Open thread Sept. 20, 2013 Dan Crawford | September 20, 2013 4:57 pm Tags: open thread Comments (16) | Digg Facebook Twitter |
Hello AB people. I want everyone to know that tomorrow, Saturday, is my last day of work for compensation. After that it’s me and Social Security and my personal savings. I’m not asking for donations. I’ve been frugal and saved for a rainy day, and I’ve been fortunate enough to be gainfully employed all of my life. So too my wife, who retired three weeks ago. It’s the dawn of a new day, as they say. I’ll report back periodically on the personal effects of the change in labor status.
The first order of business having all this new found time on my hands will be to point out what an asinine bunch of cynical asses the Republican members of the House are being. Dickens could not have made up a more ideologically dishonest and grim group of elected representatives. Who they represent is any one’s guess, but it certainly isn’t the whole of the American people. For sure they are not simply ignorant of the potential effects of their machinations. They are striking out at their imagined enemies and in reality they are likely to land a punch square on the jaw of the working class. They are scum. And every time one thinks that the low point has been reached a more venal piece of crap takes the podium. Ted Cruz, you take the cake.
Question for AB readers. Any thoughts on the CBO report this week on Social Security?
CBO changed some variables, the result was an increase in the unfunded numbers. In 2012 CBO concluded that the shortfall was 1.9% of payrolls. In 2013 they increased that to 3.4% – A 70% increase.
SSA will have to adjust its numbers for the 2014 report to congress.
Question; How big does this shortfall have to be before anything is done about it??
There are two main reasons for the CBO change. They assume higher unemployment and the assume longer lifespans.
Longer lifespans indicate that each person needs to save more, both on his own and as part of SS. In the NW Plan this is covered by triggers to raise the payroll tax when needed. Even without recalculating a spreadsheet, I can see that would mean more increases, but I do not see that they would need to be sooner.
Higher unemployment also shows the need for a stronger safety net without being clear about when to start making increases.
I suspect you may be correct that I should change my estimate from between 2022 and 2024 to between 2021 and 2023.
Hope that helps.
The answer to the probelm of retirement programs is rather simple. Raise the tax on outsized incomes of all sorts to a point that makes it virtually of little value to be paid mre than five, ten, fifteen or twenty million dollars each year. No need to redistribute the newly reduced incomes levels of the absurdly wealthy. More money will become available to increase the pay of the rest of the population.
Also, tariff the shit out of exploitation imports. The race to the bottom of the labor market has to be blocked. Cheap labor has to be taken out of the category of a natural resource. Level the playing field for the labor factor in production.
i approve of your sentiment, and i am all for taxing imports to discourage outsourcing of jobs, and to tax very high wages… or other income to discourage destabilizing concentrations of wealth. But I would prefer the money be spent on other programs: education, unemployment, infrastructure, even defense, and certainly to pay down the debt until they stop crying about it.
But not to pay for “retirement.” I prefer to buy my own groceries without demanding that the grocery clerk charge the rich man a higher price for his bread and give me my bread at a reduced price… paid for by that rich man.
Social Security has worked to reduce poverty in old age for the last seventy five years exactly because the workers pay for it themselves… it is not a tax on the rich.
The cost of paying for the projected increase in life expectancy… and reduced increases in wages over the next seventy five years amounts to pennies per week. I don’t want to see Social Security destroyed because the people who “support” Social Security can’t understand the difference between and welfare.
you put me in a dilemma. it does no good to either you or to my reputation for me to call you an idiot.
but the fact is that you reliably run around shouting the sky is falling the sky is falling every time you see a new number which you do not understand.
ulitmately the social security tax will increase by about 2% for workers and 2% for employers. This is money that will be needed to provide those workers with an adequate benefit over a retirement that will be longer than current retirements. There is no way to avoid the higher cost of retirement. And there is no better way to pay for at least “enough” of it than Social Security.
Arne, I don’t keep up with CBO numbers, but I am unaware of any change in the essential projections of the SS actuaries. If you know of any reason that projection is materially different from “need to raise the tax about one tenth of one percent per year over roughly the next twenty years,” point me at it.
I don’t know where your own prediction of when the increase will begin to be needed. My last look said about 2018 when the TF will be projected fall, in ten years, below 100% of one year’s benefits.
I think we ought to move sooner than that, just to stop the shouting, and Krasting’s confusion, but in any case 2018 is approaching, and Dean Baker’s plenty of time to fix the roof is not as compelling a metaphor as it was ten or fifteen years ago.
I don’t think you even understand decimal places.
the last two lines of my above reply to krasting were inadvertently placed out of context by the comment editor… they should have been deleted.. in any case they apply to Krating and not to Arne.
Coberly, I’m asking a question about a CBO report, and you get nasty. Why?
From the report:
to bring the program into actuarial balance through 2087,
given CBO’s projections, payroll taxes could be increased
immediately and permanently by 3.4 percent of taxable
Payroll is near $6T. 3.4% of that comes to $200 billion a year. That’s a huge tax increase – and it’s regressive. A very bad plan, don’t you agree?
