On "Noteworthy"

Bruce Krasting's picture




The most recent report from the Congressional Budget Office (CBO) used the following language it the summary section:


The resulting rise in the projected rates of.............is noteworthy.


"Noteworthy" is an interesting word for the CBO to use. Normally, the reports don't use words like that, so the word is, by itself, noteworthy. If I was writing the report I would have stepped it up from the CBO language. I would have used:


Holy Smokes! Look at this will ya! The country is trying to fix one problem - but the consequences of the "fix" - will be far greater than the benefits! We're shooting ourselves in the foot! What are these people doing??


The CBO report is a discussion of the Full Retirement Age (FRA). How could that be interesting, and why is it noteworthy? Some background.

In a few years, Social Security will (gradually) increase the FRA from 65 years, to 66. This change in eligibility has been on the books for some time, so no one should be surprised when it happens.

If you put your economics hat on for a moment, and ponder the broader implications of changing the FRA, you probably would conclude that increasing the FRA causes older people to stay in the workforce longer. That conclusion is pretty obvious, and by itself, is not noteworthy. What is worthy of note is how significant the implications of adjusting the FRA are. The CBO estimates:




Men aged 62-64 = +3%

Men aged 65-69 = +4%

Women aged 62-64 = +4%

Women aged 65-69 = +4%


If you look at these results and conclude that the 3-4% changes over a 5-8 year period is a rounding error, and not of any consequence, you would be wrong. This is a very big deal. In this case, "Holey Smokes" for me, and "Noteworthy" for the CBO, are appropriate reactions.


Put the Eco 101 hat on again, and you can immediately conclude:


Changing the FRA by just one year, will translate into a generational increase in youth unemployment.


Changing FRA will reduce upward mobility for all workers who are under 50. This will be a permanent change.


The timing of the CBO blog is interesting. The change in FRA will not happen for years, and its consequences will take years more to be felt. - "Who cares? We have plenty of pressing stuff today; worry about this one later" - is one way of thinking about this. But actually, the CBO report is very timely and on point.

Over the next month we will (hopefully) hear some serious proposals on how to change the direction of spending and debt. The CBO sent a message to the legislators who will be crafting the "fixes". There was no reference to the debt ceiling in the report, but the conclusions are obvious. I think what the CBO was trying to say was:


Beware of what you do with your fixes. Changing the age limits for SS and Medicare will backfire one day. You are trading an accounting problem for a social/economic problem to be. There is already a huge intergenerational transfer of wealth programed into the system with SS/Medicare. Do you really want to add to that burden?


Note: I'm quite sure that changing age limits will be part of the "fixes". They are "painless" solutions, as the changes would not become effective for many years, and be phased in thereafter. So this is a politically cheap way of kicking the can a generation or so, and then claiming success.

I have no answer to this. I know it's not a Platinum Coin. Nor is it 200 - 300% debt to GDP. I see that it is tempting to bend things to preserve a system today, at the expense of future generations. I also believe that some bending is necessary.

But lets not kid ourselves, we are shooting arrows at younger workers. The arrows will take years to land, but they will land, and when they do, they will hit 24 year olds.

What will come in the next few weeks will prove to be a huge pass-of-the-buck. No doubt, everyone will celebrate that result. Shooting arrows at kids who are five years old today is nothing to celebrate, even if the arrows won't hit for another decade or two.














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hooligan2009's picture

this is just another step on the way to people earning between 30,000 and 69,000 being laid off by employers so that they or those over 60 can be re-employed on a salary of 30,000 plus 39,000 in benefit freebies issued by the mobocracy to top them up to 69,000 that the ex employees were earning.

hey .it works for wal-mart! the new mobocracy business model is to pay everyone 30,000 and get them to shape their lives so they can claim 39,000 in benefits! 


knock yourselves out OR pay no tax and recive no benefits!! I AM SPARTACUS!..screw this for a pathetic attempt at government

The Alarmist's picture

Problematic?  The young of today are never going to earn enough to pay for the geezers keeping them out of the workforce, so it is a net positive to keep the geezers running on the wheel a few more years and let the young sit around at Uni a few more years to cement their debt serfdom before stepping on the wheel for themselves.

steve from virginia's picture



Alright! A sensible analysis of Social by Bruce Krasting!


Best to look at Social is as a jobs exchange. The government- plus younger workers ‘buy’ job openings by offering modest payments to aged and disabled workers so that they might retire. Social is the jobs-purchase plan that college lending is supposed to be! The ingenious promotion of Social as a pension for the elderly has given it an enduring constituency. One can see in Liberty Square and on the streets of New York what sort of (non)constituency unemployed younger workers represent!





Yancey Ward's picture


The age is already at 66 for FRA.  It will rise to 67 in increments, and then be 67 for everyone born after 1960.

