Andrew Biggs - Lies and Statistics—What the 401(k) Data Actually Says

Former high-ranking Social Security Administration official and retirement policy gadfly Andrew Biggs joins American Retirement Association CEO Brian Graff for a frank discussion about the data fueling the 401(k) debate. Biggs, a frequent financial media critic of ‘retirement crisis’ sensationalism, explains the retirement readiness disconnect—and why we get it so wrong.

Episode Transcript

Andrew Biggs (00:01):
And so you know, recently I said I'd kind of take
the gloves off a little bit andsay, look, you can't cite these
data anymore.
No responsible researcher willcite them.
It is irresponsible to do it.

Intro (00:12):
DC Pension Geeks brings you exclusive conversations with
top retirement policymakers andregulators in and around
Washington DC, hosted by BrianGraff, an attorney, accountant,
former Capitol Hill staffer andCEO of the American Retirement
Association.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a

(00:32):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.

Brian Graff (00:39):
Hey everybody, welcome to another episode of DC
Pension Geeks.
I'm very fortunate to have withme today a very well-known,
renowned economic expert onretirement policy, andrew Biggs.
He's with the AmericanEnterprise Institute currently.

(01:00):
I guess You've got so many gigs, andy, maybe it's probably best
to have you introduce yourself.
But also, what we like to dohere is give people an
opportunity to talk about howthey ended up becoming a pension
geek, because, you know, noteveryone just you know as

(01:21):
they're going through theirformative years, as a child,
dreams of working on retirementpolicy.
So how'd you get stuck workingon it?

Andrew Biggs (01:30):
It's great to be here with you today.
I really appreciate it.
As I was saying before we wenton air, I'm always happy to talk
about retirement.
For me, it's not just my job,it's something I find endlessly
fascinating, and you and whatthat says about me.
I don't leave it to thelisteners to decide, but it's a
fascinating topic to work on.

(01:50):
My main gig is I'm a seniorfellow at the American
Enterprise Institute, which is alarge think tank in Washington
DC, and I've been at AEI since2009.
Prior to that, I spent aboutfive years in the Social
Security Administration.
I ran the Office of Policythere, which does the policy

(02:11):
research.
I eventually got kicked up tobe the number two of the agency,
which is sort of the Peterprinciple at work, in the sense
of I'm a researcher, butmanaging 60,000 federal
employees is a little bit beyondmy skill set.
In addition to my work at AEI,during that time at SSA, I spent

(02:33):
a year at the National EconomicCouncil in the White House when
George W Bush was doing socialsecurity reform, so I did a lot
of work on that.
In addition, I'm a member ofwhat's called the financial
oversight management board forpuerto rico.
Uh, puerto rico declaredbankruptcy in 2016, and one of
the reasons for that was thepublic sector pensions had all

(02:54):
gone bankrupt, and so myexpertise from my background on
state and local donor pensionsgrew me to that.
I'm a policy fellow at theStanford Institute for Economic
Policy Research.
I do some retirement-relatedstuff there.
There may be various otherthings, but that's the main
stuff.
In terms of how I got into it,it was a sort of interesting

(03:17):
story.
I got out of grad school I'mfrom New York I did most of my
education in the UK.
I graduated undergrad fromQueens University of Belfast,
then went to Cambridge for mymaster's and London School of
Economics for my PhD.
After that I wanted to sort ofjust get involved in public
policy, so I moved to WashingtonDC, worked on Capitol Hill for

(03:41):
a few years, but after that Iwanted to get back into the
research side, so I startedworking at think tanks.
I remember when I first started,my then boss was like well, do
you want to?
We're thinking, maybe a projecton social security or a project
on tax policy.
And so at that point I was like, all right, let's just choose

(04:02):
one or the other.
Social security seemed moreinteresting to me at the time
because there's so many peopleworking on tax policy and there
still are and that just onething led to the next that it
just it was social securityitself.
I still do quite a bit of workon that.
At the Social SecurityAdministration we did a lot of

(04:23):
work on modeling, not justSocial Security, but you know
they have a very sophisticatedmodel at SSA for projecting
people's future retirementincomes, and that was, you know,
interesting for a whole varietyof reasons.
But what probably set me on thepath I am in terms of kind of my
current research narrative wasback in this is probably 2006 or

(04:49):
so when these first studiescame out saying all Americans
facing retirement crisis youknow 60% or 50% won't be able to
maintain their standard ofliving.
You know the people, the careeremployees at Social Security who
ran this model, are like youknow, that's not what we're
getting.
And so then I said, okay, I'vegot a really interesting sort of

(05:10):
research agenda here, in thesense that you've got this very
dominant narrative of things arenot going well, but then you
also have sort of credibleprojections that things are
going to be okay, and so that,just as a researcher, that gets
you interested and then you know, 10 years later you're still
working on it, but it's justreally.

(05:32):
It's interesting stuff as aresearcher.
But it's also important topeople from the governmental
standpoint.
You know social security is thebiggest federal program.
It's important to people from ahousehold, personal perspective
, because they depend on SocialSecurity.
They depend on other sources ofincome and retirement.
So for somebody in myperspective, it's just a great

(05:54):
issue to be working on.

Brian Graff (06:01):
One of the things that I've been frustrated with
is this disconnect between whatyou know several, you know a lot
, frankly the predominantperspective from academia versus
others who are relying on whatI would describe as real data

(06:30):
Versus the academic reliance onsurvey data.
And you know what seems.
You know because you've gotthese incredibly disparate
perspectives.
You know you've got what you'resaying based on Social Security
data.
What you're saying based onSocial Security data ICI's got a

(07:12):
version of this based on IRSdata from the statistics on
income of retirement readinessversus.
You know, teresa Garaducci,alicia Minnell, others that are
many others, including the mediain general, who are parroting
this narrative that basically,the system is a complete failure
and no one's going to have anyretirement savings.
So what's going on here?

Andrew Biggs (07:27):
Well, yeah.
I mean this is?
I mean it's one question amongsort of several in thinking
about retirement readiness.
But let me put it to you thisway Imagine if I were saying
well, there's one thing we coulddo to increase the typical or
median retirees income by 29%.
People would say that'sunbelievable.
How do you do that?

(07:48):
The answer is you use accuratedata to measure retirees'
incomes, and I'll back up alittle bit.
Most studies or citations ofretirees' incomes come from what
are called household surveys.
These are done by the CensusBureau or by others, and it's in

(08:08):
fact a survey.
They call people up or go totheir homes.
They ask them a whole series ofquestions.

Brian Graff (08:16):
And Michigan's got one that a lot of them tend to
rely on Sure.

