‘A Well Tailored Safety Net’: Social Security and Old-Age Risk-Sharing
by Bruce Webb
Well I guess my reputation precedes me at least a little bit. Jed Graham of Investor’s Business Daily has devised a new fix for Social Security and published it as A Well Tailored Safety Net (link to chapter summary) and kindly offered to send me a copy to review. Well I am in the midst of a move South to Seattle and a new job search (see note under fold) and so won’t have time for a full reading but will put some first impressions below the fold. Mr. Graham points us to a favorable review by
Jonathon Chait Noam Scheiber on Chait’s blog in The New Republic (h/t Graham) A Bona-Fide Social Security Fix as well as a piece in The National Review by Reiham Salam Jed Graham on Work Disincentives and concludes with some apparent satisfaction:
It’s kind of noteworthy when these liberal and conservative publications see eye to eye on an issue as ideologically divisive as Social Security reform. It’s even more noteworthy considering that these are two of the more thoughtful people writing about economic policy.
Well while Chait is a reasonably consistent liberal both him and TNR lean a lot heavier in the direction of ‘neo’ than ‘New Deal’ liberal, if we had an equally favorable opinion from The Nation maybe we could talk here. But Angry Bear readers can make up their own minds on the substance of the reviews and the overall political approach of the reviewers.
Meanwhile Mr. Graham appended a copy of his testimony to the Obama Deficit Commission What I told Obama’s Fiscal Commission About Social Security.
Well having let Mr. Graham by implication make his full case up-front I will address some of his points below. Rather roughly I am afraid, since merits of his specific proposal aside he is working from the same flawed conception of Social Security as almost everyone else, he just adopts them to screw over workers in a slightly more equitable way than most other ‘Reform’ plans.
(First on that job hunting note. I am looking for full, part time or project related work in the Seattle area, if interested my resume has its own blog PlanWebb)
Okay back to Mr. Graham.
First, and a minor carp, Graham didn’t tell the ‘Commission’ anything, instead he meet with two unidentified but “first-rate” staff members. which considering much of that staff was supplied by Pete G Peterson may mean little more than preaching to the converted.
But more serious objections can be found in his chapter summaries linked above.
Chapter one: “Social Security’s $2.4-trillion trust fund contains no real resources.” Graham has simply adopted the ‘Phony IOU’ narrative whole. There is nothing in the law or in past or current practice to suggest that the Special Treasuries will not be honored just as they were in the entire period from 1971 to 1982 when interest and principal were honored down to the next to the last dime or as they are being honored TODAY in respect to the DI Trust Fund which has been taking accrued interest in cash since 2006 and principal since 2009. If they are not “real resources” why is Treasury forking over some $32 billion in cash to the Disability Trust Fund in 2010 alone? The reality of those resources is proven every time a disability check hits a bank account. Graham thus loses me at sentence one.
Chapter two; “Social Security’s history over the past quarter-century reveals that today’s predicament of a worthless Trust Fund didn’t take anyone by surprise”. Pure polemic. The Fund is not “worthless”, a fact revealed by the redemption of DI assets over the last year and a half with no outcry from anyone. The Special Treasuries are real as the regular Treasuries held by the CCB and the proof is in the continuing benefit checks. And Graham doesn’t build back any cred with me by titling this chapter ‘A political fraud’, instead the political fraud is insisting that notes that in accordance with the Social Security Act of 1935 are “fully guaranteed as to principal and interest by the Federal government” are nothing of the sort.
Chapter three: ‘The Price of Delay’. Well unless we ignore that the cost of delay since 1997 has been a projected payroll gap down by more than 10% (from 2.23% over 75 years to 2.01% in 2010) even as the change in projection period itself should add 0.05% per year to the gap, the drop itself shows that the whole concept of “We can’t afford to wait” could use some examination. And Graham suggests that an immediate fix would require 1% of GDP where a fix delayed until 2037 would require 3% which numbers could use some sourcing. Per this Table from the Report Table IV.B6.—Unfunded OASDI Obligations for 1935 (Program Inception) Through the Infinite Horizon, Based on Intermediate Assumptions total Infinite Horizon GDP gap is 1.2% of GDP whereas the 75 year gap is put by the Trustees at 0.6%. Nor is it clear that GDP is the right measure here, far more informative would be to put these numbers in pocketbook form as a percentage of payroll. And the Trustees put that cost if the Trust Fund goes to depletion at 3.7% of covered payroll (12.4% to 16.1%), an amount significantly less than 3% of GDP.
