160 Speaker 2: who will be in off us in twenty thirty two 289 00:16:01,160 --> 00:16:04,320 Speaker 2: because they have sixty year terms. So it is starting 290 00:16:04,360 --> 00:16:07,960 Speaker 2: to become a more salient issue. And the question, though, 291 00:16:08,040 --> 00:16:11,840 Speaker 2: is how our political process handles this. The difficulty we 292 00:16:11,920 --> 00:16:14,960 Speaker 2: face on sol scary form or any large issue is 293 00:16:14,960 --> 00:16:18,320 Speaker 2: a number of hurdles you have to come over to 294 00:16:18,400 --> 00:16:20,880 Speaker 2: make anything pass into law. You have to get it 295 00:16:20,920 --> 00:16:23,320 Speaker 2: through the House, which means the majority. Then you have 296 00:16:23,400 --> 00:16:25,720 Speaker 2: to get sixty votes in the Senate. Then you have 297 00:16:25,760 --> 00:16:28,880 Speaker 2: to hope the President signs it, and then most likely 298 00:16:28,920 --> 00:16:30,960 Speaker 2: somehow it ends up in the Supreme Court, it's just 299 00:16:31,000 --> 00:16:34,960 Speaker 2: a very high hurdle to overcome. In other countries with 300 00:16:35,000 --> 00:16:37,720 Speaker 2: parliamentary systems, you know, it's a simple majority, and they've 301 00:16:37,760 --> 00:16:41,000 Speaker 2: been able to reform their systems much better than we have. 302 00:16:41,880 --> 00:16:45,360 Speaker 2: With the exception of France, most countries have reformed their pensions, 303 00:16:45,360 --> 00:16:48,160 Speaker 2: you know, in the past couple of decades. So we 304 00:16:48,280 --> 00:16:49,840 Speaker 2: really face a challenge. 305 00:16:50,400 --> 00:16:55,120 Speaker 1: Are there particularly successful structural reforms that you think we 306 00:16:55,160 --> 00:16:59,560 Speaker 1: should look at and begin to think about this conversation. 307 00:16:59,560 --> 00:17:03,000 Speaker 2: In the look the real retirement crisis. When I look 308 00:17:03,040 --> 00:17:06,000 Speaker 2: at other countries, I try to say, what do other 309 00:17:06,080 --> 00:17:09,679 Speaker 2: countries who are like the US do with pensions? You 310 00:17:09,680 --> 00:17:12,240 Speaker 2: could look at what is happening in France or Lichtenstein, 311 00:17:12,320 --> 00:17:14,480 Speaker 2: but where they're just very different countries from the US. 312 00:17:14,920 --> 00:17:16,840 Speaker 2: What I think of countries that are similar, I think 313 00:17:16,840 --> 00:17:21,200 Speaker 2: of certain Anglo countries like Canada, the United Kingdom, Australia, 314 00:17:21,200 --> 00:17:24,479 Speaker 2: and New Zealand. They're by and large free market, limited 315 00:17:24,520 --> 00:17:29,000 Speaker 2: government countries. The interesting thing is our social security program 316 00:17:29,119 --> 00:17:34,080 Speaker 2: is very different from theirs. They focus much more of 317 00:17:34,119 --> 00:17:38,120 Speaker 2: their resources on preventing poverty in old age and much 318 00:17:38,280 --> 00:17:42,240 Speaker 2: less on essentially running a pension system. For upper middle 319 00:17:42,240 --> 00:17:45,000 Speaker 2: class people. You know the example I use. You know, 320 00:17:45,040 --> 00:17:47,440 Speaker 2: if you have a high income couple today retiring under 321 00:17:47,480 --> 00:17:50,520 Speaker 2: Social Security, they could get somewhere on ninety six thousand 322 00:17:50,560 --> 00:17:53,960 Speaker 2: dollars per year in benefits. If