Asymptosis

And guess what?

Saving ≠ Investment. Even though it’s the fundamental “identity” of national capital accounting.

Update 2/2/2011:

It’s no wonder people think economics is confusing.

I’m being facetious. As defined, the Savings Identity is obviously true. But what is an “accounting identity”? It’s basically a definition of terms, a statement of accounting methods. And as every textbook will tell you, the Savings Identity doesn’t imply anything causative, much less normative: “if we want more savings, we should encourage investment?” Or is it vice versa? From the perspective of the Savings Identity, it’s neither.

Here’s how that identity actually plays out in national accounts, here in NIPA Account 6, the Domestic Capital Account for 2005:

Sure enough, “gross domestic investment” equals “gross saving” (roughly). But this account includes international inflows/outflows (imports/exports), and government deficit/surplus. There’s also the issue of gross versus net fixed investment. (Net (roughly) = gross minus consumption of fixed capital. Plus there are some dicey considerations, not shown here, of both fixed capital and inventory valuation adjustments based on price changes, which swing things by quite large amounts relative to the totals.)

If you can parse all that in your head to deduce what’s happening in the real private economy (the flows among individuals and nonfinancial businesses), you’re a better man than I.

The Savings Identity doesn’t really relate to our vernacular usage of the words “investment” and (especially) “savings.”

In particular you’ll notice that “gross saving” has almost nothing to do with what most people imagine when they hear “saving” in the Saving Identity: private saving (by businesses and individuals). That’s only $320 billion here, out of $1.7 trillion in flows.

In the world of the individual and individual businesses — “savings” is what Stanley Kuznets (the man who created the national account system used by almost every country in the world) refers to as “money savings” or “monetary savings.” (Capital in the American Economy, p. 398 and etc.) It’s completely different from the national saving referred to in the Savings Identity.

It’s actually kind of the opposite.

What do national savings consist of? Money? Financial assets? Not even close. Fixed assets. The stock of fixed assets, the fixed capital base — which we can live in, or use to produce more stuff and services — is the very stuff of national wealth. Financial assets aren’t even included in this measure.

In Kuznets’ words:

…[fixed] capital formation…represents the real savings of the nation. (p. 391)

With that cleared up, let’s go back and look at just the private, nonfinancial, domestic sector, a.k.a. the “real” economy. Here’s what “saving” means there (roughly):

Private saving = Undistributed business profits + personal saving

Now that’s simple, isn’t it? It’s the money that’s left over, that you can put in the bank.

Here’s another, which really does encapsulate quite simply how the big flows in the real private economy work:

Income = Consumption + fixed investment + taxes + saving

There are only four things businesses and individuals can do with their income, and those are them.

You can juggle that various ways, of course:

Saving = Income – taxes – consumption – fixed investment

Fixed Investment = Income – taxes  – consumption – saving

Which imparts the main point I want to make here: In the real private economy, saving and fixed investment are enemies. If you save — store money in financial assets — you are by definition not spending on/investing in fixed assets (though somebody who receives those funds might). And vice versa — money spent on fixed investment is not available for saving. This is completely contrary to the simplistic notion that most people harbor, with help from a misunderstanding of the Savings Identity.

Now of course money savings (as a stock, stored in financial assets) are useful in at least two ways.

1. They can be spent on fixed investment. They’ve got potential.

2. They serve as a buffer and store that allows people and businesses to time-shift their income and consumption/investment spending — you don’t have to spend everything as soon as you get it. (Heck, with credit you can spend it before you get it.)

A well-oiled financial system is essential as an intermediary and storehouse for those two things to happen. But that’s about all it’s good for. (Except as a market mechanism for determining prices/values, and Fama/French showed long ago that it takes very few traders to achieve an efficient market.)

To highlight that point with one more pearl of insight into the national accounts, for those who (like me) have never really understood them:

No: Price changes of financial assets do not affect GDP. (There are innumerable indirect effects, of couse — the “wealth effect,” etc.) When the stock market goes up, GDP doesn’t change a whit. Neither does “national savings” — the fixed capital stock.

In the final analysis, neither of those things is about money. They’re about stuff. (And knowledge/skills.)

The more perspicacious of my gentle readers will already be wondering: how much do we stow away in monetary savings/financial assets every year? How much do we invest in fixed assets? How big are the stocks of the two? Is there a big enough stock of money savings to fund fixed investment? Is a shortage of money savings impeding fixed investment?

