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Comments (5)

  1. I’m writing an article on the DI Fund.

    I think the go bust date is now October 2015 for the DI fund to run to zero.

    Based on SSTF reports, the cut in benefits at that time would be in excess of 30%. (current law)

    Two questions:

    1) When should the fix for DI be made? Before or after the bi-elections? Why?

    2) What do you think the fix should be? More taxes? Less benefits? Should Treasury just transfer the money DI needs on a monthly basis?(put a portion of DI on the budget)

    What do you think of the probability that there is no “Fix” to DI and the OAI Fund is tapped to make up for the annual DI shortfall??

  2. Krating

    most likely the OASI fund will be tapped to help fund DI.

    we have advocated raising the payroll tax about three tenths of a percent now, and once more about fifty years from now, to cover DI’s expected shortfall. This number may change a bit from year to year, but it won’t change much. It amounts to about two dollars a week (one time hit only in your lifetime) to pay for the increased probability and cost of becoming disabled.

    this answers all three of your questions.

  3. Coberly,

    $2 per week is $100 a year. Times 150m workers, it comes to $15B a year.

    That is about a third of the fix that is required for DI. The shortfall in 2016 will be $45B.

    So the number you need is not $2, it is $6.

    An extra $300 a year from workers. Everyone one of them, including the paper boy.

    Me, I don’t see any tax increase. I think they will just tap the OAI fund.

    That would bring the combined fund down to around 2028 for the end game. Only 15 years left…..

  4. Krasting

    I did the arithmetic a few years ago, the situation may have changed.

    Assuming it is now $6, that would be on an average income of about 40k per year. If that’s the cost of insurance against disability, that is the cost.

    I don’t hear you crying real tears when the cost of gasoline goes up.

    Given that you don’t seem to understand that the payroll tax is a percent of income… and that the paper boy will not be paying the “average” cost, I have my doubts about the rest of your arithmetic.

    I’ll check into it. But even I … and I am dirt poor… could find an extra six dollars per week. And I don’t even like the DI part of Social Security.

    By the way, it’s OASI, and it is not “end game” whatever the arithmetic turns out to be.

  5. Oh, I did do the math

    quite carefully on the 2012 Trustees Report. A one tenth of one percent payroll tax increase on each the worker and the employer each year the Trustees project short term actuarial insolvency (reserve falls below one year of costs within ten years) will still keep SS “solvent” forever, with this “fix” being needed at decreasing frequencies so that it doesn’t look as though it will be needed at all after 2080 or so.

    Because of the recession, this fix would need to be front loaded so that it started in about 2018… or started in 2013 and ran for 15 of the next 20 years.

    This includes DI as well as OASI, so if Krastings numbers are right (doubtful) there would likely be considerable borrowing by DI from OASI at least at first.

    that one tenth of one percent is still about eighty cents per week per year.

    still a very very good deal for retirement insurance as well as death and disability insurance.

    this is definitely NOT “end game” unless the liars… and their fools… make it that way.

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