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Monday, August 22, 2011

180° backwards

by folkbum

Yglesias, today, cites a deal the Financial Times wants progressives to take on another stimulus:
In broad terms, the needed elements are plain: further short-term stimulus combined with credible longer-term fiscal restraint. Cut the payroll tax, extend jobless benefits and subsidise new jobs; then curb entitlement spending by raising the retirement age.
No! You want an immediate, effective stimulus and curb to rising unemployment? Lower the retirement age.

Right now, offer anyone over 60 an early out to Medicare and Social Security. Make it temporary--people would have to pull the trigger by, say, December 31--but offer it.

With millions dropping out of the workforce (and likely, high wage earners too), unemployment falls, labor costs fall, consumer spending rises, and, boom, stimulus.

Short-term it creates additional cost; but short-term borrowing is cheap right now and all of those new retirees would have been entering the system in the next five years anyway.

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