New series on Social Security: Angry Bear and Committee on Responsible Federal Budget
This post is simply a short note to let readers know that a series of posts and topical threads will be published over the next weeks by staff at the Committee on Responsible Federal Budget and contributors to Angry Bear blog and several outside authors in our network.
Marc Goldwein, Policy Director for the Committee for a Responsible Federal Budget (see Wikipedia) and I have been trading e-mails discussing how to have a debate on one of the issues confronting us, namely the role of Social Security in the retirement process, how it is working at the moment, and what is projected over the next few decades .
Of necessity some posts must be ‘wonkish’ and arcane to the general reader, but such information needs explaining and interpreted as data and then secondarily as a ‘story’ is developed. The other part of the debate is the actual narrative of how we think about Social Security, the role of private and government programs, and of course the narrative on the nature of our federal budget, what is responsible, and what seems to work.
The first post by CRFB is a direct response to Dale Coberly’s post Setting the record straight on Social Security. The following posts and topical threads are in the works.
Interesting but I wonder if the organization in question can talk about SS without depending on making it (not meeting obligations/promises) a solution to revenue problems in the general fund. It’s hard to see how anyone has an argument that will win against Dale’s, especially an argument against letting the workers decide.
This organization is a OMG the debt is falling on our heads and we don’t want to collect revenues to pay it type organization as far as I can tell from the actual names of most of the bipartisan members.
The response will be cross posted with CRFB 10 am Wed.
Well, they are a well funded organization and a force in the conversation. It is also a chance to have our more national friends pop in for a chat!
I was wondering if anyone had seen this study and what is their response?
I think Anna Lee has it about right.
Social Security has nothing to do with the budget or the deficit.
If your brother in law borrows money from you and when you ask him to pay it back he says, “But if I pay you back, that will hurt my budget,” I think you would know what to say to him.
The workers can pay for their own Social Security as they always have. If retirement costs go up, and wages don’t go up as fast as they have in the past, it might be necessary to raise the payroll tax as much as 2% for each the worker and the employer. This can be done one one tenth of a percent at a time, as needed. That is about eighty cents per week per year. And you will get the money back, with interest, when you will need it more than you do today.
Try to keep that in mind.
I will be out most of the day working. Will try to reply this evening.
The Committee on Responsible Federal Budget is concerned about a non budget issue because…? I am not sure “Responsible” belongs in their title.
I would add to Dale’s earlier reply to the less than honest report from CRFB, ““The costs of benefits are well in excess of revenue from payroll taxes…” This is a lie. But it is a clever lie because it turns on “revenue from payroll taxes,” completely ignoring the revenue from previous payroll taxes that were saved exactly in anticipation of the higher costs that Social Security is facing today.” Add to that saved revenue the interest earned by the Trust Fund assets. I believe that the current rate of interest earned is between 3% and 4%. When applied to the total of the Trust Fund assets that earned interest becomes a significant part of the current revenue stream that is available to pay Social Security benefits.
Also, to suggest that the Social Security program adds or subtracts from Treasury debt or budget deficit is disingenuous at best. This statement from the CRFB report, “Regardless of whether past surpluses were saved in an economic sense or not, the federal government will have to borrow more to make up for the Social Security system’s cash flow deficit.” especially the first clause, hints at the concept of a unified budget wherein FICA surplus is used to offset any general budget deficit. There is no legal basis for the such a conceptualization of the budget. FICA revenues are “off budget”, and have been for almost the entire history of the Social Security program. Only during a span of time from the end of the 1960s to about 1985 was there a legislated unified budget. That was changed back to the historical precedence at the recommendation of the so-called Greenspan Commission and enacted into the Social Security Amendments of 1983, signed into law by President Reagan on April 20, 1983. The off budget status was reconfirmed by passage of the Balanced Budget and Emergency Deficit Control Act of 1985. In short there is no legal basis for considering FICA revenue as though it were simply one additional source of funds to balance the general budget.
It is worth reading the history, in short, as posted on the Social Security Administration web site: http://www.socialsecurity.gov/history/BudgetTreatment.html
E. Michael–I saw the Cato/Urban Institute piece. It revives a longstanding argument about the reason for the exclusion of agricultural employees from SS coverage in the SS Act of 1935. Recently, CATO has renewed this argument which can be seen to support the view that SS favors white workers over African American and other minority workers. Michael Hiltzik argues against this view in the link above. NancyO
The exchange is a good idea, if only to tone down the sneering “but of course” tone of Angry Bear on SS. One examples above: the CRFB is concerned about present revenues of the government regardless of source versus the outlays. That the existence of an internal accounting mechanism like the “trust fund,” (which is at base a political marker that could be rendered moot in any one of a number of ways) doesn’t figure into their concerns doesn’t make them “iiars” or even “lss than honest.” In order to be taken seriously outside the echo chamber of this comments section, Bruce, Dale, and AB are going to have to raise their game.
Well if the CRFB is concerned about present revenue then there are many option to be considered prior to looking at SS as a means of reducing revenue needs.
Mike here at AB has some wonderful work on simply going out and collecting the taxes that are in the law. Then of course we could always raise the rates. We certainly could spend some of our equity and drive the economy thus increasing revenue at current rates. We could drive a more equitable division of labor derived income by returning the DOL to being what it was, for labor vs as a vehicle for business to deal with labor. That would drive revenue increases at current rates as more of the income would now become taxable (not hidden in tax havens).