Anon.

I’ve been befuddled about this for a while. The widespread belief is that government deficit spending caused the inflation of the sixties, seventies, and early eighties.

But:

• Government debt as a percent of GDP was steadily declining until 1981.

and

• Government debt/GDP started to soar in the early eighties (for the first time since WWII), even as the inflation rate plummeted.

How to explain that? Thanks once again to Jazzbumpa, I found an answer in Alan Meltzer’s “Origins of the Great Inflation” (PDF). Meltzer offers a much more complex and nuanced view than I can impart here, but the crux very much answers the conundrum above.

In the sixties:

1. Treasuries were not auctioned.

2. The Fed was not really independent, and

3. The Fed governors by their own admission didn’t understand or much care about monetary theory. (Hence their instructions to the Manager of the System Open Market Account — who actually implements the policy — were vague to the point of uselessness, i.e. “maintain the tone and feel of the market.” !!)

The Treasury set the price of new issues, and the Fed had to issue reserves to banks to support that price, holding interest rates constant. (If that didn’t suffice, the Fed just bought the unsold issues.)

As those new issues became more frequent (and larger) with greater deficit spending (an absolute increase, not as a percent of GDP), the Fed had less and less days when it could raise interest rates (withdraw reserves) to control inflation. They were slaves to the fiscal deficit.

That all changed when:

1. The Treasury started auctioning its issues, and

2. The Fed got independent — adjusting reserves/interest rates based not on a need to support Treasury sales (because treasuries were auctioned), but on a (reasonably) coherent and effective theory of monetary policy.

Here is what for me is Meltzer’s key paragraph on what started and ended The Great Inflation, referring to William McChesney Martin Jr., Chairman of the Board of Governors 1951-70 (bold mine; italic his):

Some of his successors showed that inflation could be reduced even in a period with large deficits. In the 1980s, the federal government ran large, persistent deficits. The Federal Reserve had an independent policy, did not assist in deficit finance, and did not coordinate policy. The important operating changes were the end of the Federal Reserve’s even-keel policy of holding interest rates constant when the Treasury sold notes or bonds and the end of policy coordination as practiced in the 1960s. By the 1980s, the Treasury auctioned its securities and let the market price them instead of having the Treasury set a price that the Federal Reserve felt bound to support.

I’m not befuddled anymore. This makes perfect sense to me.

And — if declining debt/GDP throughout the 60s and 70s wasn’t enough — it also drives a spike through the standard belief that government deficits caused The Great Inflation. As is so often the case — especially with Tea-Party-esque beliefs — that belief is both childishly simplistic and profoundly wrong.

To quote Milton Friedman, “Inflation is always and everywhere a monetary [not a fiscal] phenomenon.”

I’ve gotten a few comments over the years that comments were getting bounced as spam — generally, it seems, because they contained URLs, or too many URLs.

I could never figure out why this was; according to its documentation, WP-Spam Free, the plug-in I’ve been using, doesn’t filter based on that. And I’ve found no settings in WordPress or any other plug-in related to this.

But I’ve just gotten a couple more such messages, and I gotta figure a fair number of other people have just gone away in frustration.

So I’ve switched to a new spam filter, Akismet. Please let me know if you experience any difficulties.

And yes: a spam filter is seriously necessary. WP-Spam Free has blocked >10,000 ads for Viagra, Cialis and the like over the years.

The following paper was a real Aha! for me. It lays out in very clear language the understanding of economies that I think is embodied in Modern Monetary Theory or Chartalism. (Though I’m not a well-versed theorist; I could have that wrong.)

It also very convincingly explains the ultimate (as opposed to proximate) cause of our recent…economic difficulties.

Banks As Social Accountants: Credit and Crisis Through an Accounting Lens – Munich RePEc Personal Archive. –Dirk J. Bezemer, Groningen University

Here’s what I got out of it:

Money is credit, and is created by issuing credit. The earliest forms of money we know of are tally sticks of credits — IOUs — that eventually started being passed around as currency. Money is created (“printed”) by somebody issuing credit — a merchant, temple, lord, government, or in our modern world, probably a bank.

Think of a dollar bill as the same as a stored-value card issued by Target. Same for any “dollar” that you have in your bank account. It has value because somebody (everybody) is willing to give you credit for it — take it in exchange for something else.

