Millenial generation and Social Security
Hilary Doe, the National Director of the Roosevelt Campus Network, spoke this week at the National Academy for Social Insurance conference in Washington, DC. She thinks ahead to the year 2040 — and fighting to keep Social Security around.
Think 2040 is the Roosevelt Institute sponsored platform for Millenial generation input into the whole debate.
Follow the link to the National Academy of Social Insurance website.
Gee
I wish someone would invite a speaker to talk to these kids and tell them the basic facts. As it is they are trying to fix what ain’t broke.
It is impossible to save Social Security just like it is impossible to save these pensions. Even the great http://www.socialnews.biz/tag/Barack%2BObama“>Obama can’t do it unless he can defy math. Can’t bring in less than you pay out unless you have unlimited borrowing power. Hmm…
Coberly,
Your Wallace Heartly, while the women and childern dawn their lifevests………it makes me Giggle!
LOL…do you know the math mike gold. Real math. Show us.
Nothing from Nothing leaves Nothing! You tell us where the cuts in the general fund are coming from?
Even though Rdan deleted my comment…your still Wallace Heartly!
“Nothing from Nothing leaves Nothing!”
Ooooh…profound!
The fact that social security is solvent until at least 2053 according to the non-partisan CBO is obviously is not something you *believe* in. According to “low-information” conservatives SS has been in danger of failing in 10 years for the past 5 decades. And the real irony is that SS would be even more solvent if republican (and democratic) congresses had not played accounting tricks by buying low interest trust fund bonds with surplus SS revenues. And the solution according to low-information types is reliance on wall street investments! LOL!
“Nothing from Nothing leaves Nothing!”
Ooooh…profound!
Social security is solvent until at least 2052 according to the non-partisan CBO.
According to conservatives SS has been in danger of failing in 10 years for the past 5 decades. And the real irony is that SS would be even more solvent if republican (and democratic) congresses had not played accounting tricks with surplus SS revenues. And the solution according to many low-information types is reliance on wall street investments!
It’s going to suck, but we’re just going to have to significantly raise taxes on the top 5% of this country again.
Republicans predicted the end of the world in 1993 when we last had to do this, they were wrong then, and they’ll be wrong again.
I’m all for cutting the military 50% or more, even though that will throw millions of people out of work. I really don’t understand what we’re getting for that $700B/yr . . . just dividing it by $70K per job that’s TEN MILLION jobs directly funded by military spending. Damn.
Since SS is supposed to be self-funding, any actuarial imbalance should also result in increased contributions. Perhaps uncapping the FICA limit would be enough.
Actually the Northwest plan would take care of it with much less drama. But then, that is math, which appears to be amathama to critics…who refuse to even try. If Jimi can do math he ought to try. I might even post it for critique. Maybe he can get mike gold to help.
My patience is short tonight for those quick on the draw with one shot statements they consider zingers. And for people who cannot even explain what actually might be a problem for SS in the long term. Hint…not by Peterson’s group so far that I have seen.
Lots of things in the US are broken. Fix those, leave the working programs alone.
Misdirection is unbecoming.
Yuan,
“Social security is solvent until at least 2052 according to the non-partisan CBO.”
Yuan, your paying for retirees now. This year we went into the red ($29 Billion). There is no surplus, just IOU’s. To keep pace, which certainly is getting worse, since the retirement of Baby Boomers is strarting to hit, we need to either raise taxes specifically for Social Security, cut spending out of the general fund to make room for Social Security Spending, or cut benefits and raise the retirement age. The projected ratio of retirees to earners is only going to get worse, so each year the CBO will report the situation getting worse, and with economically incompitent harvard geniuses in office like we have now, there is no growth expected to help fill the gap. The CBO does the numbers by the book, but not very good at keeping up with the reality of the situation.
So when your tax goes up for less benefit, you can call that solvent all you want, but I operate in the real world.
“And the real irony is that SS would be even more solvent if republican (and democratic) congresses had not played accounting tricks with surplus SS revenues.”
Lyndon Johnson and the Democrat controlled Congress transfered the surplus to the general fund.
Rdan,
The tax has been raised 17 times, and here we are going to have to raise it again, and all we here “Nope nothing to see here, move along.”
If there is no problem, then why have we had to print money just to keep up?
