The Ryan Medicare Plan: Winners and Losers

Representative Paul Ryan's proposed 2012 budget has been lauded as a path to prosperity, with much attetion given to his overhaul of the medicare system. Using data from the CBO analysis of the Ryan plan, this issue brief demonstrates that any savings to the government under the revamped medicare system places the burden of rising healthcare costs more squarely on the shoulders of beneficiaries

The Impact of the Housing Crash on Family Wealth

This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families will see a substantial reduction in wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families will have little or no equity in their homes in 2009

IOUSA Not OK: An Analysis of the Deficit Disaster Story in the Film IOUSA

The movie I.O.U.S.A. portrays a picture of the United States as a country hopelessly addicted to debt. According to the film, the country is about to fall off a cliff if the budget and the economy continue on their current course. While there are certainly many grounds to be concerned about the country's economic condition, the view presented in I.O.U.S.A. is one-sided and misleading.This analysis puts many of the issues raised in the movie in a broader context and features a minute-by-minute viewer's guide of inaccurate or misleading statements in the film. It is important that the public be well informed about economic issues and not allow itself to be railroaded into ill-considered policy choices

The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble

This report builds upon previous CEPR projections to more accurately describe the current wealth prospects for the baby boom cohorts aged 45 to 54 and 55 to 64. The severity of the housing market meltdown, coupled with the recent collapse of the stock market, has had a severe negative impact on the wealth of these cohorts. Using data from the 2004 Survey of Consumer Finance and the November 2008 Case-Shiller 20 City Price Index, the authors create three possible scenarios for baby boomer wealth and find these households will enter retirement with little wealth beyond Social Security. For each cohort in 2004 and 2009, the paper analyzes net worth, financial assets, equity in real estate, percent of households in each cohort who will need cash to close on their primary residence, net worth of homeowners, net worth of non-homeowners, and the percent of homeowners who would need cash to close on their primary residence

The Wealth of Households: An Analysis of the 2013 Survey of Consumer Finances

This paper presents data on the wealth of households by age cohort based on new data from the 2013 Survey of Consumer Finances (SCF). It shows that the upward redistribution of wealth continued between 2010 and 2013. As a result, most households had less wealth in 2013 than they did in 2010 and much less than in 1989, the first year examined. This is in spite of the fact that households were much less likely to have traditionally-defined benefit pensions than in prior decades

Missing the Story: The OECD's Analysis of Inequality

The OECD recently published a lengthy volume examining the causes of rising inequality in most wealthy countries over the last three decades. This paper examines that study, finding that the OECD misses most of the story of inequality because its primary focus is the ratio of the annual wage of the 90th percentile worker to the 10th percentile worker, while most of the benefits of rising inequality were concentrated much further up the income ladder. In contrast to the OECD, this paper finds that the impact of technology is negligible and actually trivially negative over the period examined. It also finds many errors in the use of data in the OECD's study, most importantly by exaggerating the number of independent observations when many of the data points are simply extrapolations. This causes the OECD to exaggerate the statistical significance of its findings. Finally, this paper suggests that the growth of the financial sector may have been an important factor contributing to the growth in inequality over the past 30 years

The Impact of Cutting Social Security Cost of Living Adjustments on the Living Standards of the Elderly

During the negotiations over raising the debt ceiling, President Obama proposed cutting the annual cost of living adjustment for Social Security by switching to an index that would show a lower measured rate of inflation. This alternative index, the chained consumer price index (CCPI-U), shows an annual rate of inflation that averages approximately 0.3 percentage points less than the consumer price index (CPI-W) that is currently used to index benefits. While this change would lead to $122 billion in savings to the government over the next decade, it also means that beneficiaries would receive lower benefits.Since the vast majority of retirees rely on Social Security for the bulk of their retirement income, this cut in the cost of living adjustment would imply a substantial reduction in the standard of living of retirees, unless they offset it by saving more during their working years or retiring later in life. While we cannot know for sure how workers in future years will adjust their behavior, this paper assesses their past response to changes in the cost of living adjustment. It finds that they were not able to raise their non-Social Security income in response to cuts in Social Security benefits

The Housing Crash and the Retirement Prospects of Late Baby Boomers

This paper extrapolates from data from the 2004 Survey of Consumer Finance to project household wealth, by wealth quintile, for the cohort that will be between the ages of 45-54 in 2009 under three alternative scenarios. The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009. Finally, the projections show that the renters within the same wealth quintiles in 2004 will have more wealth in 2009 than homeowners in all three scenarios

Do Tax Cuts Boost the Economy?

There are many economists who argue that temporary tax cuts, like those in the 2009 stimulus and the ones proposed by President Obama last week, have no impact on the economy. They argue that people will save a temporary tax credit rather than spend it.Stanford Economics Professor John Taylor, who served as Under Secretary of the Treasury for International Affairs under President Bush, is one of the economists making this argument. He purports to show that there was no statistically significant increase in private consumption of goods and services as a result of certain types of government transfers made over the last decade. According to his analysis, it is unclear whether an additional dollar of government transfers led to any additional spending, or, alternatively, whether it raised personal savings by more than one dollar. This paper shows that there is very little indication that -- based on Taylor's work -- personal transfers from the government fail to stimulate private spending