Andrew Biggs (08:21):
But the key thing is when you're measuring
people's incomes.
In some areas, these householdsurveys are very, very accurate.
If you ask people what theirSocial Security benefits are and
then you match it up to whatyou call administrative data
from the Social SecurityAdministration, from the IRS,
saying what those same people'sSocial Security benefits are,

(08:42):
the household surveys areactually very accurate.
Compared to what you get fromthese data sources that you know
are correct, the issue comesfrom when they ask people about
the incomes they get from whatwe'll call private retirement
plans.

Brian Graff (08:58):
Or how much they have in retirement.

Andrew Biggs (09:00):
Yes, but let me just talk about the income stuff
first, because that's a key inthe sense of they say, okay, how
much are you getting fromprivate retirement plans?
That can be pensions, that canbe 401k, ira, 403b withdrawals,
so they're all kind of lumpedtogether.
But 2012,.

(09:21):
I wrote a piece in the WallStreet Journal with Sylvester
Schieber and Syl is one of thesort of longstanding experts in
retirement policy and what wepointed out is, if you compare
the total amounts of retirementplan income in these household
surveys from the Census Bureau,like the current population
survey, which is a very, verycommonly used data set, if you

(09:42):
compare that to what the IRSreports, they're dramatically
different.
For things like earnings,things like Social Security
benefits, are very, very similar.
For things like retirement planbenefits, the Household Survey
has reported something like halfas much total income, total
benefits, as what you get fromthe IRS.

(10:03):
And so the question is why isthat?
And the answer comes down tothe way the Census Bureau
surveys define what is income.
Put my quotey fingers aroundincome.
They define income as regularpayments.
So if you get a regularpaycheck, regular Social
Security benefit, regularpension defined by the pension

(10:24):
check, that's income.
But what if you just withdrawfrom your retirement account as
needed, and that's, in fact,what most people do.
They pull money out when theyneed it.
It doesn't count, it's part oftheir definition.
It's not that people are makingmistakes.
They're answering the questionthat is given to them, which is

(10:44):
what is the regular income youget, and so what happens is,
when you have those data, itturns out they're excluding the
vast majority of the incomepeople get from retirement
accounts.
It's a little hard to sayprecisely, but you can look at
IRAs where that's?
The IRS breaks it outseparately, breaks it out

(11:05):
separately from pensions and401ks, and I looked at data a
while ago and these householdsurveys were catching something
like 5% of the income people gotfrom individual retirement
accounts.
They're just essentiallyomitting it.
But when people rely on thishousehold survey data, they'll
say say, look, people aren'tgetting very much income from

(11:26):
401ks or IRAs.
Clearly these things don't work.
Therefore, the whole retirementsystem there doesn't work.
Therefore, you expand socialsecurity.
That's like that.
All makes sense so long as youare relying on a data source
that literally ignores theincome you get from retirement
accounts.

Brian Graff (11:41):
So it's so how are they getting away with this I?

Andrew Biggs (11:42):
mean they're well it's not really a.

Brian Graff (11:43):
So it's how are they getting away with this?
I mean, they're Well, it's notreally a plot, it's.

Andrew Biggs (11:49):
One thing that happens with government is, once
they start doing something,they never change the way
they're doing it.

Brian Graff (11:54):
So I think, but how do these economists get away
with then, knowing that thisdisconnect is there, making
these, you know, I I would arguevery spurious statements,
because it's not just and it'snot just about the income side,
it's also about the savings pottoo.
There's surveys where they'reasking people to um, to reveal

(12:19):
how much they have in retirementsaving, and they get it wrong
all the time yeah it's.

Andrew Biggs (12:25):
I mean, okay, that's probably just an error
where people if there is, peopleget things wrong.
I mean, when I was at socialsecurity, uh, one of our
economists did a research paperwhere they looked at survey data
where people asked you know,are you offered a retirement
plan of work, do you participatein your retirement plan?
And then you get the usualresponses you know, are you

(12:47):
offered a retirement plan ofwork, do you participate in your
retirement plan?
And then you get the usualresponses you know, say 50% of
people are participating,something like that.
But then they matched thosehousehold surveys up to tax data
.
So for those same people youcould see are they in fact
participating in a retirementplan?
And you had some people whowere not participating but said
they were.
You had a much bigger numberwho were in fact participating.

(13:11):
We could see it on the tax data.

Brian Graff (13:13):
And they said they don't.

Andrew Biggs (13:14):
So the actual participation rate was reported
in the survey data as 50% andthe actual rate was like 62% or
something like that.

Brian Graff (13:25):
So when the surveys also ask for what people's you
know accumulate current accountbalances are, or whatever, if
they don't even know if they'reparticipating in the plan,
they're obviously, or at leastthey're not answering it that
way.
The likelihood is they don'tknow what's in their account
balance.
The point is that we're makingthese blanket statements about

(13:49):
the failure of the system, basedon data that is as reliable as
presidential polling.

Andrew Biggs (14:02):
Or less probably.
Yeah, I just finished a couplemonths ago, a draft of what will
be my first and maybe only book.
The book is about this idea ofthe retirement crisis, but I
have a chapter in it called theCrisis in Retirement Data.
We may not have a retirementcrisis.
We do have a crisis in the data, in that these data sources

(14:23):
that people rely on are reallywrong in a whole bunch of ways.

Brian Graff (14:27):
But again.
So back to my frustration.
We actually have data.
They just refuse to use theactual, real data.
So if we have Social Securitydata, if we have IRS data, it is
indisputably accurate.
How do you get away, as aneconomist, relying on data that

(14:52):
you know isn't as accurate asthe actual government data?

Andrew Biggs (15:19):
no-transcript.
Really good at PR, very good atPR, and she you know it's and
you know more power to her.
But she continues to citecurrent population survey data.
I mean, I wrote a piecerecently.
I'm just saying, look, youcan't do this anymore.
We've known I mean it's notjust since I wrote this piece in

(15:39):
in 2012.
There's a piece that socialsecurity administration
published 2006 and at that timethey were saying that 20 percent
, based on these householdsurveys, current population
survey, they said 20 percent ofseniors get 100 percent of their
income from social securitybenefits, and part of that
because they're not countingretirement accounts.