How is it that each generation has more of the burden than the generation before it, not a long term SS problem…can you please explain that?
Jimi:
SS still gens a surplus. DI is what is pulling the system down. Guess we should do away with handicap parking and let the 4-wheelers park close? You do not know what you are talking about.
Jimi:
2001/2003 tax breaks, Iraq and Afghanistan, recession is why taxes must be raised
Are you asking about SS or the general fund.??
Wasteful militarism.
Wars that have no meaning run by frat boys like Mc Chrystal.
The militarists and corporate welfare need to be cut to free resources for better use.
Stop pillaging the economy then SS is easily paid back.
Jimi,
Pull the plank out of your eye……………… look around.
SS has a $2 trillion accumulated surplus.
Unfortunately, that cash was thrown away on militarism which has nothing to show but flag draped coffins and guys with masses of ribbons on their chests who have done no more than pillage their own country.
If the SS surplus had been uesd for infrastructure, and the rich whose taxes were cut due to the SS surpluses had invested in America and not China then the SS surpluses would be easily redeemed.
Instead the money was used to pillage the US economy for militarism.
Pull the plank out of your eye and look around.
Quiz: who first told a blind arguer to pull the plank from his eye?
mike gold
looks like you were a drive by. might explain why you don’t know anything.
jimi
we been telling you and telling you. nothing sinks in.
jimi
you are sadly ill informed. johnson changed the reporting. but the law keeps the Trust Fund out of the General Fund. That’s why they bother to write those bonds. And no, you do not operate in the real world. You are exactly like a mental patient with his own separate reality.
jimi
the simple explanation would be that we are living longer. but it’s more complicated than that. SS was started as “self funded” that meant that no one would collect a pension who had not paid in (at least something). so the first year, only those who had been 64 the year before got to collect. this would be about 1/40 of the people who were paying in, so the necessary tax on a pay as you go system would be 1/40 of 40% (the replacement rate) or about 1%. The next year the people collecting benefits would be those who were 64 and 63 the year the program started, about 2/40 of the people paying in… so the tax would be 2%. and so on… except that about year 10 or so, the number of retirees who are dying begins to catch up with the number who are retiring, so the ratio of retired persons to working persons starts to stabilize reaching about 3:1, so the tax needed becomes about 1/3 of 40% or about 12.4%. Sound familiar? The increase in life expectancies is expected to bring this ratio to closer to 2:1, so the tax rate might reach 1/2 of 40%. If 20% sounds high to you, its because you aren’t considering the cost of living about 20 years in retirement. And other factors enter in that will actually hold the cost down to about 16%, or 8% for you and 8% for your boss.
This has been vastly oversimplified, and Jimi will neither understand it nor remember it, but i thought it might be worth giving the intelligent readers a sense that we do know the math.
and remember that 8% goes to pay for your ability to retire at 67 or 62 and live for a long long time without working…. and by the time you are 62 that will sound a lot better to you than it might today. And it is worth remembering that by the time we reach that point, your pay will be twice what it is today, in real dollars. So that extra 2% won’t even be noticed. what else were you going to spend your 100% raise on?
Which is why I think he is not sincere….the old stuff is tossed in without reference to past discussion…so easy to do at the moment, but indicates a lack of curiosity that is profound.
Run
strictly speaking the system is not being pulled down. last time i looked even DI still has a reserve it is drawing from. it ought to have a raise of one tenth percent to return to cash flow balance, and to restore “short term actuarial solvency” which only means to raise the reserve back up to one full year’s expenses.
jimi
you need to explain to yourself why “the tax has been raised 17 times” means anything at all.
the idiot right is full of these sound bites that don’t mean anything but sound really impressive to folks who don’t have to know what anything means.
Dan
that. and the driveby’s. even the sincere ones who get all upset when i am not pc. but don’t stick around long enough to find out why.
Run,
Guess we should do away with handicap parking and let the 4-wheelers park close?
If you walk into the parking office with a limp can you get one of those premier handicap parking spots?
Coberly,
The relevent metric is the burden of retirees to those working. The accounting of the social security system is secondary.
Coberly,
but don’t stick around long enough to find out why.
But then again maybe they do and it just appears that they don’t because of this site’s bias.
Jimi,
Even though Rdan deleted my comment
doh! I hate when that happens.
