It's Granny! She's Got Her Bag!

It seems that everybody’s down on Grandma, at least all the free market Republicans. She’s accused of chewing up resources that could be better used by younger more productive people. Not only does she gobble up Social Security payments, she practically inhales Medicare and may even someday be faced with sucking up Medicaid. The question seems to be heading toward, “Why doesn’t the old fart make like an Eskimo and drift away on an ice flow?”

Since I live with one of these grandmas, I feel obligated to mount a defense for the old bats and try to offer reasons why that kind might not be so bad to keep around, at least for a while. As you young folks go about reforming Social Security try not to think only negative thoughts about the oldsters. Remember you may well be a granny or grampa one day too, unless, of course, they take you to the vet’s and put you to sleep.

As the president keeps reminding us, most workers contribute more than 6% of their wages into the system for well over forty years, and their employers are dunned a like amount. The government borrows from the fund at the low rate of T-Bills thus saving taxpayers a goodly sum over the period. Now, instead of investing program funds at a better rate itself, the president proposes to let individuals make such investment while it borrows trillions to prop up the system.

Obviously, tax liability on 85% percent of Social Security payments provides significant income to the feds at least from all those rich seniors which are the ones that everyone complains about.

Another factor that is lost in the discussion on Social Security, federal, and private defined benefit pension programs is that at least when Grandma was young, it was a social good to provide job openings for younger generations of workers by buying out the incumbents. You may recall from reading about the Civil War that doddering clerks were unable to keep up with the burgeoning paper work due to their physical and mental incapacity and decline. They had no choice but to work until they fell face first on their desks. In actuality, that’s the way it was everywhere until the New Deal. We’re rethinking that one, and Granny will have to soldier on into the sunset.

Many of the elderly contribute to the present boom by providing off books services to workers in the form of baby sitting and other minor work that maintain the productivity of the working generation. Wild Bill opines that more of that goes on at the lower income levels where it is more desperately needed. Obviously, that service ranges from almost nothing to practically supporting the whole operation while the productive generation puts food on the table. Also because of many a Granny, the lucky minority also puts money in 401Ks and contributes their 6% to granny’s current Social Security check.

Next time you’re in the hospital – naturally, we hope it’s only to visit the sick – look around and note that many of the unpaid volunteers are a little older than you. When Granny’s broke, health care costs will have to rise as she will require a wage to do that job. Grannies also read to your kids at school. I guess we’ll have to budget an aid for that job when Granny has to bag groceries. That reminds me, a lot of old folks are working for pay – and paying all kinds of taxes – even as this is written.

Seniors pay a great deal more in local taxes than they take in the form of services. While this can be written off their federal liability, their net property tax is far greater than their local benefits. Also many millions of home owning seniors who are exempt from federal taxes because of low income pay a local tax tariff. This eases the burden on workers who – if they have children – are heavily subsidized as they prepare for the burden of paying for college. Naturally, seniors continue to support state schools if they pay state taxes and millions of them do.

But by far the biggest subsidy that goes to the elderly is in the form of health care, including nursing home care. This federal subsidy in the form of Medicare and Medicaid – which spills over to become a state problem as well - is terribly expensive. But there are mitigations to these benefits as well. For earlier generations, many were sandwiched by two other generations needing their physical and financial support. Much about what the president rails about came about because a lot of folks didn’t want to be saddled with Grandma just hanging around the house.

These are hidden subsidies for the working middle class as well as for the direct beneficiaries. People today have enough trouble raising and caring for junior without the added burden of putting old Mom up in the closet.

The social compact works in many ways and to attack it frontally sometimes opens up things that are not usually taken into account. Times have changed since the majority of grannies lived in the back bedroom of the middle aged, so as you think about cutting Grandma off the federal teat, remember she may have to come live with you. Not to worry, you’ll treasure those memories when you move in with your own little junior.

Blog on!

Wild Bill