Well I don’t have the time or inclination to go through the rest of the chapters but as typical Graham ignores the simplest solution to Social Security: keep the current structure in place and raise FICA by 0.1% per year (less than a tenth of projected Real Wage increases projected) for 20 years and per CBO the problem is solved without the complicated structure proposed by Graham. Plus the table in Graham’s testimony tells it all. Under his plan average workers taking early retirement are absolute losers compared to the current system for the first seven years of retirement and only slowly make it up via extra years of life. And since the initial cut is to 56.9% instead of the current steady 80.1% the net effect is to tie low income workers to the plow for some extra work years, a prospect pleasing to those fully invested in the Protestant Work Ethic (particularly those whose own jobs are pretty cushy) but not necessarily to the low income worker who is not a good bet to beat the mortality tables anyway.
In any event Graham would have to address my objections to his formulations and numbers in Chapters 1-3 for me to take this proposal seriously.
If it ain’t broke, don’t fix it.
BTW, this phony IOU propaganda is not just a lie, it’s, as Freud would say, a projection. The people making the claim are the ones who don’t want to honor the obligations of the gov’t.
Nothing new, interesting or different than “kill the new deal” blithering around since 1935.
Government defaulting on debt to labor is defeating socialism, a strategy that has been implemented since 1981 when the modern monetarists (voodoo economics) decided to kill the US government by putting it into debt driven default. Only don’t default on the ownership class, default on the laborer. Only socialist worry that the laborer loses all the “excess value of labor”.
The GAS’ in the SSTF were actually paid for with cash from FICA taxes on work. The cash went to making the deficit irrelevant to Cheney and his pirate band who ran the US into the ground since 1981. If there are not asset value then the faith and creidt of the US government is in the dirt as well.
The rest of the special treasuries should be defaulted upon as well, including a rounded $800B for OPM retirement, around 240B for a trillion in military retirement “obligations” for a couple of million retirees, and a coupla others adding to about $4T in the more easily defaulted upon than debt to China and Japan……………….
Ch 2 rehashes the lies in Ch one.
Ch 3 US government will only default on the New Deal.
The tea partiers believe there is “no equality of outcomes” (no matter what the Declaration of Independence wrote), socialism is immoral, so labor sit back, shut up and forget about a piece of the pie.
Defaulting on GAS’s is a routine unequal outcome justified in Calvinist dogma, and wrote in Adam Smith.
This could have been put together by Werndall Wilkie in 1940!!!
It ain’t broke and Graham is as wrong as wrong can be. Please, let’s keep working on the costs of health care and on economic performance for the lower-99%, and address Social Security a little later as necessary.
BTW, I’m just curious: has anyone calculated the impact (on Social Security’s long-term projected financial health) of a thirty-year decline in real wages, and/or the impact of the shift of income-share away from people earning below the system’s wage cap? I’m wondering how a thirty-year shift in the opposite direction would change the long-term picture, not that I’m predicting this.
i would be a little jealous that they called you instead of me, but your reply is probably better than mine. you talk to them about their difficulties with honest language. i would have talked to them about their difficulties with honest arithmetic. but they wouldn’t have understood me at all.
not that the arithmetic is so hard, but that it is so convincing. once you understand it, the verbal lies cannot be maintained with a straight face. but when you are talking about words… well, everyone has their own opinion.
here is what i would have added…. and i don’t want to waste my time reading graham’s idiocies, unless he wants to debate me on television.
social security is not an invetment program: their is no “risk” to share. the whole point of social security is to take the risk out of at least a basic retirement, by having the workers pay for it themselves in advance. the pay as you go feature is what does the trick. but for some reason the mighty financial experts can’t understand that pay as you go is no more of a transfer tax than buying a stock that provides cash to someone else today, and selling the stock years later when you need the cash… except the SS rests on a far more secure foundation than the stock market.
CBO option number three describes the same fix that you do… except it’s half of one tenth percent per year, for sixty years in the CBO case to solve 5/6 of the 75 year actuarial gap. running it another ten years would solve 100% of the actuarial gap and fund Social Security “over the infinite horizon.”
