Teresa G:	I am very honored to be here, not only because of being here at Swarthmore, which is story-famous, very impressive institution, but also to be the Frank Person lecturer. There's much intellectual history between what my work and what Frank Person stood for. Not only a labor economist, but when he was an economist, being a labor economist was to be a core economist.
	There was classes taught all over the most elite universities, that were called the capital problem, and the labor problem. They were seen as all of economics, and for Frank Person to engage as an economist who had all the strife's of the profession, a quantitative and theoretical chops to be an economist, he also threw himself into solving problems facing humanity at the time. And what was facing humanity at the time right after world war two, was a way to organize our institutions, our laws, so that everyone in the economy were engaged economically, so that people had a job if they wanted a job, but also that peoples lives as workers had dignity. And I want to extend his work, his concern about unemployment, to talk about the other part of what a standard of living is for workers, and that's the period after you've worked for so long. That period of time called retirement.
	So retirement sounds kind of AARP-ish, and I'm very sensitive to that, because it's not about retirement, I'm talking about work, and just a big part of the work is not only days off, a holiday, the weekend, it's also mandatory schooling, so you don't have to work when you're 12, and it's also the period of time after you've worked. So it's all about labor. I title my talk in various ways you know it as The Old Don't Eat The Young, I gave it tonight a little more of a policy flavor in which I'm talking about the conflict between issues around austerity and austerity budgeting. The concern that the budget deficit is one of the most important public finance issues, and how claims that austerity economics is the only way to manage an economy is twinned with moral claims about, it's the only way to be fair to other and future generations. 
	Budget cuts have been justified on the moral claim that it's the only fair way to achieve intergenerational equity. That's the topic of the talk, I'm going to talk about the myths behind the idea that spending on the old, takes money away from children and from young families. I'm going to walk you through the way the social security system is constructed and funded, and then talk about what could be lost if we don't secure pensions. That's hard to do in a room full of people who's mean age is about 21 and a half. But we're all going to get old, and you also have connections with old people, so it's really a bid for solidarity. Let's talk about the way we arrange our institutions over the life cycle of a human beings.
	Let me tell you my frame. My frame is that the hallmark of a functioning, growing, flourishing society, is that both the rich and workers live a normal human life span. Those of you in development economics know this metric, that we haven't achieved equality unless everybody on the planet born, can live a normal human life span. So one metric for development economics is just, how far away people live from the average mortality rates. Y'all agree? Are y'all with me? That's a pretty good metric, it's simple, it makes sense, everybody gets to live a normal human life span. 
	The second metric for a functioning, well organized, flourishing economy, is that entitlement to leisure at the end of one's working life, could also be the weekend or holidays. Entitlement to leisure at the end of the working life should be available to the rich, to the middle class, and to the poor. So those two propositions. We were doing pretty well in the United States until about two decades ago. Two things happened that make those marks, those benchmarks for a good society to look less achievable. 
	One is that we're seeing that pensions are eroding, for almost all workers in the United States, they are eroding for two reasons. Employers just haven't bothered sponsoring pension plans, and we have less pension plans now, than we did 40 years ago. Employers are running their companies without bothering to supply what's called a 401K plan, these are also called Do It Yourself accounts, it's what most of you if you're lucky to have a pension, will have. Your employer and you will put money into an account, and you're left to manage it. You're left to decide how much to invest in it, and you're left to decide what money managers to use, and you're left to decide how fast you should take the money out when you retire. It's a big lift for human beings.
	So one of them is that people are switching from what's a traditional pension plan, it's called a Define Benefit Plan, and that's that you work and you work and you work, and you might change jobs, but you accumulate credits to a plan and it pays you an annuity for the rest of your life. Now all of us, all of you ... How many of you have worked and gotten a paycheck? Have you noticed something taken out of your paycheck, at least if you're an American worker, called FICA? And you wondered who FICA was? Well that's the amount of money you pay for your Social Security and your MediCare, it's a federal insurance contributory act, if you want to know. So you are in a defined benefit plan to begin with; but it won't replace enough of your pre retirement earnings, to get you to your standard of living when you're retirement. So, the design of the system is to supplement that. 
