Social Security Works!: the Book.
Publisher’s (New Press) webpage: Social Security Works!
More below the fold.
Non-disclaimer: I bought my copy. Nobody gave me one for review or to plug.
Disclaimer: I am a casual friend of author Eric Kingson and a somewhat better friend of Nancy Altman.
Disclaimer: It would not bother me a bit if you happened to stumble across Endnote 25 to Chapter 8 which appears on pg. 266 and which reads in part “Perhaps the first to propose this were Bruce Webb and Dale Coberly in their Northwest Plan”.
All that said this is a very good book and one that goes well beyond the ‘Defend Social Security’ stance that is seen in such plans as Northwest to the more ambitious ‘Expand Social Security’ rhetoric being pushed by such folk as Senators Elizabeth Warren and Sherrod Brown. The book is organized into five sections:
The Facts
The Challenges
The Solution
The Threats
The Next Steps
And between them they touch on all the themes that have been raised in the Social Security debate here at Angry Bear over the years and around the blogosphere. The book is pitched at the general reader/voter/citizen, it includes plenty of numbers but doesn’t dive into the data tables of the Annual Report. Nor is it the kind of detailed history you find in Nancy Altman’s earlier book The Battle for Social Security or Eric Laursen’s newer one The Peoples’ Pension. And it takes a different tack from Baker and Weisbrot’s 1999 Social Security: the Phony Crisis. All of which are important reads for the serious policy wonks among us. But if you just want to brief yourself on the issues and to be prepared to push back on the talking points pushed by say various Peter G Peterson entities like Fix the Debt then you really could do no better than buying (or borrowing) and reading this book.
You have an “http.com” in the link to the book. Correct link:
http://thenewpress.com/books/social-security-works
15 Components of the Plan – Scored
Current 75 Year actuarial gap as %payroll/%GDP: -2.88/-1.02
1. Increase benefits by 10%/$150 max -1.20/-0.42
2. Institute CPI/E for CPI/W -0.37/-0.13
3. Minimum benefit 30 years work 125% FPL -0.19/-0.07
4. 12 weeks paid birth leave -0.40/-0.14
5. Child care credit (up to 5 years) -0.25/-0.09
6. Restore benefits for surviving children to age 22 -0.07/-0.02
7. $1000 new child born/adopt credit -0.07/-0.02
8. ‘Family Max’ change in DI -0.01/-0004
9. Widow of DI changes -0.04/-0.01
Those are the ‘expand’ part. None of which are free.
Now for the ‘strengthen finance’ part.
10. Eliminate taxable
minimummaximum/allow benefit increase +1.95/+0.6911. New 10% rate on income over $1 mil +1.50/+0.53
12. Treat salary reduction plans like 401ks +0.25/+0.09
13. 20 year phase in 2.0% FICA increase +1.41/+0.50
14. Invest 40% of TF in equities +0.59/+0.21
15. Combine OAS and DI Trust Funds 0.0/0.0
Long range surplus +0.22/+0.08
JDM thanks muchly.
Fixed in post.
Point 13 is a scaled back version of Northwest and more directly taken from the Virginia Reno/NASI proposal rather than the more complex and comprehensive (and standalone) fix than is the Coberly/Northwest one.
But as noted in the post we got a hat tip in the Endnotes.
Interesting that they proposing investing 40% of the TF in common stocks. And 20 years of PR tax increases? A very tough sale.
A few snippets from CBO’s Elmendorf on SS today:
“on a unified budget basis, taking account of just the tax revenues, the dedicated tax revenues, and the benefits, [Social Security] is contributing [to] the deficit now.”
Rep. McClintock: “If we continue down the path we’re on, can today’s college students count on receiving the Social Security benefits that they’ve been promised?”
CBO Dir. Elmendorf: “Um, no, Congressman.”
On the proposed raid of OASI:
CBO Dir. Elmendorf: “So the approach you describe has been used before, as you know. If money is moved from the Old Age Survivors Insurance trust fund into the Disability Insurance trust fund, that will extend the number of years from which the DI trust fund can pay benefits and reduce the number of years for which the OAS trust fund can pay benefits.”
Rep. Diane Black: “So that old [adage] robbing Peter to pay Paul is certainly the case here, and if something is not done to reform both of these programs, that will be all that we’re doing is robbing Peter to pay Paul until essentially there’s nothing left in either program to rob or pay?”
Krasting screw Elmendorf. Why should I care about his rhetoric? His numbers yes but his bloviating in front of Congress no. Particularly when there is open talk about the Republican majority kicking his ass to the curb. Why should I not just see this as some pandering/begging by him for him to keep his job?
