Bottom line score on Simpson-Bowles from SSA
by Bruce Webb
The above though not yet widely released is a from a public document produced by the Social Security Office of the Chief Actuary. It shows the final results of the Simpson-Bowles Social Security proposal as percentage of benefits payable to various income levels compared to ‘scheduled’ and ‘payable’ benefits. Under current projections ‘payable’ benefits after Trust Fund Depletion will have to be reduced by 22% initially and 25% ultimately. On the other hand ‘scheduled’ benefits are payable in full up to the point of Depletion. So any payout less than 100% in the ‘scheduled’ column between now and 2037 is a loss compared to the status quo as is any payout less than 78% in 2037 or 75% in 2080.
Coberly and I (and some others) have been warning for years about the dangers of turning Social Security from an insurance program with mild progressive transfers to a welfare system. Well this is a pure illustration of that, I can’t imagine any scheme designed to more undermine support for Social Security than one that calls for earners in the top 50% taking a cut even from the projected cut. The answer to a ‘crisis’ defined as an ultimate 25% cut in scheduled benefit is for upper income folk to take a 35-41% cut? All in an effort to save them a phased in 0.1% of payroll per year increase over the next 20 years?
(In passing note that despite promises to hold current retirees harmless changes in (mostly) COLA result in cuts compared to the 2030 baseline of between 5% for medium earners to 12% for maximum earners.)
Bruce,
I don’t mind SSI tax dollars going to the elderly to keep them out of abject poverty. I do mind SSI tax dollars going to the elderly so that they can maintain 2 homes, travel around the country in an RV and golf 365. There is a compromise here.
Wow, you can do ALL THAT on Social Security??? WTF?!? My $500/mo. must be a mistake. Where’s my fair share??
“I do mind SSI tax dollars going to the elderly so that they can maintain 2 homes, travel around the country in an RV and golf 365.”
This is silly. Even if Bill Gates retires on full SS, it won’t pay for 2 homes, travel around the country in an RV and golf 365. Your post reveals that you know nothing about SS.
Sammy,
Do you know anyone over 60 years of age? Do you have parents? Or, did you fall from space? Perhaps you were hatched from an alien space pod. If you know anyone collecting Social Security benefits you will know only too well that there is no largesse built into the program. It was meant as a safety net protection from posverty, but unfortunately corporate America decided several decades past to eviscerate defined pensions as they had been long ago. Now Social Security is often the primary income of the retired generation.
Every participant who receives, or will receive, benefits has spent a working life time making Federal Insurance Contirubtions to the plan. No one is on a free ride from Social Security income. Thoughs fortunate enough to have additional retirement income have paid twice, once through FICA and again through their personal savings or deferred compensation from their employers. Your comments continue to be bull shit. Grow up and learn to argue based on facts.
Sammy a maximum Social Security check wouldn’t even pay for green’s fees 365 days a year. Not unless you limited yourself to municipal courses, and even then cart fees and lunch would eat up most of the rest of the check.
Under the Simpson plan ‘wealthy retirees’ are classified as those with incomes of more than $35 thousand a year. Weird! In Simpson world banksters struggling along on $250k to $500k barely register as anything but middle class (and obviously can’t afford another penny in taxes), whereas public workers or steel workers with total compensation above $60 thousand are simply pigs slurping at the trough. “How dare a garbage man make 25% of the salary of a beginning MBA on Wall Street? Why it is an outrage! (And yes I will have another glass of Veuve Cliquot thank you.)”
And yet the angry mobs aren’t coming for the boys in the penthouses and executive suites, they’re demanding that government cut all benefits to the middle class and transfer more wealth to the top. Or, at least that’s what the GOP and the MSM would have us believe.
Excuse me, but if I have an insurance program for my old age, what am I insuring against? Gee, how about poverty? To say that Social Security (conceived of as insurance) should not be means tested is like saying that my fire insurance should pay off even if my house does not catch fire.
And Sammy we already have a special tax for higher income Social Security recipients. If you are proposing to add a new bracket to that that would make it essentially confiscatory for the top 2% then great. But you don’t strike me as a guy that is normally pushing for increases in top marginal rates.
So for God sakes quit trotting out the fricking ‘Why should Bill Gates get a Social Security check?’ line when you would never, ever apply that progressivism in any other circumstance.
(Christ the Right continuously thinks they can flummox us with liberal guilt no matter how stretched the logic.)
That is a fantastic point Min. You guys need to read it a couple of times.
Bill Gates is also in the process of giving away $50 Billion to charity, sp let’s call it a wash.
LLoyd Blankcheck and friends don’t seem to think the flow works that way, however.
Bruce,
And I’ve never seen you defend the rich.
But it’s only contradictory on the surface. The consistency is that you want to maximize the number of people getting a government check ($ = power) and I want to minimize it.
What a crock. The ‘nothing’ plan is political and one of self-protection from people who wish to fundamentally change SS for reasons having little to do with how well it works and how important it has become as a baseline for retirement.
$=power is even more relevant. I fail to see how the very wealthy need any protection from me as they are well guarded, nor the ‘want to be wealthy’ are harmed by SS. Other policies would appear to be harmful to the ‘want to be wealthy’.
A very simple untruth sammy.
Sammy I daresay the rich don’t need defense by me. Or for that matter from me. They seem to do well enough hiring their own lawyers, accountants, congressmen and media figures. Oh and not to forget: internet shills.
The question remains. Why do you defend the rich on every front but then demand that liberals embrace policies that adversely affect the working and middle classes just so that Bill Gates doesn’t have access to $2000 a month in Social Security? Liberals by and large don’t hate rich people for being rich, we just hate that large sub-set of rich people who have convinced themselves that they are Masters of the Universe Producers who have no responsibilities at all to those they openly consider and call Parasites. You don’t have to fully embrace the Labor Theory of Value to understand that Objectivism in all its forms is just rationalization of the philosophy “I’ve got mine, and everyone else can fuck off if they don’t like it”.
Do SS receipents continue to pay income taxes on these benefits?
If so that would generate an even greater cut for the high earners.
Bruce,
then demand that liberals embrace policies that adversely affect the working and middle classes just so that Bill Gates doesn’t have access to $2000 a month in Social Security?
You are not making any sense. Means testing Social Securtiy helps those in the middle class and the poor by making sure the program exists for them. I fyou don’t give Bill Gates his $2,000 that is just more money for the rest of the recipients.
Far as I know it’s fully taxable income at federal level. I think some states have at least a partial exclusion for state income tax.
sammy
bull shit.,
bill gates paid for his benefit check. and the money he paid is actually what creates the excess so that starving granny can get a better “rate of return” on what she paid. it’s why SS is insurance.
you and god help us the people who run this country, don’t know a damn thing about what you are talking about but you keep making noises that help you feel better about your stupidity.
Min
i think you are confused. means testing is when you go to the government proctologist every few months to have him look up your assets and make sure you are poor enough to get a dole from the tax paying public.