But they don’t want to know this. It would make the “solution” too obvious.
one half of one tenth percent per year amounts to 40 cents per week per year, and for most people the boss pays half of that (he can afford it too).
Well the short answer is ‘Low Cost’. The Trustees actually present three possible alternatives, Low, Intermediate and High Cost and while Low Cost is formally set as the top end of the probability band by coincidence or not it represents the combination of productivity and real wage plus demographic factors needed to fully fund 100% of the scheduled benefit.
Really short version is any ultimate real wage above 1.0% per year improves the outcome where real wage increases of 2.0% delivers 100%. And these are not crazy numbers, we met this test in 1960-65 and beat it soundly in 1995-2000.
http://www.ssa.gov/OACT/TR/2010/V_economic.html#188118 Table V.B1
and now, like Bruce, I have a problem. I could stay here for the rest of this “debate,” but I really need to go out and backfill a trench before the rain makes it impossible.
I’ll try to get back later, but I’d feel so much better if we could talk about this in front of the people who will make the decisions.
btw… i note on second reading that Bruce referred to CBO option number two (i think.) i prefer option number 3. but in either case the fix is so small it’s laughable that we are having a debate about the Social Security “crisis.” And it’s criminal that they are blaming the deficit on Social Security. SS has not a goddam thing to do with the deficit. And even Medicare will have nothing to do with any future deficit once people realize that they are going to have to pay for their medical care anyway, and Medicare is the safest way for them to pay for it. And the cost of paying for it is an increase in the Medicare tax on about the same order as the increase in the SS tax. ultimately its a lot of money, but you are paying for an expensive product… medical care on the one hand, and 20 years of retirement on the other. And you will be paying it out of an income that is more than twice as high as today’s in real value. The choice is not between eating and Social Security, or even between new Submarines for the War on Terror and Medicare. The choice is between retirement and medical care insurance, and second and third trips to Las Vegas every year.
another answer besides Bruce’s (which is correct) is that whatever happens to wages, SS is based on wages. if the workers are poorer, retireees will be poorer. not as much fun as being richer. but not a crisis, either. taking the good times with the bad has been what humanity has done for the last three million years. and they supported their old folks all of that time.
the reason i prefer cbo option number three is that option two actuallly raises more money than SS needs in the first 20 years… which simply postpones the problem with “phony iou’s.” that is, the excess money will be “lent” to congress and the Big Liars will continue to call it phony iou’s and the congress will continue to look for ways to avoid repaying the money.
an even better approach would be to raise the tax one tenth of a percent (each) at “need,” that is when an actual “short term actuarial deficit” emerges. this is projected to work out the same cost as CBO otion number three (half a tenth of a percent per year) (no surprise) but would have the virtue of happening only when there is an actual need for it, avoiding the problem of aiming too high or aiming too low over the next seventy five years or infinite horizon, whichever comes first.
the thing about graham and others is that they are part of the lie machine, or they are seriously stupid victims of the lie machine. it’s hard to have an argument over any particular lie, because by now everyone believes ten other lies and they can no longer think through them one at a time, but use the other lies as a reason to not think about the one you are addressing at the time.
You are defining a confidence game. The kind run by monarchs and dictators, there is no voting without truth.
O Tempores, O Mores.
Nothing amuses me more than the easy manner with which everybody settles the abundance of those who have a great deal less than themselves. –Jane Austen
Mr. Graham would be well advised to consider the wisdom of Ms. Austen’s caustic little aphorism. He seems to have no trouble contemplating the impoverishment of every retired person in the country who does not have the good fortune to be rich first and working second. Nancy Ortiz
Via e-mail Graham corrects me by pointing out the TNR review is by Scheiber on Chait’s blog. Which makes more sense since Chait’s more reliably a classic liberal than Noam. I’ll update the main post when I get home.
