Froma Harrop: Should economic policy include a senior discount?
We’ve seen senior discounts for buses. We’ve seen senior discounts at movie theaters. We’ve seen senior discounts in supermarkets.
Most make some sense, helping businesses attract older customers at slow times when others are working. What makes no sense whatsoever is applying senior discounts to economic policy.
Older Americans vote, and nowadays they tend to vote Republican. Clearly, there’s political hay to be made framing President Obama’s economic proposals as attacks on seniors. But the results can be odd, especially when the fault Republicans find in one Obama plan conflicts with a fault they find in another.
For instance, you have Peter Morici, an economist at the University of Maryland and a sometime presence on Fox News Channel, strangely suggesting that Obama’s proposal to raise taxes on the overseas earnings of American businesses would be “a stealth tax on the elderly.”
The argument appears in a column with the superbly loony headline “Tax Grandma to Fund the AFL-CIO?”
Here’s how Morici gets there: Companies such as General Electric, Ford and Procter & Gamble earn profits abroad. Many retirement portfolios contain their stocks. Therefore, new taxes on those companies’ overseas profits would be taxes on retirees.
One might ask why stock portfolios owned by retirees should be of more concern than stock portfolios owned by others. The answer is politics and the partisans’ hope that working people aren’t listening in.
What does any of this have to do with the AFL-CIO? Thanks for asking. Morici explains that the taxes would go to fixing roads. Unionized workers would get jobs doing that. America would have better roads and more well-paying jobs — but where’s the upside?
(To digress, one hopes that older Americans will rebel to being referred to as grandmas and grandpas. No one belittles 40-somethings by calling them all mommies and daddies.)
This argument goes contrary to earlier Republican complaints about the Federal Reserve’s policy to keep interest rates low. You see, many seniors put their money in interest-bearing investments, such as CDs and bonds. Lower interest rates reduce the income from them.
Republicans from Paul Ryan to Mitt Romney hollered about the alleged unfairness of low rates. Republican Sen. Bob Corker of Tennessee accused then-Fed Chairman Ben Bernanke of “throwing seniors under the bus.”
The point of low interest rates was to breathe life into a moribund economy. The looser monetary policy is credited with boosting the prices of stocks — stocks like GE, Ford and Procter & Gamble.
So what will it be, higher interest rates to provide more income to elderly savers or lower interest rates to help elderly stock investors? The answer should be “not applicable.” Economic policy should concentrate on economic growth, not age of investor.
Just as they twist the terms “family farm” and “small business,” many on the right try to make “retiree” a stand-in for “struggling old people.” Some members of all those categories are struggling, true. But hedge funders own family farms; law firms are small businesses; and many retirees are very rich.
Even less-than-rich retirees are pursuing lives of leisure, their medical costs covered in large part by younger taxpayers. And federal and state tax codes already offer a variety of special breaks for people of a certain age.
So this idea that retirees are being “punished” when some change in policy affects a broadly owned investment is on the wacky side. Investment income, such as that from stocks, is already more lightly taxed than the middle-class salaries earned by the sweat of someone’s brow.
Most younger Americans, one assumes, are not following the pity party for retired investors. They’re too busy working.