Explain bias. All blogs have bias.
Ben
not exactly. the people who are paying the tax… the workers… are paying in advance for their own retirement checks. this is managed by a very clever idea called “pay as you go,” which formally, is something that goverments can do that a private retirement system would find difficult.
but even a private retirement system is essentially pay as you go, because the money you “save” today is spent today, and the money you get when you retire comes from someone (a worker) spending his money tomorrow.
you may be more comfortable with private enterprises because you “don’t trust the government”, but you need to recognize that the “burden” on the worker to support the retirees is essentially the same in either case.
taxes for social security will go up because we are going to be living longer. you can think of that as fewer workers per retiree, or you can think of it as fewer worker hours for each retirement hour for any given worker-future retire. it comes down to the same thing.
in general the people paying the higher tax now because the generation ahead of them is living longer, will in turn live longer themselves and receive in benefits more than they themselves paid in, being “supported” by the generation following them, but that generation will also get their money back by living longer. the living longer than the last generation probably can’t go on forever, but it is very unlikely you will ever see a time when you get less than you paid in.
and you need to understand that if people are going to retire at all, and they will want to, the “burden” of “retirees per worker” will be the same whether it is paid for by private investments, or by Social Security.
the same growth in the economy that produces “returns on investment” is also what produces the effective interest that supports “pay as you go WITH WAGE INDEXING.”
this is not difficult, but you would have to spend some time honestly thinking about it to understand it.
Ben
how would you sort out this site’s bias from your own bias.
as a general rule people cannot see their own bias. it takes real intellectual rigor to even suspect it.
i grew up in a situation where it was impossible not to be called to account for my own bias, so i always suspect it. i see no evidence whatsoever that you have ever sat down and honestly thought hard about anything, least of all your own bias.
Jimi those tax increases all trailed increases in Real Wage over that period. Or are you really arguing people today don’t have better standards of living when measured in baskets of goods than they did four and five decades ago?
Social Security has delivered a better basket of goods for each generation of retiree. That is just the facts, I am sorry you can’t seem to grasp them and are trapped in this ridiculous ‘backwards transfer’ mindset.
And so I ask again, because nobody is willing to actually answer the question, and obviously Coberly doesn’t understand what the question is.
Where is the money going to come from?
One way to avoid bias is to agree on a given data set.
The Northwest Plan has three authors with varying levels of contribution but all of us have agreed on a simple principle: for operating purposes simply accept the Trustees Intermediate Cost assumptions and solvency measures and calculate what a payroll only fix would look like within those constraints. If those projections turn out to be too pessimistic we have built in a mechanism for adjusting the fix at least a decade in advance, similarly if those projections are too optimistic. Given that accustations of ‘bias’ are themselves off-base, in the final analysis these are not our numbers.
Now if someone can take the ACTUAL demographic projections of IC and show they are too optimistic (which oddly translates to more pessimistic about mortality assumptions) then great. But for God’s sake don’t lecture us about ‘people are living longer’ and ‘worker-retiree ratios’ because not only are we fully aware of those factors so are the people who are building the model we are using.
For most purposes policy discussions involving Social Security have explicitly adopted numbers and dates drawn from the Trustees Intermediate Cost Alternative, although some would like to point to the alternative projections presented by CBO. But either way accusing me and Dale and some others here of ‘bias’ because we are deploying the officially accepted data set is faintly absurd. Attack our math or attack the Trustees’ models, but these drive by “don’t you knows—-” aren’t cutting ice. Because by and large we do know and can back up our assertions with numbers and links right from the SS Reports.
There is an old saying in the Law: “If you have the Law, argue the Law. If you don’t have the Law argue the Facts. If you don’t have the Facts, Pound on the Table”. Well too much of the discource coming from the other side amounts to little more than pounding on the table.
Numbers are bitches. But in this case they are our bitches. If you got bigger and better ones than bring them. You can call that arrogance or bias if you like, I call it not bringing a rubber knife to a numeric gun fight.
Coberly,
it will come from the payroll tax. raised about twenty cents per week per year. i have told you that before.
But you’re not credible.
Jimi: “There is no surplus, just IOU’s.”