that same couple were 323 00:17:54,000 --> 00:17:57,200 Speaker 2: retiring in Canada, they get less than thirty thousand dollars 324 00:17:57,240 --> 00:18:01,480 Speaker 2: a year in benefits. Now, rich Canadians are not starving 325 00:18:01,880 --> 00:18:04,840 Speaker 2: in retirement in Canada, they're just saving more on their own. 326 00:18:05,200 --> 00:18:06,679 Speaker 2: You know, if you were in the UK, or if 327 00:18:06,720 --> 00:18:09,240 Speaker 2: you're in Australia and New Zealand, the benefits are more 328 00:18:09,240 --> 00:18:11,560 Speaker 2: generous at the bottom, but they are capped at a 329 00:18:11,640 --> 00:18:15,320 Speaker 2: much lower level. And what that means essentially is you know, 330 00:18:15,320 --> 00:18:18,120 Speaker 2: people say, well, that turns social Security into a welfare program. Well, 331 00:18:18,240 --> 00:18:21,720 Speaker 2: government is good at running welfare programs. Government is terrible 332 00:18:21,800 --> 00:18:25,280 Speaker 2: at running pension systems. If you look around the world, 333 00:18:25,359 --> 00:18:29,600 Speaker 2: the sort of retirement savings gaps that people reference are 334 00:18:29,640 --> 00:18:33,320 Speaker 2: almost entirely a function of governments failing to fund the 335 00:18:33,359 --> 00:18:36,880 Speaker 2: benefits that they've promised. They run these programs, we owe 336 00:18:36,920 --> 00:18:39,920 Speaker 2: trillion dollars in money, but we put nothing aside for it. 337 00:18:40,359 --> 00:18:43,399 Speaker 2: So government is good at running safety nets. And you 338 00:18:43,480 --> 00:18:47,320 Speaker 2: know every developed country has a safety net. It's terrible 339 00:18:47,400 --> 00:18:49,919 Speaker 2: at saving for the future. So what we should do 340 00:18:49,960 --> 00:18:53,440 Speaker 2: is simply expand for one k's and other retirement savings 341 00:18:53,480 --> 00:18:57,720 Speaker 2: program To expand retirement savings on top of social security 342 00:18:57,920 --> 00:19:02,240 Speaker 2: will refocusing social security more on its role as a 343 00:19:02,240 --> 00:19:06,120 Speaker 2: safety program and less as an upper middle class entitlement. 344 00:19:06,600 --> 00:19:09,919 Speaker 2: That's how other countries do this, and there's different formulas. 345 00:19:09,960 --> 00:19:14,280 Speaker 2: For Australia as a means tested minimum benefit with universal 346 00:19:14,320 --> 00:19:18,440 Speaker 2: fore and ks. New Zealand has a universal benefit, everybody 347 00:19:18,440 --> 00:19:20,760 Speaker 2: gets it. It's not means tested, and if you want 348 00:19:20,800 --> 00:19:23,040 Speaker 2: to save on top of that, it's voluntary. So there's 349 00:19:23,080 --> 00:19:26,960 Speaker 2: different flavors of doing it, but the key is simply 350 00:19:27,040 --> 00:19:31,160 Speaker 2: focus your resources where they're needed. Government shouldn't do things 351 00:19:31,240 --> 00:19:35,240 Speaker 2: that people could would and should do on their own. America, 352 00:19:35,280 --> 00:19:38,440 Speaker 2: they're amply able to save for retirement on their own. 353 00:19:38,480 --> 00:19:41,600 Speaker 2: Savings have never been higher, so let's focus more on 354 00:19:41,640 --> 00:19:45,159 Speaker 2: expanding that and refocus social security on its core mission. 