	Most workers do not have anything, a defined benefit or a 401K plan. That's one thing that's happened, that's actually moving us away from the goal that everybody gets to retire; not everybody has a pension. And the other thing that is less well known, is that there's a growing gap between those who get to live a normal human life span, and those who don't. Now everybody in America is living longer than they did, at birth, at age 20, at age 65; but for the past 30 years the gap between those who are poor, rich, black, or brown, has actually widened and it's become an even more important problem among the social scientists who are looking at it than growing wealth, and income, and equality. There seems to be on average, longevity increases, but some estimates have shown all those longevity increases have gone to people who are above the average medium life-time earnings. There's some measurements that if we look at healthy life, that most of those gains are going to the top 20, 30 percent, depending upon how you measure it.
	There seems to be not only an erosion of pensions, there's also an erosion in equity in life span, for at least the people who make it to retirement age. And so this metric, I thought I saw some nods of ascent, about what makes for a good society, we're not doing very well. We're losing income support for the elderly, and we're losing equality in life span. There is a new value proposition being presented and a new political vision, which answers some of these problems, at least the first one. 
	"Ah there's not enough pensions? Then we're going to define," these are among policy makers and some economists, we're going to define a new kind of retirement, and that's a working retirement. The new retirement, it's supposed to be ironic and funny. All right. And it manifests itself in a policy prescription that sounds benign enough, raise the retirement age. Well raising the retirement age in pension systems and now, all just located into social security, means to cut benefits at the age that people used to collect social security. 
	Right now we can collect our full social security benefits at 67. There are proposals now to move that age to collect full benefits to age 69 and 70. They're quite will, I'm on a federal commission that is looking at that proposal. And that is predicated on the false belief that if we don't cut benefits to the elderly, that it's going to impinge upon spending for children and for young families, that proposition is false and there's no evidence for any policy making in the United States, where money not spent on the elderly goes to head start programs. No evidence for that in the United States, and a report, not technically, but report on some economic metric evidence to show that it's also not true across countries and across time in those countries. 174 Countries over 30 years have shown no trade off. I gave you the highlight first, so let me present my case.
	Everyone deserves to live, everyone deserves a normal human life span, everybody deserves a retirement, and there's no trade off between that goal and other goals of making sure we support young families, and last that we have the money to spend to achieve both those goals.
	I do want to thank Frank Pearson. Not only am I honored to be here, but I'm thanking him and his colleagues at the time, for economists to really focus on the functioning of an economy in terms of how it employs it's people. This is from one of his books, his last book, was on unemployment and the quote from that book is, "That the kind of unemployment that persists, even in periods of general prosperity falls more heavily on certain groups than on others. Another economist in the department, Professor Prior, who's actually talked about how big pockets of unemployment or big surges of labor supply, can actually spoil labor markets. And I'm going to actually pivot on some of that work to show that if we force a lot of older people to take jobs that teenagers have, 80 year old baristas, you'll meet some of these folks, that it actually may put labor on it's back foot and suppress a wage growth. 
	Here Frank Pearson draws our attention again to the same way I want to, is what is a good society? One that has unemployment even when times are good, is one that has chronic levels of unemployment and that has implications for everybody. So I started my talk to say that there are now developing moral claims for intergenerational equity, in devising ways to cut the budget. Here are two quotes, one from an economist you may or may not have heard from, but he is very influential; and one is for a very rich influential banker called, Lloyd Blankfein who runs a company you might have heard of Goldman Sachs. Both have the same message. 
	My colleague professor Kotlikoff at Boston College says, "The social security system is a fiscal child abuse." Catchy term. "It's fiscal child abuse because the system is so expensive and will grow so expensive that it's going to burden the next generation and it's irresponsible and shortsighted." Which is kind of worrisome, to think you younger people would be a little bit worried about being abused every day in this sneaky way. 
	Blankfein, talking about the austerity movements in cutting budgets in this sequester, you guys were all in high school then, but some of us remember the sequester of four or five years ago; was that, "We have to cut the budget because we can't afford it and the real political economy issue is just to lower everybody's expectations." Well there's a vision about what a flourishing economy should do, just expect a lot less. 