SS is people paying into a savings plan. the savings is what is insured. against inflation, market losses, and the possiblity that you never make enough in your life to save enough to be able to afford to retire. the way it works is by a progrssive pay out schedule that transfers some of the “return on investment” from the better off to those not well enough off to survive on their savings.
the damn thing works because it is not means tested. you get what you pay for. including that little insurance boost if you end up poor enough to need it.
Min
what you are saying is that your fire insurance should not pay off it the government proctologist finds out that you don’t need the money.
Cedric
as of now, if your income is over a certain minimun, HALF of your
Social Security can be figured as part of your gross income subject to tax.
SS is not fully taxable at the Fed level. I don’t have the details, but I think it’s something like 85% taxable. Here in MI, SS is exempt from income tax.
The maximim, BTW, is $2,346. This figure is based on earnings at the maximum taxable amount for every year after age 21.
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/the-maximum-social-security-retirement-benefit.
This pretty much describes me – but I started recieving benefits at 62, so I get $542 less.
Pays the mortgage and buys some groceries. If I didn’t have a decent penion, I would be in a world of hurt.
And I don’t even play golf.
Cheers!
JzB
“Means testing Social Securtiy helps those in the middle class and the poor by making sure the program exists for them. “
No it doesn’t. If you exempt the ‘middle class’ from Social Security means testing there is not enough savings to add up to a pimple on an elephant. CBO scored a couple of means testing proposals and you had to get down to the top 50% of recipients before you got any meaningful savings: http://www.angrybearblog.com/2010/07/cbo-scores-social-security-policy.html
In fact per CBO taxing all income above $250,000 at 4%, which from people with million plus annuall incomes yields a lot more than their entire Social Security check (means testing with a vengeance) or Option 9 only backfills 1/6th of the gap.
Sammy you are trying to shove 20 lbs of bullshit into a lunch bag, means testing isn’t a free lunch solution to anything.
http://www.ssa.gov/planners/taxes.htm
“Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.
No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.”
More typical would be paying tax on 50% of your benefit. There are calculators at the link.
I would just add that unless Sammy relies exclusively on clipping coupons from foreign corporations for his wealth, that means testing social security–particularly at $35K- just means that unless you are an importer of catfood, you are likely to see further decrease in consumer demand from the oldsters which is plainly a growing demographic group. I mean the folks who develop golf course, make golf balls, make golf clubs, cut grass, make lawn mowers, make tees. make golf gloves, make those little flags that fly from the pin, make irrigation systems etc all have to eat too. And some of those young people want to get the jobs at McDonalds when they are teenagers and as Walmart greeters someday.
There is also the idea of moral hazard with insurance. I have saved money for retirement, not because I thought the government would renege on its promise that if I paid into the system for 50 years it would pay me a small monthly stipend for every year over 66 that I hung around, but so that my wife and I could avoid eating catfood every night until we died. If the government tells me that my efforts are useless and that because I saved money I will not get social security, why should I save money? Why not eat filet mignon now knowing I will have Kitty Stew every day when I retire? It would be like buying fire insurance on a house you keep vacant. What would keep you from burning it down?
There’s a lot to hate here. Chained CPI is a gimmick. Changing the PIA bend points is a gimmick. Retirement education is a gimmick. All these gimmicks try to hide the costs of what they’re actually doing. It’s all euphemism. The cuts are all referred to as “indexing” or “refining” while the tax increase is “broadening the tax base.”
Switching to chained CPI is especially galling. It assumes that the current system unfairly rewards beneficiaries. When you consider the 4.4% increase in Part B premiums, it’s tough to imagine that even CPI-W accurately reflects the magnitude of price increases given the consumption patterns of the disabled and retired. (Granted, the hold harmless provisions will keep most beneficiaries’ checks the same despite the Part B increase, thankfully.)
Giving the devil his due, it’s not all terrible. Covering state workers seems unobjectionable. Increasing the taxable maximum to cover 90% of wages isn’t my preference, but isn’t the end of the world. Pretty much everything else is stupid.
Sammy,
You know very well that Social Security is not a welfare/socialist program whereby we collect from the rich in order to provide for the poor. Thats what you want it to become so that you can then call it welfare and a drag on those who work for their own welfare. That is what the program is right now, a worker’s means by which they put aside a small portion along with every paycheck, matched by their employers, so that as a productive working person they will be assured of a minimum amount of retirement income. When do you stop talking like a sock puppet?
Try to keep in mind while looking at all the percents and marginal this’s and thats
that what this comes down to is a proposal to cut about 250 dollars a month off the average benefit check in order to save the average worker a 20 cent per week increase in his payroll tax each year.
Min,
Wrong again. The insurance aspect is there for sudden disability and untimely death. Social Security is more similar to an annuity if you live long enough to retire. That’s what makes the recommendation to increase the age for full benefits. One has to live long enough to collect any benefit for retirement rather than support for one’s widow or orphaned children. But Social Security has been providing all three benefits very successfully for a long time now. Why the need to change the most successful government financial program ever.
One other point. Social Security, through the Trust Fund, has also been providing a significant benefit to the government and the rich by providing a source of funds to cover government operations rather than collecting additional taxes. That benefit ihas been represented by the Special Treasury notes held by the Trust Fund. Those are Treasury notes very similar to the ones that have been issued to many foreign governments in return for their help keeping our taxes low inspite of increasing govenment spending. The Social Security program uses that cushion to supplement the benefits it pays to the recipients. Those are the recipients that have been paying their payroll taxes throughout their working lives so that they would be entitled to those benefits. Those payroll taxes have been the source of the funds represented by those Special Treasury notes. It works very well. It isn’t broken. It doesn’t need to be fixed.
Hey, Some Guy. Glad you’re here. One comment–The majority of state retirement systems are based on Social Security with additional add-ons over and above SS benefits and something like a 401K plan. Only a few systems are excluded and these are usually the smaller ones, such as the ones for teachers in Texas.
Otherwise, you are absolutely right that the the Catfood gangs’ preliminary mark up is crap. What’s disturbing however is that the Deficit Commission isn’t supposed to consider SS at all. It’s paid for through a dedicated revenue stream until at least 2037. And, nobody is saying anything about this key fact at all.
These slimy con men and many other “very important people” think that SS benefits are bankrupting the country and must be cut to save the budget and reduce the deficits. MSM don’t question this absurd and destructive notion. Just blah blah blah “In other news today, the chairmen of the Catfood….ooops, Deficit Commission say SS benefits for future beneficiaries will have to be cut to balance the budget…blah blah…Nothing to see here folks….Move along.” That’s distressing and disgusting enough, but we have the current Democratic administration to thank (if that’s the right word) for this whole mess. Enough said. NancyO
btw
that average SS benefit is around a thousand dollars a month.
try to keep that in mind when you say that some future check will have a real value 20% greatre even if nothing is done.