Its ultimate value, though, is because you can use it to appease the ultimate issuer: you can pay your taxes — and hence keep your sorry carcass out of jail. (De jure, at least, the only debtor’s prison is tax prison.) It derives proximate value from a million other sources, of course — your desire to visit Hawaii, for instance.

Most money is “printed” by banks, not governments — though the authority to do so, and the limits on that authority — come from government. Banks (and their shadow counterparts) print/create at least ten times as much money as governments, via fractional-reserve lending. (The investment banks a few years back were leveraged 50-to-1.)

When a bank gives you a loan — issues you credit — they are quite literally creating (metaphorically “printing”) new money and putting it in your bank account. All they get in return is promises. (You may fulfill those promises by earning, or by getting credit from someone else — quite literally passing the buck.)

Banks decide who gets that newly-created credit/money, based on who they think is creditworthy.

And who, of late, have they considered to be creditworthy, hence worthy of receiving the money?

Here’s Bezemer’s revelatory picture — hiding some very careful and diligent accounting* behind a deceptively simple graphic. (“FIRE” is finance, insurance, and real estate.)

As Bezemer describes it:

an expansion of the financial sector from being equal to the size of the real economy in 1952 to a volume of nearly five times GDP in 2007.

Like a good accountant, he not only shows us the stocks, but the flows:

It’s no surprise that all that newly-printed money in the financial industry 1) drives up prices of existing assets, and 2) prompts the creation of new financial assets that can be sold to get a share of that money.

My gentle readers will no doubt remember that credit issued to buy inflated securities — causing them to inflate further before de-inflating — is what precipitated The Great Depression. (At least the main proximate cause.)

The traditional source of funds to purchase financial assets — personal and business savings from income and profits — don’t even begin to account for the runup since the ’80s (my graphic, not Bezemer’s):

Here’s another picture of the growth in financial “investments” (different accounting methods, similar picture):

(McKinsey and Co. PDF. Page 8.)

I’m going to give the final word here to Bezemer. Please read these paragraphs twice; they’re cogent, lucid, and clear. (I’ve broken his paragraph into three, included a bracketed comment that may be helpful to some, and highlighted what I think is a crucial conclusion.)

From the above it is clear that the growth of debt depends on the use of newly created credit-money – whether in support of self-amortizing tangible investment [houses and factories, equipment and software, which both throw off real value/income and decay and become obsolete over time], or in debt-bearing financial market investment.

This may not be so obvious on the microeconomic level since in an asset price boom any single individual can borrow, purchase assets, and sell them to pay off the debt with a profit left. No personal debt remains, and the good news spreads. However, as in many areas of economics there is a micro-macro paradox, or a ‘fallacy of composition’. For on the macro, society-wide level, there must be a growth in indebtedness of the economy when assets are traded at rising prices.

This indebtedness takes the form of both rising commitments for the real sector to finance asset transaction out of wages and profit, and rising actual debt levels. When the asset was sold at a profit, someone else bought the asset at the new, higher price. He or she financed this either by diverting liquidity away from real-sector transactions, or by borrowing – at higher levels than did the first buyer. Therefore asset price booms are accompanied by rising debt and by a slowdown in real-sector nominal growth.

——————————

* In mapping debt growth onto economic growth (in GDP), we note that the FOFA [Fed flow-of-funds accounts] total-debt definition is both too wide (it includes FIRE sector debt) and too narrow (it excludes trade credit). Therefore in order to arrive at credit to the real sector (i.e. in support of GDP), we subtract from the total value of credit market instruments all equity, mortgage and finance credit market instruments which support FIRE sector transactions, not transactions in goods and services. We also correct for inter-firm trade credit (account FL383170005 in table Z.1), which is debt creation in support of transactions in goods and services, but not via credit market instruments and therefore not recorded in the FOFA definition of total debt. Trade credit is substantial: the stock of outstanding trade debt equals a quarter of GDP (24.4 % in 2007Q4), up from 12 % at the start of the series we study in 1952Q1. This is just one illustration of the importance of studying the whole credit supply, not just an (arbitrary) statistical definition of ‘money’.

Mike Kimel once again does yeoman’s duty to compare the two:

Tax Rates v. Real GDP Growth Rates, a Scatter Plot | Angry Bear.

In this post commenter Kaleberg adds a very cool scatterplot.

Each dot is a year (t), compared to another year one to four years later (t+1, t+2, etc.).