	So this is the context in which these public policy debates are being made. I want you to step back from the doom and gloom and throw a little party. And the part is, what we have done, Frank Person was part of this in the trenches of the economist ranks, that we devise with our social security system, our disability insurance system, our employer pension plans, defined benefit, and somewhat 401K plans; we devised a system so that everybody, remember my value proposition? That rich and poor and middle class should be able to have the same number of retirement time? We did it, right now people who are retired can expect no matter what their wealth levels are, to have the same number of years in retirement, and this color, what is that color? I ... yellow? Gold. Gold. Is that you don't see much variation in life span. The rich are living a little bit longer, and that's sort of a hint, seven point five years, but the low wealth folks are living at 75 years. That's a couple of months. Doesn't seem to matter now, but it does if you're like 75, right?
	It's actually the idea that there is a little bit of a different and the wealth are winning, the wealthy are winning, is a hint. Are you going to see that, that gap is growing even more? These are all workers. They're not everybody, this is why this sample's going to look a little differently than things you might read in the press, and these are people who have made it to 65. So these are actual people that I know everything about, because they're in this sample called the health and retirement survey from University of Michigan, and they're dead. Because that's how I know, how much retirement time they had. So that's my sample. It took me actually six years to have enough dead people in my sample, to actually get this, so don't laugh at them, this is a hard power point slide. 
	So let's just celebrate it, hoo ha, with all this talk, this Piketty talk about inequality and income and wealth; we did pretty well here. We've equality in what's called retirement time. But, there's lots of evidence to show that if the privileged live longer, that they're going to get more retirement time because they'll be living longer. It's simple math.
	There's lots of ways I could show you that and we could be until, what's today? Tuesday? Wednesday? To tell you all the ways, all the evidence is accumulating to show that the rich are pulling away from the poor in terms of life expectancy. I chose to show you this one because of a lot more to talk about. This is an amazing fact, that if a black and white man live to age 65, and that's a big if, but if those hearty men made it they were about even in terms of life expectancy. They were expected to live until 79. Now, you get a white and black man to live until 65 and there's now a gap of two years. Again, two years matters a lot at this point. It's a big percentage and it's also human life we're talking about. 
	There's something about access to statins, life choices, and increasingly we're explaining these differences, this growing gap, by the characteristics of the jobs that the privileged and the not privileged have. We have lots of medical evidence that subordination, and having to be subject to shocks. Which could be fear of being fired, or being fired, or just having a constant stream of demands, commands. Being subordinate at work can cause chronic inflammation, which is connected to all sorts of bad things that affects your morbidity and mortality. So there's lots of really interesting [ebidemiological 00:18:28] work on what may be causing this, but it's not all pork chops and cigarettes. It's not all because of the lifestyle choices made by the individuals. We're seeing a lot of social, economic and even environmental differences in the life cycle experience that are affecting that. And a lot is a legacy of not having an actual health insurance system as well. Lots of interesting stuff, but the take away, is that we're seeing socioeconomic class being a significant determinant of longevity, and I'm not even talk to you about morbidity that is illness and sickness and limitations on activities. it's the same pattern. 
	So that's my first thing, the rich are living longer than workers. The second is that we are approaching what I've called in the press, a retirement crisis. We're seeing a trend, this is another way to show it, we could be here until Thursday, I could tell you in other ways to show it, that more and more Americans are not prepared for retirement and it's not just because of the great recession of 2008. That because of the lack of coverage, and because of the poor design of the way that people accumulate and manage their accounts, they are not reaching 65 with enough assets to take them to their death, maintaining their standard of living when they were living. And that wasn't always true. 
	I've backed up this claim, that this next generation of retirees are going to doing relatively worse than their parents and grand children. We had a legacy, well Frank Pearson was an economist, that things were getting better in terms of what the life cycle of a worker could look like. Social Security went up with inflation, we funded it when we did, we expanded national health insurance for people over 65 in the MediCare plan, things were getting better and the last 20 years there's been a reversal. 
	Remember I told you those folks, I just gave you Lloyd Blankfein and Professor Kotlikoff, well they're have lots of other colleagues. The answer to his erosion of pension income is the new retirement. The new retirement is work. In my last book I talked about this proposition as resting on a belief that work is good for you, this is actually what Burcham Russel talked about in the 19th century, is that only the rich say to the poor, "You know, it's good to work. Why do you need an extra holiday? It structures your time, it makes your brain active," all the things that the policy makers believe, and no worker I've ever met says, "Oh I can't structure my time or have a social life without working." They might be working about being bored, you might hear people say, "Well I wouldn't know what to do if I retired," but give them a week.