The Coberly plan does not come anywhere close to raising this much in tax revenue.
You blaming me for bad news?? Blame the CBO, not me…
I don’t mean to be nasty, but the fact is you are an idiot. You don’t understand what you are talking about, and you have never understood any of my answers. So I do what any poor, beleagured math teacher does after having failed to teach you anything: I give you an “F.”
The “immediate and permanent” tax increase would pay for Social Security for the next 75 years, but it is NOT NEEDED at once. In fact, it would be far better to increase the tax one tenth of one percent each year that it would be needed, which would be about twenty of the next seventy five years, while wages are going up over one full percent in every one of those years. The taxpayer would be getting richer, not poorer. And do try to remember that that “tax” is not really a tax: the “taxpayer” will get the money back, with interest. It goes to pay for his own retirement.
The two hundred billion is a meaningless number, it’s only good for scaring mathematical illiterates with . Try dividing it by the 150 million people who will be paying the “tax”: it’s 1300 dollars per person… and that’s an average over the next seventy five years, when the average wage increase (in today’s dollars) will be about 20,000 dollars per year. AND the money goes to pay for that persons retirement, which will cost about 20,000 dollars per year for 20 years on average… or more than that.
And IF wages are not going to go up, where are you going to get the money to pay for ANY retirement?
And it’s not “regressive.” Only idiots with PhD’s in economics call it “regressive” because they are too damn dumb to understand that the PAYOUT makes it highly PROgressive… the poor get more back per dollar “invested” (or “taxed”) than the rich. And even the rich get back at least what they paid in adjusted for inflation.
The “coberly plan” raises more revenue than this, because the coberly plan raises the tax to about 4% combined over the 75 years, which raises about the same amount of money over that time PLUS raises the tax over that time just enough more to fully fund Social Security over the “infinite horizon.”
But you don’t understand any of this… and neither do the idiots on either side of the “issue.” Like you, all they can do is see a big number and squawk and run around in circles shouting either, according to their party, “social security is going broke” or “tax the rich,” both of which are stupid. Did I say something insensitive?
“The Coberly plan does not come anywhere close to raising this much in tax revenue. ”
Actually, it does. I continues to raise taxes as much as needed. Since the increase in lifespan (if the CBO is correct) comes gradually, the need to raise taxes comes gradually.
Since the raise in taxes is lower than the raise in income, rational planners will see that their standard of living will increase both befre and after retirement. Without the tax increase, it may increase more before retrement, but it will decrease after.
“Arne, I don’t keep up with CBO numbers, but I am unaware of any change in the essential projections of the SS actuaries. ”
Then don’t bother to comment without looking into it. The CBO has diverged from the SS actuaries as to expected lifespan and as to out-year unemployment.
i’m glad someone else here is as rude as i am, though with less justification.
I did NOT comment on the CBO estimate: I commented on Krasting’s over reaction to it. A close reading of my comment would show that I ASSUMED the CBO estimate… .exactly because i did not want to get into a long winded and futile analysis of it.
“i’m glad someone else here is as rude as i am”
I’m learning to be as cranky as you, but I was nowhere near as rude.
It does not matter how many times he comes back, if you want to be a meaningful advocate you need to suppress your crankiness and rudeness. When I see your behaviour it makes me cranky because I hate to see someone with the right answer be such a lousy advocate.
This is what Galileo called his opponents:
pezzo d’asinaccio, elefantisimo, bufolacio, villan poltrone, balordone, barattiere, poveraccio, ingratissimo, villano, ridicoloso, sfacciato, inurbano..
Like Galileo, I started out being polite and nice. It didn’t do any good.
I am still nice, but having been called “rude” by people who mean “shut up, we don’t want to hear the truth,” I am no longer capable of being polite.
I had not meant to suggest that any of the increased income tax revenue be used to support Social Security. My point is that when stupid levels of compensation and all forms of income are brought under control, (in my suggestion that would be by way of taxing the absurdly high incomes by equally absurdly high marginal tax rates), more business profits might then be available to raise the pay levels of the workers and possibly increase the number of workers. That in turn provides increased revenue to the Social Security program from the workers’ income. The same should be true of blocking exploitation imports.
I’m not suggesting that this will ever pass the legislative hurdles of our Congress. God forbid our sanctimonious legislators should take any action that would help to improve the incomes of working Americans.
I couldn’t agree more. The right way to “fix” SS… and other things… is to find a way to increase the wages of workers.
When I see someone actually working on a realistic plan to do that, I will be glad. But in the meanwhile I see my task as trying to tell people what the scare-numbers really mean, and warn them against foolish “solutions” like destroying SS by turning it into welfare.
I am, as Arne points out, perhaps a little too testy to be the best messenger.
To which all I can say is, “Shoot the messenger, but read the damn message!”