Grandparents Know How To Give Their Grandkids Money

Vacation could be more fun than surgery.

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On my birthday, my grandparents normally give me money as a present. It’s not, I think, a super-rare occurrence. But obviously, grandparents, like everyone else, are financially constrained, so to the extent that grandparents have more money, they’re likely to give more to their grandkids. That’s simple.

Zeke Emanuel wants to make it complicated:

In the Children’s Opportunity Bequest, older Americans could agree to forgo Social Security or Medicare benefits for one to three years—to start getting benefits at 66, 67 or 68 instead of 65. (They would then begin receiving Social Security benefits at the normal retirement age level, that is, without delayed retirement credits.) They could designate that the money saved—amounting on average to tens of thousands of dollars a year—be targeted for use by their very own grandchildren or any specific child identified by their Social Security number.

I think that all this goes to show is that “generational equity” concerns around Social Security and Medicare are wildly overblown. There’s no need for a special program that allows old people to transform their Social Security checks into gifts to younger people. The genius of cash is that you can do what you want with it. The only real policy issue that should be on the table is whether we ought to give elderly people the right to transform their Medicare benefits into larger Social Security checks. Right now if you’re over the age of 65 and would like a $10,000-$15,000 hip replacement surgery, Medicare will buy it for you. But if you’d rather take a $10,000 vacation with your grandkids to go see the ruins of Monte Albán near Oaxaca you’re out of luck.

Obviously that’s a controversial idea. But the point is that once you’ve put cash in the hands of elderly people, there’s no need for further complicated programs to facilitate the transfer of cash to younger people. The two questions are “how much overall money do we want to spend on the elderly?” and “how much of that money should be spent on giving the elderly cash and how much on giving them health care services?”