	There's lots of evidence to show that there isn't this degradation of community and of cognition after retirement. But here's a plan and this is a nice side it has lots of information, and it's based on a very fancy projection model on wealth. It's the only one we have social security administration uses it and this is to look at cohorts, so potential students of economics will see this as cohort study. We looked at the people who were born during the great depression, to see when they got older, where they might be getting their income when they get old. So they'd have some assets, that's their retirement, assets and their house. Their DB pension, that plan I talked to you about. Social security, it was born when they were born and it grew while they grew, and earnings. Some people over 65 would still be working.
	Now watch this. An erosion here, the increase in assets did not make up for this erosion. Social security is pretty stable. The new retirement is work. The only way the middle class workers stay middle class elderly for these generations and beyond, is if they work. And this is really unusual if you look at other rich planets, other rich countries on the planet. We're the only one with a stated retirement policy is actually no retirement at all. We've had a great America job machine, I'm going to end my talk with this when we talk about those jobs, but we really do seem to employ, or have people look for work where in other countries, they have other ways of handling a population.
	This is another way to show that the elderly are expected to work more, is that these are projected rates for people, look at this age. 75. You probably know people who are 75. They're probably not working. But imagine them, one point three percent of them are working in the '90s. This is the projection, that even though the labor force participation rates for the whole population will actually be staying about the same, in economics speak, point three percent of change over number of years is really zero. No change at all. That's a rounding error. This is a very definite increase in the expectation of labor force participation, amongst 75 year olds and this is strange. This is not going on in the rest of the world. 
	I've given you this cover of a magazine because this reporter told a story, those of you have read Thomas Piketty, we're talking this at dinner, is another way an economist actually tells a story. This is a journalist who told a story. I showed you those graphs right? Older workers are working, she actually embedded herself for six months in a group of older workers and she wrote about their lives, their motivations, and their work life. She embedded herself in a group of people called workampers, and these are older people that don't have homes, they live out of their RV's and they go from seasonal job to seasonal job, mostly in the summer. National parks, tourist areas, but increasingly to warehousing facilities. 
	That Amazon, every time you click, to get a book from Amazon Prime, do you ever know what happens between the click and the receipt in your mail box? Somebody gets that information and they're directed to go pack in that little box to you, to send it wherever you live. And that person increasingly are older people who work in these long warehouses, read the article, and describe it. And they're doing a lot of stooping and bending. I'm quoted in this article and the reason she found me, is because a couple of years ago I analyzed the characteristics of jobs that older people have. In the '90s they were getting better. 
	There was less physical labor involved, especially heavy lifting. But in the late '90's and beyond, something was creeping up to show that these jobs may be getting worse. There's more intense eyesight required, keen eyesight, intense concentration, and stooping and bending. So here it was in my data, and here she had a story of who might be that's stooping and bending. Other work is confirming that a greater concentration of workers in warehouses are older people and these folks, this is a story it's not a national sample, a story these people are not working to keep themselves busy. They're not doing it for love. They're doing it for money. And I called it, said, "Oh Jessica it looks like the end of retirement for me," and she named the title of her article, based on my quote. I really like that.
	Here's a guy who is in a PBS documentary that I'm also in, commenting on the numbers, it just won the Emmy two weeks ago, called The Retirement Gamble, and this guy, never met him but we're in the same program, he's 73 and right after that photograph was taken he's working at 10 o'clock at night, shoveling garbage into a and incinerator. And he's not doing this to keep himself from boredom. He's doing this because he needs the money. So this is the face, and the story of the policy prescription to raise the retirement age.
	This is evidence of the degradation of job quality for older Americans, it's a new trend, and I'm purposely showing you a different kind of methodology. I'll look at a panel and take their subjective assessment of what their job is, meaning that you ask people, "What's your job like?" That's called a subjective assessment. Other ways to do it is to take an objective assessment, the labor department, she looks at every jobs that we all have and categorize them, and gives them about 15 characteristics. A big characteristic, is who you take orders from. So right now with a graduate student, we're linking the jobs that older people have with the objective assessment of the various aspects of the jobs. Were especially interested because of what we learned from epidemiologist, that the hierarchy, where you are on the hierarchy of the job might matter.