Plus it is disingenous to evoke “unified budget” while omitting interest. “unified budget” is under law an artificial concept, if you are going to reference it at all you are constrained to use ALL of its terms. Including interest earnings on the Trust Fund. Elmendorf by invoking “unified budget” while deploying “primary surplus/deficit” is just talking about something that does not exist. Simple cherry picking special pleading.
And you always resort to versions of “very tough sale” without presenting any actual argument why proposals that poll very, very well across the political spectrum are that tough to pass. Once at least after people get exposed to the actual numbers.
Social Security Works! covers the numbers. And much, much more. If people read it they are likely to come to the understanding that BK is talking through his hat and that expanding Social Security is both possible and desirable. Which would make it tough to be you.
Oh well, all I can suggest is saving yourself the $16.95 plus tax. This post really didn’t have your mind in mind.
The “unified budget” seems like an artificial way of making SS appear to impact the deficit when in fact it does not. It is a liar’s way of making his lie appear as truth.
Shouldn’t 10 be “Eliminate taxable maximum,” that is, the cap?
(Bruce here. Absolutely right, fixed in comment. Thanks for tip.)
I don’t favor putting any of the TF into equities.
Webb – I thought you were apposed to steps that would socialize SS?
#10 appears to be an elimination of the cap?? If so that would go a long way toward socializing the program.
#11 – a millionaires tax of an extra 10% on high incomes. (10 and 11 would result in a 22.4% increase on those making >1m)
I applaud #s 4-7, but why does this have to be on the back of SS? It should be outside of SS and it should be funded by general revenues (deficits).
What you outline is a far distance away from what SS was/is. I’m surprised that you are jumping on board these proposals.
Why do I think these are a tough sale? Because none of these things will even be discussed until we have a new president. As of today that will be H Clinton. She may like some of these things, but millionaire taxes, Higher middle class taxes (the cap) and 20 years of increases is not going to be a program she supports.
We shall see. You’ll have to wait 3 years to find out.
PS Hillary may be the next Prez, but it will be nearly impossible to swing the House from Republican to Democrat. Do you really think a Republican House would sign off on this plan? I say not a chance in hell. If this is correct then next chance you have for changes like these will be 2020. By then it will be too late to implement these steps and avert the 2029 cliff without cuts in benefits.
Webb – Have a look at Jeb Graham’s latest on SS.
http://news.investors.com/022615-741103-social-security-bullish-on-economy-obamacare-vs-cbo.htm
A nice chart that show the difference between CBO and SSA. If you believe (as I do) that CBO is closer to reality and SSA is drinking cool aide then this chart is important.
The TF goes empty in 2029. Now go to the 2014 TF report and look up benefit payments in 2023 (intermediate case) = $1.5T
You tell me – when does the TF fall below 1-1? After 2023, but before 2025.
If you want to keep SS viable you can’t run the TF down to zero. Right?
Or do you now believe it is just fine to run the TF down to zero and make the program a hostage to politics? That would be the new definition of ‘sustainability’ or “program integrity’??
I don’t think #11 is another 10% tax on incomes over $1 million. I think it is another bend point at $1 million (I assume that is per year, so the bend point would be at $83,333 per month) in the formula to used to calculate benefits from average indexed monthly income. This is just a little under the 15% rate used for incomes over about $5,000/month now.
“receiving the Social Security benefits that they’ve been promised?”
AFAIK, Social Security doesn’t “promise” a specific benefit. SS makes projections about benefits in the future. These projections are not promises and are subject to change as circumstances change.
CBO numbers going forward assume perpetual war profiteering and pentagon trough filling.
If any are worried about deficits, rather than gutting the SSA, look at the F-35 and the $40B a year pentagon needs to try to fly and fix the failed dog. F-35 is one of about $17T in weapons life cycle costs that are waste and fraud.
Torture the numbers and they will confess to anything!
When pentagon fraud and waste takes less than 6% of federal outlays we can talk about deficits driven by inadequate taxation.
Krasting – Jed Graham is an ignorant ass. I don’t care to debate him or you on anything at this point. If you want to take that as a win then fine.
Mike you are right on #10
Not so right on #11
Mine were paraphrases designed to fit on a single line. The original text from page 227
“Starting in 2016 gradually eliminate the maximum taxable wage base, giving credit for these contributions”
“Enact a new dedicated 10% marginal tax rate on yearly incomes in excess of $1 million (no additional tax on the first $1 million dollars of yearly income”
The first provision would phase in over ten years. And it would add two additional bend points. See details on page 223.