(16:03):
When they matched that surveydata to IRS data, they said the
true answer is like four and ahalf percent or something.
This stuff has been known withcertainty for close on 20 years
with certainty.
And so you know, recently Isaid I've kind of take the
gloves off a little bit and say,look, you can't cite these data

(16:25):
anymore.
No responsible researcher willcite them.
It is irresponsible to do it.
You're saying, well, okay, whydo people do it?
And one answer is those dataare very amenable to this
retirement crisis narrativeBecause the current population
survey doesn't just show sort oflow or stagnating incomes for

(16:47):
retirees because ignoredretirement accounts.
It also shows low and decliningparticipation in retirement
plans.
You know 401ks pensions we knowthat's false.
And it shows high dependence onsocial security.
We know that's false, but it'svery amenable to that narrative.
The second reason they keepdoing it is because the media

(17:08):
don't call them on it.
It is.
I mean this can sound a littlebit harsh, but you know, a
couple of years ago I did a likea debate with Teresa, sponsored
by the Wall Street Journal, andyou know it's good, I'm happy
to do it and and all that.
But you but I think listenersto it came to the conclusion I
came out on the better end ofthat debate and the reason for

(17:30):
that isn't that I'm smarter ormore articulate, say, than she
is.
I'm not.
I mean she's a very smart, veryarticulate person.
But if you're coming from myperspective, you're always being
challenged by the media.
If I go and I tell a reporter,look, the retirement system is
actually working pretty well,they'll say, well, what do you
mean?
And they'll come at me with thewhole slew of statistics

(17:52):
challenging me.
So I've learned I have to beable to defend myself.
If you're somebody who's comingto this narrative the
retirement system doesn't work,people can't save the blah, blah
, blah, blah, blah.
Therefore, you know we need todo something that most, to be
honest, washington Post or NewYork Times reporters agree with
we need to expand SocialSecurity.
We need to nationalizeretirement savings.
You don't get much pushback, youdon't get much fact checking,

(18:15):
and so it's.
I've been sort of toughened upa little bit by the fact that
most people and most reportersdon't agree with what I'm saying
, and so that makes me better atwhat I do.
But if you're spewing or Idon't want to say spewing if
you're speaking the dominantnarrative of the US retirement

(18:36):
system, that doesn't work,you're not getting much
challenge from people and,seriously, I could show you some
of the stuff.
It's just laudatory.
Nobody's asking any toughquestions, but that's not good
for you as a researcher.
Being asked tough questions iswhat makes you better.

Brian Graff (18:50):
So the Census Bureau does the CPS right?

Andrew Biggs (18:52):
Yes, Census and Bureau of Labor Statistics, but
the Census Bureau it's-.

Brian Graff (18:58):
Is it really something for the Census Bureau
to do between the 10 years thatthey do the census?

Andrew Biggs (19:02):
Yeah, I'm going to stop.
I mean because you want to sayokay, where does the
unemployment rate come from?
Current population survey.

Brian Graff (19:09):
I guess part of it makes me wonder whether we
should you know we should go tothis.
You know, try to get the CensusBureau to do something
differently.

Andrew Biggs (19:16):
Well, they have tried to improve things a bit.
Ideally, you would simply useadministrative data for all of
us, and they can.
They can match.
They've been doing more of this.
Take the survey data and matchit to administrative data.
Use the more accurate datawhere it's available.

(19:37):
It's just not as timely.
It takes a long time to do that.
Getting irs data makes you jumpthrough a lot of hoops because
there's all these privacyconcerns.

Intro (19:46):
So it's not an easy thing .

Andrew Biggs (19:49):
But I think this definition of money income,
that's, the regular paymentsprobably came during a time when
people didn't have retirementaccounts.
They want to exclude lotterywinnings or whatever.

Brian Graff (20:06):
I understand the genesis, but again it leads to
this false narrative.
Does your book kind of, will it, I wonder?
Would it be helpful to sort ofshow the CPS data and then kind
of fact by fact juxtapose itagainst the actual admin data?

(20:30):
Is that what you're doing inyour book?

Andrew Biggs (20:33):
Yeah, no, and that's an important part of it,
because part of when I thinkabout you know how well is the
retirement system doing?
I mean, there's verysophisticated ways of thinking
about this, but you're trying totalk to normal people.
My starting point is how wellare current retirees doing?
Do we have a retirement crisistoday?
Are retirees suffering To tellthat?

(20:54):
You want to know.
Accurate data survey.
The poverty rate for seniors issomewhere nine and a half
percent, something like that.
If you look using IRS data,where they capture their full
incomes, the poverty rate isabout six and a half percent and

(21:14):
the poverty rate has.
If you look in the CPS, thepoverty rate for seniors has
remained roughly stagnant for 30years.
If you look using more accuratedata, the share of seniors in
poverty has dropped by a thirdsince 1990.
It's been a dramatic reductionin the risk of poverty in old
age, and so you really want toknow how well people are doing.

(21:37):
And so, yeah, a whole chapteris devoted simply to the data
part and getting an accuratepicture of what retirees have.

Brian Graff (21:44):
Well, let me encourage you to make like a
chart that maybe you know alittle bit more, you know
digestible version.
That would sort of say, hey,here's some good examples of why
you know the reliance on thissurvey data is so flawed and
skews the policy discussion in away that's not productive.

Andrew Biggs (22:06):
No, you're absolutely correct.

Brian Graff (22:09):
So that then turns me to my next question related
to this somewhat, in that youwrote a paper that was very
controversial.
It did get a lot of press thatsuggested that, given the

(22:29):
importance of Social Security,one way to fund the current gap
that we're going to be cascadinginto in roughly 10 years would
be to pull that from the taxincentives for 401k bonds.

Andrew Biggs (22:49):
Sure, so I'm going to give you an opportunity to
state your case and then, yeah,that was a paper I wrote a few
months ago with alicia minnell,who's an economist at boston
college, and it's interesting.
Alicia and I are on differentsides of a lot of policy but she
thinks we face retirementcrisis.
I clearly don't.
She is more to the left onsocial security, I'm more to the
right, but you know, we justdidn't.

(23:11):
But we have written variouspapers together on sort of
technical topics and what cameabout was we both had this sort
of agreement that we don't thinkthe federal tax incentives or
retirement savings do very muchto increase retirement savings.
I'm pulling numbers out of myhead.

Brian Graff (23:32):
I think the the cost of the tax incentive for
retirement savings and sort ofnet well, the stated cost,
because it's not scoredcorrectly, because they ignore
the, the fact that the moneycoming out um returns to the
treasury.

Andrew Biggs (23:50):
If you look at, say, congressional budget office
will do a net present value,meaning they'll look at the
outflow today, the lost revenuesfor, say, 401k or pension
contribution but the cbo scoreis not what they use.

Brian Graff (24:04):
The jct numbers and the jct numbers um are 1.5
trillion over five years yeah,no, no and that's too high.

Andrew Biggs (24:13):
But if you look at CBO because that's the figure
we work from, because we'retrying to use we're not trying
to use some artificiallyinflated number, we're trying to
say what is the real cost ofthis.
So what CBO does they say?
What is the lost revenue today?
Because when people put moneyinto a 401k it's not taxed.
But then we subtract from thatloss the future revenues they'll

(24:36):
be collecting when peopleretire and they collect their
benefits.
So that comes to about $185billion a year.
So that's a smaller number.
And so the question is what areyou getting for that $185
billion?
And this is one of those thingswhere people say you know we
have this incentive.
Clearly you know it must behelping increase retirement

(24:58):
savings.
But if you actually look at theresearch on it, both in the US
but also in other countrieswhere they have similar
incentives, it basically itdoesn't say zero, although some
of it says zero.