	I also said that we're very unusual in moving in our policy direction to make older people work. Not because, not other OECD countries, OECD countries Organization of Economic Cooperation Development, it's the organization of rich countries on the planet, and it's called the OECD. Is not that other countries in the OECD aren't trying to raise the retirement age, the difference is they're raising it from 58 to 62. Nobody is at our limits, at our outer bounds. We're now among the highest age to collect full benefits at 67, the average in the OECD is 65 and there are many countries that are at 60 and 62. 
	We are an outlier, this American exceptionalism of pro work, or working retirement policy. I'm going to Berlin and Amsterdam on these conferences in two weeks, you're getting this talk before they do. This is going to be a hard sell. They're not going to be able to get that last slide, where I showed that most older people are going to work more, it's just even a value proposition they even consider. 
	Again, to prove where we are, this is the calculation of how many years people live in retirement, with this numbers, they have thirteen point six, with my sample of just workers, full time workers, I had twelve point seven. Other people in other nations, retire longer than we do. it's only the people in the poorer countries, Ireland, a new entrant to the OECD is Israel, Korea, I left of Mexico their retirees have shorter retirement time. 
	This helps introduce the results of my study, and this is the study I think it's called, The Mythical Trade off between Spending on the Old and the Young, and it's a very simple methodology, which is I norm the spending on the old and the young, based on the level of GDP, and I control for the number of old people relative to the young people in a country, and I can get some really fancy estimates for how generous the pensions are, just to see if a country spends a lot of GDP on the elderly, what explains it. The variable of interest, is whether or not what explains generosity to the old, is being less generous to the young. So my variable of interest is how much of GDP goes to the young after I control for how many young people there are, and I found no matter how I cut the data, no matter how many lags and how many ways that I've measured it, that there was only a positive relationship between spending on the vulnerable when they're old and spending on the vulnerable when they're young.
	Political Scientists help me explain this, the hypothesis of there's a trade off, would come from a society that's really built on special interest groups, that what the government spends, depends upon the strength of a lobby, or the idea that all of Government can be explained by who has most money. Another way to describe the way democracy exist is that it's a social demographic framework where parties get together, and advocate a way of living, or what a good society is. That's called the Social Democratic Thesis. The other one is called a Liberal Democratic Thesis, if you must know. There's two ways to look at this, and I found support for the solidarity thesis. That if you have a society that says, "We have to invest in children. In education, we have to support young families," it's most likely to be a society that has a decent pension for workers at the end of their working lives. 
	I don't report any of the regressions, but I'm reporting the raw correlations they both tell the same story. That it's a positive relationship between spending on the old and spending on the young. This is over 154 countries, now I'm going to come home to America, and what I've done is really take on the latest Washington Post article, but they come around like a comet. I just know it's going to come around again so I have these numbers ready for the next time there's going to be a New York Times article, another article that says, "Hey we spend so much on the elderly, look at this bill for social security and MediCare, and we hardly spend anything on childcare spending." 
	Those are often fatally flawed and I write the same nice letter to the journalist, "Hey you forgot to add state and local spending on schools." So if you do it right, I've developed this for you is to show that social security and MediCare do take five and three percent of GDP, but if we look at public education, and then the healthcare spending for poor young families, chip is for the children, and the EITC is a tax credit for low income workers. And add that together it's about even. Maybe you don't like my categories but I just wanted to give you an order of magnitude. Suggestion. That they're not that off. 
	We haven't even talked about the way these are financed. Social security and MediCare are financed by workers, by FICA. And most people se their FICA as insurance just in case I do get disabled, just in case I do live until 115. And don't get most of their money back. Just like you won't get your money back from your health insurance or your car insurance because you're not going to have a wreck or get liver cancer. [inaudible 00:35:38] likely. So insurance isn't valued on a rate of return basis. It's based on a fair deal for a premium, and most of what this is, is insurance. 