Bottom axis is the top marginal tax rate in the starting year. Left axis is annual GDP growth over the ensuing one to four years.

Starting years from 1933 to 2008.

With everything trending up and to the right, it sure looks like higher marginal rates and faster growth go together. But it’s hard to eyeball these kinds of things, so I pulled correlations. For ending years t+1 through t+4:

0.27 0.28 0.28 0.27

I also dropped in Real GDP/Capita in place of Real GDP. Of course the growth rates are slightly lower — the population (the denominator) was growing. But the graph looks basically the same.

Here are the correlations with marginal tax rate — also lower, but darn close:

0.23 0.23 0.23 0.21

Very consistent.

Short story, there is a statistically significant correlation between marginal tax rates in year X and both GDP and GDP-per-capita growth over ensuing years.

It’s pretty small, but consistent and consistently positive — a higher marginal tax rate in year X correlates with faster growth over the ensuing four years.

Especially interesting: this encompasses a huge range of marginal rates — from a low of 28% (’88 through ’90) to highs of 84-94% (1944 to 1963 — when we saw the fastest growth in U.S. history; ’64-’69, the top marginal rate was over 70%).

It’s worth noting that the lowest rate since 1928 was 24% — in 1929.

Both Mike Kimel and commenter Jazzbumpa have suggested recently that higher personal tax rates encourage business owners to invest in their businesses — “investment spending” in truly productive fixed capital — as opposed to “investing” the money in financial instruments (IOW, “saving” it). (If you’re not totally clear on “investment” versus “savings,” and versus investment in fixed assets, see here.)

The notion sort of made sense to me — you could avoid being taxed on that income/profit if you put it back into the business (deducting it from taxable profit), so there’s real incentive there, and the higher the tax rate on income from your savings, the more the incentive.

But I needed to run the numbers to see what was really going on. Here are two scenarios.

In both, the business owner has a million dollars in profits in Year 1.

She can either purchase fixed assets for the business, or take the money personally. (If she’s running an S-Corp-elected business, it doesn’t matter whether she distributes them or leaves them as cash in the business; she’s taxed on the profits at personal rates whether she distributes them to herself or not.)

Assumptions:

• 20% tax rate on both financial returns and business profits

• Ten-year straight-line depreciation on business fixed assets ($100K/year in this scenario)

• 8% before-tax returns on financial investments

• 15% before-tax returns on fixed-asset investments

In which scenario does she have more money in Year 11?

Invest in fixed assets: $1.24 million

Invest in financial assets: $1.40 million

And the financial investment requires no work on her part. She can just gaze fondly at her bank balance and buy another ticket to Antigua.

Which would you choose?

It seems odd, I know. The financial investment costs $200K in taxes right off the bat, instantly reducing it to $800K, and it only earns 8% compared to 15% for the fixed asset. How could it end up ahead?

Here’s the rub: fixed assets actually do depreciate. Buy a million dollars of laptops for your employees, and ten years from now they’re worth nothing. Yeah, you get to deduct that depreciation from your taxes over the years, but that just means Uncle Sam’s paying part of it — significantly less than 20% in present-value terms.

Our business owner’s financial investment is quite otherwise. In year 11 she’s got ten years of returns from that investment, plus the original million dollars.

So from the perspective of a business owner, fixed-asset investments are — by their very nature — disadvantaged compared to “investments” in financial assets.

Yes: as tax rates go up, the differential between the two investments shrinks. But to make them equal (I goal-seeked it), the tax rate would have to be 104% — she’d need to give Uncle Sam more in taxes than she earns in profits/returns.

Here’s another goal-seek: with everything else the same, if returns on fixed capital were 18% instead of 15%, the two investments would yield equal returns. So in this example annual returns on fixed capital have to be 10% higher than returns on financial capital for the two “investments” to deliver equal returns.

Now assume we want to encourage investments in fixed capital — stuff that actually produces things — instead of financial assets that essentially chase their own (and each other’s) tails, throwing off more financial assets (“money”)  in the process. Can we do that through the tax code? You bet.

If you tax returns on fixed assets (true business profits) at a lower rate than returns on financial assets, you give fixed-asset investments a real advantage. But their native disadvantage is so great that the tax difference has to be big — about 30% in this scenario.

So if taxes on returns to fixed-asset investments are 0%, and taxes on returns to financial assets are 30%, in this scenario it’s pretty much a toss-up which one to invest in. 5% and 35%, same thing.

