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Charles Blahous

Charles Blahous

Charles Blahous is the director of the Spending and Budget Initiative, a senior research fellow at the Mercatus Center at George Mason University, and has served as a public trustee for Social Security and Medicare. He specializes in domestic economic policy and retirement security (with an emphasis on Social Security), as well as federal fiscal policy, entitlements, demographic change, and health-care reform.

Articles by Charles Blahous

Strengthening Social Security: An Overview for Policymakers

6 days ago

Social Security is the federal government’s most important and possibly its most successful social insurance program. Not only has it largely achieved its purposes of enhancing income security for American workers and their families after their departure from the workforce, but also it has done so while sustaining strong if not unique political support.
Social Security’s projected financing shortfall may be its most salient challenge, but it is by no means the only one. The program has grown to the point where its real-world effects in many ways run counter to its intended policy purposes and where its uncontrolled further growth will, without reform, reduce its effectiveness in supporting a coherent income security policy. Specifically, the program engages in many forms of income

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Explaining the Debate Surrounding President Trump’s Payroll Tax Deferral

October 28, 2020

President Trump signed an executive order in August 2020 allowing American workers’ payroll tax contributions to be deferred until the end of the year. This action has been aggressively criticized by President Trump’s political opponents. The purpose of this policy brief is to explain the substantive issues and factors surrounding the debate over President Trump’s actions.
Background on the Social Security Payroll Tax: Its Purpose and Effects
Factor 1: The Purpose of the Payroll Tax Is to Fund Social Security
Workers’ earnings (up to an annual cap that is automatically adjusted each year) are subject to a 12.4 percent payroll tax that funds the Social Security program. Ostensibly, 6.2 percentage points of that amount are paid by the worker, and 6.2 are paid by the worker’s employer, but

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No Bailout for Broke Pensions

August 21, 2020

Charles Blahous argues that attaching a pension bailout to the coronavirus relief bill would reward irresponsible corporate behavior at taxpayer expense. Read more at The Wall Street Journal.

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How COVID-19 Is Affecting Social Security Benefits, and What to Do about It

July 29, 2020

The economic contraction precipitated by the COVID-19 crisis is causing severe problems in Social Security. These problems include further weakening of Social Security finances, as payroll tax collections plunge during the recession, and a sharp decline in benefits for those eligible to begin collecting Social Security old-age benefits two years from now. To their credit, members of Congress are studying this unfolding crisis, and some are stepping forward with proposed responses. Many of these problems have their roots in Social Security law long predating the COVID-19 crisis, and they are simply being exacerbated or exposed by current conditions. Unfortunately, it is too easy for elected officials to react in a way that makes Social Security’s various problems even worse, as a recently

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Social Security Insolvency Is Rushing Toward Us

April 24, 2020

On Wednesday, April 22, the Social Security trustees issued their annual report on the program’s financial condition. The sobering contents of the report’s analysis are being underreported for at least two reasons. One is the current health crisis that is obscuring all other policy challenges. The other is that the report’s projections are already obsolete, because they do not account for the economic contraction currently underway.
Nevertheless, it would be a severe mistake to ignore the information this report contains. It shows us that, even as we are preoccupied with our immediate crises, Social Security’s projected insolvency is rushing toward us and must be dealt with soon, whether we wish to or not.
Some background is necessary to understand the situation fully. The financing

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Keep Social Security Politics out of the Coronavirus Crisis Response

March 24, 2020

Federal lawmakers are currently struggling to pass a third coronavirus crisis response bill, by far the largest of the three they hope to enact. This “phase three” package is shaping up to be a massive outpouring of deficit spending stretching into the trillions of dollars, a desperate federal effort to stabilize a U.S. economy that has been brought to a virtual standstill. Given the severity and urgency of the situation, we should not expect the federal response to be characterized by precision, efficiency or restraint. Elected officials would far rather risk doing too much than too little.  Nevertheless, a line can and should be drawn against exploitation of the current crisis to advance policy agendas unrelated to it.
            A prime example of an extraneous initiative

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The Warren Plan to Paper Over the Costs of Medicare for All

November 4, 2019

Earlier today, presidential candidate Sen. Elizabeth Warren (D-MA) released her proposal to ostensibly pay for the costs of Medicare for All (M4A) without raising taxes on the middle class. As published, the plan would not actually finance the costs of M4A. First, I will provide a top-line summary of the financing proposal. The remainder of this piece will provide additional details underlying the estimates.
To summarize, the Warren proposal understates M4A’s costs, as quantified by multiple credible studies, by about 34.2 percent. Another 11.2 percent of the cost would be met by cutting payments to health providers such as physicians and hospitals. Approximately 20 percent of the financing is sought by tapping sources that are unavailable for various reasons, for example because she has

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How the Urban Institute’s Estimates of ‘Medicare for All’ Costs Stack Up Against Mine