The second provision looks to be a straight out surcharge. Now it would seem that after 10 years the combination of these two would result in a double hit on top marginal income. And political reality might have the 10% surcharge on $1 million be an interim step that would be itself phased out once the taxable maximum was eliminated. Or not. The Social Security Works All Generations Plan is presented as a unity but obviously could be implemented in parts or with different phasing. It is however any answer to the question ‘Reformers’ like to pose to defenders of Social Security: “Well what is YOUR plan”.
Well if Eric and Nancy were running the zoo here it is.
Krasting
as far as I know Webb does not oppose “socializing” Social Security. As far as I know, I am the only one making the point that taxing the rich defeats the genius of Roosevelt in making SS “worker paid” insurance “so no damn politician can take it away from them.”
The Northwest “plan” shows a way to avoid both socializing Social Security and/or cutting benefits., I believe it is the honest way to solve the Social Security “problem.”
I am not in a position to criticize Altman-Kingson because I have not read their book.
I think you agree with me above about some things, but your “logic” is so thoroughly founded on bad logic and misleading information that I cannot welcome your fellowship.
Webb is correct that Elmendorf is a damned liar. ooops…. Webb didn’t call him that. I did. Webb merely pointed it out and indicated the “nature of his game.”
Joel you are straining at gnats here.
That Social Security doesn’t promise a “specific benefit” does not invalidate the fact that there are “benefits that they have been promised”. Under current law it is certainly possible that there could be a gap between “scheduled benefits” and “payable benefits” that would require a reset of the former to the latter. But that would still be “benefits” pursuant to a “promise”.
It is within the power of Congress to simply abolish the Social Security program and abrogate the Trust Fund and zero out benefits. But that would be rightly seen as outright theft and Congresscritters who went along with it would be lucky to escape with loss of office.
The only way to substantially transform Social Security is to convince voters that Congress simply had no choice, that it is all a matter of simple arithmetic and demographics, and so to set the stage for draining the juice from the Third Rail of American Politics. It has little to nothing to do with the fact that per the Supreme Court individual workers do not in fact have a direct ownership interest in their future benefits. Flemming vs Nestor might send a thrill up the legs of libertarians and other anti-social insurance folks but it has no realistic bearing on the politics.
Joel
I think you are making too much of a word. The whole Social Security program is a “promise” that if you pay your Social Security “tax” you will be entitled to benefits… and the benefits will be calculated based on the amount of tax you paid… making allowance for the insurance feature.
There might be a way to write a specific “promise” into law, but this is a democracy and we already have a law, which it is up to the vigilance of the people to protect. Granted that this vigilance seems to be either lacking or being effectively ignored by the lying politicians we seem to have elected.
To amplify Dale’s point.
There is a difference between “Bruce Webb, junior author and defender of the Northwest Plan” and “Bruce Webb, Social Democrat”.
Northwest had its origin in an often biting and occassionally bitter two and then three way debate between Dale, me and a northwest based engineer named Arne. What we did agree on was the arithmetic. If you assume the numbers of the Social Security Report’s Intermediate Cost Alternative then a plan of phased and triggered increases in FICA would arithmetically backfill the whole gap at what all of us agreed was a very modest burden. And so Northwest was born.
But that doesn’t mean that either Arne or I was convinced by the numbers of the Intermediate Cost alternative. And it certainly didn’t mean that I had simply surrendered to NW as the only desirable approach. In fact my own preferred plan would attack the problem from a totally different direction, one that I gave the acronym MJ.ABW.
Which I still prefer to either Northwest or Nancy and Eric’s All Generation Plan. I believe there is little in the way of the progressive agenda that can’t be addressed first and foremost on the front end rather than on the back end as NW and AGP do. What is that front end:
More Jobs. At Better Wages. (Which in practice means rejecting large parts of the Neo-Liberal project that relies on the Invisible Hand). But in the interim it may be that the path forward is through increased tax on wages with or without a cap increase.
well, i don’t remember any bitter or biting debate about the Northwest plan. For my part, what “debate” between me and Bruce, or me and Arne came long after the fact and really has nothing to do with the Northwest plan. Mostly it is due to my inability to make myself clear, and/or my inability to understand some of Bruce’s more abstract flights of scholarship. And my belief that it is not good politics or good teaching to confuse your audience by talking about, or fighting about, abstractions they are not prepared to understand, but some of whom are prepared to exploit differences of opinion among the “defenders.”
the “northwest plan”, so named by Bruce Webb, did not originate with me as a plan at all, but simply a demonstration of the arithmetic that showed… clearly and completely… that the Trustees projected 5 then 8 “Trillion Dollar Unfunded Deficit!” could be paid for by raising the tax on workers by one tenth of one percent of wages per year (eighty cents per week in present terms) in years when the Trustees would otherwise project “short term actuarial insolvency” (which does not mean what you probably think it means …it doesn’t mean “broke”… not even close).
for some time Bruce has maintained that he prefers “do nothing” as a “plan.” I am not sure he realized that “Northwest” IS a plan to “do nothing” until something needs to be done: when the Trustees make the actual projection of short term actuarial insolvency. Which now looks like it will occur in 2018. that means that in 2018 the Trustees will say that it sure looks like by 2028 the Trust Fund reserve will fall below 100% of a full year’s cost of benefits.