355 00:19:45,800 --> 00:19:50,320 Speaker 1: In the current debate about COVID subsidies for health insurance, 356 00:19:50,880 --> 00:19:54,359 Speaker 1: I think we currently subsidize up to nine hundred percent 357 00:19:54,400 --> 00:19:55,120 Speaker 1: above poverty. 358 00:19:55,720 --> 00:19:57,560 Speaker 2: At that point, it's not a poverty program. 359 00:19:57,920 --> 00:20:02,119 Speaker 1: The bold proposal is to reduce that to seven percent 360 00:20:02,760 --> 00:20:07,040 Speaker 1: above poverty. In some ways, we've become addicted to upper 361 00:20:07,040 --> 00:20:11,600 Speaker 1: middle class subsidies by the government, which are in a 362 00:20:11,680 --> 00:20:13,959 Speaker 1: sense paid for by the very people who will get 363 00:20:14,000 --> 00:20:14,680 Speaker 1: into subsidy. 364 00:20:15,200 --> 00:20:17,280 Speaker 2: You know, you higher taxes on rich people to have 365 00:20:17,400 --> 00:20:21,600 Speaker 2: higher Social Security benefits to rich people. It's very inexpensive 366 00:20:21,680 --> 00:20:25,359 Speaker 2: to protect low income people via Social Security form. You know, 367 00:20:25,400 --> 00:20:28,760 Speaker 2: if you google Social Security form, everything will be about 368 00:20:29,040 --> 00:20:32,600 Speaker 2: anti poverty or safety net or things like that. We 369 00:20:32,680 --> 00:20:36,679 Speaker 2: could give every senior a social scarity benefit set at 370 00:20:36,680 --> 00:20:40,280 Speaker 2: the poverty line, so that literally no one has a 371 00:20:40,320 --> 00:20:43,480 Speaker 2: sub poverty level income taking poverty zero. That would cost 372 00:20:43,480 --> 00:20:45,720 Speaker 2: about half as much as we're currently paying on the 373 00:20:45,760 --> 00:20:50,119 Speaker 2: Social Security program. Although all the language the discussion is 374 00:20:50,119 --> 00:20:53,400 Speaker 2: about the safety net, all the money is actually for 375 00:20:53,600 --> 00:20:56,800 Speaker 2: middle class, upper middle class people. If you're just a 376 00:20:56,920 --> 00:21:00,920 Speaker 2: middle income couple retiring today at the retirement ages now 377 00:21:00,960 --> 00:21:03,960 Speaker 2: sixty seven, you would get around fifty eight thousand dollars 378 00:21:04,000 --> 00:21:07,560 Speaker 2: in Social Security benefits for a safety debt program. That's 379 00:21:07,720 --> 00:21:11,760 Speaker 2: three times the poverty threshold before you've touched a penny 380 00:21:11,800 --> 00:21:15,320 Speaker 2: of your own savings, which are at record levels. So 381 00:21:15,520 --> 00:21:18,320 Speaker 2: it's one of these things where the rhetoric just doesn't 382 00:21:18,359 --> 00:21:20,520 Speaker 2: match the reality of where the money is going. 383 00:21:21,000 --> 00:21:24,200 Speaker 1: How deep do you think, How intense do you think 384 00:21:24,320 --> 00:21:26,919 Speaker 1: the pushback would be if you tried to go to 385 00:21:26,960 --> 00:21:27,879 Speaker 1: that kind of program? 386 00:21:28,400 --> 00:21:31,639 Speaker 2: Oh, I think it would be intense. Where I think 387 00:21:32,000 --> 00:21:36,720 Speaker 2: there is some avenue for progress is this. If you 388 00:21:36,840 --> 00:21:40,120 Speaker 2: ask progressives what would you do to fix Social Security? 389 00:21:40,520 --> 00:21:45,000 Speaker 2: Almost universally they'll say, we should lift the cap on 390 00:21:45,080 --> 00:21:48,520 Speaker 2: earrings subject to the Social Security payroll tax. This year 391 00:21:48,600 --> 00:21:51,439 Speaker 2: you're taxed up to one hundred and seventy six thousand dollars. 