Just think of all those greedy geezers drinking their way through an exta 200 real dollars per month. Of course by then “quality improvements” will have raised the “real value” of a bottle of beer by 20%,
That’s not a price increase, of course, to be measured by the CPI It’s really. an increase in the quality of the product. You’ll really be drinking Stella with a Bud lable, and most economists agree it will be fully worth the higher price.
But you won’t be able to afford it, because the cost of living like people did in 1936 will not have gone up at all.
Hi Nancy! There are still a few holdout states. It seems like a fairly painless way of making a tiny dent in the shortfall. There might be a way to make it work for the individual states to help with their pension shortfalls, too.
You might be the only other person ’round these parts that would care, but I think one of the other costs of these schemes is the likely increase in operational complexity. Making SS difficult to administer increases anger and serves to undermine the program. Most beneficiaries can look past dimes down rounding or other simple ways of lowering Social Security’s costs. But more complicated provisions like the Annual Earnings Test, Government Pension Offset and Windfall Elimination can get beneficiaries pretty riled up. They’re error prone in implementation, confusing to explain and to many seem unfair.
My fear is that in the desire to make cuts opaque will result in changes in Social Security that will make its administration more challenging, less efficient and ultimately more frustrating for the recipient.
This is ancillary to my concern about the stupidity and unfairness of the proposal. But it’s worth noting that any scheme that doesn’t cut benefits across the board is going to increase unfairness both by changing the distribution of benefits and creating an opportunity for the mis-adminstration of them. (Oh No! SS incorrectly paid out $50-some MILLION to pensioners! How inefficient!)
I have always wondered where the anxiety comes from on the other side of the SS argument.
Mankiw points to this piece by Blauhaus. He uses a graph that shows “contribution per worker” as the basis of why SS is unaffordable. This is NOT the correct way to display the issue. I think their point is that taxes will need to go up to repay the SSTF.
http://www.economics21.org/commentary/fairly-understanding-simpson-bowles-social-security-proposal
Well, Some Guy, you are absolutely right that anything that we have to explain away makes the program seem unfair and corrupt. The last thing we need is another SSI to administer and the fact that high-end earners will end up getting hosed under these proposals really is fundamentally unfair.
We avoided this problem before with the present cap and a three tiered percent replacement comp. However, if we don’t change the comp to permit a more equitable return to high-end earners, they will withdraw what little support they now give the program. Big problem because they have a disproportionate influence on how Congress reacts to criticism of SS or any other program.
Besides, we don’t need to do anything except let people pay a little more tax over the next 50 years or so. Bruce and Coberly have it worked out very neatly and literally painlessly. So, to pretend that we need all this big time movin’ and shakin’ is just bull. As you say, lets have the little nips and tucks that the late Mr. Meyers excelled at. A dime down here and there, and we’re home free.
Current workloads would discourage Hercules. Perhaps you wouldn’t agree, but I think that if SS were abolished tomorrow, we’d still have enough backlogged claims, hearings, and PE work for previously entitled beneficiaires in the system to keep the agency open for another 20 years. And that doesn’t include SSN and earnings record processes. Makes me happy to think they can’t get rid of us–or any other federal agency–with the stroke of a pen. Nope, old bureaucrats never die they just fade away. NancyO
jazz
i think you have it backwards. at least for most people, if they didn’t have their SS they would be in a world of hurt. you could live on your SS. you can’t live on less. i suspect that extra 1800 a month comes in handy even if you are rich by my standards. But you paid for it yourself, so enjoy.
Some Guy
you don’t have to cut anyone’s benefits. a tiny tax increase would cover the actuarial shortfall. and since it is needed only to pay for the longer life expectancy of those paying the tax, it would seem like the simple, fair, and obvious solution.
Bakho
it is very likely that taxes would have to go up to repay the SSTF. but since taxes were lowered by borrowing the money from the SSTF, it seems like the fair thing to do.
The anxiety on the other side of the argument has been there since 1936. There was some excuse for the people then not understanding how it would work. There is no excuse today. The people telling the big lies, and the news sources that repeat the lies but never manage to discover the truth, have another agenda that seems to include fees for managing worker savings, and apparently 90,000 dollars per year per non-retiree that remains in the workforce. Since very few workers are making this money, you have to figure that the boss gets it… or maybe its the magic of the way money works it way through the economy. I don’t know how it works, but I did read that the 90,000 per non-retiree is the expected gain in the GDP if people aren’t allowed to retire when they want to.
In any case it sure as hell has nothing to do with the budget deficit… unless they are counting on collecting income taxes from all those grannies working the night shift at Burger King.
Oh, I know. My point was just that if benefit were cut & it’s not straight across the board, that is going to increase unfairness. To me, that’s an argument for increasing the tax rate over time, since there won’t be distributional / fairness concerns.
backho
i read blahouse. he is a little cute with his numbers, but his basic point is that a raise in the payroll tax from 12.4% to 16.4% is too much for the worker to bear. He doesn’t see that this is actually an extra 2% taken out of the workers check. A check that will be more than twice as big as it is today.
Instead he looks at the rise in benefits… keeping up with the rise in wages… and sees that as some kind of unsustainable cost.
But the fact is the worker pays for it out of a much bigger paycheck, and he will want the bigger pension to keep up with the standard of living of his time. And he will have more than twice as much left over from his paycheck after paying the higher tax than he does today.
The simple fact that Blahouse and others are trying to obscure is that you are going to live longer, you will need to save more of your money to pay for your expenses in retirement… unless you really want to keep workingn for the boss. The good news is that you are going to have the extra money to pay for it, and a lot more besides.
Can I say that again? you are going to be richer and live longer. the bad guys are trying to tell you that you can’t pay any more for your retirement than you do today.
They are insane.
btw
if the paycheck does not increase, neither will the “real” benefits. there is NOTHING driving a higher cost for SS other than longer life expectancy. your choice… if they’d let you make it… is between paying an extra twenty cents per week each year, or cutting your benefits by 25%, or working until your mind and your body are gone. after all, why would working people want to retire?
It’s a little saddening to think of the Herculean effort necessary to get anywhere on the backlog when you consider how much progress has already been made.
I think SSA serves as a reductio ad absurdum to the Commission’s proposals to cut the government. They’re not a particularly atypical agency. On balance, SSA’s employees save the Trust Fund money. And given the baby boom bulge, a sizable increase in the workforce is going to be necessary. If those workforce reductions were enacted, whatever government emerged would be unrecognizable.
coberly/bruce,
99.9% of analysts from both sides of the aisle believe there is a problem. If you are in the other .1%, there is a small chance you are correct, but a much bigger chance that you are overlooking something.
In this case, while you and Bruce may be correct that the Trust Fund is nearly in balance, you are overlooking: 1) Medicare and 2) the rest of the Federal Budget. While you may be correct that those are not the problem of Social Security, that is like saying that because your cabin on the Titanic is dry, you need not worry about that gash in the hull.
sammy,
It appears that we’re going to hit that iceberg, probably at full force. Just listen to all the special interest groups and other howlers from Pelosi on down. Same old crap.