It turns out I actually favor the”Northwest Plan”, believing it is the only solution that preserves the “workers paid for it themselves” feature that Roosevelt thought was so important. As do I. I agree with Bruce Webb that more jobs at better wages would be the Best of All Possible Worlds. But it is not a “plan.” Meanwhile the Northwest Plan will take care of You while you are waiting for the politicians to find those more jobs and better wages.
My disagreement with Arne is not, I think, about the Northwest “plan” as a fact of arithmetic, but only that he seems willing to “compromise” with the bad guys which I am not: There is no basis for “compromise” with a thief.
And with the present subject… Social Security Works. Yes it does. So why do we need a complicated plan to destroy what makes it work so we can make the rich pay for our retirement? The higher taxes suggested and the greater welfare suggested are probably good ideas, but not good to pile on the back of Social Security, which only needs an extra eighty cents per week from You.
Meanwhile I am not here arguing with anybody.
Webb – Some numbers help?
I added up the tax increase side of the ledger, I excluded the annual income from common stocks (it’s a joke to plug in a number like .59% annual income – stock investing does not work like that)
The increase came to 5.11% of taxable payroll, or 1.81% of GDP.
I use taxable payroll = 41% of GDP (??)
In 2018 we should (hopefully) have an 18T economy. 41% of that Xs 5.11% comes to $377B
18T Xs 1.81% = $325B
There appears to be a $50B discrepancy in the first year numbers. Can you square these numbers up for me?
Also. The book starts with the assumption that the hole in SS is equal to 2.88% of taxable payrolls. Do you think Nancy and Eric will rewrite the book after the 2015 SSA report moves the number to 4% (The CBO and OMB estimates for the shortfall)?? Or should they have just waited to release the book using updated numbers? (oh – that would not work so good – so I guess not).
Krasting
there is no reason for anyone who knows anything to believe your numbers mean anything.
payroll taxable for SS is around 35% of GDP headed for 30%… in big part because people get much of their “pay” as “benefits”… about half of the actuarial gap would be closed simply by paying people in cash and taxing that cash as income. you can check these numbers simply by reading the Trustees Report.
otherwise the Trustees numbers are the “official” numbers and you ought to work with those if you are going to understand anything we (I) or anyone else says here. The “Trillion Dollar Unfunded Deficit!” hysteria is based on the Trustees numbers… a stupid reading of the Trustees numbers… getting hysterical about the Trillions because you are too dumb to realize that divided by hundreds of millions of people and seventy five years (or forever depending which “prediction” you prefer) Trillions of Dollars turns into tens of cents per worker per week.
i don’t think Bruce Webb wiill want to play your game of confusing the subject by chasing around any numbers that pop into your head. but I invite anyone who thinks Krasting has anything to say to try to make actual sense out of his arithmetic. That may be asking a lot, because not only does Krasting make no sense, but most people…. sorry, i used to be a math teacher… can’t make sense out of anything that has numbers in it. Even when they can do the arithmetic, or follow the algorithm, they rarely have a clue about which numbers mean what.
i’ll be out the rest of the day, but anyone who wants to talk seriously about this will find me willing…. for a while… to give it a try when i get back.
Coberly – the 2013 taxable base was $6.5T, GDP was $15.9T. The ratio, therefore is 41%. If it were to fall to 30% SS would be on its ass.
You bitch about my numbers. I think you make stuff up.
Krasting give precise cites for your numbers or go away.
“I added up the tax increase side of the ledger”
What ledger? Am I supposed to go back through all your comments on this post and previous posts to figure out what the heck you are referencing here? Why should I bother when you can just give the cite? The only link you have give is to Graham’s piece, you didn’t bother giving a link to anything from CBO in that comment and now you are referencing some unspecified “ledger”. What ledger in what document at what cite?
Ditto for your reply to Coberly:
“the 2013 taxable base was $6.5 T, GDP was $15.9T”
In what document? In context I suppose we are expected to assume the 2013 Social Security Report but why not make that explicit AND PROVIDE A LINK. For other readers if not for me and Dale.