392 00:21:51,640 --> 00:21:54,840 Speaker 2: You earn benefits on that same kind of cap earrings. 393 00:21:55,400 --> 00:21:58,480 Speaker 2: Anything above that you neither are tax nor your own benefits. 394 00:21:58,480 --> 00:22:01,520 Speaker 2: And so they say, let's eliminate that. There's a variety 395 00:22:01,520 --> 00:22:04,920 Speaker 2: of proposals to either do it immediately or phase it out. Now, 396 00:22:04,920 --> 00:22:08,399 Speaker 2: that's again the largest peace time tax increase in history, folks, 397 00:22:08,440 --> 00:22:11,200 Speaker 2: and a very small number of people. And you say, well, 398 00:22:11,240 --> 00:22:14,080 Speaker 2: why would progressives be willing to combine on that? Isn't 399 00:22:14,119 --> 00:22:18,160 Speaker 2: this what they want? The issue is that every other 400 00:22:18,240 --> 00:22:22,760 Speaker 2: progressive priority depends on that very same money. Probably the 401 00:22:22,800 --> 00:22:27,000 Speaker 2: best argument I can think of from a conservative standpoint 402 00:22:27,040 --> 00:22:30,479 Speaker 2: or fiscal conservative standpoint of fixing so scare a boy 403 00:22:30,560 --> 00:22:32,800 Speaker 2: raising taxes and the rich. At that point, the rich 404 00:22:32,840 --> 00:22:36,399 Speaker 2: people are tapped out. You're not going to have green 405 00:22:36,480 --> 00:22:38,520 Speaker 2: new deal, you're not going to have Medicare for all, 406 00:22:38,560 --> 00:22:40,440 Speaker 2: You're not going to have all these other things that 407 00:22:40,480 --> 00:22:43,800 Speaker 2: the progressives want, simply because they've decided to use all 408 00:22:43,840 --> 00:22:46,600 Speaker 2: that money to pay higher social security benefits to rich people. 409 00:22:47,160 --> 00:22:49,560 Speaker 2: When you talk to progressives, they kind of get this. 410 00:22:50,119 --> 00:22:54,480 Speaker 2: It's a standard thing in politics or public policy that 411 00:22:55,000 --> 00:22:57,480 Speaker 2: every person work in their area thinks all that extra 412 00:22:57,520 --> 00:23:00,480 Speaker 2: money is going to go to their priority. There's somebody 413 00:23:00,520 --> 00:23:02,520 Speaker 2: next door at the thing tank it works in some 414 00:23:02,560 --> 00:23:04,399 Speaker 2: other issue thinks they're going to get the money. Well, 415 00:23:04,400 --> 00:23:06,119 Speaker 2: they're not all going to get the money. There's an 416 00:23:06,160 --> 00:23:09,840 Speaker 2: opportunity cost, even for progressives on this. And I've noticed this, 417 00:23:10,400 --> 00:23:12,639 Speaker 2: you know, as I've been talking about these issues over 418 00:23:12,680 --> 00:23:16,440 Speaker 2: the years, Not just conservatives I talked to, but progressive 419 00:23:16,520 --> 00:23:18,600 Speaker 2: policy people are like, yeah, you kind of have a point. 420 00:23:19,359 --> 00:23:22,760 Speaker 2: Anything on this would be very very hard politically, and 421 00:23:22,880 --> 00:23:25,040 Speaker 2: so it's how do you manage the process. I honestly 422 00:23:25,080 --> 00:23:28,000 Speaker 2: don't think what you'd call the regular order can handle this. 423 00:23:28,400 --> 00:23:32,719 Speaker 2: I think you need some sort of commission or extrajudicial 424 00:23:32,760 --> 00:23:35,159 Speaker 2: process or political process. Just can't do this. 425 00:23:52,520 --> 00:23:56,159 Speaker 