The Democrats in Congress have had four years to implement something like Coberly’s plan tied to my recommended trigger approach. There is legislative precedent for doing it as explained in a 2006 GAO report. They sat on their ass. Whatever…
The major econ blogs and other blogs will bitch and moan, but they will not step up and provide meaningful discussions for a full breakdown of the cochairs’ draft proposal to committee members nor a detailed analysis of the President’s 2011 or 2012 budgets. It’s not in their mental DNA to provide that type of leadership and insight. So, bitch they shall, focusing on a few bits here and there. BFD.
On to the iceberg. Kick in the secondary burners. Let’s go.
sammy the following is malarky: “99.9% of analysts from both sides of the aisle believe there is a problem.”
BTW, malarky is Irish for horse manure.
Unless you are talking about both sides of the aisle in the Faux news room.
I’m not sure I’m reading the table correctly, but the younger you are today, the worse this looks, right? So how does this respond to the idea (sold by some) that we need to address deficits so our children and grandchildren won’t be burdened by all that debt?
Sammy if you really think only 1 analyst out of a 1000 agrees with me then there is no hope for you.
Plus people like you have been citing similar imbalances for things like iraqi WMDs and pointing out that heterodox/salt water economists were idiots for not agreeing with the ‘Washington Consensus’ that held with Greenspan and others that we had beaten the business cycle forever, that EMH meant that things like housing bubbles and financial market collapses were simply impossible.
Frankly the argument from authority never moved me much, on Social Security in particular if you can’t say it with numbers you really should not be participating in the debate at all. I’ve been putting up my stuff here for two and a half years and really can’t recall many instances of being beaten into submission by force of numbers. Biggs may have played me to a draw a couple times but otherwise it has mostly been talking points vs Trustees’ data tables.
sammy was talking about the smart analysts who can read this table and know that changes are needed if there is a plan to ever balance the federal budget going forward instead of piling on more deficit spending or crowding out all discretionary spending:
Table VI.F9. OASDI and HI Annual Income Excluding Interest, Cost, and
Balance in Current Dollars, Calendar Years 2010-85
[In billions]
http://www.ssa.gov/OACT/TR/2010/VI_OASDHI_dollars.html#176345
OASDI
Income excluding Interest – Cost = Balance
Intermediate Cost:
2010 -$41 billion
2011 -7
2012 +2
2013 +5
2014 +4
2015 -3
2016 -11
2017 -25
2018 -45
2019 -71
2020 -101
2025 -275
2030 -457
2035 -622
2040 -758
2045 -892
2050 -1,073
2055 -1,344
2060 -1,726
2065 -2,225
2070 -2,909
2075 -3,822
2080 -5,006
2085 -6,535
“something like Coberly’s plan tied to my recommended trigger approach”
MG the idea that any part of the NW Plan trigger approach derives from you is laughable. Trigger is at least implicit is this post of mine from Nov 25, 2004:
http://bruceweb.blogspot.com/2004/11/trust-fund-exhaustion-personal-odyssey.html and made more explicit in this post from May 23, 2006 http://bruceweb.blogspot.com/2006/05/cost-of-inactivity-nothing-as-plan-for.html a time that I was posting on Social Security regularly at Economist’s View. Where you may have picked it up. But if anyone deserves credit for explicitly mediating between Coberly’s original position which I would characterize as ‘fix it and forget it’ via phased in payroll cuts, and my plan of ‘Nothing’ by formally introducing ‘triggers’ it was Arne. If I had to pinpoint it it would be in the post ultimately named “Seven Good Questions by Reader Arne”
http://www.angrybearblog.com/2008/05/soc-sec-xi-halo-ate-my-homework.html where my response to his question one: “1) What should we do if the SSA intermedicate forecast is right? When and how would we change?” ultimately led me to the following conclusion:
“The legal answer is to wait until the Social Security system falls out of Short Term Actuarial Balance. Under Intermediate Cost assumptions the TF ratio falls below 100 in around 2036, meaning the system would fail the test some nine years earlier or in 2027 which would leave 14 years to 2041 to come to a policy decision, which would be plenty of time and a much more informed information environment. Of course if depletion continues to move out in time then so would this decision point.” That ‘decision point’ ultimately became a legislative ‘trigger’.
But your fingerprints are nowhere to be found. Don’t flatter yourself.
arghh
“via phased in payroll INCREASES“
MG
we have been over this before. your numbers are inflated numbers and don’t show the corresponding numbers for the payroll available to pay for the shortfall by increasing the tax one half of one tenth of one percent per year on average.
it is also not quite honest to talk about income excluding interest. is that the way you count your income? the trust fund, principle and interest, was created exactly to pay for shortfalls such as these.
Bruce
arghh 2. “via phased in payroll tax increases.”
as it happens “the idea” came to me while i was playing with a spread sheet looking at various ways to “phase in” the tax increase. it is entirely possible i got the idea subconciously or telepathically from you or Arne. it turns out that someone preceded all of us. he gets mention in the NASI publication “Fixing Social Security,” 2009. see p 14 cite ref “Thompson 2005) or Ball 2007.
I did write my “trigger” plan in response to something MG said about putting up a proposal in the form that congress could understand it. i don’t recall that he offered any specific ideas, but if he wants credit for it, I’d be glad to give it to him if he can get one congressman to sit down and look at it honestly.
No need to squabble over credit. the idea is “obvious” to anyone honest enough to look at the numbers. which leaves out all of Sammy’s “analysts.”
coberly: “SS is people paying into a savings plan. the savings is what is insured.”
Like the FDIC? Then we may think of Social Security as a forced savings plan? OK. 🙂
When I was a kid, I was taught that I ought to save 10% of my income. Social Security is 15%. Then how come people can’t live on their Social Security payments? Were my parents lying to me? (And all the other adults, as well?) How disappointing!
Maybe we should increase the minimum wage.
Those are Treasury notes very similar to the ones that have been issued to many foreign
Alaska’s Permanent Fund has bought $2.5B of Treasuries on its books, $7000 per household. Better not tell them their bond purchases were all just a big scam . . .
It doesn’t need to be fixed.
It does if you want to steal $1.5T plus another $1T of owed interest from middle-class taxpayers, 1985-now.
You and MG can send a post or two and I may put them up for discussion. So far neither of you have.
They are insane.