	These are self financed program, and if enough money isn't there in the program, benefits are automatically cut. That's the way the system is structured. More about the system in a minute. But here my point is, is that we spend about even in terms of government units that matter, federal, state, and local governments. But we also spend a lot of money on the wealthy. So here I'm trying to pivot from a frame of young and old, and now let's look at the rich and everybody else. Embedded in the federal tax code, is actually a lot of what's called back door spending, on taxes not collected called tax expenditures, or tax deduction. This is quite large, it's2 percent of GDP and these are tax deductions that are entitlements. If you buy a million dollar house and you get a million dollar mortgage, you're entitled to the deduction on the interest rates. 
	If you have profits abroad, you're entitled to deduct those profits abroad. So in the tax code are number of entitlements that don't get appropriated every year, they're not debated for their fairness or effectiveness. They are built into the tax code, so those are called tax expenditures, and these are for corporations and for everybody. But you're going to see in a minute most of those goes to the top ten percent. 
	Here's our defense spending, and here's everything else. Money for NIH, National Institutes for Health, and space ships. Everything else you can think of, goes in there. Agricultural subsidies. So here again gives you an order of magnitude. So let's now dive deep into this guy. Who gets those tax breaks? The big ones are preferential treatment for long term capital gains, that if you hold an asset for long enough time you don't have to pay the top rate, you get a deal on it. It's like 12 percent now, right? Or ten percent? So really low rate. And that's a big tax expenditure.
	The big one is home mortgage deduction. The higher the income you are and the more money you spend on your house, the bigger your tax break is. If you're at the 36% tax bracket, you spend a dollar for interest, you get a 36 cent saving, if you're the 15% tax bracket you have to pay a dollar of mortgage interest you get a 15 cent savings. That math helps drives this result. So we look at these tax breaks and big ones is retirements, and we find that most of them go to the top 20%, and 23% of these tax breaks go to the top 1%. They have the highest rate, and they do most of the tax favored activity. 
	The money I'm suggesting is there. Anybody do any literary analysis? If you're in those English classes they'll tell you if a gun is shot in the first act, it's going to be used in the third? We'll I've just showed you the gun. There's lots of money floating around, and I am going to spend it by the time this lecture is over. The money is there and there is no detectable evidence that there's a trade off in spending between the old and the young. So what are we going to do about social security? First of all, I misclassified it. It ain't just an old person's program.
	That a good eight percent of the beneficiaries are children, little kids, these are children of disabled parents, or dead parents. A lot of disabled workers are under the age of 65 and some of recipients are parents who are dependent on their working adult children and they became disabled or dead. It's a social insurance program, and it's an insurance against contingencies that can happen in a capitalist economy when people have to work for a living. Through no fault of their own, they might not be able to get a living. 
	So everybody is subject to those contingencies and we all are forced to pay premiums against that contingency. And that's the contingency that you're a worker, you have a dependent called a child and you actually may not be able to support them through your work. By the time you all are 30, and if you're married and have a child or two, the present value of this insurance package is about a quarter of a million dollars. It wasn't just given to you, you paid your premium; all of you have paid FICA. That adds up and you will have this insurance system, all of your life. So it's not quite an expenditure for a Mars probe, it's a social insurance program. 
	Now let me tell you about how it's financed. it's financed in two ways. Earnings are taxed at a taxed rate, and the earnings that are taxed are defined up until an earnings limit. Those are the two things you have to remember. A tax rate, and the base. Let's talk about the tax rate. The tax rate now, is six point two percent for both the employer and the employee. Your FICA is six percent of your taxable earnings, and your employer pays the same amount. In that system, that tax rate has increased over time and since the beginning of the system, it's increased. The first 12 years it wasn't increased, and every two or one year since then, it was always increased. Except the last increase we had was in 1990. It's the longest period of time that we've ever gone, without increasing the tax rate. So when you hear it's running out of money, it's not because social security benefits have exploded. Much of it is because we haven't collected any more revenue. So that's the tax rate, got it? Okay.
	The next important issue is what do we tax? Most of you in the room don't earn enough money to get to the limit, every year it goes up according to wage inflation. It's not this year, $117,000. The 8 Percent of people in the United States who work, who make over $117,000 per year, stop paying on their extra income. They look to the social security system, to someone who makes $117,000. So some of my high earning friends, stop paying FICA tax like in April. Some stopped in November. Some stop in July. But that's eight percent of workers, have earnings about $117,000. 