1: Peter Drucker used to say that if you weren't already 426 00:23:56,200 --> 00:24:00,439 Speaker 1: doing something, would you start? And if the is no, 427 00:24:00,560 --> 00:24:02,840 Speaker 1: why are you still doing it? If you had a 428 00:24:02,840 --> 00:24:07,320 Speaker 1: blank slate today, given how the world has evolved, and 429 00:24:07,359 --> 00:24:12,320 Speaker 1: you could design the optimum lifetime retirement program, what would 430 00:24:12,320 --> 00:24:12,800 Speaker 1: it look like? 431 00:24:14,040 --> 00:24:16,160 Speaker 2: I think I've do two things. I mean, the only 432 00:24:16,240 --> 00:24:18,840 Speaker 2: reason we are going to pay one hundred thousand dollars 433 00:24:18,880 --> 00:24:21,000 Speaker 2: in benefits so high in a couple next year is 434 00:24:21,000 --> 00:24:23,880 Speaker 2: we're doing that this year. Nobody would invent that from 435 00:24:23,880 --> 00:24:26,800 Speaker 2: a scratch. And so in the book, I go through 436 00:24:26,840 --> 00:24:29,520 Speaker 2: this thought exercise of you know, if I were inventing 437 00:24:29,520 --> 00:24:32,800 Speaker 2: Social Security from a blank slate, what would it look like? 438 00:24:33,359 --> 00:24:36,880 Speaker 2: You can't reinvent the program for people retiring today, they've 439 00:24:36,880 --> 00:24:39,760 Speaker 2: paid their taxes, they've made their plans. But for somebody's 440 00:24:39,760 --> 00:24:42,680 Speaker 2: just entering the workforce today, they haven't paid anything into 441 00:24:42,680 --> 00:24:45,119 Speaker 2: the system, they're not owed anything. So for them, we 442 00:24:45,160 --> 00:24:47,800 Speaker 2: can do whatever we want. And then you sort of 443 00:24:47,840 --> 00:24:50,600 Speaker 2: phase into it. But the idea is you would want 444 00:24:50,640 --> 00:24:53,639 Speaker 2: to have a strong minimum benefit so that people are 445 00:24:53,680 --> 00:24:55,600 Speaker 2: not going to retire into poverty. I mean, we are 446 00:24:55,640 --> 00:24:57,679 Speaker 2: the richest country in the world, with the richest seniors 447 00:24:57,720 --> 00:25:00,399 Speaker 2: in the world. It's not too much to ask to 448 00:25:00,480 --> 00:25:03,040 Speaker 2: prevent poverty in old age. So you would have some 449 00:25:03,119 --> 00:25:07,080 Speaker 2: sort of universal benefit set at the poverty threshold that 450 00:25:07,280 --> 00:25:11,320 Speaker 2: just guarantees against that people can go their working lives 451 00:25:11,520 --> 00:25:15,560 Speaker 2: knowing with certainty they will not retire into poverty. That's 452 00:25:15,560 --> 00:25:18,880 Speaker 2: something government is good at. For retirement income on top 453 00:25:19,000 --> 00:25:21,200 Speaker 2: of that, which is not anti poverty, but it's more 454 00:25:21,240 --> 00:25:25,439 Speaker 2: sort of income replacement to maintain your pre retirement standard living. 455 00:25:25,880 --> 00:25:28,960 Speaker 2: That's where personal savings come in. So I think that 456 00:25:29,200 --> 00:25:32,560 Speaker 2: everybody should be offered a retirement plan at work, meaning 457 00:25:32,600 --> 00:25:35,000 Speaker 2: you know, four to oh one K or similar. Everybody 458 00:25:35,040 --> 00:25:37,879 Speaker 2: should be enrolled in that plan. That This could be 459 00:25:37,960 --> 00:25:40,760 Speaker 2: what people call automatic enrollment where you have the chance 460 00:25:40,800 --> 00:25:43,199 Speaker 2: to pull out, which is sort of what you have 461 00:25:43,359 --> 00:25:46,000 Speaker 2: in the UK or New Zealand, or it could be 462 00:25:46,119 --> 00:25:49,240 Speaker 2: mandatory enrollment, which is what you have in Australia. And 463 00:25:49,240 --> 00:25:52,520 Speaker 2: there's pros and cons to each. Compared to something like 464 00:25:52,560 --> 00:25:56,080 Speaker 2: fixing medicare, this is really a very easy problem to solve. 