Must-Read: Ben Steverman: Advice for the Next President: Expand Social Security

Must-Read: The lowest-hanging fruit in terms of improving the conditions of life of the working class was… ObamaCare: the system that Mitt Romney had set up in Massachusetts generalized to the nation as a whole. But the next lowest-hanging fruit is Social Security expansion, as Jesse Rothstein points out:

Ben Steverman: Advice for the Next President: Expand Social Security: “Is expanding Social Security the right thing to do? Is it even possible? Yes and yes, Jesse Rothstein argues…

…The only problem with the word “crisis” is that it didn’t happen overnight—it’s a very slow-rolling crisis. An awfully large number of people hit retirement with nothing to live on except Social Security benefits…. [Franklin Roosevelt] talked about the “three-legged stool,” that Social Security would be basically one-third of the solution to the retirement puzzle…. And we’ve never really gotten the other two legs of the stool…. If you set up your “nudge” right, you can raise the share of people participating in their 401(k) plan by a few percentage points. But… there are still an awful lot of people who don’t participate. States trying to set up portable plans is a good idea, and we should be doing that. But ultimately what all these plans are relying on is voluntary contributions from people who aren’t necessarily making enough money to be able to make those contributions.

Social Security offers two things…. One, a Social Security payment is an annuity: The money keeps coming as long as you live. That’s really useful. If you’re living on private retirement savings, even if you saved enough, you have to be very careful how you spend it down, because you don’t know how long you need it to last. The other thing that Social Security solves is market risk….

We should be expanding Social Security. We should be making it more generous…. Instead of having the Social Security payroll tax rate be 6.2 percent, we could make it 7.2 percent, and all of a sudden everybody’s Social Security benefit gets 15 percent larger…. If we raise the cap and start taxing higher incomes, we can expand benefits by a lot without increasing the burden on middle-class workers….

If the question is, “Can we afford more generous Social Security benefits?” the right way to think about it is, we’re asking people to afford lots of private retirement savings in addition to Social Security. It doesn’t make it any less affordable to move it into the Social Security system rather than outside of it. And, again, Social Security offers you a much more robust benefit. The goal should be telling people not to save quite so much in their 401(k) or their IRAs, because Social Security is doing it for them….

The threat is that the vast majority of workers retire without enough to live on. People will continue to save, to try to assure themselves a secure retirement. And some of them will get it, and some of them won’t, due to factors entirely outside their control…