No, liars. SS (and any other mandatory contribution plan) is the most effective means of increasing the wealth of the middle class, simply because what is not taxed will end up in land values and rents in the end.
pjr
no. you are not reading the table correctly. in the first place there is no “debt.” those are numbers in inflated dollars by which the current tax rate falls short of meeting expected benefits on the present benefit schedule. there is no way that could turn into debt, because social securit does not have the authority to borrow. it is unlikely congress would borrow the money from the public and turn it over to social security. social security is paid for from payroll taxes… that is the workers pay for their own benefits… if the taxes fall short, the benefits will be cut. there will be no debt.
but where it is completely misleading is that it fails to show the corresponding rise in payroll in the same inflated dollars. from that you could see that an increase in the tax on that payroll of half of one tenth of one percent per year would cover the “balance.” Future workers won’t get hurt unless they hurt themselves…. that is, unless they refuse to pay the amount that their own retirements are going to cost.
for some reason people think Social Security is some kind of magic trick. an evil one in the case of those who hate the government. a kind one in the case of those who think the government is some kind of fairy that showers money on the poor and deserving. it is neither of those. it’s just a way for working people to save their own money protected by the government from inflation and market losses by “pay as you go financing with wage indexing.”
because later generations are paying in more money out of their higher wages, current retirees always get more than they paid in… just like with interest on bonds, only safer. even with increaseing life spans and (therefore) increasing ratio of retirees to workers, each generation will get more than it paid in.
and if something happened whereby that turned out not to be true it would be no different than the fact that some generations face wars and depressions and rising food costs and lower interest rates and stock market crashes. the fact is that Social Security manages all these things better than anything else you can think of.
what it can’t manage is the stupidity of the people who let criminals like Simpson and Bowles take it away from them.
probably i needed to mention that with increasing life expectancy each cohort lives a little longer than the last and gets paid back the increased tax it paid simply by living longer and collecting more benefit checks. the following cohort will be paying a tax that is higher than the one the current retirees paid, enough to cover the longer life of the current retirees, but will receive more than they pay in because the following cohort will be paying a (slightly) higher tax (on a higher income).. and these in turn will get their increased tax back by collecting more benefits by living longer.
oh, and before you get carried away pitying the poor younger folks inheriting all this imaginary debt, try to remember they are also inheriting all the things their parents money bought them.
they aren’t really a generation of vipers, it’s just hard for them to keep two things in mind at once.
pjr: “So how does this respond to the idea (sold by some) that we need to address deficits so our children and grandchildren won’t be burdened by all that debt?”
I don’t know whether you buy that BS or not. In the 50s the children of Depression parents really suffered from the deficits of the 30s, didn’t they? Life was really hard in the 50s because of that.
coberly,
Those are SSA cashflow numbers taken from an SSA table in the lastest annual report. This is about cashflow not interest or principal payments that the SSA can, as necessary, seek redemption from the U.S. Treasury. These are the amounts that are either projected to (1) flow to the Treasury and the General Fund as surplus current dollars or (2) current dollars that the Treasury will provide to insure continued full payment of benefits.
Now, if you want to complain about it, call or write to the SSA. I didn’t invent the numbers. You know that. And, yes, the numbers are expressed in current dollars as so stated in the SSA table. Anyone can see that once the link is accessed.
Stella IS Bud, by Belgian standards (and Heineken is the Dutch equivalent). If you want a good yellow beer, get Urquell. Otherwise, actually explore your local or regional micros and stop being a fncking sheeple.
1) The elite who organised and implemented stuff called credit cards, credit, debt etc. They knew it would implode, and now it has.
2) Bush, greenspan, bernanke are all part of the same boys club. They do not care about anyone but themselves. When we are screaming about high cost of things, then those in charge of the NWO will have us right where they want us. Time to prepare was yesterday.
Go have a look at http://www.forecastfortomorrow.com those guys have been spot on about the elections and what is coming very soon.
pjr: “So how does this respond to the idea (sold by some) that we need to address deficits so our children and grandchildren won’t be burdened by all that debt?”
Do yourself a big favor and read these two documents (and sublinks):
Federal Debt and the Risk of a Fiscal Crisis
Congressional Budget Office
July 27, 2010
http://www.cbo.gov/doc.cfm?index=11659
The Long-Term Budget Outlook
Congressional Budget Office
June 2010
http://www.cbo.gov/doc.cfm?index=11579
In my judgement, you don’t want to pay attention to people who don’t understand the problems associated with Federal deficits and U.S. National Debt. They’re clueless.
Min is correct.
Be concerned. Be alert.
MG,
Do not pass go, until you listen to the ideology.
“sammy was talking about the smart analysts who can read this table and know that changes are needed if there is a plan to ever balance the federal budget going forward instead of piling on more deficit spending or crowding out all discretionary spending:”
1. I am unaware of “smart analysts” you/sammy refer to.
2. In UK outlays for their warfare welfare system and it is centuries older than the MICC were 7% of outlays before they went austerian on defence. So, there is lots of room in “discretionary” aka corporate welfare to address cash deficits becfore defaulting on SS.
Leave the 40% of US G outlays (20% of outlays are war profiteering and matched by corporate welfare in other discretionary accounts) off the table and balance on SS.
Not a starter.
Let’s talk reality about deficits, and the spending side.
While doing that talk the hugely inefficient, no market, high marging US health delivery system where the main drag on the economy is coming, along with crazy levels of interest outlays.
No rational debate on deficits will matter until the health system is addressed, ideology aside or not.
Unless GINI numbers in the Somali range are acceptable.
Just finished Krugman’s Fri column and some early comments at economist view.
“smart analysts” are the ones who support the ideology that all value comes from labor and labor cannot share in it.
ideology 101.
Dan,
You and the other main posters already have the cochairs’ draft proposal. What more do you guys and gals need?
Break it down.
Maybe we can find out if the AB readers support any of the recommendations contained in the draft document. If so, why. If not, why not.
The blogs and news media are loaded with people whining and complaining, beginning with Pelosi (#3 in power in the U.S. Government for another 1.5 months).
Can’t Spencer, Robert, Linda, Rebecca, or the other main posters take it on? Looks pretty easy.
I’ve already posted the source links for the President’s FY2011 budget a number of times. Ditto for the Green Book (as has Linda). Not much readership interest based on observation. Same old story. No one wants to identify more than a handful of program cuts or reductions other than Defense.
None of the other key econ blogs are touching detailed budget stuff as far as I know. Must require too much thinking or something…
**OT – If there aren’t going to be any main posts put up this morning or early afternoon, maybe an open thread or two would generate some conversations.
It looks like the readers are burned out on the existing posts. Yesterday was boring…except for this one thread.
Just saying
If it is easy feel free to send me a post I can publish. Simply because econ blogs don’t fit your framing doesn’t make them blind to fiscal deficit.
If Soc Sec. is not a deficit problem as the two guys admit why is it in their list….it is a throwaway item for them and an advertisement of a pet peeve. Strike one for pet peeve by thewir own admission.
As Kevin Drum illustrates, runaway healthcare costs are draining private and public coffers. Under the 10% per year inflation of medical costs, their GDP plus 1% takes care of medicare permanently (gutted) but has no details, all details being given to the SS part, which is not a problem. Go figure. Just ignored.
The tax code options are clearer but slanted and are being discussed.