John_Coltrane's picture

The FRA discussion is rather silly since anyone who understands SS is a Ponzi without enough new "suckers/workers" to fund its fraudulent promishes is taking their SS at 62 or is faking disability to bilk it for everything its worth.  Then you can collect at least something for a few years until its inevitable collapse.  I'd like to see a poll indicating how many are planning to do this.  (Amazing how long the Madoff ponzi went on wasn't it)  All the people bitching and moaning about how they won't get out their SS taxes should be buying gold and storing oil, medicines and foodstuffs.  This ponzi is going down-you've been had.  There's no free lunch.

Why would anyone with real skills want to "retire" anyway?  This whole modern anomoly is bizarre.  The only important issue as you get older is whether you are in good health-that's what determines quality of life. 

As far as taking jobs away from youth-let them compete with superior skills and work attitude to offer.  Economics is all about competition for scarce resources. 


booboo's picture

I am going to go on a steady tenderizer diet when I turn 65. I mean its the least I can do for the younger generations for what our (18-65 Year olds) people will have allowed. The least I can do is to make sure I taste good to the kids who will no doubt BBQ my wrinkled ass.
And yes, if you are of voting and public teat sucking age you are just as culpable.

goodrich4bk's picture

The arrows are already landing.  A client of mine told me yesterday that he let go his $80k/yr operating manager for his store and replaced him with a $24k/yr "retiree" who is also receiving SS.  The new hire used to work at Magnolia before it was purchased by Best Buy, and has great experience managing retail customer installations.  Bruce's other posts on the rising unemployment of 22-55 vs. the decreasing unemployment of workers over 55 is evidence this is not merely anecdotal.

DR's picture

Yes, no need to worry about paying for ObamaCare if your employee is on Medicare. Yesterday at Walmart I notice that the new produce guy was around retirement age. I live in an low-middle income area with a lots of young people and moderate unemployment-it's hard for me to believe that they couldn't find a 20 something to work the job. I wonder if having to pay medical insurance for a young person has something to do with it...

citizen2084's picture

This always happens when the govt idiots try to "fix" something. The fix causes new problems. One intervention leads to the next two and so on...

If Washing DC would just fall in on itself. 



boogerbently's picture

Waiting for the deranged, mass murdering youth to figure out who the real enemy is and buy a map to DC to "make their statement."

sangell's picture

I think ZIRP is doing more damage than a 1 year add to the retirement age. It is going to make retirement impossible not just delay it for many.

DR's picture

The young( spending mode)  pay interest to the old(savings mode). If you want higher interest rates you need to produce enough economic growth to employ the young in good jobs so they can consume your credit otherwise your savings stay idle.

Someone has to put your money to work...



Winston Churchill's picture

As it always was. except for a select few.

A historical anomaly, is how it will be remembered.

Now get back to work.

Moe Howard's picture

Bingo! ZIRP forces current retirees to expend capital rather than interest on the capital.

ZIRP makes it almost impossible to put away money for retirement because you can't earn enough interest to overcome the huge inflation that is destroying value.

NEOSERF's picture

Simple solution to fix the debt problem...2 steps, could be accomplished this year.

1.  Offer to sell Alaska to Russia for $16T and if they refuse, let them know China is interested

2.  Require all future Federal budgets to be balanced...immediate sequestration across all gov outlays in 2013 to get budgets back in line with revenues (expect they will decline 10% in 2014).

Bruce Krasting's picture

I think the part about selling Alaska might work. The Chinese would pay top dollar, and they already have a lot of those dollars.

But #2 will never fly. Balanced budgets? Forgetabout that.

Funny tho..

NotApplicable's picture

Eat your bread, enjoy your circus, sure.

But critique the clowns???

You're just ruining the show for yourself.

therearetoomanyidiots's picture

Problem with BB amend.....mandatory tax increases to keep up with spending. You assume an honest effort by these guys?

SmoothCoolSmoke's picture

I like #1.  Make Sara Palin's family a "must take".

As for #2.  If we had a balanced budget amendment in1940..... we would have probably lost WWII.  Of course Corporate Facism took over the world in 60 years any way....so maybe we shoulda let Hitler win.

Thisson's picture

This is not necessarily true.  Just because we can't borrow resources with the promise to give them back later with interest, doesn't mean those in possession of those resources would not want to make them available for the war effort.  We can't know the results of this null case.

DeadFred's picture

I wonder if they Russians have enough platinum to mint a 16 trillion dolar coin?

Moe Howard's picture

I don't know what a dolar is but it only takes an ounce. Put any number you want on there.

4shzl's picture

Simple "solution" to complex problem = FAIL.  

Nice analysis (again), Bruce.

Panafrican Funktron Robot's picture

"I have no answer to this."  - Bruce Krasting

Same as it ever was.

Racer's picture

In the UK they have recently changed retirement age for women from 60 to 65 ... how much will that impact?!

Okay it is agruable that men and women should be the same but that isn't the point of this argument

Winston Churchill's picture

I thought they had raised both to 70.