465 00:25:56,560 --> 00:25:57,560 Speaker 2: It's just common sense. 466 00:25:58,680 --> 00:26:02,040 Speaker 1: Aren't there a couple of programs ms like in Britain 467 00:26:02,080 --> 00:26:05,560 Speaker 1: where at birth you get an initial grant of money 468 00:26:06,240 --> 00:26:07,960 Speaker 1: that's in a savings account. 469 00:26:08,520 --> 00:26:11,760 Speaker 2: That's similar to what they're calling now the Trump accounts. 470 00:26:12,119 --> 00:26:16,480 Speaker 2: I have mixed feelings in the sense that a lot 471 00:26:16,520 --> 00:26:19,920 Speaker 2: of the motivation for that is sort of a numbers game. 472 00:26:20,000 --> 00:26:22,560 Speaker 2: They're just saying, well, we borrow the money. Yeah, we 473 00:26:22,640 --> 00:26:25,320 Speaker 2: borrowed a five percent. We can invest it seven percent 474 00:26:25,440 --> 00:26:28,200 Speaker 2: or whatever and have some sort of arbitrage on it. 475 00:26:28,240 --> 00:26:31,280 Speaker 2: And you know, for reasons that economists care about that, 476 00:26:31,320 --> 00:26:33,880 Speaker 2: most other people don't. I could explain why that doesn't 477 00:26:33,920 --> 00:26:37,560 Speaker 2: make a difference, but you know, I think the issue 478 00:26:37,720 --> 00:26:40,119 Speaker 2: we face on that and this was sort of the 479 00:26:40,200 --> 00:26:43,280 Speaker 2: motivation for the personal accounts for Social Security sake back 480 00:26:43,320 --> 00:26:46,479 Speaker 2: in the Bush ear before. At that point, social Security 481 00:26:46,560 --> 00:26:50,000 Speaker 2: was throwing off extra money. We're collecting more in taxes 482 00:26:50,040 --> 00:26:52,359 Speaker 2: than we need and benefits, and so the question is 483 00:26:52,400 --> 00:26:55,159 Speaker 2: what do you do with that money? Government was spending it, 484 00:26:55,200 --> 00:26:58,040 Speaker 2: and the accounts would have helped save it. The idea 485 00:26:58,080 --> 00:27:01,520 Speaker 2: of these accounts at birth baby bonds or Trump accounts 486 00:27:02,040 --> 00:27:04,560 Speaker 2: is okay, you can get ahead of the game. The 487 00:27:04,720 --> 00:27:08,480 Speaker 2: problem you face financially is that does nothing for SOLI 488 00:27:08,480 --> 00:27:12,040 Speaker 2: security in the short term, and members of Congress they're 489 00:27:12,160 --> 00:27:13,800 Speaker 2: to have to come up with money to find these 490 00:27:13,840 --> 00:27:16,280 Speaker 2: accounts for the long term. But then they're still going 491 00:27:16,320 --> 00:27:17,879 Speaker 2: to have to come up with money to address the 492 00:27:17,880 --> 00:27:20,960 Speaker 2: social security problem that's staring us down in twenty thirty two. 493 00:27:21,440 --> 00:27:24,480 Speaker 2: You know, in the short term, it makes the financial 494 00:27:24,600 --> 00:27:29,640 Speaker 2: problem harder, and the short term is what most politicians 495 00:27:29,640 --> 00:27:32,479 Speaker 2: think about. So I think that is the