Jimi are you trying to suggest that you are really Georgie Boy with that ignorant comment? If the T-Bills that are the assets of the Trust Fund are “just IOUs” does that imply that the interest due need not be paid and principle amounts need not generate additional interest income to the Fund? If so, do we apply that same logic to all T-Bills? i would think that China, Japan, Korea, etc and a good many Americans might be dismayed to know that the T-Bills they hold are just so many IOUs. What does that statement even mean, since IOUs are contractual obligations to repay a debt with interest? Or, are you just being your old stupid self again?
Rdan and Coberly,
Listen to what your saying…”No problem with Social Security…Oh, but we need to raise the tax, but besides that no problem with Social Security.” And your calling me stupid?
Run,
And the surplus gets spent as fast as it is generated, and we then have to cut somewhere else, raise the tax, or print the money.
So what exactly are you talking about?
mike gold
your “math” misses two points.
first, Social Security saved up for just this day. It has 2.5 Trillion Dollars in the bank. It’s the same reason your wife wants you to give her some money for groceries when you get paid on Friday. She knows that by monday you won’t have any left. it’s called “prudence.”
second, when the Trust Fund runs out… as it was always expected to… social security can continue to pay all benefits… pay as you go… with a possible tiny tax raise to take care of the longer lives the next generation is expecting.
Social Security does not borrow anything.
jimi
who, exactly, are you talking to?
the surplus in Social Security has been gathering for 30 years. hardly “spent as fast as it is generated.”
unless you are referring to the fact that it has been lent to the government, and the government spent it. that’s call “borrowing.” it’s something you could do one day if you ever get a better credit rating. the government can easily afford to pay back the money it borrowed. if worse comes to worse, it could rescind the tax cuts made possible by that borrowing. this is called paying your bills. if you ever find out what that means, maybe your credit rating will improve. by the way, every business in the world does it.
David
the fact that you don’t understand the math does not make me “not credible,” if you want to do some reading and some arithmetic you can figure it out for yourself. get the Trustees Report and read it carefully. Be careful of words designed to fool you. Look at the numbers. Make sure you understand what they mean.
But here is a rough approximation… the Trustees tell you they will need to raise the tax 33% or cut benefits 25%. The 25% is one fourth of you whole pension. But the 33% is 33% of your 6% payroll tax. That is, it is 2% of your paycheck. Now this 2% raise doesn’t happen all at once, it takes place over 75 years. so every year you raise your tax 1/75 of 2%, or about 0.03%. If your weekly pay is about 1000 dollars, that comes out to twenty seven cents per week, per year.
The average wage is lower than 1000 dollars per week… so you’ll have to take my word that when i do the arithmetic more carefully it comes out close to twenty cents per week. Or you can go cry to Mr Peterson about the huge tax increase of twenty seven cents per week that it is going to cost you to get your pension on time, for a longer life expectancy at the standard of living your peers will be enjoying in the future
jimi
i guess that’s why we are calling you stupid. raising the tax to take care of the fact that people are going to be living longer is not “something wrong with Social Security.” It’s what normally happens to an insurance policy when the insured event gets more expensive. Most people would be glad to live longer. And be willing to pay an extra twenty cents per week per year to be able to know they would have enough to eat all those years.
“Lyndon Johnson and the Democrat controlled Congress transfered the surplus to the general fund. “
http://www.ssa.gov/OACT/TR/2009/VI_cyoper_history.html#159726
Jimi you are worse than ignorant, your knowledge base on this topic is actually negative. Cash surpluses under Johnson:
1964: $100 million
1965 -$1.5 billion
1966: $1.6 billion
1967: $1.7 billion
1968: $100 million for a net ‘primary surplus’ of precisely $2 billion. Do you really think this served or even was designed to hide the costs of the Great Society or the Vietnam War?
To the extent that parking that $2 billion in Treasuries respresented some ‘transfer’ to the General Fund by Democrats it was more than balanced by transfers back in subsequent years. Primary surplus/deficit:
1969: $2.7 bn
1970: $500 million
1971: -$800 million
1972: -$700 million
1973: -$1.2 billion
1974: -$1.3 billion
By which point the net transfer from 1964 to 1974 was FROM the General Fund TO Social Security. You have confused some distorted memory of Johnson implementing the ‘Unified Budget’ in early 1968 (that is about the time he announced he wasn’t running for reelection) with some urban legend that the Dems somehow used the Trust Funds as a slush fund. They didn’t. Which even a small amount of fact checking would have disclosed.