Maybe I misread the UK govdirect website.

Doesn't matter though ,neither that Ponzi nor this, will survive to

pay anyone except in nominal pounds, and dollars.

Just bad luck to be at the shafted end of the fiat cycle.

ultraticum's picture

All of this assumes that the status quo America continues to exist long enough for today's 5 year old to learn that they've been kicked in balls.  That assumption is a huge normalcy bias.  Please just let the default and reset begin - the one without social security.

a growing concern's picture

Yep, if you're not currently preparing yourself for a world without SS and Medicare probably even 20 years from now, you're ignorant or delusional. The good news is that our planet may get a bit of "breathing room".

boogerbently's picture

Yeah, Yeah,

In our day it was Vietnam.


hazden's picture

The unemployed youth living off their parents or retired seniors dependent upon Social Security, it's a wash economically.  Transferring a job from one person to another simply shifts the dependency.


ArkansasAngie's picture

job skills are supposedly being developed by the young.  Sitting on the couch plalying WOW ... not so much

therearetoomanyidiots's picture

Maybe Obama's drone strategy is really a jobs bill employing all the young gamers?

NotApplicable's picture

Ender's World, ftw.

Personally, I think that's what Farmville is all about.

hazden's picture

You'd be surprised how many retired seniors sit around playing WoW :)

My point is we need to focus on adding jobs, creating new ones, not transferring existing ones.

Thisson's picture

Actually, you need to think out of the box a bit more.  The number of jobs isn't as important as how much stuff there is to go around.  Whether producing that stuff takes 5 million people or 100 million people isn't the main issue.

Panafrican Funktron Robot's picture

Agree, technology gain trajectory is continuing to make human input obselete.  I get the sense that the push towards plant over animal consumption in the developed world is a nod to the resource constrait issue you bring up.  Shelter and entertainment are fairly easy to manage, food and water are the real bitch.  

dexter_morgan's picture

Maybe not - perhaps these will be the recruits for the gun confiscation troops and FEMA camp guards. :-)

NoDebt's picture

"I have no answer to this."

Mark of an honest man to put that in writing from time to time.

I think what you're grasping at is there is no answer to this WHERE EVERYONE WINS.  Transfers of wealth work that way.  Zero sum game.  Zero sum games are particularly nasty when the whole pie isn't growing (or is shrinking).



donsluck's picture

I was presented with this zero-sum argument a month ago while discussing SS "reorganization" with someone who believed that in order for the rest of the world to rise economically, we HAD to fall. I pointed out that centuries of technological developement have made it easier and easier for humans to survive. That is not zero sum. So where does this idea come from? I believe that the bankers realized what was coming 100 years ago and decided that they should be able to skim off the advances for their profit, through the central bank. In other words, if technology is making life easier, why are things going up in price? My "opponent" in the debate agreed that inflation is engineered in, but also maintained it was necessary. I could not pin him down on why.

ItchyBeard's picture

Increase in money supply i.e. monetary inflation is leading to overall increase in price even as technology advances. This Inflation is a form of theft and is only required to keep the Ponzi from collapsing. The real economy and consequently you and I will be much better off without this inflation, as true economic growth should lead to deflation and overall downward pressure on prices.

mrktwtch2's picture

more fear and doom..doesnt this get old?...lol

boogerbently's picture


ANOTHER BK Soc. Sec. bashing article!!!

Who'd a thunk?

This guy is a "one note" moron, who is oblivious to the irony of his posts.

He , seemingly, understands the outrage of his money being stolen to pay for SS, but misses the injustice of my SS $$$ being stolen to pay for "welfare"......which he also finds too generous.

The only way to keep his SS $$$ from being "lost" is to return the SS fund to it's "untouchable" and "surplus" status.

If that means defunding the programs that were started with MY stolen SS contributions, that allow welfare mommas from collecting $57/yr in govt handouts, so be it.

His logic of eliminating SS to cure its underfunding is the same as eliminating guns to solve gun violence.

It makes sense to the shortsighted.


Toolshed's picture

If you find your lack of concern with reality comforting then good for you. Put your head back up your ass and shut the fuck up.

metastar's picture

That's not a semi-auto assault bow & arrow, is it?

boogerbently's picture

It's OK, his quiver only holds 7 arrows.

NotApplicable's picture

Well, there went Bruce's streak of two coherent articles in a row. As always, had to quit reading upon encountering this idiocy,

Over the next month we will (hopefully) hear some serious proposals on how to change the direction of spending and debt.

Damn, Bruce, you gotta wake the fuck up. You're talking about organized crime here. To believe they exist in order to solve social problems is to tell us all how childish and immature your world view is.

You should know better.

Quit being so apathetically evil for once, okay?

Panafrican Funktron Robot's picture

I'm with you there, really the only saving grace for Bruce is that he was so fucking far into the matrix, it's a minor miracle he's asking any questions at all, about anything.