Brian Graff (25:13):
But it says, really not a large effect.
Well, I know, I mean, I knowthat Denmark this is Denmark
study that a lot of economistsrely on in this regard, that I,
you know, don't.
I do think is more apples andoranges.
But you know, most of thecountries around the world do
provide some type of tax benefitfor savings and, you know, one

(25:38):
would think there's some logicalrationale for this, both when I
was on the Hill and since offthe Hill, is that when you're

(26:01):
looking at the tax incidence ofsavings for the employees' own
deferrals, granted, that you areproviding a much bigger
incentive for higher-incomepeople than lower income people
because it's a progressive taxrate structure.
But what that ignores is thefact that, particularly in the
small business environment, thattax incentive is the major

(26:24):
driver for the employer, smallbusiness owner to choose to have
the plan in the first place.

Andrew Biggs (26:29):
Okay, so we've got two different things going on.
One is contingent on 401ks orother retirement plans being
offered.
Does the tax incentive increasethe amount that?

(26:49):
people contribute to their 401k.
Or the same would apply to IRAs, logistic 401ks, if your
employer offers it.
What effect does the taxincentive have?
The answer to that in most ofthe research.
I know we didn't relyparticularly heavily on the
Denmark study.
There's been stuff done in theUS and in other countries and
the conclusion is it reallydoesn't do very much.
The conclusion is it reallydoesn't do very much and they'll

(27:13):
look at it in a variety of ways.
Say, when people sign up for aretirement plan, as a tax
incentive they'll use data thatlooks at not just how much they
contributed to the plan but whatis going on in the rest of
their household's finances.
And what appears to happen isthat a large amount of what's

(27:36):
going into tax preferred plansis money that otherwise would
have gone into a taxableinvestment account, you know,
just an ordinary Fidelityaccount.
You also get some effectbecause the tax incentive is
raising your after-tax incomeand that produces a little more
money you can put in.
But on net it doesn't appear todo very much.

(27:56):
You know I can explain theeconomic theory of why it
wouldn't do much.

Brian Graff (28:01):
No, I mean, I understand the substitution, it
appears not to do very much.
You're making the argumentaround the substitution effect
and you know certainly I'm notdisputing the fact that among
higher income individuals rightthat there is certainly a fair

(28:22):
argument to be made that theywould be saving somewhere else.
The degree to which theincentive, along with the
matching contribution, are thedrivers for savings.

Andrew Biggs (28:41):
Okay, and it is possible you're getting
different effects in differentparts of the income distribution
.
But if the net effect is verylow, let's just assume for
argument the net effect is zero.

Brian Graff (28:55):
I will allow you to do that.

Andrew Biggs (28:57):
Okay, just assume it is.
Or the net effect, just assumeit is.
Whatever it is.
It would mean that if you'regetting some increase in some
part of the income distribution,it would mean the effects are
even smaller elsewhere.
And I don't think we reallyknow very much either way on it.
The more salient point youraise is does the tax incentive

(29:21):
encourage employers to offerretirement plans, you know, so
that their high-income employeescan reap the benefits of the
tax incentive?
I mean, most of this money isgoing to the top.

Brian Graff (29:36):
Well, the business owners particularly, you know,
people who work in thisenvironment will say repeatedly
that the selling point for thebusiness owner is the tax
subsidy helps to pay for thecontributions that they have to
make to satisfy thenon-discrimination rules.

Andrew Biggs (29:56):
Okay, if that's the case, then effectively
you're not increasing retirementsavings, you're not increasing
net national savings becauseessentially, the federal money
is substituting for employers.
But let me just what you'redoing was.

Intro (30:21):
If I'm going to lay out the argument in full.

Andrew Biggs (30:23):
Yeah, it's not going to make sense if I give it
to you in pieces, but I guessand there's two parts.
One is you can say okay, forsome reason this incentive to
tax preference for retirementsavings encourages employers to
offer retirement plans.
It could be so they can gain asubsidy for their own
contributions.
It could be because it'sattractive that their

(30:43):
high-income employees can getthe subsidy.
It doesn't matter, let's justsay that it does.
The question is, how do we knowthat?
And there really hasn't beenvery much research on it.
As part of this paper, I triedto do something which I'll admit

(31:07):
was crude for thecharacteristics of the workforce
and also controlling fordifferences in the highest
income tax rate in each state.
And the reason I looked at thatis the state income.
You get a deduction in generalfor your state income taxes.

(31:27):
That mirrors that for federalincome taxes, because the states
often piggyback on the federaltax code.
What that means is, if you'rein a very high income tax state
let's say you live in New YorkCity, you're living in
California, I live in Oregon,where I pay 10% income taxes a
retirement plan should be moreattractive than if I live in
Florida or Texas, where thereisn't.

(31:48):
So you should see higherretirement plan coverage,
controlling for other workforcedifferences in high income tax
states.
You don't, so there's that.
But then there's just thispolicy argument that Alicia and
I make that even if you'regetting some benefit of coverage
from this preference, it's anincredibly expensive way to get

(32:11):
there because the benefitprobably isn't that big.
And then we looked at it andthe cost is high.
It's almost enough to affectsocial security.
But then we looked at whathappened in the UK with they
call it NEST is the acronym forthe Savings Trust and that's
essentially a supplementalretirement account offered to

(32:31):
employees who are not offeredretirement plan at work and
above some minimal income levelyou're automatically enrolled in
it.
Over the course of 10 years inthe UK they went from, I think,
42% private sector retirementplan participation to 86% yeah,
and it costs.
It costs a fraction, a smallfraction, of what we're paying

(32:54):
for retirement tax preference.
So our point is, even if thetax preference gives you a
little bit of encouragement tooffer a retirement plan for
employers, just do what the UKdid at a fraction of the cost
and get-.

Brian Graff (33:08):
Mandate.
Everybody have to have a plan.
You don't-.

Andrew Biggs (33:12):
What happens in the UK is you're not mandating
the employers have the plan.
The plan is run by thegovernment, by a trust.
If the employer doesn't offer aplan, then the employees are
automatically signed up for it.
They're not mandated, they'redefaulted in.
But the point is, over thecourse of 10 years they doubled
their retirement plan coveragein the private sector at a very

(33:36):
low cost.
So what we argued is get rid ofthe tax preference, use that
money to fix Social Security andthen set up some UK-style
supplementary.

Brian Graff (33:48):
Basically have the government take over the entire
system.