Bruce and Coberly: you answered half my question (thanks!). The part about looking backwards: is the projected problem (such as it is) for SS today attributable to the failure of hourly wages to grow–and the concentration of income growth to the upper-tiers–over the past three decades? My memory (also such as it is!) is that SS had no projected problems until the difficult economic times of the 1970s, and the “fix” under Reagan should have done the trick, but also that we assumed growth in real hourly wages covered by SS–which did not happen. (The data I’ve seen indicate these wages were depressed below early-1970s levels for many years, and I can only guess that this had immediate and long-term impacts on the fiscal picture for SS.)
there is some relation between wage growth and unemployment and inflation that will affect the “solvency” of SS over short periods of time. that was what led to the need for the 1983 fix. But the ’83 fix pretty much solved that problem. The projected shortfall in SS finances is due almost entirely to the fact that we are projected to live longer than previous generations. Best way I know to describe it is with the following basic equation which is not “true” but explains the principle”
Years worked times payroll tax equals years retired times replacement rate.
Thus if you work 40 years and pay 12% you pay for 12 years retirement at 40% of your average real lifetime pay.
then if you work 40 years and pay 20% you pay for 20 years retirement at 40% of your average real pay.
We are transitioning from an expected life in retirement of 12 years to an expected life in retirement of 20 years.
This means the payroll tax the worker pays (half of the total) will need to rise from 6% today to about 10% by the end of the century.
Actually the numbers are a bit lower than that for complications i don’t care much about. But if one of those complications is wage levels, remember that the replacement rate is based on wages, so if the workers get less than expected in pay, they will get less than expected in retirement… leaving the “solvency” of SS unchanged.
IT’s worth remembering, in case that 20% scares you, that incomes are projected to more than double while the payroll tax is rising (to more like 16% combined). So that at the end of the day you will have more than twice as much money AFTER the tax as you have today PLUS you will have paid for a retirement that will be 33% longer, at a benefit level that is nearly twice as high in real terms. That doesn’t mean retirees will be rich: that replacement rate will still be less that half their average wage. But it does mean they will be able to live at roughly the same standard of living as their neighbors.
This really needs to be thought about carefully. You can scare yourself silly with numbers when you forget the denominators.
oh, the short answer to your question is “in part, yes.” but not, in my view, an important part.
Scheiber and Shoven wrote a throughly dishonest book called “The Real Deal.”
An example of their dishonesty: they begin by noting that the shortfall in SS funding amounts to 2% of payroll… which is true. But rather than let the reader realize that is a tiny amount of money… given what it pays for, and that it will come out of far greater future wages… they quickly remind the reader that it’s 2% of total wages times 75 years (figure about 40 Trillion Dollars !) so you can go crazy thinking about where this enormous amount of money is going to come from…. unless you are sane enough to realize it’s still going to be 2% of your paycheck.
Then they fill the book with clever but misleading “parables” like uncle sam lending himself money.
(hint: there is no such person as Uncle Sam. the trust fund is some taxpayers lending money to other taxpayers. they need to be paid back.)
Was it you who was discussing VistA (VA’s Computer Program) ?
Coberly, I guess I’m mentally overestimating the impact on SS of the failure to raise real hourly wages for three decades. Had they risen one percent per year, as one might have expected especially following Morning in America (sic), real hourly wages would be about one-third higher today. We missed out on a lot of money going into SS per worker in the past and future–at a decreasing “rate-of-return” in the retirement benefits formula. But I can see that this might not account for much of the “solvency” challenge that some people are exaggerating for political reasons.
The Social Security programs (all three) will probably be dead issues within the next 12-18 months (after the Congress undertakes whatever action). Thereafter, some people may wonder why the SSA vocal supporters lost the fight.
A few more rounds of pushing out the eligibility age, say to 75 years of age, may cause a larger portion of the U.S. population to question the value of one of the SSA programs. Oddly enough, that may cause a relook at offering alternatives to the existing program under discussion.
It struck me recently that Orwell also nailed this. lying Inner Party, coopted Outer Party, and the clueless Proles.
>they need to be paid back
not necessarily. I’m glad I only have ~$50,000 at risk in the current system somehow. A long UC undergrad employment and moving to Japan for a while took me out of their crosshairs for a long time.
Are you cheering on this eventuality that you describe? Are you gloating over the possible victory of the wealthiest Americans over the eventual senior years of the workers who have produced that wealth? Clarify your position, please.
That is the goal. Biggs is proposing ‘early retirement’ to start at age 66 and suggests it is for retiree benefit anyway so a good deal. I would assume these people want to make SS of less value to real people. But then there won’t be retirement plans except for what each individual can put together and pinpoint retirement accurately.
Then again, retirement will be a vague idea financially for most.
