Our two biggest policy problems here in America are Social Security and Medicare. We, as a nation, can’t afford them. But beyond that, these programs are sucking our younger generations dry. They represent an enormous wealth transfer from younger, working Americans who are trying to start careers and start families to retired Americans who have already made their way in the world and, more often than not, wouldn’t need the benefits in the first place.
Into that equation comes Ezekiel Emanuel, Rahm Emanuel’s brother, who wants to fix the problem with that wealth transfer. He wants older Americans to be able to defer a portion of their Social Security and Medicare benefits to younger members in their family for things like child care and the like.
In an op-ed to the New York Times, appropriately titled “Share the Wealth,” he cites a litany of poverty statistics, then contrasts them with the comparatively better financial picture of your average retiree to arrive at the conclusion that,
“The rising standard of living among older Americans is largely a result of the tens of thousands of dollars each collects from Social Security and Medicare. And this huge transfer of wealth is harming our children.” (emphasis mine)
To counteract this perceived injustice, Emanuel suggests the government “allow” individual retirees to forego their own Social Security and Medicare benefits for a period up to three years, with the cost savings used to fund daycare or early childhood education for their own grandchildren, creating what is essentially a self-directed transfer payment facilitated by the existing federal programs.
Of course, any government program requires oversight — not for the program itself mind you — but rather, the participants. Emanuel continues
“We would have to be certain that the bequests were free of waste and abuse, and so there would need to be stringent quality standards for the various education and child care programs. Similarly, we might allow a maximum of two grandparents to donate to the children in any particular family.”
This is an idea motivated by a real problem – the wealth transfer from younger to older Americans – but one that would ultimately make that problem worse.
The last thing we need to do to these expensive, byzantine entitlement programs is to make them even more expensive and byzantine by initiating a wealth transfer on top of an existing wealth transfer.
The solution for Social Security and Medicare is means testing. Give the benefits only to those elderly who cannot care for themselves – affluent retirees can pay their own way – then use the cost savings to reduce burdens on working Americans.