Make a list of discretionary cuts. All I see are personnel cuts and pulling the rug out of state level employment in addition.
Min
yes, increasing the minimum wage would be a good idea.
people are living longer now than they were in your parent’s generation, so a little less than 12% is a good basic retirement savings. The 15% you refer to includes Medicare as well as the disability portion of Social Security. MOreover, SS includes life insurance.
when you look at the numbers, as i have, you can see that SS is exactly what your parents were advising you. The difference is that SS is insured against things your savings account, and even your insurance policy, can’t insure you against. Inflation mostly.
But yes, SS is a forced savings plan. The insurance is what justifies the force.
That and the fact that experience has taught us that most people never manage to save “enough” on their own. even when they invest it in the stock market.
People can live on their Social Security benefits. Though probably not in the style they had hoped. It won’t get you a ticket on the Love Boat. It will keep you out of Dumpsters.
Kayaker
I have been a beer sampler for fifty years. fortunately i have avoided becoming a beer snob.
Be concerned yes, but look out for smoke and mirrors. That is the dilemma. To simply say we are going to hit a glacier is not enough…take a risk and post MG.
Waiting for yours.
heywood
shhh. you are not supposed to know that. but i try to keep the SS “debate” simple.
there is a magic point where you can solve a complex problem by simplifying it. beyond that you enter endless compllications and end up sitting on a log contemplating your navel and the unfairness of the universe and everything.
MG
this may not be productive. you are at best hard to understand. and i never take my memory seriously. there is no need for a “who gets credit” war here. what is needed is to take the “plan” and explain it to Congress and the people so that they understand it. if it is successful, i’ll be glad to give you my share of the credit. But you ought to realize that it is Bruce who has been doing the heroic work here. I don’t always agree with him, and he knows that, but he has been a thousand times as effective as i have in educating people to the nature of the fraud being perpetrated by the great Social Security Crisis scam.
As for conversations reasonably regarded as private, you should understand that sometimes people say things by way of agreeing with you in order to keep you happy that do not reflect the full nature of their own understanding.
MG
as i said, we have been over this before. your comments suggest you don’t understand what you are talking about. certainly I don’t understand what you are talking about.
if you want me to I can provide the links that show that the first time you tried to make this point you did not know the difference between current dollars and constant dollars. i don’t think that would be productive.
Min
thank you. I wish you could explain this to Peter Orszag, who is pretty sure that if your dad had to help out your grandfather instead of investing his money in a trust fund for you, you are owed some kind of “legacy debt.”
Hey, Scrawny–Regarding Urquell–Tried it. Meh. Bleh. I know that Stella is just table beer, nothing special. But, my needs are simple and Stella is a simple, clean beer. fncking sheeple. Hmm. Nice to meet you too. NO
sammy’s claim to be helping middle class social security beneficiaries is a refusal to discuss the point that he knows full well is being made. From the outset, treating all beneficiaries (mostly) alike was part of the program because it would bind the interests of the powerful to those of the powerless. The concern about changing the nature of social security is in many cases that it would give the well-off additional insentive to end social security. sammy is pretending that making social security less attractive to those with the greatest political power is a boon to those with the least political power. It is possible to disagree that this would threaten social security, but sammy is simply ignoring that issue. It’s not new for sammy to behave like this, though, so no surprise.
coberly: “people are living longer now than they were in your parent’s generation.”
Back when I was a kid learning statistics, I was taught that the mean is a lousy statistic for social purposes. (If you have to rely on a single number, the median is better. Something that Adam Smith well knew.) Life expectancy is particularly bad in that regard. It is greatly skewed by childhood mortality. Life expectancy at age 20 is not so different from what it was 200 years ago. Community health and sanitation provided a big boost in the late 19th century. More recently, private medicine (I suppose) has significantly improved life expectancy at age 65 ****** for the well to do ******. If we regard Social Security as insurance against poverty, we do not want to use mean life expectancy at 65 as our measure.
coberly: “People can live on their Social Security benefits. Though probably not in the style they had hoped. It won’t get you a ticket on the Love Boat. It will keep you out of Dumpsters.”
Really? You also said that the average (there is the mean again) SS payment is around $1,000 per month. How much for rent? $500? I remember looking for an apartment about 20 years ago (in an urban area). What I found for less than $500 smelled of urine. (I did find a nice place for $575. :))
Hoe did Simpson vote on the integration of Social Security with Civil Service pensions back in the 1980s? Pensions are property, their value dependent on the assets that back them. What part of “full faith and credit” did he not understand? He is now proposing to dilute the value of those pensions by changing the terms of payment over time. “Full faith” or Bad faith?”
Where is CAGW on this? The commission is a prime example of government waste — we paid for these geniuses to recycle proposals that will not become law — and have no chance of passing Congress. No wonder taxpayers are angry.
“Arne spoke on the comment thread and stated that he was opposed to my recommendation.”
Where? I can’t find a response by me to MG.
I don’t really care about credit. colberly is right that triggers are obvious. Nonetheless, for the curious, my first shot at responding to the situation with triggered increases is here. http://adastra1960.blogspot.com/2009_04_01_archive.html
Once again, I’ve sparked informative Angry Bear postings by asking a poorly worded (or dumb!) question. I’m not an economist but come here because it’s the most educational US economic policy website on the net, loaded with smart contributors and comments. You’re welcome.
Let me separate my two thoughts and reverse their order, and (sorry) not be so brief. First, politically–I am not talking about economic calculations or reality here–the problem has been sold in part as “we’re passing on mountains of debt to future generations” which is bad, unfair, shame on us because our children and grandchildren will pay a huge price. If I were a young person, maybe planning to have a baby, my ears perk-up because they’re speaking to me. If I’m older, which I am, my ears perk up even more because I worry about my kids’ and grandchildrens’ futures. I even join the Tea Party and demand action. Perhaps I even demand that my senator listen to the cat food commission chairmen who will fix this problem by making the government tighten its belt.
Second thought. I look at your table. My impression (right or wrong–politically, it doesn’t really matter) is that my kids and grandchildren will be getting a lot less in SS than scheduled, whereas my elderly parents and I will be just fine. So, I am now worried that this plan does not help, and indeed harms, my sincere effort to protect my children’s and grandchildren’s futures. And that supporting this plan would seem the height of hypocrisy on my part. Now I’m confused. I ask my friend, Mary, who’s very smart on such things and not an ideologue who might mislead me, “Mary, am I reading this table right? Wouldn’t this plan do the opposite of what I want, by screwing my kids and grandchildren when they retire? WTF?”
And Mary says . . . ? “No, you are misreading the table. This plan ensures that SS will continue to pay what it’s always been expected to pay, for you, your parents, your kids and grandchildren. And it helps reduce the projected overall national debt that leave to your heirs. Tell your Tea Party to support this honest belt-tightening plan to save our children.” OR “You’re right, the plan won’t cut SS benefits much or at all for you or your parents, but it will pay benetits that are far less than scheduled to your children and grandchildren. That’s how it helps to lower the projected overall national debt facing them–by giving them less in retirement. Tell your Tea Party that this plan is Washington insider politics as usual BS.”