Run–Nope, but if the commenter viewed the program with a jaundiced eye, it sure would sound like me! NO
i think that’s correct. but you ought to do a little research and convince yourself. read, carefully, the Trustees Report. One of the proposed “fixes” to SS is to raise the cap above which wages are not taxed for SS. This more or less reflects the issue you are getting at, but it presents some other problems… mainly that the people currently above the cap would not get any value for their extra taxes, turning SS into a welfare program. The tiny payroll tax needed to fix SS and keep it “worker funded” (and at least in a sane world safe from political attacks on “welfare”) are too small to be a burden on the workers, and fully justified by the pensions they expect to receive.
if wages had risen, then benefits would rise… though the higher benefits would not be felt by the system until the higher wage cohorts retired…leading to a wash in terms of solvency.
btw the Trustees project real wages to rise just over one percent per year.
Rdan–What these people want to do is monstrous. There isn’t enough money in the world, it would seem, to satisfy them so they cheerfully figure that as long as no one can quit work without starving, they can successfully get even greater returns on their essentially bogus bond schemes. Why do I think that bonds inflated by former FICA revenues would be a bubble? Couldn’t have anything to do with experience could it? Nancy O
first, your personal good fortune should not be used as an argument against the need for an insurance program for the great majority of workers…. many of whom will also have the good fortune not to “need” their SS benefits. but they can’t know that in advance. and it is only the most foolish of them who think they will never really, really need their SS.
second, i frequently argue that repaying debts is not a matter of great importance. the people who lent the money have done without it, and can generally do without it. i think this is true enough for both the national debt in general, and for the Trust Fund debt (owed TO Social Security).
But on the other hand, not paying your debts is a kind of theft, and that is the sense in which i said that “these people need to be repaid.”
And Biggs wonders why I call him a damned liar.
most people have jobs they are desperate to quit. they can save enough… through SS… to be able to afford to quit by the time they are 62. Raising the “early retirement” age to 66 is about like adding 4 years to their sentence. four years of penal servitude so the boss can extract the last life-juice out of their aging bodies.
but Biggs likes his job… lying for monetary gain… and gets enough money so that he could afford to retire even if he didn’t enjoy hurting people so much.
the idea that we “need” to raise the retirement age… rather than raise the payroll tax twenty cents per week every year… is the sort of Big Lie that brings tears of joy to the eyes of the really, really evil when they see how easy it is to sell.
The recent NYT article on retiring later http://www.nytimes.com/2010/10/30/business/30charts.html?partner=rss&emc=rss shows that for the most part there are few USA women in the workforce as ages advance – and does not address non-working spouses who are eligible for benefits. Too many forget the ‘survivor’s benefits’ part of Social Security.
Also, there seems to be a complete lack of plans of having meaningful jobs at meaningful wages for those who will be forced to work longer – perhaps to age 70.
coberly: “there is some relation between wage growth and unemployment and inflation that will affect the “solvency” of SS over short periods of time. that was what led to the need for the 1983 fix. But the ’83 fix pretty much solved that problem.”
The ’83 legislation was a fix? In what sense? As in, I’ll really fix Social Security?
I have always relied upon the suffering of others.
(Apologies to Tennessee Williams)
coberly: “i frequently argue that repaying debts is not a matter of great importance. the people who lent the money have done without it, and can generally do without it. i think this is true enough for both the national debt in general, and for the Trust Fund debt (owed TO Social Security).
“But on the other hand, not paying your debts is a kind of theft, and that is the sense in which i said that “these people need to be repaid.”
Then perhaps we need a new term for the National Debt. Repaying the National Debt would drain money from the economy, making us all poorer. Not repaying the National Debt is a boon, which is why we haven’t repaid it for almost 175 years.
Two issues come up when the “raise the age” argument is offered as the cure for what doesn’t ail Social Security. Most obvious is the conflict with undeminished unemployment. How on Earth does it make any sense to require people to work unitl they are in their late 60s or 70 years of age when the rest of the work force is in dire need of work? That’s nuts and I wish the Sandwichman would address the stupidity of that argument.