	This guy is Jamie Diamond, he has friends who run banks who are corporate executives. They have a lot of wealthy so their income comes from owning things. But most of their income comes from earning, so I was bored on July 1st, I was hanging out with 90 year old mother-in-law, and so I wrote a blog, a Huffington Post blog, and it was viral. Because it was just said, "I wonder who today will stop paying social security tax." Because there are some people who live in United States who make $117,000 a day. And I figure that Bill Gates stops paying his social security tax before he gets rid of his hangover from the New Years Eve celebration. That he makes $117,000 about every six, seven, hours. 
	I actually counted, I went to the Forbes list, I had a lot of time and she had a good internet connection. And tactfully counted who would stop paying social security benefits today. And it turns out it's people who make about 20 to 50 million dollars a year. And I named names, and it went viral. And the reason I'm telling you about this tax base, because one of the most popular proposal to get more money into the social security system is to, guess what? Make him and his colleagues pay all year log, just like the most of us do. 
	If you do that, you solve almost all the shortfall in the social security system for the next 75 years. So to go back to Blankfein who was his friend, to say that the only way to afford social security is to lower people's expectations? I got another plan. Just make them pay for the all year, and good behavioral economists, starting from Thorstein Veblen in the 1920's who taught at the new school. On up, tell me that their wellbeing will not be affected because what humans care about, is actually what peacocks care about. They want to have the biggest feathers.
	These people will still be on top. They will have the best stuff. It's just that we're going to lower their consumption, just a little bit. So their measurable wellbeing will not be affected because they still demonstrably still like to be on top of the wage. So I have a way to save social security and not hurt anybody's wellbeing, it's a paradal superior position. 
	Let me walk through the options for social security financing. If we do nothing we'll have a shortfall; we won't eliminate any of the shortfall. If we raise the FICA tax from six poin two, remember we've had that there for how many years? This is a test.
Speaker 2:	Twenty.
Teresa G:	Twenty four years, good. If we raise it to seven point, just another one point four, four percent on each the employer and the employee, we would eliminate the shortfall, okay. So I'm in favor of that as well. There's no labor economist will say that an increase in the payroll tax will impede job growth. There is a FICA tax I might now like, but it's nowhere near this range. It won't have a feedback effect of impeding job growth. 
	We eliminate the earnings cap, remember this guy, he pays. We do that, we get to 82 percent of the shortfall, but if we go to the lower expectations crowd, and make the elderly work and raise that full benefits to 69, we only solve this. And it turns out the crowd knows. Let me just do, a political economy analysis. If we do nothing who pays? Future generations, that would be you. You get a benefit cut. Sorry. If we raise the FICA tax, current workers pay more in their social security. If we eliminate the earnings cap, you remember our friend, Jamie Dimon, you know who he is? Sorry. He's the head of JP Morgan, which is a bank, a big one. Just checking. 
	If we cut benefits by raising the age of full benefits, we really hurt everybody who makes it to 65 especially those people, you met the ones before, who are doing physical jobs, stooping and bending, and who have to work. So as the crowd knows, it's no surprise that this one, making the top pay more, is the more popular option. Raising the FICA tax is the next most popular one. Reducing benefits for high income seniors, it's a bad idea. The people think it's a good one. Taxing people who happen to make it to 65 just because they made in insurance, makes as much sense as taxing people who have car insurance, and not giving them as much insurance because they happen to have a big bank account.
	If you pay insurance you get the payment for the contingency, it's a bad idea, but raising the eligibility age is actually, if you ask people, most people are working they don't want to have to work until they're 69. There's also wide support to help that middle class. Remember I told you that middle class retirees only remain middle class retirees if they work? There's lots of support, and this is a political point, among people to start saving more for their own retirement. If you ask people, "Do you want to be mandated, to save more for your own retirement," most people say, "Yes, force me."
	Poor people will say, "I'm making minimum wage now," Remember that gun I showed you? The tax deduction? I have a way to help people who are at low wages, get more money into their retirement account. But this becomes a very popular ... Create an automatic mandatory IRA, require companies to provide pensions, even if I have to take a payroll deduction for it, or create a new universal portable pension plan on top of social security. These are all variants of the same theme, and the theme is create, design, a system where I can be personally responsible or my supplement onto social security. 
