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    Will It Be Morning in Joe Biden’s America?

    If the midterm elections could be rerun this month, Democrats would probably end up in full control of Congress. President Biden’s approval ratings are rising. Inflation is down, and consumers are feeling more optimistic. And Americans are getting a better look at the G.O.P.’s actual policy agenda, which is deeply unpopular.OK, we don’t give politicians who lost an election the opportunity for a mulligan, even when they falsely claim that the election was stolen. But it is, I think, worth noting just how much the economic and hence political environment has shifted in the past few months, and to start thinking seriously about the possibility that Democrats might be in a startlingly strong position next year.It’s hard to overstate how bad things looked for Biden’s party on election eve. The last report on consumer prices released before the midterms showed inflation of 8.2 percent over the previous year, a terrible number by anyone’s reckoning. The unemployment rate was still very low by historical standards, but the news media was full of warnings about hard times ahead, and a large majority of likely voters believed (falsely) that we were in a recession.Given the perceived grimness of the economic environment, Republicans and many political analysts confidently expected a huge electoral red wave.Why didn’t that happen? Part of the answer may be that Americans weren’t feeling as bad about the economy as some surveys suggested. It’s true that the venerable University of Michigan index of consumer sentiment had fallen to levels last seen in the aftermath of the 2008 financial crisis, during the worst slump since the Great Depression.But the Michigan index was probably distorted by partisanship: Did Republicans really believe, as they claimed, that the economy was worse than it had been in June 1980? (Back then the economy actually was in a recession, inflation was 14 percent, and unemployment was above 7 percent.)And another longstanding index of consumer confidence, from the Conference Board, was telling a quite different story, with consumers feeling pretty good about the economy. I’m not sure why these measures were so different, but the Conference Board measure seemed to do a better job of predicting the vote — although the backlash over Roe v. Wade, and against some terrible Republican candidates, surely also played a role.In any case, in mid-January — a bit over two months after the election, but three consumer price reports later — things look very different. There’s still no recession. Consumer prices actually fell in December; more to the point, they’ve risen at an annual rate of only 2 percent over the past six months.And while consumer expectations haven’t caught up with financial markets, which appear to believe that inflation will stay low for the foreseeable future, consumer expectations of inflation are back down to their levels of a year and a half ago.Which raises a question few would have asked even a few months ago: Is Joe Biden — who, for the record, had a much better midterm than Ronald Reagan did in 1982 — possibly headed for a “morning in America” moment?A few months ago I looked at the “misery index” — the sum of unemployment and inflation, originally suggested by Arthur Okun as a quick-and-dirty summary of the state of the economy. I used to think this index was silly; there are multiple reasons it shouldn’t make sense. But it has historically done a surprisingly good job of tracking consumer sentiment. And as I noted even then, the misery index seemed to be declining.Well, now it has fallen off a cliff. If we use the inflation rate over the past six months, the misery index, which stood at 14 as recently as June, is now down to 5.4, or about what it was on the eve of the pandemic, when Donald Trump confidently expected a strong economy to guarantee his re-election.Nor is that the only thing Democrats have going for them. The green energy subsidies in the Inflation Reduction Act are leading to multiple new investments in domestic manufacturing; it’s unclear how many jobs will be created, but the next two years will give Biden many opportunities to preside over factory openings, giving speeches about how America is, um, becoming great again.Now, I’m not predicting a Democratic blowout in 2024. For one thing, many things can happen over the next 22 months, although I don’t think Republicans, even with cooperation from too many in the media, will convince Americans that the Biden administration is riddled with corruption. For another, elections often turn not so much on how good things are as on the perceived rate of improvement, and with inflation and unemployment already low, it’s not clear how much room there is for a boom.Also, extreme political polarization has probably made landslide elections a thing of the past. Republicans could probably nominate George Santos and still get 47 percent of the vote.But to the extent that the economic landscape shapes the political landscape, things look far better for Democrats now than almost anyone imagined until very recently.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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    Why Social Security’s Inflation Protection Is Priceless