Secondly, virtually every form of retirement planning taking place during the past two or three decades for people from middle to upper middle calss has included ‘ the Social Security benefit as a significant factor in that planning. Now the rug gets pulled out from under. The difficulty with the debate is that it is a liar’s activity.
prior to the 83 fix a combination of unemployment and inflation had made the then tax rate inadequate to pay the benefits. they over-fixed the tax rate.. depending who you listen to and when.. arguably to allow the boomers to prepay their retirement and avoid a “generational inequity.” that created the trust fund and an opportunity for demogoguery.
by my lights the 83 fix was a good one except that they raised the nominal retirement age two years. would have been better to phase in a gradual tax increase.
but the current crop of fixers is out to fix SS as in “lets get the dog fixed so he won’t be so uppity.”
the national debt gets repaid. it doesn’t get paid down. that is teh people who lent the money get their money back… the gov just borrows more money from someone else. this may not be a bad way to run a country up to a point. we may have passed that point. we have certainly passed some point when politicians argue in public about stiffing the workers who lent them money out of their retirement fund.
but if the United States of America wants to renege, it turns out that the workers can afford the hit. the boomers will get the retirement they paid for. and the post boomers will have to pay more than they expected, but they will still get their money back by just living longer in retirement.
in any case, over a lifetime the theft of the Trust Fund amounts to a small increase in the cost of “security” which is priceless… if the workers make up the money and keep the bad guys from “fixing” Social Security.
Jack – “MG, Are you cheering on this eventuality that you describe? Are you gloating over the possible victory of the wealthiest Americans over the eventual senior years of the workers who have produced that wealth? Clarify your position, please.”
I stated my opinion as to what I expect to unfold. Nothing more.
We are watching a disaster in the making, much of which was self-inflicted in my opinion by the handful of groups supporting the SSA programs. Simply, if you want to avoid being washed away in a flood, move to high ground. Translation: Two of the three SSA programs could have already been set up with triggers for minor rate increases which would have taken the issues off the table long before the fiscal commission met. It’s sheer arrogance and weak leadership that it wasn’t accomplished. All part of the “do nothing” crowd mentality which, in my judgement, is proving to be a failed strategy with the current Administration.
One has to wonder how many more times the eligibility age will be pushed out. Mandated individual contributions vs. benefit payouts should be recalculated based on various push out eligibilty ages. We should expect resistance from younger workers at some point in time, and that resistance may not be limited to age push out. Rather, one can expect that the partial privatization of one SSA program may reemerge with a stronger following some time in the future.
Valid points. We will know how bad the situation is within 12-18 months in all likelihood.
The idea of pushing out the retirement age to 70 years or even further out later on will serve as a warning to younger workers to reconsider supporting mandated contributions (taxation) to the one SSA program. Why should a young worker voluntary voice support for a taxation program that cuts 5-10 years off of his/her payout return as compared to today’s eligible retirees? Many of the younger workers are fully capable of performing a cost-benefit analysis.
Someone should consider posting the cost-benefit analysis comparison of different eligibility ages. Age 70 years sounds a bit nuts to me. And age 72 or age 75…well, forget it.
I don’t support pushing out the eligibility age. It’s just another death nail in the one SSA program as we know it today. The younger workers will get sick of this nonsense at some point and demand alternatives such as partial privatization.
I can’t argue about what folks will do or demand. You are right that gradual, triggered, “tax” increases that pay for the benefits people need would have saved Social Security as we know it. For some reason even the “defenders” of SS prefer to demand tax increases on the people who would not get benefits… turning SS into welfare,
Raising the retirement age does reduce benefits below a level where SS operates as meaningful retirement insurance. But “partial privatization” is not the, or even “an” answer. We can have private retirement accounts any time we want them. Just go out to your corner broker. What the people need is insurance. And the people have no way to buy a real insurance that will work in all conditions of inflation and economic climate… SS is the only thing that does that.
Moreover, if the insurance is not managed as a tax, the people who will ultimately need it will be exactly the people who forget to buy it.
A mandatory privatized add-on that looks like a PERS could work by satisfying the “money for free” dreams of the poor deluded American public, but it would have to be designed carefully so that the remaining pay as you go “insurance” would be adequate to meet the needs of those folks who end up without enough to retire on otherwise. And unless the “early” retirment age remains at 62, you really don’t have any retirement insurance at all. The strong will work until they die. The weak will just die.
The Coberly plan is flawed. 40 cents a week, increasing every year. What does that come to?
