On KUOW’s Weekday talk program today, Steve Scher, the host, asked if I had any ideas about the “Lesser Depression” I was talking about. I think I have a decent radio voice, but I’m slow on my feet, not nimble. I stalled for time, then mumbled something about Paul Ryan’s plan. Lame.
What I should have said would go something like this:
Look, demography is destiny. Forty years from now, there will be only three workers for every person of retirement age, down from about five now. Social Security is — always has been — an inter-generational income-transfer program. Today’s workers pay the benefits of today’s retirees. We’re living longer, collecting benefits for more years. The situation is untenable. Workers will eventually revolt against payroll taxes needed to pay benefits to the growing cohort of retirees.
So we are going to have to do it all. We have to raise payroll taxes. We must raise the retirement age. We should means-test benefits; after they recover contributions, the very rich would have to do with smaller benefit checks. And we all must save more and retire later.
The government will need more revenue to fund the benefits of retirees. So let’s raise taxes, mainly by reforming “tax expenditures” (tax breaks) that today go overwhelmingly to the rich. Above a certain modest level, the tax break for mortgage interest has to go. The same for tax-free employee health benefits. The same for farm subsidies, and subsidies to any number of industries.
To jump-start the economy and reduce the unemployment rate, let’s try to end the policy uncertainty about health-care costs, the costs of energy and, most important, future tax rates. Let us lighten the hand of government. “Shampoo specialists” in Texas hair salons can’t work until they have sat through 150 hours of classroom instruction and passed a licensing exam. California requires barbers to study for up to a year at a cost of up to $12,000. Much regulation is outmoded.
Endless facts and anecdotes to support my arguments are stored on my hard drive (metaphorically speaking), where access is slow. I could not summon them up on air as if they had been stored in RAM.