Andrew Biggs (33:52):
Well, no, yes, well, it's no, yes.
Well, has that happened in theUK?
No, it hasn't, and because it'sa system.

Brian Graff (34:03):
But the UK has a tax incentive for retirement
savings.

Andrew Biggs (34:06):
Yeah, they do, but my point is the Offering.

Brian Graff (34:11):
Because if you're saying, get rid of the tax
incentive, you're not.

Andrew Biggs (34:15):
Again, it's not an apples to apples comparison, no
, it's if they're, uh say, theuk was around 42 percent, you
had the supplemental plan, makeup 86 percent.

Brian Graff (34:25):
Now, okay, if you took away the tax preference in
the uk you know again using yourassumption okay, my assumption
would be less private sectorplans.
It would be the governmenttaking over the system.

Andrew Biggs (34:39):
Your assumption is less private sector plans.
I don't know how much less, butlet's say you'd have less, but
you'd still your retirementsavings problem is solved and
it's, aren't you ignoring?

Brian Graff (34:53):
but aren't you ignore, aren't you see?
I disagree, because what you'refailing to take into account is
the employer contributions thatare being made by the private
sector in these plans, which aresubstantial part of the
equation for most workingamericans and you.
If the private sector plans goaway, then you won't have those

(35:19):
employer contributions and thegovernment's going to be picking
up that tab.
I mean one of the objections.
You know.
You've got this proposal, theRetirement Savings for America
Act, which essentially is sortof like NEST in a way that
requires people without a planto be automatically enrolled
into a retirement 401k styleplan run by the Treasury

(35:43):
Department, and the governmentpays for the match.
Yes, we've argued, is well, ifthe government's going to pay
for a 5% contribution on behalfof these employees.
Employers will eventually saywhy am I paying for something
the government's going to payfor?
And they'll just drop theirplans and maybe divert some of

(36:05):
the benefits that they werepaying for the match to health
care or emergency savings orsomething else.
And so the government, all of asudden, is now not only having
to pay for Social Security, theyhave to pay for this.

Andrew Biggs (36:20):
Yeah, I understand that.
I don't know the legislationthat well.
I'm not sure how well it wouldsubstitute for a high-income
person.
I don't think the matches go upthat high.

Brian Graff (36:30):
No, it's actually up to about 150,000.
It would cover about 70, 75% ofthe working population, which
is not your current taxpreference is heavily weighted
towards the high end.

Andrew Biggs (36:43):
I understand.

Brian Graff (36:44):
It is, except it is , andrew, except the
non-discrimination rules docreate a drive down effect.
Rules do create a drive downeffect and you know we have some
research that shows that whenyou add the employer
contributions in, the benefitshifts dramatically in the

(37:05):
reverse direction and primarilybenefits lower income people
because they're getting fortheir dollar a much more
powerful tax incentive throughthe deferral of the match and
employer contributions that aregiven directly to those
employees than someone at higherincome levels because of the

(37:27):
limits on on contributions.

Andrew Biggs (37:30):
Oh, because of the .

Brian Graff (37:33):
The 401k.

Andrew Biggs (37:35):
The percentage of the total income.
All right, I mean it's you know.

Brian Graff (37:42):
And what troubles us is that.

Andrew Biggs (37:44):
I'm just not sure that's sufficient to.

Brian Graff (37:48):
Oh, I'm happy to share that data with you.

Andrew Biggs (37:50):
No, I'm interested , I'm just saying I'm not sure
that's sufficient to defeat theentire argument, because it's
just a backtrack about why Iwould propose something like
this.
Because it's you know, mygeneral view is that the US
Social Security program shouldgradually evolve to be something
closer to UK or Australia orNew Zealand.
It's much more focused onpoverty prevention, much less

(38:11):
focused on income replacementfor middle and high income
people.
So the question is why would Iwant to have all this extra
money going into Social Securitywhen you know under my druthers
you don't really need it?
And the answer is that theentire political spectrum on
Social Security has shifted tothe left since the time I was,
you know, started working onthis late 1990s time.

(38:33):
I worked in the Bushadministration, if you look
around, say 2000,.
You had a number of prominentDemocrats in the Senate who
would support pretty significantlong term social security
benefit reductions, retirementage, cost, living adjustments.
You had Republicans likePresident Bush who would fix the
entire program deficit if theycould through benefit reductions

(38:56):
.
Now you have essentially I mean, there is a bill in the House
that was co-sponsored by 90percent of House Democrats which
not only would have maintainedcurrent benefits but expanded
them.
President Trump has said hedoesn't want to cut benefits at
all.
President Biden says he doesn'twant to cut benefits at all.
President Biden says he doesn'twant to cut benefits at all.
The whole spectrum has shiftedto the left, and the cost of

(39:17):
doing that, though, is thelargest tax, largest peacetime
tax increase in US history.
It's a huge amount of money.
If you do it through thepayroll tax rate, you're looking
at another's three, fourpercentage points.
Yep you.
The preferred uh approachthrough most uh congressional
democrats is to eliminate thecap.

(39:37):
Uh, currently, social securitytaxes go up to 168 000.
They want to eliminate that cap.
That's a 12 percentage pointincrease in your top marginal
tax rate.
That's a very, very big dealfrom the point of view of
economic policy, and so thepoint of view I have on this was
that if that's our alternativeand increasingly it's looking
like that is our alternativethen I want to find a way to-.

Brian Graff (40:00):
You're actually just talking about maintaining
status quo in terms of benefitstructure.

Andrew Biggs (40:04):
Yes, you know, maintain the currently promised
benefits, which increase withtime.
I mean, that's part of theproblem with social security is
not just more retirees livinglonger, it's ever increasing
benefits.
But the point is here that itis not simply a choice between,
you know, getting rid of theretirement tax preference and
doing nothing.

(40:24):
It's a choice between gettingrid of the retirement tax
preference and having a massiveincrease in taxes on labor,
which are clearly damaging.

Brian Graff (40:35):
So I think the concern that I have, that we
have is that we do think thatthere would be a significant
amount of plans, particularlysmaller plans, which are the
majority of plans, that would goaway without an incentive.

Intro (41:00):
Let's assume I'm right about it.

Andrew Biggs (41:03):
There's very little research, one way or the
other.

Brian Graff (41:08):
You asked me to assume some things, so I'm going
to assume some.
I'm going to ask you to do thesame.
So, assuming that's the case,even with a mandate of payroll
deduction just for deferrals,without the structure driving
the business owners to have theincentive to put the plan in
place to provide the matchingcontributions and profit sharing

(41:30):
contributions, to provide thematching contributions and
profit-sharing contributions,you're going to diminish the
opportunity for people to savein the workplace, and we know,
when they don't have a plan atwork they don't save.
And really it's the middleincome.
I'm talking about the secondlet's quartiles here.