October 29, 2019

Last week, a group of scholars from the Urban Institute (UI) released cost estimates for several alternative approaches to health care reform, including an updated estimate of the cost of Medicare for All (M4A) in essentially the form proposed by Democratic presidential candidates Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA). The UI team found that M4A would add $34 trillion to federal spending over its first tenyears. Several people have asked me how the UI team’s estimate compares with my own that M4A would add at least $32.6 trillion to federal budget costs over its first ten years, and most likely substantially more (between $32.6 trillion and $38.8 trillion). To help with comparing the two estimates, I will first offer some general observations and then some specific

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The Costs of Medicare for All Are Rising Already

August 28, 2019

After my study of the costs of Medicare for All (M4A) was published last July, a fierce debate erupted over whether M4A, while dramatically increasing the costs borne by federal taxpayers, might nevertheless reduce total U.S. health expenditures. Now, just one year after my findings, we have substantial additional evidence that M4A would further increase, not reduce, national health spending.
To be clear, no one on either side of this debate questioned my central finding that M4A would increase federal costs by an unprecedented amount, likely between $32.6 trillion and $38.8 trillion over 10 years—a federal tab so large that even doubling all projected federal individual and corporate income taxes couldn’t finance it. Yet M4A advocates continued to believe that it could bring national

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Thinking Apolitically about Gerrymandering

July 17, 2019

Americans express strong concerns about gerrymandering, and with good reason. The practice undermines the perceived fairness of legislative representation and violates the foundational principle of geographic districting, that voters within the same constituency should live reasonably near one another.
In his latest research study, “Thinking Apolitically about Gerrymandering,” Charles Blahous draws the following conclusions:

Americans across party lines share a stake in constraining gerrymandering.

Gerrymandering reform should focus on limiting the warping of legislative district shapes rather than on allocating power between political parties.

A mathematical limit on the allowable irregularity of a legislative district’s shape would constrain gerry- mandering in a manner that is

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Gerrymandering Reform Shouldn’t Be about Politics

June 25, 2019

The US Supreme Court is considering two cases pertaining to gerrymandering in North Carolina and Maryland, and its rulings are eagerly awaited by those who report on or are otherwise concerned about the practice.[1]In a forthcoming study for the Mercatus Center at George Mason University that analyzes many of the issues surrounding gerrymandering, I find that (1) gerrymandering is a substantial public policy problem and should be constrained, (2) the emphasis on partisan interests in much if not most of the public discussion of gerrymandering is misguided, (3) gerrymandering reform should focus instead on limiting the irregularity of district shapes, and (4) reform is best achieved by amending federal law rather than by recruiting the judiciary or deputizing independent commissions to do

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Gerrymandering Reform Shouldn’t Be about Politics

June 21, 2019

The US Supreme Court is considering two cases pertaining to gerrymandering in North Carolina and Maryland, and its rulings are eagerly awaited by those who report on or are otherwise concerned about the practice. In a forthcoming study for the Mercatus Center at George Mason University that analyzes many of the issues surrounding gerrymandering, I find that (1) gerrymandering is a substantial public policy problem and should be constrained, (2) the emphasis on partisan interests in much if not most of the public discussion of gerrymandering is misguided, (3) gerrymandering reform should focus instead on limiting the irregularity of district shapes, and (4) reform is best achieved by amending federal law rather than by recruiting the judiciary or deputizing independent commissions to do the

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Four Lessons from the Latest Social Security Trustees’ Report

June 12, 2019

The Social Security trustees issued their annual report on the program’s financial condition earlier this year, along with their companion report on Medicare. As in previous years, these reports contain sobering news that lawmakers and the public need to know. The trustees who authored these reports are Treasury Secretary Steven Mnuchin, Health and Human Services Secretary Alex Azar, Labor Secretary Alexander Acosta, and then-acting Social Security Commissioner Nancy Berryhill. Two other trustee positions, those of the independent, bipartisan public trustees, have remained vacant since Robert Reischauer and I last served in those capacities in 2015. This article summarizes four key lessons of the Social Security report.
#1: Social Security faces a huge financing shortfall. Social Security

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Tim Ryan’s Good Idea to Shield Workers’ Pensions

May 31, 2019

On May 20,  Rep. Tim Ryan (D., Ohio) introduced the Prioritizing Our Workers Act of 2019, also introduced in the Senate by Sen. Joe Manchin (D., W.V.). The technical explanation of the bill is that it would classify unfunded worker pension benefits as “administrative expenses” in a Chapter 11 bankruptcy proceeding. A layman’s explanation is that the bill would require that pension benefits owed to workers be honored before other creditors of a bankrupt company are paid back. Such a change to bankruptcy law faces formidable political obstacles and would have substantial effects on financial markets. But while some critical technical aspects would need to be worked out, Ryan’s proposal moves in the right direction from the standpoints of both economics and fairness, as the following piece

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