    Automatically adjusted lifetime income is rare and worth protecting, our columnist says.The 8.7 percent cost-of-living adjustment for Social Security isn’t just a big benefit increase.It’s priceless.You can’t buy inflation-protected lifetime income like that on the open market, not from an entity as solid as the United States government.“People don’t appreciate what a terrific thing Social Security is, in so many ways,” said Charles D. Ellis, an author and investment consultant who has studied Social Security for decades. “The COLA is a reminder: When there is serious inflation, as we have right now, you can count on Social Security taking care of it for you.”If you are an investor, there are many ways of hedging against inflation, like I bonds, which are issued by the Treasury Department and currently pay 9.62 percent interest.But safe, monthly lifetime income that automatically keeps up with inflation? You get that with Social Security.“It’s just what investors need for retirement,” Zvi Bodie, professor emeritus in finance at Boston University, said in an interview. “But, unfortunately, you can’t really get it anywhere else.”How It StartedWhile the market value of Social Security’s inflation-adjusted income can’t be easily priced, it can be evaluated in limited ways.The new COLA is really big — the biggest since 1981, when the adjustment was 11.2 percent. These automatic, yearly inflation increases began in 1975, during a decade of high inflation, when politicians understood that retirees needed help to keep up with rising prices. Before then, it took specific congressional action to raise benefit levels.The first automatic increase was 8 percent in 1975; the highest was 14.3 percent in 1980. The adjustments didn’t drop below 5 percent until 1983, after the Federal Reserve, led by Paul A. Volcker, threw the economy into two successive recessions.Until last year’s 5.9 percent COLA, the previous nine annual adjustments were invariably below 3 percent. Social Security COLAs didn’t command big headlines.More on Social Security and RetirementMedicare Costs: Low-income Americans on Medicare can get assistance paying their premiums and other expenses. This is how to apply.Downsizing in Retirement: People selling their homes often have to shell out more to spend less. Here’s what to consider.Claiming Social Security: Looking to make the most of this benefit? These online tools can help you figure out your income needs and when to file.A Look at the Current NumbersBut high inflation has come back with a vengeance, and the current COLA is welcome for the roughly 70 million people, including retirees and the disabled, who receive Social Security benefits.For someone receiving $1,754 a month — the average monthly benefit for someone retiring in December — the COLA means an increase of about $153 a month, or $1,831 a year.For many people, these increases are absolutely critical.Consider a few statistics.Among older women who receive Social Security retiree or survivor benefits, 42 percent get at least half their income from Social Security. Among older men, 37 percent do. If you are living on Social Security, every cent matters after the price of food has risen 11.2 percent this year, as the latest numbers show.Even for fairly affluent people, the inflation-adjusted payments can be significant.Imagine that your earnings have put you at the high end of the national income distribution for many years. In addition, you have followed the standard advice to maximize benefits by not claiming Social Security until you reach 70. That will get you the maximum retirement benefit for Social Security, which is $4,194 a month, or $50,328 for this year.The inflation adjustment amounts to an annual increase of about $4,379, raising your yearly Social Security benefits to $54,707. And the inflation increase will be compounded, as part of your Social Security income, year after year.I don’t know about you, but the total strikes me as substantial. What’s more, if prices soar next year, there will be another significant inflation adjustment.Most jobs don’t afford this kind of protection, but Social Security is different. You don’t have to convince anyone that your income — now or in the future — ought to keep up with inflation.Social Security may seem irrelevant if you are young. You may believe it’s too early to think about retirement, or you may have been told that Social Security won’t be there for you when you are older.But be aware that these inflation adjustments are likely to affect you.All else being equal — that is, if your promised benefits aren’t cut because of future funding shortfalls — the inflation adjustments will increase what you receive down the road.Now, it’s true that unless Congress takes action, the Social Security Trust Funds are projected to run out of money around 2035. If that happened and Congress did absolutely nothing, the tax revenues coming regularly into the Social Security system would still pay about 80 percent of your promised benefits.But what about the rest of the money?I asked Mr. Ellis. He is a co-author of the book “Falling Short: The Coming Retirement Crisis and What to Do About It.”First, he said, Congress is virtually certain to fully protect people already receiving benefits. “No politician wants to tell older people, who vote