	Given this wisdom and given the economics, I have been involved in a national movement, to create such a system by states. And they only did this because in 2008 when I testified in congress to a congress that said, that congress should create a supplement of social security, there was republican expert, independent expert support for this, they were doing something else, which was not passing legislation.
	What happens in America when we do social policy? I know that professor Pearson is a student of social policy in Britain, the way we do social policy in the United States is usually at the states. The states are laboratories of democracy, just as brand I said. We had unemployment insurance in New York, we had disability insurance in Wisconsin, we had a social security plan in states before it become nationalized. That's the way we do it here. And this is what we have higher minimum wages in some states, before the feds move. 
	So what we're doing is going state by state and saying create a system, a law that says everybody in the state has to have a supplement to social security, and I've been to all those places. On airplanes. I went there. I say, we say Minnesota, they haven't passed the law but I've been there too. Thank goodness it's mostly [inaudible 00:52:13] here, but I've been to those places. Omaha's not so bad. I've testified, "You've got a problem in your state, you have a financial institution called a state pension plan that can run this money cheap, and well, and have everybody in the state." And the state is picking up on what people are doing. There's lots of movement and progress here. 
	But I'm going to close, and John Kenneth Galbraith said that those words not only give you a time marker for my lecture, but it engenders hope in the audience. So in closing, I want to make the point that the warfare, the divide, the conflict in these budget issues and the answer to the question of how do we provide a dignified retirement life to all workers, at all levels of income, isn't a debate about spending for the young or spending for the poor. That the old are not eating the young person's lunch. And somebody I gave this slide to said, "No, it's the rich are eating their lunch." And there's some evidence here that a growing thriving economy, at least in the United States, is 79, has not thrived for most people. These are the bottom 99%, but that most of the gains income, this is just income here, has gone to the top one percent. 
	Does anybody know the number your household income has to be to be in the top one percent? Again this is order of magnitude. Is it 117,000? No. Is it 250? It's 350. To be in the top point one percent, at 16,000 families, what's the average income there, just order of magnitude? 
Speaker 3:	[inaudible 00:54:14] million.
Teresa G:	It's ten million, that's a median, it's probably average is 50. So just to give you an order of magnitude. So most of the gains in income have gone to the top one percent over 350. If I did it by wealth, this is all from Thomas Piketty we could all ... Thomas Piketty is great with the manual side is a co-author at Berkeley, has also calculated that 99.5% of all wealth increases over this period of time have gone to the top one percent, in ranked by wealth distribution. So, there has not been shared prosperity here.
	Why? Lots of reasons. Frank Pearson, if you're alive, could point to one, a loss of bargaining power among workers. Measured here by the lack of unionization, but it's also been development and trade policy. Developments in minimum wage, we haven't raised it. And other institutional factors that balance the power between labor and capital. The result of this, has been that The America leads the world, we have a dubious distinction, but we are the leader in the creation of low wage jobs. Compared to, where are we? We are ... There at the top, we're up there with The Korea. That 25% of our jobs pay at or less than 45% of the median wage. In a lot of countries that's actually their metric for the poverty level.
	So 25% of our jobs are low wage jobs, and no other OECD country, really comes close except Israel, Ireland, Canada, and Poland. But we are at the point, we even do beat Korea, and the average is 16%. So the combination of these institutions have created a great america job machine, low wage jobs, and a lot of our elderly are taking them. 
	Well, I'm going to end now with a famous question, "What is to be done?" I've told you some facts, the old and the young are falsely being pitted to each other I see no evidence for political economy that takes a dollar from the elderly and gives it to head start, or to young families. I also have supported the claim that if we don't have a strong social security system and a supplemental pension system, the elderly will have to work more. And I've also shown you evidence that many of the elderly are competing for low wage and physically difficult jobs. It looks like they're working for money, not love. Okay? That it's involuntary, as Frank Person would talk about. Involuntary employment in bad jobs, not voluntary. And the fixes are that there are equitable ways to fid social security and that we can follow the state lead to supplement pensions, and I'm going to end there with just a why we should do all this. 
	Because I feel it's important that every person who works for a person, in the United States, whether rich or poor, middle class, has entitlement to the weekend, to holidays, and to a dignified retirement at the end of their working lives. I'm done. Thank you. [inaudible 00:58:02].