There are 160mm workers contributing to SSA. 40 cents a week comes to 1.64b in the first year. At the end of 10 years that has grown to 16.4b. The ten year total comes to 91b. That seems like a lot of money. But actually 91b wil be about one month of benefits in ten years.
20-30 years out the Coberly plan catches up as the ever increasing taxes take hold. But the problem is we will not make it past the 10th year. The system is too much in the hole today to think that 90b over ten years is going to make a difference. Taxes have to go up much more quickly than Coberly is suggesting.
I can imagine Coberly saying that the number of workers paying into the sytstem will rise every year and that, plus the proposed increases, will make the difference. Don’t even think of going in that direction. The number of workers contributing to SSA has falling by 5mm over the past three years. That is not going to turn around anytime soon.
Let’s not lose sight of the fact that the “worst case” scenarios for Social Security going deep negative are based upon economic projections more than twenty years into the future. You tell me what the devil an economist or a politician knows about the future of an economy. In the past ten years we’ve already had two stock market fiascos resulting in economic distraction. The arguments for a serious revision of the Social Security system are based on bullshit arguments and instigated not by concern for the sanctity of the program, but on a variety of hidden agendas all having to do with the destruction of the program. As prevously noted opn other threads of a similar theme, those that have well more than needed for a good life and those that have far too much still want more. The only wealth left among the working class is there deferred income, their retirement assets. It’s too big a prize and the One Pecenters have their eyes on it.
as usual you make up you own numbers. my twenty cents is “in today’s terms.” the actual number is one fourth of one tenth of one percent for each the worker and the employer. if you bother to check you will see that this is exactly what CB”O option number three says will fix the problem. or i could show you how it works by simply writing in the changes over the Trustees numbers.
CBO option number three stops at 60 years for unknown reasons. this solves 5/6 of the 75 year actuarial gap. continuing the same rate of increase another ten years solves ALL of the 75 year gap and funds SS going forward over the infinite horizon without further tax increases.
at the end of the day, the worker is paying 2% more than he is today out of a wage that is more than 200% of what he gets today.
Krasting prefers his own fantasies to the hard work of actually learning the facts and doing the arithmetic.
the system is NOT “in the hold today.” it is paying for itself as planned and can continue to so without even my tiny tax increases for another 30 years.
what’s in the hole is the general budget, which has nothing to do with SS, except that it borrowed money from SS that is now coming due.
the system is NOT “in the hole today.” it is paying for itself as planned and can continue to so without even my tiny tax increases for another 30 years.
what’s in the hole is the general budget, which has nothing to do with SS, except that it borrowed money from SS that is now coming due.
coberly: “ the current crop of fixers is out to fix SS as in “lets get the dog fixed so he won’t be so uppity.”
The system is in the hole.
The cash flow deficit will be 42b in calendar 2010. SSA says it will return to a small surplus for a few years and then go negative on cash forever. Even those last few years of surplus wont happen. The economy is too weak to create the jobs that SSA needs to achieve any surplus.
I know that you think a cash flow deficit is not a problem. I know that SS was designed for this to happen at some point. But it is happening in 2011, many years before it was supposed to happen. Surely you see this.
Yes SS is cashing in its IOU’s exactly as planned. But I tell you that this is something that will be hurtful outside of SS. There is a war going on. Possiblly you have not noticed. You will see some battles in this war on TV tonight when the Dems get beaten up. The war you are not seeing is the war on deficits. And given that SSA is showing deficts as far as the eye can see (as far as cash goes) it will have to be a battle in the broader war. Sorry.
write this down.
SS is not in deficit. it is spending part of the money it saved up for bad times like these. it will soon be spending the money it saved up for the retirement of the baby boomers. some time while all this is happening the payroll tax will need to be raised a tiny bit to make up for the fact that people are living longer. it is the people who will live longer who will be paying the increased tax.
only someone with a criminal mind would see this as a problem in Social Security. that seems to include you and the congress. i understand that is a problem FOR Social Security. but please don’t blame the victim.
Write this down. SS is running a cash deficit. That is all that matters. You will be isolated if you do not recognize that this is an issue.
Look at this election. SS will be front and center…..
Actually I am reviewing Longman’s book on it and will post on the VA’s accomplishments in healthcare utilizing it.