You literally know less than nothing about Social Security finance, because near as I can tell most of what you believe you know is just not supported by these little things I call “numbers”
http://www.socialsecurity.gov/history/BudgetTreatment.html
Jimi the problem is that you have no fricking idea how much money, or in the actual case how little we are talking about. It only sounds like a big problem is you address it conceptually and avoid actually examining dollars per future year (as opposed to compounding them to Heat Death of the Sun).
Coberly,
“the surplus in Social Security has been gathering for 30 years. hardly “spent as fast as it is generated.”
Why do consistantly play games with this? You know better than anybody, that to redeem the Securities that we need to raise the tax, or cut the spending somewhere else.
If the money was there and ready to repay what was borrowed we wouldn’t be talking about this would we?
Webb,
The transfer was an acounting trick, never said it was a slush fund.
So tell us Bruce, and don’t get me wrong, I really believe that you are one of the finest experts on this topic, where the *%&$ is the money gonna come from. The reason it is being attacked because the solution is always to raise the tax.
I don’t want anything to happend to SS, but the writing is on the wall, and the ulimate point is, where the hell is the compromise?
It already has been adjusted for the surplus it needs, but when we are loaning money to ourselves to pay the loan that we already paid, the SS selling points don’t look appetizing to the public.
jimi
i guess we would be. some folks is slow to catch on.
i suppose by “the tax” you mean the income tax which is the one most likely to be raised to pay back the money the congress borrowed in order to cut the income tax. can’t imagine why the prospect of a tax increase shuts your brain down.
or we could cut spending… say on new submarines for the war on terror.
or we could just borrow the money from someone else. but we’d have to pay them back eventually, and that appears to be where we came in.
Your theory about killing the person you owe money to has been tried. But not in the best circles.
Jimi
who is this “we” you speak of.
“we” the workers who pay the payroll tax lent the money to congress, which spent it… which is what you do with borrowed money… for, among other things, a tax cut that mostly benefited the rich. who told us that by giving them a tax cut they would grow the economy and so “the cut would pay for itself.” well, here we are. time for the cut to pay for itself…. by paying back the money the mostly rich borrowed from social security.
generaly when you borrow money, the bank is not interested in a “compromise.” they want you to pay them back.
jimi
it will come from the payroll tax. raised about twenty cents per week per year. i have told you that before.
you may not have noticed, but the united states of america is a going concern. and future workers will need to save for their retirement too. the best way for them to save is to put the money in a bank called “Social Security.”
you have to “ask again” because you don’t remember that you have been answered probably hundreds of times.
jack
jimi is just being jimi. we have explained this to him before.
suppose there were NO Social Security, but that workers had saved for their retirement by buying government savings bonds. now that a lot of them are ready to retire, or they are out of work because of the recession, they want to start cashing in their bonds. the congress would then face exactly the same situation as it faces with the Trust Fund bonds (iou’s).
But you probably wouldn’t hear too many people suggesting that Congress just not pay the bond holders.
“The transfer was an acounting trick, never said it was a slush fund.”
First of all nothing was “transferred” and second slush fund was implied or at least some nefarious act by the Democrats. Methinks thou doth protest too much.
As to where the money is coming from, well from the same place other debt service comes from. It is incumbent on you, using actual numbers to explain why that debt service is such a burden that the first policy choice should be cutbacks in benefits. Because both absolute and relative magnitudes matter and you have yet to show that you have an understanding of either, instead talking in conceptual soundbites detached from any numeric reality. Bring numbers and maybe we will take you seriously.
Jimi said,
“I don’t want anything to happend to SS, but the writing is on the wall,”
Jimi, try to hold on to that point. And maybe we can get somewhere. You might even want to write some of this down. It helps to think about it.
If you were a working person, you would know that one day you will want to retire. And you don’t expect anybody else to pay for it. So what you would do is try to save some of your money, so that one day you can stop working and start living. Not living rich. Not “Love boat” rich. But not having to work for the man. Not having to do something stupid or degrading or painful just to survive.
But saving money is harder than you might think. Banks fail. Inflation eats up your savings. Stocks go down at just the wrong time. And you never really have enough to put aside anyway. What can you do?