This gets complicated, of course, because 1. businesses have returns from financial assets, but they’re taxed the same as returns from fixed assets (it’s all “profits”), and 2) Non-S corps (C corps) in theory pay 15% taxes on all profits (whatever their source), and the remaining profits, when distributed as dividends, are taxed again at a reduced personal tax rate for dividends. Further spreadsheeting needed.

But still: this all tells me that if we want to encourage productive business investment in fixed assets, we should tax businesses’ returns on financial assets at a much higher rate than the rest of their profits. Ditto for personal returns on financial assets.

Since this post is getting long, I will leave it to my gentle readers to ponder all the salutary effects such a tax regime would deliver.

I really love it when somebody points out that I’m wrong. (At least, when they’re right that I’m wrong.)

Jazzbumpah in an email pointed out a whopper of an error in a previous post, in this graphic:

The blue slice is State and Local. The red slice is Federal.

Here’s the real picture:

(Expenditures: NIPA table 3.9.5, lines 12, 17, and 22; GDP: NIPA GDPA. Grants in aid: http://research.stlouisfed.org/fred2/series/AFGSL/downloaddata?cid=107)

Reminder: government consumption expenditures is government expenditures minus outlays for social-insurance programs like Social Security, Medicare, etc. (they’re insurance programs that happen to funnel the money through the government), and minus government investment in fixed assets. As Tyler Cowen points out, it’s the best measure of what government is actually “spending” — what it delivers in government services.

We’re so used to believing the “massive federal government” meme that even while staring directly at the data I misinterpreted and misrepresented it.

This also prompted me to add an important slice that I’d thought of before, but hadn’t included: federal transfers, or “grants in aid” to state and local governments. This is money that is taxed at the federal level, but transferred to state and local governments for spending — usually with strings attached. (Largely based on the “locals know their needs better” meme — which may be true.)

Since (as Jazzbumpah again pointed out) stacked area charts can be hard to read, here are a few slices broken out for you:

Notice that grants in aid tend to compensate for the business cycle/state of the economy. When times are bad and state and local budgets (most of which are required to be balanced) are strapped, grants in aid smooth things out and provide for those who are hurt by the down economy. In other words, they’re “countercyclical” — which is a good thing both for the economy as a whole and for individuals.

Long story short, government consumption spending has been basically flat since the 70s. The notion of massive runups is delusional. (Yes, we need to control health-care costs that are overwhelming our economy and our government budgets [Medicare and Medicaid]. That’s a different issue. Also pension plans. Social security really isn’t an issue at all.)

As always, I’m happy to share my work. Drop a line if you want the spreadsheet.

I’m quite taken with the central notion of Tyler’s new mini-book — that America has been picking the economic low-hanging fruit for decades or centuries, and that there’s a lot less of it around over the last three to six decades.

Before I get to the parts I like, I have to instantly respond to his section on government, because it has some flaws and falsehoods that I’m really stunned to hear from him — because I know for a fact that he knows they’re not true.

He uses the marginal utility argument (you only need so many apples, so additional — marginal — apples yield progressively less benefit per apple) to argue that as government grows, the marginal additions yield progressively less value:

Even if you think everything our government does is awesome, successive units of government are on still on average less valuable than the core functions.

He’s basically applying his low-hanging fruit contention (which is different from the single-good marginal-value argument) to government: all the high-value services (i.e. the low-hanging fruit) have already been delivered. That contention may be true; more below. But first we need to look at the basic facts he presents.

Full credit: though he waits a bit to do it, he acknowledges that government expansions of medicare, social security, etc. are not necessarily subject to the marginal-value rule, or at least that they shouldn’t be considered in evaluating it.

The relevant number for government here is not “government as a percentage of the economy,” because that includes a lot of transfer and welfare and social security payments, which simply shuffle money from one person to another. A better measure is “government consumption” –– what government itself is doing

In addition to the money-shuffle argument (which is correct): medicare etc. are not so much additional services as existing services for which the money is funneled through government instead of through private enterprises. (Far more efficiently than the private enterprises, it so happens, so the value returned from those additional government revenues/expenditures is higher, not lower, than if the money flowed through private enterprises.*)

Here’s where it gets really dicey.

that figure [government consumption] commonly falls in the range of 15 to 20 percent of U.S. GDP. As long as the absolute size of government consumption is rising — as it generally does — we are getting less value than our measurements indicate.