in large numbers, that their benefits are being cut,” he said.As for everyone else, it’s important that people understand how valuable these benefits are and make their voices heard, Mr. Ellis said. Social Security has been short on funds before, and the Trust Funds can easily be built up again, much as they were in the 1980s. “I think the more people understand about Social Security,” he said, “the more likely it is that it will be preserved.” An Invaluable Benefit Without a Market PriceAll that said, how much would Social Security be worth if you could buy and sell a lifetime of benefits?You can’t really do this in financial markets, but let’s look more closely.In technical terms, Social Security is a form of an annuity — insurance that pays annual income for the rest of your life (and, for retirees, with benefits for your surviving spouse and children until they reach age 18).Annuities are sold by insurance companies in many shapes and sizes, but they aren’t popular, even though economists often recommend simple, low-cost annuities for safe and stable income.You can buy annuities that will increase their payouts by, say, 3 percent every year, but none are available now that include full cost-of-living adjustments like Social Security.There are two reasons for this, said Wade Pfau, a professor of retirement income at the American College of Financial Services. First, inflation was so low for so long that there was little demand for them, and the market withered. Second, as the current inflation surge demonstrates, “no one can accurately predict inflation, and it’s extremely difficult for insurance companies to make long-term projections and price the annuities properly,” he said.Ariel Stern, the chief operating officer of ImmediateAnnuities.com, which provides estimates of annuity costs, identified the only person who had ever used the service to buy an annuity with a full COLA. That was Jim Oatman, a 73-year-old actuary in Arizona, who purchased one from Principal for himself and his wife in 2018, shortly before Principal, the last company to offer such annuities, stopped selling them.In a telephone interview, Mr. Oatman said he had paid $200,000 for the annuity. Its monthly payouts started at $602 in early 2019. That was about half of what he said he could have gotten in monthly payments for an annuity without an inflation adjustment.“It’s expensive, but I’m a numbers guy, and I remember the 1970s and wanted the protection,” Mr. Oatman said. One COLA increased the payments to $635 a month, and another, bigger “bump” will come in November, he said, but added ruefully, “It will take years of inflation for me to catch up to what I would have had without that inflation adjustment.”Still, “it’s a risk thing,” he said. “If inflation goes very high for several years running, I’m going to feel like the smartest guy around.”Even when you could buy an annuity like that, the market was tiny. In addition, interest rates were lower a few years ago, and payouts for annuities were lower, too. For these reasons, we can’t really use Mr. Oatman’s annuity to come up with reliable market pricing for Social Security benefits.In addition, no private company is directly comparable to the U.S. government, which, even with its manifest problems, is backed by the world’s largest economy and most powerful military. In theory, the government should be safer than a mere corporation — if not for Social Security funding’s politics-induced uncertainty, which economists have been measuring for years.Still, for a ballpark estimate, it seems safe to say that as an annuity on the open market, the average monthly Social Security benefit awarded in December, even without that invaluable COLA, would be worth close to $300,000 and probably much more, based on estimates from ImmediateAnnuites.com.Even at the low end, that’s more than double the $144,000 that the average household had in 401(k) and individual retirement accounts in 2019, according to the most recent estimates provided by Anqi Chen, a senior research economist of the Center for Retirement Research at Boston College. The inflation adjustment has immeasurable value on top of that.If you are fairly affluent, consider this.As an annuity, the maximum Social Security benefit without any COLA would be worth at least $665,000 and as much as $909,000. Adding a COLA of any kind would push its value to $1 million, and much more than that for a full inflation adjustment linked to the Consumer Price Index, like Social Security’s.If anything, these numbers understate Social Security’s monetary value. They are intended merely to give you an appreciation of benefits that are, really, priceless.Anything that precious needs to be preserved.By all means, put away as much money as you can and invest it wisely.But these estimates suggest that the most important steps most Americans can take to fortify their retirement involve Social Security.Work as long as you can at a job you enjoy, and delay claiming Social Security until as late as possible — ideally, until you turn 70. That’s just a start.You must pay Social Security taxes your entire working life. If you want to collect what you are owed when the time comes, make it crystal clear to the political class that you expect every cent of the Social Security benefits you have been promised. More