challenge. So conception, 496 00:27:32,560 --> 00:27:35,000 Speaker 2: I'm not against the idea, but the challenge is just 497 00:27:35,920 --> 00:27:40,120 Speaker 2: members of Congress neither want to raise taxes nor cut benefits, 498 00:27:40,520 --> 00:27:43,359 Speaker 2: but come twenty thirty two, they must rate taxes or 499 00:27:43,400 --> 00:27:46,320 Speaker 2: cut benefits. So it's precisely the thing they want to do. 500 00:27:46,359 --> 00:27:51,080 Speaker 1: The least, you know, are some combination thereof managing to 501 00:27:51,119 --> 00:27:52,280 Speaker 1: piss everybody. 502 00:27:51,840 --> 00:27:54,280 Speaker 2: Off, which is why the threat is that you'll just 503 00:27:54,320 --> 00:27:58,600 Speaker 2: borrow the money, which would really be rolling the dice. 504 00:28:00,640 --> 00:28:03,919 Speaker 2: I don't know whether financial markets will bear it, And 505 00:28:04,400 --> 00:28:06,960 Speaker 2: for the last nine years I've been on an oversight 506 00:28:07,040 --> 00:28:11,160 Speaker 2: board handling the bankruptcy of the island to Puerto Rico, 507 00:28:11,640 --> 00:28:13,680 Speaker 2: they had a similar thing. You can borrow until you 508 00:28:13,720 --> 00:28:17,200 Speaker 2: can't borrow, and when the markets lose faith in you, 509 00:28:17,840 --> 00:28:21,560 Speaker 2: then interest rate skyrocket. And let's just say, going through 510 00:28:21,640 --> 00:28:25,200 Speaker 2: a bankruptcy, even at the level of three million people 511 00:28:25,240 --> 00:28:29,720 Speaker 2: in Puerto Rico, is incredibly difficult. Having something like that 512 00:28:29,840 --> 00:28:33,800 Speaker 2: at the federal level, that's not just the federal finance 513 00:28:33,920 --> 00:28:37,399 Speaker 2: is that will destabilize the world economy. And it just 514 00:28:37,440 --> 00:28:40,560 Speaker 2: strikes these very strange that we would risk that simply 515 00:28:40,680 --> 00:28:43,160 Speaker 2: because we don't want to tell people we've got to 516 00:28:43,240 --> 00:28:44,760 Speaker 2: change how we're doing things. 517 00:28:45,240 --> 00:28:49,320 Speaker 1: Would Trump be smart to sometimes say in twenty eight 518 00:28:50,080 --> 00:28:54,840 Speaker 1: a point a Blue Ribbon commission that could report in 519 00:28:54,840 --> 00:28:56,600 Speaker 1: twenty nine and start the conversation. 520 00:28:57,240 --> 00:29:01,720 Speaker 2: I think he would be. Both Democrats Republicans on Capitol 521 00:29:01,800 --> 00:29:06,840 Speaker 2: Hill understand that their positions are not really politically tenable. 522 00:29:07,240 --> 00:29:10,160 Speaker 2: When I speak to Republicans, they know that they're in 523 00:29:10,200 --> 00:29:14,280 Speaker 2: an incongruous position where, you know, the position now from 524 00:29:14,320 --> 00:29:16,440 Speaker 2: the President is we're never at a county benefits, but 525 00:29:16,440 --> 00:29:18,760 Speaker 2: it's also we're not going to raise taxes. They know 526 00:29:18,840 --> 00:29:21,000 Speaker 2: that that doesn't work, and they're kind of looking for 527 00:29:21,040 --> 00:29:23,040 Speaker 2: a way out of it. At the same time, in 528 00:29:23,080 --> 00:29:25,120 Speaker 2: the Democratic side, you know, if you go back to 529 00:29:25,160 --> 00:29:28,640 Speaker 2: the early and the Biden administration. They had control of 530 00:29:28,840 --> 00:29:33,040 Speaker 2: all of Congress and the presidency, and they had bills 531 00:29:33,080 --> 00:29:36,680 Speaker 2: in Congress to fix sols Cree entirely by raising taxes. 