What in the heck???!!! He cites consumption relative to GDP, states that it’s been pretty steady, then talks about the “absolute size” of government consumption, and says that it generally rises. He really seems to be talking out of both sides of his mouth.

1. Yes, the absolute size of government consumption does tend to rise — no duh. The population is getting larger and the economy is getting larger even faster.

2. The relative size, on the other hand — which really is the most useful measure, which is presumably why he cites it — does not generally rise (which he acknowledges) — making his “it generally does” a patently false statement.

Update! See corrected graphs here. The Federal and State/Local labels should be reversed.

(Expenditures: NIPA table 3.9.5, lines 12, 17, and 22; GDP: NIPA GDPA.)

I don’t even have to comment on this graph; the import is clear on its face. Tyler’s doing the typical righty thing here: making assertions based on facts from the sixties and seventies — facts that have not been facts since that time.

And I know Tyler knows this.

But to return to his basic assertion, which is not and really can’t be based on quality data: has government already picked all the low-hanging fruit? We can’t really answer that for the reason that he states (accurately): in measuring GDP, government services are measured by what they cost, not what people payed for them. They could be worth more than they cost, and they could be worth less. Since we don’t have the pricing information by which to judge their value, we have to use other methods that are probably far less accurate, and are certainly more subject to disagreement.

Are additional government services inevitably less productive than existing ones? Let’s think about the government consumption expenditures that were thrown into enforcing civil rights and fair employment starting in the sixties. Were those less productive than consumption expenditures that preceded them? I would argue “no,” and suggest that just because some government public service has not been offered in the past, it is not necessarily less productive than existing services (though it may well be). It’s an assumption, not anything like a fact or a given.

And in fact, it’s not even asking or answering the right question, which is: is money taken from circulation in the private economy and spent by government on service X more or less productive than if the money was left circulating in the private economy? With $55 trillion of purely financial assets in this country — most of which is chasing its own tail and producing nothing — and desperate, gaping shortages of clearly productive government spending, I would say “yes.”

The basic truth, though — by Tyler’s own assertion — is that we just don’t know. Which means that Tyler could have deleted this whole government section from the book without removing any of the book’s value. He just interjects some ideological axe-grinding here — promulgating a belief that is at best faith-based, and at worst completely false — even though it has little or nothing to do with his central thesis. This government section is a digression — an unhealthy pseudopod that could be lopped off with great benefit to the creature as a whole.

* 25% of health-care dollars disappear on the way through the private-insurance funnel. Only 3% of the dollars disappear on the way through Medicare. Health care: 17% of GDP. 22% of that is 3.8% of GDP that we could use for other things if everyone was on Medicare instead of private insurance. That’s half a trillion dollars a year, which would pay for almost all our governments’ nondefense consumption expenditures combined.

Prompted by:

1) My curiosity about what might have changed in the ’70s

2) My sister’s suggestion that this Andrew Sullivan post might be a clue (we invent ipods now, not particle accelerators)

3) Tyler Cowen’s new e-book(let), The Great Stagnation (talking about America’s slow growth of the last 30 years), and

4) A realization I had a couple of years ago.

Here it is: pretty much every important invention of the modern world — trains, planes, automobiles, air conditioning, antibiotics, painkillers, telephones, radio/television, computers — had already been invented and was in at-least-fairly widespread use when I was growing up in the sixties. The only thing since then has been the internet.

Post-’70 it’s just been distribution, improvements (i.e. cell phones), and price reductions — important stuff, no doubt, but compared to the germ theory of disease or the electric motor? (Arguably even the internet is just a distribution thing.)

Can you think of an exception?

I don’t know quite what to do with this fact, but I would like to know if others think it is in fact a fact, and what you would do with it.

…rather than increase the retirement age for Social Security.

Somebody just asked them. See Question 11:

Would you rather have people pay social security taxes on salaries above $106,800, or would you rather see benefits cut and the retirement age increased to age 69?

Self-identified tea party members:*

67%: Raise taxes
20%: Cut benefits, raise retirement age

Every other demographic slice agrees with them. But more so.

Which raises the question: why have we had leaders for three decades who are ideologically incompatible with the wishes of the American people, as the people have expressed those wishes, resoundingly, over the last three-quarters of a century?

* “Q13: Do you consider yourself to be a member of the Tea Party?”