USA Today decided to get its entry in the summer horror flicks out early, The Return of the Granny Bashers XCIV tells readers how the affluent elderly are ripping off their children and grandchildren by collecting Social Security and Medicare (ahhhhhhhhhhhhhhhhh!). This horror story is so chock full of misleading information that it's difficult for this reviewer to know where to begin. Well let's start with the fact that median family income for households between ages 55 and 59 rose by 52 percent over the last 15 years, while median income for families between age 35 and 39 fell by 10 percent. That should make you really mad at the old folks ripping off the young. You'll no doubt get even madder when you find out that high-living old-timers have a median household income of $57,100, while the 35-39 set must struggle by on just $56,900. Is your blood boiling yet? The main reason for the rise in the income of 55-59 group is a surge in employment rates. This has been driven by the decline in pension coverage and retiree health benefits. Many workers who would have had the option to retire in their late fifties no longer have that option today. USA Today has managed to turn reality on its head. The older group has seen a larger increase in wealth which is almost entirely due to the housing bubble. This groups owns homes in much higher percentages than younger households and they have held homes through the growth of the bubble, so many have accumulated some equity. Of course, when the bubble bursts, this source of inequality will be largely eliminated. Outside of their homes, these greedy semi-geezers don't have all that much. According to the Federal Reserve Board's 2004 Survey of Consumer Finance, 53 percent of households between ages 55 to 64 had less than $78,000 in financial assets. This includes all wealth held in defined contribution retirement plans, such as 401(k)s. I doubt that many reporters would view themselves as especially well set for retirement if they had $78,000 in financial wealth to draw upon in addition to their Social Security. At one point the article warns that Social Security and Medicare have become "a transfer of money from less affluent young people to much wealthier older people." It is true that older people tend to be wealthier than younger people in the sense that they have typically accumulated some wealth, most often in the form of a house, over a lifetime of working. That is how they avoid poverty in their retirement. The median income of the elderly is far lower than for younger households, but the article was clever enough to refer to wealth, not income. It doesn't look like the crusade against Social Security and Medicare will end any time soon. There are clearly very powerful interests who want these programs gutted. The basic story is very simple. These are very efficient and effective programs that have guaranteed seniors a decent standard of living in their retirement. They have not made anyone rich. Furthermore, they are eminently affordable, if we fix the U.S. health care system. Of course if the political system is too corrupt to reform the health care system, then we will face enormous economic problems, one of which will be paying for Medicare. Fortunately, the horror story about the U.S. health care system (Sicko) will soon be coming to a theater near you also. That one promises to be a much better and more believable flick.
--Dean Baker