(41:51):
I'm talking about the secondquartile, some of the third
quartile, primarily wherethey're relying in order to get
to replacement incomes that wethink are adequate.
They're relying, if you youknow, if you look at some, you
know data that ici's put outthat looks at both of these in
tandem.
The, the addition of privatesavings on top of Social

(42:14):
Security is the criticalcomponent to achieving adequate
replacement income, whereas thelowest income quartile,
generally speaking, does okaywith Social Security alone.
And so it's that I'm notworried about the upper income,
I'm not worried about the top ofthe third quartile, I'm worried

(42:36):
about the second and most ofthe third quartile that are so
critically reliant on privatesavings to get at in terms of
seeing a combination of, in ourview, private-public partnership

(42:57):
, as opposed to having thegovernment primarily the
provider.

Andrew Biggs (43:04):
I mean, I'm philosophically in agreement
with that.
I get it, get it.
I think when you look at thepaper that Alicia and I did,
it's just important to rememberwe didn't simply say get rid of
the tax preference, put themoney in social security and do
nothing else.
We coupled that with somethinglike the UK's nest plan, which

(43:24):
is going to increase theopportunity for people to save.
So on net, I think that's goingto increase saving.
Now you raise a valid point ofwhat can you do about matching
contributions and there's noreason you could not allow
employer matching contributionsinto these supplementary
accounts.
Now maybe they say, oh, wewouldn't contribute as much if

(43:45):
we didn't get the tax preference.
All right, you know there'ssome losses on this, but in
return we're fixing SocialSecurity essentially without any
tax increases.
Some losses on this, but inreturn we're fixing Social
Security essentially without anytax increases.

Brian Graff (43:53):
I guess what I would say is why gut a system
that, as we started thisconversation, that, if you look
at actual, real data as opposedto surveys is actually working?
Why gut a system that isactually working, as opposed to

(44:14):
trying to figure out a way topay for Social Security on its
own?

Andrew Biggs (44:20):
Well, I guess two thoughts on that.
First is that I mean, I agreethe 401k system is broadly
working.
That's where I would differfrom the Teresa Gillard duchies
of the world.
By and large it is working.
The question, and so somepeople say well, you want to get
rid of this entire system ofworkplace retirement plans or
whatever, and that's not thecase.
The question is, how much effectdoes the retirement tax

(44:44):
preference have?
And I'll admit, what we didlooks at one part of the
question, and if you read ourpaper, we're very clear about
this.
I mean, we looked at a part ofthe question of contingent on
being an offer to plan what isthe effect of the retirement tax
preference, and the effectappears to be very small.
There's a separate questionwhich we made only a cursory

(45:06):
attempt at answering, which iswhat is the effect of the tax
preference on retirement plansbeing offered in the workplace.
Now, that's an importantquestion and a lot would depend
on how you answer it.
There really is very littleresearch on that and so it's
just it's kind of hard to say.

(45:26):
Again, my preliminary look atit, which may not be perfect,
but didn't indicate that the taxpreference played a big role-
by looking at different states.

Brian Graff (45:38):
I don't know if the incidence and differentials
between New York versus All Ican tell you is that everyone
who works in this business, whodoes that for a living, will
tell you those plans are sold,they're not bought, okay, and
the way they're sold is through,primarily to the business owner
, through the tax preference andand um okay but let's park that

(46:04):
because we're going to agree todisagree, yeah, no, but I think
we know the, the avenue whichreassured should go.

Andrew Biggs (46:10):
It's not on.
We kind of know what happens.
The effect of tax preferencecontingent on being offered a
plan.
I think the path forward forresearch is what effect does it
have on offering and so andthere really is very, very
little research on that.
So I just as a researcher, Isay that's something people
should look at.

Brian Graff (46:31):
Sure, no-transcript .
I think you know.
Let's assume we're not going toget rid of the 401k to pay for
Social Security.
Sure, we still have to fixSocial Security, yeah, and so

(46:56):
let's spend, you know, a littlebit of time left here.
To me, the problem is the lackof a process, because everyone
has their right, as you pointedout.
Democrats have bills,republicans have ideas, you know
there's.
There's the medallion idea,there's which yeah, you made a

(47:21):
face, and understandably so.
Um, I mean there's all sorts of, but what we don't have is a
process, and what I mean by thatis our concern is Social
Security is foundational for theretirement system in this
country.

(47:41):
It has to be there, otherwise weare going to have a major
whether we can argue about whatpercentage of the seniors rely
solely on Social Security, butit's a material amount and it
would dramatically.
Social Security, the program inits entirety, has probably

(48:02):
brought more people out ofpoverty than any other federal
program in existence bar none,and so it is critically
important.
The only way we're going to getto a solution, at least in my
view, is if there's anagreed-upon process for

(48:23):
legislating a solution thatallows for both parties to put
down their swords during thisdebate and come up with a
compromise, because right now,anytime someone proposes
anything on this, they getattacked.
It's just why both of thesecandidates won't touch it.

(48:47):
There's no percentage in tryingto do so.

Andrew Biggs (48:51):
I spoke at a event at Stanford last year and it
was sort of celebrating orwhatever the word would be, you
know the 40th anniversary of the1983 social security reforms.
And the interesting thing aboutit, I thought, was that, you

(49:12):
know, by 1984, the SocialSecurity trustees were again
projecting a long term deficitfor Social Security.
By 1990, they were calling onCongress to act on this and
really by the early 90s we knewpretty much everything we need
to know, everything we knowtoday about Social Security.
By the early 90s we knew prettymuch everything we need to know,
you know everything we knowtoday about social.
By the early 1990s they wereprojecting insolvency in the

(49:33):
2030s.
That's kind of where we are.
So it's it.
It is not the 1983 socialsecurity crisis really just
snuck up on people.
It was.
It was really response, theeconomic conditions of the time.
It happened very fast.

Brian Graff (49:50):
The Social Security Well, primarily due to the
ridiculously high inflation thatwe had.

Andrew Biggs (49:53):
Sure, yeah, but it was an economic thing.
What we're looking for inSocial Security going forward is
a demographic problem.
And if you, the Social SecurityRetirement Fund is projected to
go insolvent in 2033.
The Disability Fund isprojected to go and solve in
2033.
The disability fund isprojected to stay solvent.
But if what we're looking at1983, if we had let social

(50:14):
security go and solve, and itwould have been about two and a
half 3% cut to benefits, thatwould have lasted like seven
years and then the system wouldhave come back into solvency
again.
If you go forward to 2033,you're looking at something like
a 20% cut of benefits thatlasts forever and gets bigger
forever.
So it's a very differentsituation.
But the problem is we've knownabout it for 40 years and yet

(50:36):
we've done nothing.
And this isn't I'm not a greatpolitical scientist, but I think
a key thing to think about is,during that same period, other
countries have reformed theirpension system the UK, australia
, you know.
All these countries do thisstuff.
We haven't.
And so the question is why andsometimes people make it like

(50:56):
kind of morality play we justneed to elect better people.
You know, like you know, goodluck with that, but it's that's
not really the problem.
I think we do have a structuralproblem that prevents the US
from doing any real majorreforms of any kind, and that's
because if you're in the UK orsomething, you need a simple

(51:17):
majority in parliament, onehouse of parliament, boom,
you're done, and then you can doessentially what you want.
And if it doesn't work, youlose the next election, it gets
reversed or whatever.
In the US you have to pass theHouse with a majority, you have
to pass the Senate with asupermajority usually 60.
You have to have it signed bythe president and you know,
inevitably somehow it'll gothrough the Supreme Court.

