Andrew Biggs Criticized for Displaying “Conservative Contempt for the Working Person” at US Senate Hearing

Following his testimony before the Senate Finance Committee on December 18, 2013, Andrew Biggs, resident scholar at the American Enterprise Institute (AEI), was taken to task in the Los Angeles Times for making a comment that “reflects conservatives’ failure not merely to empathize with older workers, but to learn anything about them before mouthing off.”  Writing in the business section, Pulitzer prize–winning columnist Michael A. Hiltzik observed that “Instead of understanding, they offer contempt.”

Biggs had remarked in his oral testimony that in the 1950’s when “we had a highly industrialized economy” with “coal miners, and farmers, and factory workers,” the average age of initial Social Security claimants was 68.  Today, however, “when your biggest on the job risk is, you know, carpal tunnel syndrome from your mouse or something like that, it’s 63,” Biggs quipped.  He was arguing that the idea higher retirement ages are inappropriate “just flies in the face of the fact that people did, in fact, retire later in the past, and today’s jobs are less physically demanding than they were in the past.”

Hiltzik was quick to point out that carpal tunnel syndrome is not, as Biggs seems to think, “a big joke and an excuse for malingering,” but is instead a very painful and possibly crippling condition.  He went on to note that “the idea that older workers typically hold down office jobs or other comfy sinecures is fatuous and flatly untrue,” citing a study by the Center for Economic and Policy Research (CEPR) that found that 6.5 million workers, or 35% of those 58 and older, were employed in physically demanding jobs in 2010.

Describing the technical definition for such as including “exposure to abnormal temperatures, contaminants, hazardous equipment, or distracting or uncomfortable noise,” Hiltzik remarked, “These are conditions you’re not likely to encounter in a Senate committee room, unless you consider hot air to be an environmental menace.”

Hiltzik argued that based on the actual facts, raising the retirement age for Social Security is “no easy nostrum for improving the program’s finances.”  Furthermore, based on the CEPR study, the cost of raising the retirement age falls especially hard on lower-income workers and minorities.  “Those in physically demanding jobs would have to work longer in conditions that become progressively more difficult,” Hiltzik reasoned, and many would end up filing for disability, placing “added strains on a portion of Social Security already under intense financial pressure.”

If conservative critics “can’t do better than to throw out airy misperceptions about the workforce conjured up in their Washington offices,” Hiltzik concluded, “why in heaven’s name should anyone waste time listening to them?”

Biggs was quick to respond.  The next day, in a post on the AEI website, he admitted that his comments might have been “[a] bit snarky,” but substantively they were correct.  “[I]f there’s any good evidence that today’s employees can work longer,” Biggs argues, “it’s that yesterday’s employees did work longer.”  He goes on to argue that according to other research, the share of workers in physically demanding jobs has “fallen dramatically.”

Hiltzik just as quickly fired back.  Regardless of whose data you believe, Hiltzik thinks that “[t]he entire discussion about the retirement age is, in fact, just a proxy for something much more insidious―the notion that we should pare back social programs that mostly benefit middle- and working-class Americans just to protect the wealth of the upper class.”

He concludes by suggesting that “if you really want to hold up 1950 as a benchmark of public policy,” consider the fact that the top income tax rate then was 91%, imposed on incomes over $200,000, or about $2 million today, he explains.  The wealthy paid that rate then and economic growth did not suffer, he argues.  “Isn’t that proof,” he asks, “that they can pay the same rate today?”

Biggs is well-known to the public pension community.  Disputing research by the National Institute on Retirement Security (NIRS), he has said that “the net economic impact of pension benefits is roughly zero.”  He has also written that education is a “less rigorous course of study” than other majors; that teachers “enter college with below-average SAT scores but receive much higher GPAs than other students;” and that a degree in education “simply does not reflect the same underlying skills and knowledge” as a degree in other areas.  Teachers are therefore paid more than is warranted, he concludes.

Finally, he has said that “I think a lot of talk about a retirement savings crisis is far overblown.”

Most recently, he has written in the Wall Street Journal that “pensions are larger and their investments riskier than at any point since public employees began unionizing in earnest nearly half a century ago.”  His article is based on a new report that he has released entitled “The Multiplying Risks of Public Employee Pensions to State and Local Government Budgets.”  In it, Biggs contends that while “State and local government pensions tout their ability to couple generous, guaranteed benefits for public employees with low and stable contributions from taxpayers,” in reality, the risks that public pensions pose to taxpayers and government budgets have multiplied by a factor of 10 over the past four decades.

Still, it was nice to hear him called out as being “disdainful,” making comments in testimony to Congress that were “fatuous and flatly untrue.”

See, NCTR, there is a Santa Claus!

CRR Chief Alicia Munnell Provides “Straight Talk” on Public Pensions

Alicia Munnell, the well-respected director of the Center for Retirement Research (CRR) at Boston College, recently offered Wall Street Journal readers of their blog “Market Watch” some important facts about public pension problems in an item entitled “Straight Talk about Detroit, Illinois Pensions.”

In the December 18, 2013, posting, Ms. Munnell notes that some have tried to put together the Detroit bankruptcy court ruling that pensions can be treated like other debt in bankruptcy procedures, and the recent Illinois legislation reducing future benefits for current employees, and then “project their implications for the rest of the country.”  “Unfortunately,” she writes, “the Illinois and Detroit situations are not well-suited to a single sound bite.”

Her reasons for such are:

  • The financial problems facing Illinois and Detroit are among the worst in the country, and have few implications for the nation as a whole.
  • Pensions may play a major role in the Illinois situation, but are less important in Detroit.
  • The Illinois and Detroit decisions are not the first foray at cutting pension benefits of state and local workers.
  • American cities are not going to topple like dominoes and declare bankruptcy.
  • The goal of the Detroit bankruptcy ruling and the Illinois legislation is not to hack away at public pensions.

Munnell says that states and localities “need to design compensation packages―commensurate with those in the private sector―to attract talented people to run our states and cities, to educate our children, and to protect our citizens.”  Pensions, she argues, should be part of a human resource dialogue with the goal that “when public employees retire they should have enough to maintain their standard of living.”  Whatever is taken away in terms of lower pensions “should probably be replaced by higher wages so that the public sector remains competitive,” she also warns.

Now THAT would be a Christmas miracle!