MG May 2008 is before April 2009. If you want to take credit for the label ‘trigger’, well whatever floats your boat. But I was talking ‘decision points’ tied to failure of the test for ‘short term actuarial balance’, which is operationally what a ‘trigger’ is, a year and more before you entered the debate.
The NW Plan was a collaborative effort built on top of Coberly’s plan which is why I asked that NASI give him lead author credit when citing it. Whether he incorporated some input from you is between you and him, personally I tuned you out several years before I ever started front paging here at AB.
Recognize that the confusion, to what extent things are confusing, stems from conflating two related, but not combined issues? First there is the “huge” problem of the general budget deficit. In quotes because there seems to be some difference of opinion rearding the size of the problem. Regardless. Second there is the issue of Social Security solvency. By law the budgets for SS and the general fund are seperate. There is an over lap brought about by the use of SS Trust Fund assets to fund general budget costs. Special Treasuries represent that process. The general budget deficit is not brought about by a deficit in SS funding. The Treasury owes the Trust Fund a heap of money, but so too does it owe such funds to China, Alaska (as has been pointed out above), Korea, Japan and lots of rich people and maybe even some pension funds.
Social Security isn’t the problem. Big spending on wars of adventure and anemic taxation of the really rich and corporate entities is the problem. It doesn’t require a bogus so called bipartisan, but very biased, pair of Commission Chairs to figure out the solutions. BTW, who was it that actually came up with the list of recommendations to the Commission? I don’t for a second believe that Erskine and Alan wrote out the document. How much input did the people on loan from the Peterson Foundation have in putting that list together?
Min
mean life expectancy is what determines the total cost of benefits paid out of the total yearly payroll tax. it is the driver of the great social security crisis. only this crisis can be paid for by raising your payroll tax 20 cents per week per year. once you understand that you will understand why i have no patience whatsoever with people who want to talk about other ways to fix what ain’t broke.
Min
i live on half that much. but i did buy my house before prices went up. like i said, you can’t live on SS the way you want to live. but you can live on your SS.
pjr
i thought the table you were referring to was MG’s presentation of the table from the Trustees Report, which does show a “deficit.” but the deficit only occurs if the tax is not raised.
the “plan” that i have put forward… actually that Bruce has put forward, I only did the detailed spreadsheet that shows that it works.. shows that by raising the payroll tax one tenth of one percent whenever the Trustees report an actual short term actuarial deficit,the syestem stays solven forever at an average cost of one quarter of one tenth of one percent per year for the worker and a matching cost for the employer. this cost would be twenty cents per week for an average worker today. it’s “felt” cost would never be any more… because wages are expected to increase ten dollars per week every year… it today’s terms. both numbers will change with inflation and rising real wages.
if by the plan you mean the Boles Simpson plan… they plan to force you to work into deep old age and cut your benefits as well. they totally ignore that you are paying for your own benefits. they act like the money is theirs.
coberly – “there is no need for a “who gets credit” war here. what is needed is to take the “plan” and explain it to Congress and the people so that they understand it. if it is successful, i’ll be glad to give you my share of the credit.”
I have never tried to take any credit for your plan. I simply made the recommendation to use a budget or program element financial trigger that would allow for automatic adjustments up or down without the need for further Congressional legislative action. I thought it was a good recommendation.
coberly – “As for conversations reasonably regarded as private, you should understand that sometimes people say things by way of agreeing with you in order to keep you happy that do not reflect the full nature of their own understanding.”
Dale, I didn’t raise the issue with you in the email exchange. You raised it. The exchange is as follows:
coberly – “I was going to ask if you had noticed that he has adopted your plan.
without giving you credit.”
MG – ” Yeah, I noticed that he didn’t say a word about who raised the issue of triggers. Ha. Whatever…”
Now, if you want to weasal around and pretend that you were somehow agreeing with me, that’s in direct contradiction to the facts of this exchange. I didn’t bring up the issue.
You’re more than welcome to refute what you stated in May 2009. Knock yourself out if that’s the kind of person you want others to know you to be. I thought that you were more of a stand up man than you’re now demonstrating. Guess not, eh.
coberly – “there is no need for a “who gets credit” war here. what is needed is to take the “plan” and explain it to Congress and the people so that they understand it. if it is successful, i’ll be glad to give you my share of the credit.”
I have never tried to take any credit for your plan. I simply made the recommendation to use a budget or program element financial trigger that would allow for automatic adjustments up or down without the need for further Congressional legislative action. I thought it was a good recommendation.
coberly – “As for conversations reasonably regarded as private, you should understand that sometimes people say things by way of agreeing with you in order to keep you happy that do not reflect the full nature of their own understanding.”
Dale, I didn’t raise the issue with you in the email exchange. You raised it. The exchange is as follows:
coberly – “I was going to ask if you had noticed that he has adopted your plan.
without giving you credit.”
MG – ” Yeah, I noticed that he didn’t say a word about who raised the issue of triggers. Ha. Whatever…”
Now, if you want to weasal around and pretend that you were somehow agreeing with me, that’s in contradiction to the facts of this exchange. I didn’t bring up the issue.
You’re more than welcome to refute what you stated in May 2009. Knock yourself out if that’s the kind of person you want others to know you to be. Personally, I thought that you were more of a stand up man than you’re now demonstrating. Guess not, eh.
coberly,
Apparently you have a problem with the fact that the SSA identified its projected cashflow surpluses and shortfalls. The SSA made a projection, the President’s budget made a projection, CBO made a number of projections on SSA surpluses and shortfalls, and others have made such projections.
I am not concerned that the SSA provided a projection in current dollars as that is not uncommon. CBO does it and the President’s budget did it. Yes, there is inflation that must be considered, but those balances don’t vanish.
The simple fact is that the U.S. Treasury is obligated to make up for any cashflow shortfalls that occur at the SSA. Those shortfalls impact deficit spending negatively. Period.
Now, it’s true that I confused one table’s data at the SSA in another thread, but that this table. I talked to an economist at the SSA and asked why that table wasn’t properly labeled. Long story short, you were right about the one single column of data in that table. It happens.
You need to stop pretending that the SSA funding shortfalls do not impact the fiscal year deficits. They most certainly do. If you want to convert the SSA data from current dollars to constant dollars, know yourself out. But stop pretending that the shortfalls do not exist. Not only do the projected shortfalls exist, but they impact the general fund budget.
The issue here is that discretionary spending will be crowded out by general fund interest payment obligations and mandatory programs’ funding shortfalls. That’s why there is a dual focus in play by the Fiscal Commission as mandated in its charter – medium term and long term.