(51:39):
It's just too high a hurdle andit's so easy to stop things
from happening.
So people are members ofCongress are kind of unwilling
to get on board and threatentheir political careers with
reforms that are very unlikelyto pass.

Brian Graff (51:55):
And that's why in the US Particularly, on a topic
that is so much, what is?

Andrew Biggs (52:01):
the point.
But in the US you alwaysbipartisan commissions and
they're trying.
You know, and I worked for onein 2001 for bush from the really
early 90s onward you have thesethings.
Those are admissions that arepolicy making processes
incapable of handling thingslike social security, medicare.

(52:23):
We just can't do it.
That's a pretty sad damadmission that because these are
not minor programs, these arethe Social Security, medicare,
medicaid, that's what thegovernment does.
You know.
All the other stuff is kind ofancillary.
You know, department ofEducation or whatever, these
entitlements, that's themajority of what the government
spends money on.

(52:44):
The fact that we have to turn tothese bipartisan commissions or
outside usual process is anadmission.
We that our government cannotmanage the major programs that
it administers and it's itreally is.
So it's not just a socialsecurity thing, it is a larger
policy making.
You know handicap that we facein the uS.

(53:07):
So you know I focus more onSocial Security.
So what do we do for that?
Let's try another bipartisancommission.
People, you know, make fun ofthese things, but it's no.
I.
If it works once you're good.

Brian Graff (53:20):
Actually, I think we might need even to up the
ante and do a select committee.
And do a select committeethat's bicameral, that would
involve, you know, specificmembers of the relevant
committees of jurisdiction withexpedited legislative authority.
Sure, because the problem withthe commission is it just, you

(53:45):
know, it's off the hill, theyjust hand it over to the hill.
Off the hill, they just handedover to the hill.
And the reason it got done in83 was it was imminent and it
was painful, but not, it wasn'tthat painful, it wasn't that
painful.
Yeah, and so that's going to bethe great challenge for us.

Andrew Biggs (54:10):
Yeah, if I could make another point of the
political incentives and this isgoes not towards Congress but
towards individuals.
And let's say we've known for40 years that the system faces
long term funding.
Yeah, we could have fixed it 40years ago.
What that means is for the last40 years, americans would have
either paid higher taxes and oraccrued lower Social Security

(54:31):
benefits, and we didn't do that.
And so come 2033 or whenever,we're going to have to make up
some funding gap.
Americans sort of played a gameof chicken with the political
process.
They refused to accept thereforms that would have been
needed to make Social Securitypermanently solvent.

(54:53):
You know you never had a ton ofsupport for raising taxes,
cutting benefits, retirement age, whatever.
They just didn't really supportit.
And then they're saying youknow, we kind of dare you to cut
our benefits when the trustfund runs out.
And you know we've beenentirely justified in a way
doing it.
We've been warning since BillClinton.
You know, if we don't fix thissystem, the trust fund runs out,
we're going to cut benefits.

(55:13):
It's not like nobody's beenwarned on that, but they're
playing a game of chicken.
We're not going to cut theirbenefits.
Joe Biden's not going to cuttheir benefits, donald Trump's
not going to cut their benefits.
So they played a game ofchicken and they won it.
You know they're so far they'vewon.

Brian Graff (55:34):
Yeah, but it's my.
My best guess is that in fact,they will win it.
The likelihood that we come to2033 and there's the potential
20, 21 percent, 22 percenthaircut actually goes into
effect is, I would say,virtually zero effect is, I
would say, virtually zero.

Andrew Biggs (55:50):
Now I calculated, if you're sort of a medium wage
worker and I said, okay, let'ssay we raise taxes.
You know, begin 1984, as neededto keep the system solvent for
75 years what would be theaccumulated cost Over your
career?
You would have paid.
You know, including interest onpast taxes, you would have paid
over $100,000 in additionaltaxes.
If you were somebody earningmaximum taxable wage currently

(56:12):
$168,000, you would have paidsomething like $300,000 in
additional taxes over yourcareer.
They didn't pay those taxes butthey're still very likely to
get the benefits.
So it's, you know, if, from thepoint of view of an individual
person you know, assuming youcare only about yourself, not
about your kids and grandkidsdelaying reform was an entirely

(56:33):
rational thing because thelikelihood they're going to get
hit with that 20% cut was alwayspretty small and they didn't
want to have to pay for it.

Brian Graff (56:41):
They want to pay for it.

Andrew Biggs (56:42):
So this is there is this sort of it is the
technical challenges of SocialSecurity are not that hard.
I mean it's you know no it's apension plan.
No, but you want to think youknow it's.
I mean there are biggerdisagreements than you would
think, but I think they can beresolved using data and all that
.
But these incentives, both atthe individual level, they don't

(57:04):
want to accept the reforms.
At the congressional level, whytake the risk when there's such
a low probability of passinganything?
It just conspires so thatnothing happens.
But then of course the problemgets bigger and all that.
So it's a sign of adysfunctional system.
I think if Social Security hadbeen set up I mean, the state
and local pensions are a bigproblem for various reasons.

(57:26):
But one aspect they have isthat every year they do an
actuarial evaluation and youhave to change your contribution
rate or change your benefitformula to keep yourself either
solvent or move towards solvency.
We don't have any of that withsocial security.
We have a tax formula and abenefit formula that are
mathematically incompatible.

(57:47):
They just won't meet each other.
But we have nothing thatmandates you have to make them
compatible.
So we just keep on promisingbenefits that are trillions of
dollars in excess of the taxeswe're going to collect.
It's just a screw-up, basically, at a whole variety of levels.

