I could see how lump of labor would apply to other policies that simultaneously discouraged work and decreased productivity and/or discouraged other economic activity but social security allows (possibly increases) the consumption of old people while reducing their workforce participation.
Depressing demand isn’t the only problem with thinking of the economy as being a fixed size.
If someone is doing useful work in the economy, it’s good if they keep doing it. Providing an incentive for them to not do it any more decreases productivity all on its own, even if you give them money to keep buying things.
The alternatives to “Congress looting the fund” are “well-connected private individuals raiding the fund”, or “the fund being even more direly underfunded because it doesn’t collect interest”. When people talk about “Congress looting the Social Security fund”, what they actually mean is that the Social Security fund is invested in low-risk government securities. And the alternative that’s usually proposed is to instead invest it in stocks.
I’d also think old people, especially old people in working class jobs where the benefit would be the most relevant would be the least productive in the economy.
I recently did some thinking about whether or not to get long term care insurance or not (I am not in WA), and my first impression when I read about this WA tax was similar to yours - it’s not nearly enough. My father was in long term care for most of 2019, and the cost was about $8200 per month.
But when I opened this thread, I thought I would check again about the average length of time that one spends in long term care. And I found this:
“The mean age of decedents was 83.3 (SD 9.0) and the majority were female (59.12%), and White (81.5%). Median and mean length of stay prior to death were 5 months (IQR 1-20) and 13.7 months (SD 18.4), respectively. Fifty-three percent died within 6 months of placement. Large differences in median length of stay were observed by gender (men, 3 months vs. women, 8 months) and net worth (highest quartile, 3 months vs. lowest quartile, 9 months) (all p<.001). These differences persisted after adjustment for age, sex, marital status, net worth, geographic region, and diagnosed chronic conditions (cancer, hypertension, diabetes, lung disease, heart disease, and stroke).”
Now, I don’t know if the state benefit of $36,500 is adjust for inflation (and when that adjustment occurs, because as the law is now the earliest anyone could get paid is 10 years from now, or 2033 if the implementation is delayed until 2023). In ten years, that $36,500 is worth substantially less than today. But if the mean and median lengths of stay in that study are correct, it may be more useful that you might think. Less so if you stick around a long time, but if 53% are dead within 6 months, quite a few people are going to do OK (financially that is; they will still be dead)
I agree that the law sucks, but based on the study I linked to I am glad that I decided against long term care insurance, as I was considering a policy that would provide benefits for a longer time than I would likely need them.