532 00:29:37,400 --> 00:29:41,200 Speaker 2: It had co sponsorship by something like ninety percent of 533 00:29:41,240 --> 00:29:44,600 Speaker 2: House Democrats. They never brought it to the floor because 534 00:29:44,640 --> 00:29:47,680 Speaker 2: they know that that kind of fix would be devastating 535 00:29:47,720 --> 00:29:53,600 Speaker 2: to them politically. So everybody has these very strong positions 536 00:29:53,640 --> 00:29:55,960 Speaker 2: in public, we will always do this, we will never 537 00:29:56,000 --> 00:29:58,719 Speaker 2: do that. In private, they know their positions are much weaker. 538 00:29:59,120 --> 00:30:02,240 Speaker 2: Some sort of mission where I hate to say smoke 539 00:30:02,280 --> 00:30:06,400 Speaker 2: filled rooms, but it's doing this stuff in the regular order. 540 00:30:06,400 --> 00:30:08,560 Speaker 2: It's just too difficult. So I think the president has 541 00:30:08,960 --> 00:30:13,240 Speaker 2: an opportunity there which really secretly both sides will be 542 00:30:13,240 --> 00:30:14,040 Speaker 2: grateful for her. 543 00:30:14,880 --> 00:30:17,760 Speaker 1: That's fascinating, And I have a hunch if that happens, 544 00:30:17,800 --> 00:30:19,560 Speaker 1: you're going to be one of the people testifying and 545 00:30:20,240 --> 00:30:23,000 Speaker 1: helping design it. So this is very useful. 546 00:30:23,280 --> 00:30:24,920 Speaker 2: That's every policy walk extreme. 547 00:30:25,840 --> 00:30:28,280 Speaker 1: There are moments in time when you actually have to 548 00:30:28,280 --> 00:30:31,760 Speaker 1: have people who know something as opposed to know someone. 549 00:30:32,000 --> 00:30:34,520 Speaker 1: So Andrew want to thank you for joining me. Our 550 00:30:34,600 --> 00:30:38,120 Speaker 1: listeners can follow the work you're doing on SOFI Scritiform 551 00:30:38,320 --> 00:30:42,480 Speaker 1: at AI dot org. Your new book, The Real Retirement 552 00:30:42,520 --> 00:30:46,400 Speaker 1: Crisis Why Almost Everything you Know about the US Returnment 553 00:30:46,440 --> 00:30:49,560 Speaker 1: System Is Wrong is available now on Amazon and the 554 00:30:49,600 --> 00:30:52,880 Speaker 1: bookstores everywhere, and I really appreciate your sharing with us. 555 00:30:53,240 --> 00:30:59,560 Speaker 2: Well, thank you very much, mister speaker. It's been applied here. 556 00:31:00,120 --> 00:31:02,920 Speaker 1: Thank you to my guest Andrew Biggs. Newts World is 557 00:31:02,920 --> 00:31:07,080 Speaker 1: produced by Gingers three sixty and iHeartMedia. Our executive producers 558 00:31:07,080 --> 00:31:11,240 Speaker 1: Guernsey Sloane. Our researcher is Rachel Peterson. The artwork for 559 00:31:11,280 --> 00:31:14,360 Speaker 1: the show was created by Steve Penley. Special thanks to 560 00:31:14,360 --> 00:31:17,000 Speaker 1: the team at Ginger three sixty. If you've been enjoying 561 00:31:17,040 --> 00:31:20,000 Speaker 1: neut World, I hope you'll go to Apple Podcasts and 562 00:31:20,080 --> 00:31:22,720 Speaker 1: both rate us with five stars and give us a 563 00:31:22,760 --> 00:31:26,160 Speaker 1: review so others can learn what it's all about. Join 564 00:31:26,200 --> 00:31:30,200 Speaker 1: me on substack at gangerstree sixty dot net. I'm Newt Gingrich. 565 00:31:30,560 --> 00:31:31,520 Speaker 1: This is neutral