You are so intent on pursuing some sort of “gotcha” game directly against me and Dale that you are beginning to look like Captain Ahab and the White Whale.
Look if you want to make a case then mentally frame your audience as EVERYONE BUT ME AND DALE and then explain to THEM why WE are idiots. Because your flailing around trying to play King of the Mountain specifically against us and ON MY THREAD is getting tiresome.
Give numbers, explain methodology, cite sources and make argumetns and maybe you will impress someone. This whole “well as I pointed out in June 2012 (without links) shit isn’t impressing anyone. And just wastes my time.
I mean it is nice that you pulled two numbers out of SOMEWHERE and then divided them and came up with .41. Me I spent a little time looking through the actual 2014 Report trying to figure out where you got those numbers but only found
Table VI.G5.—Ratio of OASDI Taxable Payroll to GDP, Calendar Years 2014-90
http://www.ssa.gov/oact/tr/2014/VI_G2_OASDHI_GDP.html#103985
Which gave an estimate for 2014 under Intermediate Cost at .352. Which seems kind of close to Dale’s “around 35% of GDP”.
This is the reason we bitch about your numbers. Because Dale “makes things up” by going right to the source and citing the actual numbers. While you just put up your own numbers drawn from who knows where and perform calculations and throw monkey poo from your cage.
Get rigorous or go away. Or have me make you comments go away. For example the next time you accuse Angry Bears of lying without actual evidence.
Found numbers for 2013.
Table VI.G6.—Selected Economic Variables, Calendar Years 2013-90
http://www.ssa.gov/oact/tr/2014/VI_G3_OASDHI_dollars.html#182913
Taxable payroll: $5.892 trillion
GDP: $16.790
Your numbers (apparently sourced from your nether regions)
“Taxable base” (whatever that means) $6.5 trillion
GDP: $15.9 trillion
So ON THE BEST EVIDENCE AVAILABLE (because you didn’t supply ANY) you managed to screw up both the numerator and denominator and then complain because Dale’s number disagrees with yours.
Get rigorous or go away. Don’t make me say it three times.
The national average wage index (AWI) is based on compensation (wages, tips, and the like) subject to Federal income taxes, as reported by employers on Forms W-2. Beginning with the AWI for 1991, compensation includes contributions to deferred compensation plans, but excludes certain distributions from plans where the distributions are included in the reported compensation subject to income taxes. We call the result of including contributions, and excluding certain distributions, net compensation. The table below summarizes the components of net compensation for 2013.
Net compensation components for 2013 Compensation subject to Federal income taxes $6,463,355,960,937.75
From SSA:
http://www.socialsecurity.gov/cgi-bin/netcomp.cgi?year=2013
The tax increae I asked you about are the ones you q
krasting
first, income subject to the income tax is not the same as income subject to the payroll tax. you may have heard about the “cap.”
second, the fact that income subject to the payroll tax is falling from 35% of GDP to 30% does indeed mean that SS will be hurt. This is what we have been talking about for the past eight years. Part of the reason for the decline in income subject to the payroll tax as a percent of GDP is that people are being paid in non taxable benefits. another reason is that the rich are getting richer, which means, as a matter of arithmetic, that those making under the cap are making a smaller percent pf GDP.
But apparently you just read “30%” and react with “can’t be… because that would mean ‘SS would be on it’s ass.” Well, yes, that’s what we’ve been talking about. But if you read the whole damn sentence you would have known that because that’s what I said.
That’s why it’s so tedious talking to you. Anyone else could make a mistake like that and i would patientl explain it to them. But you make mistakes like that ALL the time, and then tell me I am making stuff up.
And you do it time after time after time after time after time after time
SS will not be “on its ass”. it will however require a total of a 4% increase in the payroll tax (2% from the worker, 2% from the boss, but this can be phased in one tenth of one percent (each) at a time, so no would would feel it… because wages WILL be going up ten times as fast.
What Dale said.
Plus I am still waiting for an answer about the discrepancy in GDP between your $15.9 and SSA’s $16.8 trillion. A little more than a rounding error. Got cites?
Holy Christ, I finally figured out what Krasting meant by “ledger”. It is the 15 items of cost increase and pay for’s listed in my comment.
“I added up the tax increase side of the ledger, I excluded the annual income from common stocks (it’s a joke to plug in a number like .59% annual income – stock investing does not work like that)”
You hardly know where to start. That .59 has JACK SHIT to do with “annual income” directly. Instead it represents the gain you would have over 75 years if you invested 40% of your surplus in equities over 10 year bonds expressed as a percentage of payroll. The only joke here is Krasting’s reading skills.