Increasing the division of income for labor to a more equitable level would have the benefit of increasing the take in FICA payments simply because again, more of the nation’s income would now be exposed to it. SS solved.
When the CFRB looks at “outlays” and treats SS liabilities the same as they do the rest of US debt you will have a point.
I have seen this kind of attack on SS for a couple of decades now. But this new Urban Institute study with their strange use of demographics was new to me.
At a disadvantage since my computer has decided that Adobe is evil and will not let me read PDFs, so I appreciate the help.
unfortunately i have had to deal with pathological liars in the past. one thing about them is that they insist upon their right to lie, while insisting it is somehow playing dirty for you to call them a liar.
CRFB, and you, are lying when you pretend that SS is just a part of the budget and that the Trust Fund is just a “political marker.”
Of course Congress has the power to reneg on its debts. But if we point out that that is what they are proposing to do, we may make it politically difficult for them to get away with.
How “responsible” is a Federal Budget that solves its deficit problem by just reneging on the debt it owes to Social Security… to the people who paid their Social Security tax on the promise that the money would be used to pay for their Social Security benefits…
and why go to all the trouble to create a “Trust Fund” if the money is “just another part of the budget.”
so lets get real here. You don’t get to claim your lie is truth, and that those who call you a liar “need to raise their game.” We’re not talking polite society here. We are talking about some very bad people who want to hurt millions… hundreds of millions… of people… so they can make a little more money for themselves.
@Coberly 6:44pm. AGREED!
I think you are proof of my point. The subject is Social Security and the purpose is retirement security of we the working people. Conflagration with the deficit/debt is just gooble-goop/BS. Solve general budget problems with general budget solutions; solve Social Security problems with retirement security/disability insurance solutions. America, believe it or not, is a vast majority of little working people. All young so far have grown old.
I am happy to see the reaction to my hint that screaming “liar” in the upcoming exchange of views is likely to alienate everyone (except the echo chamber) is to up the charge to “pathological liar.” I am sure you will be an enormously effective advocate to the otherwise uncommitted for your position. They will see reason incarnate.
Message to TS,
While it may be true that a vituperate reply to a dishonest comment may close the eyes, ears and minds of some readers, it is not true that a dishonest comment or reply stated in the most polite and courteous manner makes that comment any less a lie. Case in point. You make the following comment above, “That the existence of an internal accounting mechanism like the “trust fund,” (which is at base a political marker that could be rendered moot in any one of a number of ways) doesn’t figure into their concerns doesn’t make them “iiars” or even “lss than honest.” How should one reply to that statement when it had already been pointed out that the Trust Fund is an enactment of Congressional legislation. It is the law. Yes, it is an accounting mechanism. It has nothing to do with political marking, what ever you may mean by that seemingly meaningless phrase.
Read the Social Security Act. Read your W2 form. Deductions labeled as FICA are “ear marked” by law to be sequestered from use as revenue for the general budget expenditures. The Trust Fund is the mechanism for keeping account of those funds. The Fund earns interest on those funds by lending them to the Treasury. Treasury Notes are the assets of the Fund. The only payments that can legally be made from that Trust Fund are for benefits to Social Security recipients. The entire purpose of the Social Security Act was to set aside a revenue stream, in flow from worker’s wages and employer’s contributions and out flow to beneficiaries who were those workers.
You belittle the entire purpose of the Social Security legislation and the program that results from that legal basis. How should your disingenuous manner be replied to? Why should comments that distort the truth, albeit with a pleasant smile and tone of voice, be addressed with courtesy? You are being dishonest or you are grossly ignorant in regards to the issue. The result is that your comments are met with derision. That is fair enough.
well, TStockman likes to say “echo chamber”
again and again… like an echo chamber
It seems he does not realize that “echo chamber” is an insult.
like calling someone a liar.
except that a person who tells lies is a liar. that’s just being honest.
but “echo chamber” is just a cute insult he read in the news… an echo chamber
of Peterson bought and paid for liars echoing the lie…
Dan and Dale,
Ever since Paul Ryan went around answering economic questions with a pretense that he couldn’t answer because his answer was too “wonish” for the rest of the world I have carefully avoided anything labeled “wonish”. Often people resort to obscuring fact with irrelevance via false wonish assumptions, parameters and weights. So what if you can prove the federal deficit needs addressing. What does that have to do with a discussion of retirement security? Bruce has said it well (in other words). If the country is economically secure, we can secure retirement. If retirement security must be robbed in an attempt secure the country economically, the country cannot be rendered economically sound. I suspect the truth is that the country going forward is relatively sound but pretending it is not is useful to put the kibosh on social programs. But we need to divert our attention from the non-concerns to the real concerns. Namely things like wages, workers empowerment, wealth transfer upward, etc. You know all those little ways workers security is secured for the 99% or sacrificed for the rich and powerful. (May I add worldwide?)
I have written two replies to CRFB’s reply to me.
One is “moderate” hoping to build on what might be an important are of agreement.
The other is not moderate, attempting to show the Lie in their response.
I don’t know how these will be delivered, or answered.
But I am going to at least moderate some of the language in the non moderate reply. Out of respect for those of our readers who really don’t like harsh language. As opposed to those of our readers who think they can get us to stop calling a lie a lie because it is such bad manners, you see.
agreed. but right now the attack is on Social Security. if we do not successfully defend it, we will not be successful in defending workers from the “real” concerns.