It’s understood that inflation projected at fairly low levels is in play when reviewing much of the data. That doesn’t change the general outlook for budget shortfalls and fiscal year deficit spending obligations under discussion.
coberly,
Apparently you have a problem with the fact that the SSA identified its projected cashflow surpluses and shortfalls. The SSA made a projection, the President’s budget made a projection, CBO made a number of projections on SSA surpluses and shortfalls this year, and others have made such projections.
I am not concerned that the SSA provided a projection in current dollars as that is not uncommon. CBO does it and the President’s budget did it. Yes, there is inflation that must be considered, but those balances don’t vanish.
The simple fact is that the U.S. Treasury is obligated to make up for any cashflow shortfalls that occur at the SSA. Those shortfalls impact deficit spending negatively. Period.
Now, it’s true that I confused one table’s data at the SSA in another thread, but that wasn’t this table. I talked to an economist at the SSA and asked why that table wasn’t properly labeled. Long story short, you were right about the one single column of data in the other table. Good for you.
You need to stop pretending that the SSA funding shortfalls do not impact the fiscal year deficits. They most certainly do. If you want to convert the SSA data from current dollars to constant dollars, know yourself out. But stop pretending that the shortfalls do not exist. Not only do the projected shortfalls exist, but they impact the general fund budget.
The issue here is that discretionary spending will be crowded out by general fund interest payment obligations and mandatory programs’ funding shortfalls. That’s why there is a dual focus in play by the Fiscal Commission as mandated in its charter – medium term and long term.
It’s understood that inflation projected at fairly low levels is in play when reviewing much of the data. That doesn’t change the general outlook for budget shortfalls and fiscal year deficit spending obligations under discussion by the commission or others including President Obama.
Min
SS is not insured like FDIC.
SS is insured by the principle of pay as you go. As long as the workers are making money and paying their payroll tax, the money will be there to pay the benefits.
Min
SS is not insured like FDIC.
SS is insured by the principle of pay as you go. As long as the workers are making money and paying their payroll tax, the money will be there to pay the benefits.
MG
you are not making much sense. you have shown right here on Angry Bear that you are willing to play games with posts and delete and move them to create a different impression than what they seemed to mean when first published. i don’t know if you have done that with the quotes you attribute to me.
i am sure as hell not interested in standing up for your taking credit for the Northwest Plan. that was something I thought I wrote and Bruce promoted… beyond my ability to do so. Whether I got the trigger idea from him or it it was just the sort of thing that is obvious to anyone looking at the numbers, I can’t say. I wlil say again that Bruce has done more to save Social Security from the bad guys than anyone. More than I have. And I can’t see that you even understand it.
I did start writing what became the trigger plan following a very serious effort on my part to understand what you were saying. I concluded that you were saying that Congressmen needed a “plan” they could look at and understand how it would close the reported deficit. That seemed to me a thought (yours) worth following up on. I don’t remember that you suggested the trigger. I do remember thinking you were claiming that you had access to congressional staffers and would take such a plan to them. I haven’t heard back on that.
I guess this is my idea of standing up.
MG
as I said, private conversations may not have the same meaning to both participants. I have no way to verify that you are reporting what was said accurately.
I certainly suspect that you and I never have the same understanding of anything that is written here by either of us.
MG
the treasury is only obligated to repay the money it has borrowed from the SSTF. it is not obligated to make up any shortfall in SS’s own budget,
I do not “pretend” the shortfalls don’t exist. But “current dollars” for the shortfall without the “current dollars” for the corresponding payroll give a grossly misleading picture of the situation. You don’t need to convert to constant dollars to correct the picture. Just report the corresponding payroll and you will see that the shortfall can be eliminated by increasing the tax one half of one tenth of one percent annually. This is the CBO option number three. It is also the average that results from applying the Northwest Plan “trigger”… which you seem to ignore here.
coberly,
The SSA provided the OASDI Income excluding Interest, OASDI Cost, and the OASDI Balance figures in that table. I labeled the comment correctly and showed the Balance column of data for the simple reason that it represents the projected cashflow for each year indicated. All three columns of data are stated in current dollars.
The SSA notes for that table stated: “For OASDI, income excluding interest consists of payroll-tax contributions and proceeds from taxation of OASDI benefits. Cost consists of benefit payments, administrative expenses, net transfers from the trust funds to the Railroad Retirement program, and payments for vocational rehabilitation services for disabled beneficiaries.”
The bottom line is the Balance column which represents the projected cashflow position. The projected cashflow position per year provides an estimate of how much surplus funding or shortfall will exist. If one is trying to determine how much additional deficit funding will be required, that column of data provides such an estimate assuming that nothing else in the overall federal budget projections change for a given year.
The only consideration one has to make is the issue of comparing fiscal to calendar years net cashflow and related federal budget financial positions. Thankfully, the SSA also provides a table that reflects fiscal year data.
You’re busy talking about trying to figure how to determine how much of an income chance (payroll and taxable) is required to achieve whatever Balance level one is seeking to achieve or whatever else someone might be addressing.
I am talking about SSA Balance projections that impact the federal budget positions. I am not considering imaginary changes to the existing levels of projected income. I am viewing, as is the SSA, the projected Balance figures per year under the existing laws that govern taxes collected for the OASDI SSA programs.
I am citing SSA data projections based on current law.
When an analysis of this nature is performed as the SSA has accomplished, the matter of determining what changes to recommend for whatever purpose begins with a projection based on existing laws governing the three SSA programs. That is what this table indicates:
Table VI.F9. OASDI and HI Annual Income Excluding Interest, Cost, and
Balance in Current Dollars, Calendar Years 2010-85
[In billions]
http://www.ssa.gov/OACT/TR/2010/VI_OASDHI_dollars.html#176345
Nothing more, nothing less.
MG
this looks like word salad to me. but i confess i am tired of trying to figure out what you mean.
Nancy
scrawny illustrates why there is no hope. i said something about stella and that triggered his little brain to come out with his little beer commercial, and of course his tremendously original line about “sheeple.”
the point i was trying to make was about the CPI not reflecting the actual cost of living because it is a number subject to political manipulation, as we saw with the Boskin Commision, and increases in cost of living will be called improvements in quality and not counted as “inflation” and so no benefit increase will be given to compensate.
but there is no hope people will understand this.
coberly: “mean life expectancy is what determines the total cost of benefits paid out of the total yearly payroll tax. it is the driver of the great social security crisis.”
The driver of the “great social security crisis” is propaganda.
coberly: “SS is insured by the principle of pay as you go. As long as the workers are making money and paying their payroll tax, the money will be there to pay the benefits.”
SS is insured by votes. As long as our economy is healthy, we will have the real goods and services to support our senior citizens and other SS recipients.
bakho: “I have always wondered where the anxiety comes from on the other side of the SS argument.”
What anxiety? They are the attackers. They use fear as a weapon.
Rdan: “If Soc Sec. is not a deficit problem as the two guys admit why is it in their list.”
Good question. Because they are SS predators.