SOCIAL SECURITY TRUSTEES REPORT OUT TODAY… or was it yesterday?
by Dale Coberly
SOCIAL SECURITY TRUSTEES REPORT OUT TODAYor was it yesterday?
Ho Hum. The 2019 Social Security Trustees Report was released yesterday.
The Committee for a Responsible Federal Budget published its usual half truths (also known as “lies”):. “We are all going to die!”
The Reporters and Columnists Who Cover Them ™ reported the half truths as the whole story: “We are all going to die!”
The “Progressives” demanded the “rich pay their fair share” and “expand Social Security” to pay for everything
Angry Bear ignored the whole thing.
The whole truth would have pointed out that while there is a funding problem projected for sixteen years in the future, it’s a small problem and the Trust Fund is NOT the problem.
If the future arrives as expected, Social Security will not be collecting enough “taxes” to pay the “promised” benefits at that time. (The payroll tax is not really a tax. It’s an insurance contribution… a way for workers to save for their own retirement. They get the money back with interest when they need it most.)
Social Security WILL be able to pay benefits that are about 80% of promised. That will be more in real value than benefits are today.
Those benefits COULD be redistributed so they continued to provide enough help to the poorest retirees (and widows and orphans) at the expense of the richest.
But it would be better to just raise the payroll “tax” about 2% for each the worker and his employer and continue to pay the benefits as promised.
No one would miss the 2% out of his paycheck, and he would get the money back in the form of a more comfortable retirement, which he will need and want MUCH more than whatever he would have spent that 2% on today. The 2% is not lost to some government black hole: the workers get their money back plus “interest” when they retire.
It would be still better to raise the “tax” gradually… about one tenth of one percent per year. (This is about a dollar per week per year.) This would not only not be missed, it would not even be noticed. And it would create a full Trust Fund which would provide enough interest to lower the needed “tax” by about one percent. It would also avoid the government having to pay back the money it has borrowed FROM Social Security. That money would become just a paper debt acting as a reserve to smooth over periods of recession.
The importance of this approach is that it would preserve Social Security as worker paid insurance for workers… something Roosevelt insisted upon so that SS would not become “the dole” just another welfare program subject to the political manipulations of the rich and influential (“we have the will but not the wallet”).
Under Social Security as designed the rich do pay their fair share. They pay exactly what the insurance is worth to them, and their “excess” payments are what provide the money to supplement the benefits received by the poor. (“Excess” in the sense that if you don’t have a fire, your insurance payments were “excess.”)
The Trustees Report this year was actually “better” than it was last year if you take the date of the “death of the Trust Fund” seriously, which you shouldn’t.
Sadly, this is not a ho hum moment. The opportunity to pay for the needed raise in the “tax” gradually will begin to expire next year.
And while it would still be possible to pay, say, an extra one percent now and the other one percent later, or even to pay the whole two percent in about 15 years, it would be much better to go for the gradual increase and avoid all the hysteria that will come when “Social Security is Broke!” ™
but you won’t.
Republicans have been trying to kill SS since its inception, I doubt they’re going to do anything to help it now unless it becomes a political albatross for them. Unfortunately the Dems are so bad at messaging that they won’t come up with something as simple as “a dollar a week to guarantee your retirement”.
We didn’t cover it yesterday at least in part because I got an email last week saying it would be released Friday, the 26th.
Thank you for the heads-up.
The democrats are not creative, while the republican don’t care about SS. I am not sure which is worse.
“Liberals” are not interested in social security, their donor class prefers the government fund war. They are very busy going after Trump for being soft on Putin and his questioning what NATO is doing surrounding Russia and guarantying the security of unelected regimes like the one imposed in Ukraine in 2014.
Alternate approach to SS is to have the federal reserve buy SS special treasuries for cash so the treasury has cash for benefit payments to real people like the treasury raises cash for F-35’s.
A second alternative would be to create SS treasuries out of thin air and put them in the SS Trust Fund like the financing of OPM and Military retirement benefits.
I suggest either or both approaches before raising “FICA” charges to people and employers.
ilsm
you are a good guy so i hate to argue with you. but when you can guarantee your SS pension for an extra dollar per week, why would you want to play games with dubious plans and unintended consequences.
i have been at this for ten years or more, and what depresses me is the way people torture their brains to come up with a risky way to avoid saving their own money for their own retirement.
of course it’s mostly that they have heard so many lies they are trying to solve a problem that doesn’t exist.
SS is very simple. It gives you a way to save for a basic retirement and protects that savings from inflation, bad days on the market, your own failure to make enough money in a lifetime to have saved enough to retire…etc.
it has worked fine for 80 years. the only thing that can hurt it is people being fooled by the politicians into “reforming” it.
Hank P
“democrats are so bad at messaging.”
yes. but thats because they don’t really want to save SS. they want to turn it into welfare as we knew it. so they end up making the Right’s argument for them.
As usual, your original post is well written and makes tons of sense. As usual I am just still more worried that to “pay the whole two percent in about 15 years” will be the wedge that will allow conservatives to generate the hysteria needed to destroy SS.
Dale – I don’t think that’s true. The problem is that they’re gun-shy because any proposal they make will get hammered by the GOP, the media, and the “centrists”. It’s a simple fact that unless they control the house, the senate and the presidency none of their proposals will even get a vote.
People who are worried about the welfare of citizens who can’t manage for themselves would like capitalize on the success of SS to do other good things. But SS is successful because it does one thing – insure retirement income – well. Asking too much of it will open a wedge for the propaganda savvy opponents.
Arne
you are right. both times.
Hank
the dems controlled the house, senate and presidency and Obama offered the Republicans to cut the allowance for inflation.
clearly not the same as trying to turn SS into welfare, but not exactly trying to keep it as meaningful retirement insurance.
SS has survived, so far, all the recent attacks. I can’t say I really know why,. But I am not reassured by Dems “messaging.” From what I have heard, the Dems since Carter have accepted the Repubs messaging that SS must be “reformed” in all but name.
I’d like to think that if the people knew they could keep SS as sufficient insurance for a fair price, they’d agree to it in a minute. But I have been staggered by the progressive who call me a “shill for the rich” when I point out they can pay for it themselves for an extra dollar a week.
Of course the dollar a week per year grows over time, but it grows ten times as slowly as the expected increase in wages. And even if wages do not increase, they will still need SS… which they can pay for at a reasonable price… to insure they will have enough to pay for food, shelter, and clothing when they can no longer work.
I still think that if someone with “stature” explained this all to them honestly and carefully they would see it as their best bet by far.
coberly:
Your remarks are clear and cogent. I fixed your earlier comment on “good guy” for you and deleted the other comment. I was at Loyola University of Chicago tonight talking about the Northwest Plan.
Run
thank you.
Did the people you talked to at Loyola seem to understand?
Coberly:
In a simple answer, “Yes.”
I know you have the letter from SS and a particular Congressman out east backed the Northwest plan. Can you supply me with both, a copy of the document and the Congressman’s name? It would make an impression. No one remembers or knows where the plan originated from, Coberly. I wish to make sure they know so credit can be given for the answer and the work done.
Run
i just sent you a copy of the Actuary’s letter. There is no Congressman that I know of who supports the Northwest Plan. But the Actuary says it will work.
This might be a good time to repost the Actuary’s letter.