(58:11):
I wrote a piece, maybe about sixmonths ago, with a guy named
john cogan who's an economist atstanford, and we pointed out
that, you know, from 1935 upuntil the mid-1970s the system
was imperfect but it wasn'tgoing to go and solve it and the
reason for that was thatbenefits were increased on an ad
hoc basis.
When you have inflation 808benefits or if revenues are

(58:32):
higher, we felt we could affordmore benefits.
We'd increase them.
In 1977, they put in place anautomatic formula for always
increasing benefits.
That was the moment when sortof our fate was sealed, because
you kept promising more and moreand more to people without
having the revenues to pay forthem.
If we had not done that, socialsecurity would probably be

(58:52):
solvent today.
We would just increase benefitsa slightly lower rate and it
would be fine.
We screwed up and you know it's.
It's just interesting, you can.

Intro (59:02):
So let me suggest.

Brian Graff (59:06):
So let me suggest to you, as you, as you, as you,
continue to write about this andtalk about this because,
truthfully, this is, as I said,foundational to our system.
We're having this kerfuffleabout 401ks.

(59:27):
The reality is politicallyunlikely for 401ks to go
anywhere.
It'll be more if they do anytrimming, it'll be around the
edges, but ultimately, what wewill have to do is address
social security.
And let me encourage you tofocus on the process more than

(59:47):
the substance of how to fix it,because ultimately, to your
point, this isn't nuclearphysics.
Figuring out the process isgoing to be more important than
figuring out the fixes.

Andrew Biggs (01:00:01):
I agree.
And I disagree in the sensethat I agree the process is the
thing holding us back.
And you know you talked about aselect committee.
I think that would make sense.
I think it would make sense toinclude not just, say, ways and
means of Senate finance, butalso people from, say, health,
education, labor and pensions,because for an ordinary person,
they're not just thinking aboutSocial Security in isolation,

(01:00:22):
they're thinking aboutretirement and if you can do
things to improve stuff on aprivate side.
But here's something which Ithink is interesting.
It's like if you think abouthow you fix Social Security,
people just rattle off this menuof options I'll raise the
retirement age, reduce cost ofliving adjustments, blah, blah,
blah.

(01:00:49):
The interesting thing, I think,is that when I compare the US
retirement or US Social Securitysystem to other countries that
are like us meaning I'm notcomparing it to France, I'm
comparing it to Canada, to UK,australia, new Zealand, which
are, you know, they're notidentical, but they're by and
large similar to us in the waywe think about the role of
government, the role of privatesector, the role of individual
choice.
Their social security programslook very, very different from
ours and they are much morefocused on poverty prevention,

(01:01:10):
much less focused on paying highbenefits to rich people.
For instance, if you look at ahigh income couple retiring this
year, you know both are earningthe taxable maximum $168,000.
They retire this year.
Together.
They're going to get somethinglike $96,000 in benefits this
year.
Together they're going to getsomething like $96,000 in
benefits.
If that same couple were livingin Canada, they would get

(01:01:32):
something like 31,000 dollars inbenefits.
Now you don't see rich Canadianseniors, seniors roaming the
tundra, homeless.
It's they.
They have adjusted to the fact.
Okay, I'm going to save more onmy own.
No, I think everything you'resaying, my point is that if you
don't talk about things likethat, we simply pick off this

(01:01:54):
menu of options that areconstructed by the social
security actuaries that never,ever think outside the box.
Those menus of options areentirely about keeping this
system going.
They're not about how do weserve the needs of seniors, have
an effective, cost-effectivesocial insurance program.
So I do think it's important.

Brian Graff (01:02:12):
Understood and I do think we need to rethink the
mission of this is really whatyou're getting to, but I also
think you can't, again, youcan't get to any of this without
some process for allowing thatdebate to happen.

Andrew Biggs (01:02:33):
No, you've got to acknowledge our political
process has failed on this.
That it is not that socialsecurity reform is too
technically tricky, thepolitical process has failed for
four decades.
Not a Republican problem orDemocratic problem, it's the
structure we have just makes itit doesn't make sense to reform
social security.

Brian Graff (01:02:53):
And so you're, you're precise, and there you
have it, we have to do somethingthat, um, there really is no
way current, under the currentregime politically, uh, for
anyone to want to really do it.

Andrew Biggs (01:03:07):
Exactly, and you know we're seeing that in the
presidential election.

Brian Graff (01:03:11):
Now it's you know, it's a null set.

Andrew Biggs (01:03:16):
Yeah, it doesn't get any real.
You know I'm not favoring oneperson over the other, but you
know President Biden had atleast a partial plan in 2020.
And during that election hewanted to raise the tax max or
whatever.
Literally nothing got mentionedof it since then never entered
into any of his budgets.
It was just dropped.
And if social security is asimportant as people say it is,

(01:03:38):
if it's a sacred trust, if it'san earned benefit, so on and so
forth, don't you owe it toamericans to get serious about
social security?

Brian Graff (01:03:47):
because you can't really do it without raising
taxes on people making less than$400,000.

Andrew Biggs (01:03:53):
That's it.
That's it.
You can't do what they want todo.
You can have a very effectivesocial security program, which
is why they dropped it.
Yeah, you can't have a programthat pays every penny of future
benefits that are being promisedwithout taxing the middle class
.
And there were a lot ofcongressional Democrats who
realized that and they proposed,you know, eliminating the tax

(01:04:17):
max, the payroll tax, but alsoraising the payroll tax rate,
and you can make the systembalanced that way.
But it's just not taxes peoplewant to pay.

Brian Graff (01:04:28):
And so Certainly not, and it's not something
that's very attractivepolitically.

Andrew Biggs (01:04:31):
So no, it's not attractive at all politically,
which is you know?
Which is why president bidensaid I'm not going to tax
anybody making less than fourhundred thousand dollars.
He has got it.
The average member of congresscomes from a very gerrymandered
district where they get 90 ofthe vote or whatever.
They're not thinking about themedian voter.
If you're a presidentialcandidate, says I gotta win

(01:04:52):
pennsylvania or something.
You're thinking very hard about.
The media, it's all about themiddle, and the median voter
doesn't want to pay higher taxes.
That's the difference betweenus and europe, even among sort
of lefty americans, is europeansare happy to pay the higher
taxes.
Even left-leaning Americans arenot.
You know, you're Bernie SandersLike let's get the billionaires

(01:05:12):
to pay for it.
That's not how Sweden does it.
They say no, let's have, youknow, joe Sixpack, pay for it.
And we're not there.
And so we need a little bitmore maturity from our
presidential candidates to thinkwell, what is it in fact
Americans want and to a certaindegree they want false promises,
but ultimately they want asocial security program that

(01:05:33):
works for them.

Brian Graff (01:05:34):
I think what you're asking for is maturity that
matches chronology.
Yes, and we haven't had thatquite yet.
On that note, andy, thank youso much.
Appreciate your time, great,great conversation, and

(01:05:55):
obviously I think you started bysaying retirement policy isn't
boring, and I think we've provedthat point.

Andrew Biggs (01:06:04):
Well, thank you.
I really appreciate the chanceto be with you.