Well, fortunately for you, enough people suffered really hard times at once, and a fellow from New York put some very smart people to work to solve the problem. And at the last minute he had to step in to keep them from making “the same old mistake.”
The smart people set up a way for working people to save their money, and to insure it against all kinds of losses, including the possibility that you might become disabled, or might die leaving dependents. But mostly they insured it from market loss by keeping it out of “the market” entirely, and they insured it from inflation by a very clever idea called “pay as you go with wage indexing.”
But they were about to make a bad mistake and pay for all this with general taxes… taxes on the rich. Roosevelt stopped them. He insisted that the workers pay for it themselves. That way “no damn politician can take it away from them.”
That is Social Security.
At the time it was started it was opposed by a lot of people who thought it was “socialism.” They called it a ponzi scheme. And said pretty much what some people are saying now. There was some excuse for them because the idea was new and they did not understand it. But after seventy years, seeing that it works, there is no excuse for those people to be still telling the same old lies. But they are very good liars. and they have fooled almost everyone, including you and the President.
And also some “liberal” “policy experts” who ought to know better.
So the answer to your question, “where will the money come from?” is that it will come from where it has always come from: from the people who are saving for their retirement.
There are two things that are new now compared to 1936. People will be living longer. And they are making a lot more money. So they can afford to pay a little more for a retirement that will last longer, which is what they want. Or would want if the Big Liars weren’t confusing them with claims of “bankruptcy” and “burdens on the young” and “huge deficits,” none of which are true.
End of lesson one. If you have questions, try to bring them in one at a time, and be prepared to think hard, not just spout off another of the “talking points” you have read. We can take a hard look at those talking points, but only if you are willing to think.
David….disprove the math to be credible. That is your job is it not?. You can have the spreadsheets…they are vetted by actuaries, so they are independently verified by people who count.
Coberly,
Stop it. You’re making the point much too clearly. Jimi is going to begon hyperventialting because of an inability to refute such simple logic. Peraonally I’m all in favor of the government declaring all perswoanally held T-Bills and those held by foreign entities be declared invalid. I took Georgie Boy seriously when he first warned us that T-Bills were just a bunch of paper and cashed out of governemnt securities then. So from here on all T-Bills in private and foreign accounts are to be declared null and void.
Jack
it’s probably obvous to everyone else, but sometimes i am slow to catch on. all that time the congress and the president were running up the debt, the people who had money to spare were buying bonds. that was smarter than paying taxes. but now that they are thinking of cashing out their bonds, they see this big Trust Fund also getting ready to cash out its bonds. And the only way the government can come up with the cash.. since the current bondholders won’t be buying any more bonds right away… is to raise taxes.
This puts the rich in the situation of paying themselves back. Now this is what they have been telling us all along. They just didn’t make it clear that “we” in this case was “them.”
Back in the old old days first year economics students were told that the national debt didn’t matter, because we “owed it to ourselves.” This was thick fingered thinking… because the bond holders were never “we”, but “them.” and the problem i just alluded to was never mentioned.
but there may be a happy out.
as long as the chinese are buying bonds, the government can sell new bonds to them to pay off the old bonds, without necessarily raising taxes.
now i am sure i am missing something here, and i hope someone smarter than me will point it out.
Jack,
Obviously you haven’t figured out the reality of America’s economic situation looking into the future. Nobody is happy that the systems of the past are getting thrown under the bus, but it has become clear that we are not going to be able to squeeze blood from a stone.
If you have a problem with that, I’m sorry, not my fault, I’m just pointing out reality to you.
Coberly,
Stop it. You’re making the point much too clearly. Jimi is going to begin hyperventilating because of an inability to refute such simple logic. Peronally I’m all in favor of the government declaring all personally held T-Bills and those held by foreign entities be declared invalid. I took Georgie Boy seriously when he first warned us that T-Bills were just a bunch of paper and cashed out of governemnt securities then. So from here on all T-Bills in private and foreign accounts are to be declared null and void. Look how simple it is to balance the budget and preserve Social Security all at the same time. Note that Trust Fund T-Bills are not held in a personal account, nor by a foreign entity.
jimi
here you are again. talking as if no one here had answered you. it’s one thing to disagree with what we have said. it’s another to just keep saying the same thing over and over as if we have not tried to explain it to you.