Happy 79th birthday coming up!!
For the last 79 years, Social Security has paid out every benefit owed to every eligible American, making it one of the most successful programs in American history. 67 percent of Americans are opposed to any cuts to Social Security.
These two sentences together do not really inform. The cuts that were made in 1983 were made in such a way that SS could continue to afford to pay every benefit owed.
Arne
I guess I don’t understand your two sentences.
One does not usually think of the 1983 “fix” as “cuts.” I think you may be referring to raising the retirement age from 65 to 67, which was indeed a cut and a bad idea. But there were other ways SS could continue to afford every benefit “owed.” A tiny bit higher tax increase would have done the job admirably.
My guess is that Congressmen… and perhaps the people… have no intuition about numbers whatsoever. They can understand “tax increase”… a horrible evil… but they can’t understand “a tenth of one percent.” Perhaps a lot of money when added up over 100 million people… but a tiny amount for each of those people to pay for their own “benefits”… that is, their own expected cost of retirement.
SS and California Teachers Retirement systems saved my sanity. My mom was able to live independently because of those two programs. Halalooya!!!!
Dale the FICA increase approved in 1983 was just about the right amount in that it returned Social Security to short term actuarial balance in exactly 10 years. In fact there is an argument that the rate after 1996 or so was too high and should have been calibrated on Northwest Plan lines to keep the Trust Fund steady around a 150 or so TF ratio rather than letting it baloon to its current level above 390. For one thing we wouldn’t even be having the debate about “paying back the Trust Fund” if that had been done. But it would have required a more complex fix in 1983 than the players were comfortable with. Instead by all reports the impulse was just to solve the problem over the 10 year window (which they did) and be able to claim to have addressed the problem ON AVERAGE over the 75 year window. Which until the early 90s projections also showed that they did. What wouldn’t have really made sense was to boost the FICA schedule as it was from 1984-1993. As opposed to planning a new series of modest adjustments, preferably on a permanent basis and in response to new projections, starting in the mid 1990s. Or basically Northwest Plan 1995.
Also it is a little blindered to say that the ‘tax on benefits’ instituted on upper income beneficiaries was NOT a “cut”. Because it certainly was and one highlighted by the fact that all such savings were and are rebated back to the Trust Funds.
On the other hand it would be reasonable to suggest that the best interests of Social Security long-run would have been to have foregone that “tax on benefits” in favor of a slightly higher FICA rate. I wouldn’t particularly agree but the logic would be consistent with a “no cuts” argument. But as it was and is the increase in retirement age meant a future ‘cut’ and the imposition of a tax on benefits meant a then current ‘cut’. It can’t be spun any other way.
It is also a little odd that you would try to blame the 1983 Congress for being adverse to a tax increase (“a horrible evil”) even as they raised payroll taxes by 2 percentage points over 10 years (or 16%) and imposed a tax on benefits on exactly the same income cohort that benefited from Reagan’s cuts to marginal rates. A more nuanced claim would be that Congress then and now (particularly but not exclusively Republican members) regarded tax increases on CAPITAL “a horrible evil” and managed to structure both of the actual tax increase proposals in the 1983 deal in a way that didn’t effect the interests of the 1% in any way. But that would require a more complicated narrative than the one you are presenting here.
I am going with dilbert dogbert on this note….
http://www.imdb.com/title/tt0107050/
I am a firm believer in analysis, but joy in 79 successful years is also warranted. I am a little creaky too, but good enough.
Bruce
as is getting to be usual… I agree with you 100%, but you find a way to disagree with me.
Try to understand that my head is not arranged the same way yours is. ALL communication is “shorthand”, and if you think you don’t agree with something I say, it can always be worked out. Or could be if people didn’t get so much pleasure out of being “right” while the other guy is “wrong.”
Dan
the link gave me a black screen and an invitation to “vote.” also a title: grumpy old men.
seems to be a bit of that going around here lately.
Could we have some explanation of why this plan is called the “Northwest Plan”? I Googled that and never found a description of an origin. Quite a few linking dead-ends.
The Northwest Plan has at its core a proposal by Oregonian Dale Coberly to address the actuarial gap by a sequence of FICA increases starting in the first year. At the time there was evidence that this could be overkill in the early years and yet not catch the full measure of the demographic challenge in the out years, which first point was made by then Washingtonian Bruce Webb and latter by fellow Northwesterner Arne Larson. Out of this emerged a modified plan based on ‘triggers’ that made the Plan flexible enough to handle deviations from the Intermediate Cost projections on which Dale’s core plan was based.
So given three contributers from the Pacific Northwest we ended up dubbing it “The Northwest Plan for a Real Social Security Fix”.
An early take by me with some links can be found at Daily Kos under the title: The NW Plan: How we Eliminate $15.4 trillion of SocSec Debt for $1.50/week
“http://www.dailykos.com/story/2009/06/01/737647/-The-NW-Plan-How-we-eliminate-15-4-trillion-of-Soc-Sec-debt-for-1-50-WEEK
The links from that post go back to earlier posts at Angry Bear from Spring 2009 which is when NW achieved its more or less final form (w/updates of numbers only in later versions).
As I understand it conceptually, the Trust Fund was intended to provide additional funds that would be necessary to meet the aggregate payouts needed for the “Baby Boom” generation. It looks like it is projected (under the intermediate-cost scenario projecting 2033 as the depletion date when incoming revenue will have to cover benefits) to come fairly close to doing that.
It also looks seems that under the the customary SSA optimistic or low-cost scenario, the fund holding a surplus over current needs will, for as far as we can see (2090), never be used up. As I recall from looking closely a few years ago, over the past 20 years or so actual results have usually been closer to the optimistic scenario than the intermediate scenario.
Also, it would be my understanding that when they say that only about 75 or 80% of benefits will be covered after the Trust Fund is used up, that is a projection of revenues that will be coming in thenceforward for a pay-as-you-go system. That seems especially dicey as projections go, because there are so many variables, including ones that can be politically determined, that will affect incomes and, accordingly, Social Security revenues.
If I were to stick my finger in the wind when everyone, even most conservatives and certainly businesses, are expressing concerns about income inequality and the effect it is having on aggregate demand, I am inclined to think there will be an upward trend in wages for some period of time. One state after another is making fairly dramatic increases in the minimum wage, and there will probably be a national one within a couple of years. That would imply higher payroll tax revenues from higher wages, and with the payout needs in 20 years being a more reliable prediction than the state of the economy, a likelihood that once again the optimistic scenario will be closer to reality than the intermediate one. A few strong economic years and we will see, as we did in the 90s and early 2000s, the Chicken Little date pushed back to later and later years.
The Social Security Trustees cannot, of course, stick their fingers in the wind to that extent, but policy makers should do it enough to make sure changes that might be proposed to take money away from people now or later aren’t premature.
Urban Legend
You could be right. I hope you are.
But I originally offered what Bruce has called the Northwest Plan simply to show that the Trustees projections amounted to in terms that real people could understand in terms of their own pay checks. As I remember the first way I calculated that was as an “average” increase of about twenty cents per week each year over the 75 year actuarial window. That seemed to sound a whole lot different than “5.4 Trillion Dollar Unfunded Deficit!!” which was the going rate at the time.
Some people who think of themselves as experts on Social Security told me it was impossible and did back of the envelope calculations to prove it wasn’t possible. I told them they were wrong and they called me rude.
Then, playing around with a spreadsheet I showed myself that a one tenth of one percent increase in the tax whenever the Trustees would otherwise have predicted “short term actuarial insolvency” resulted in no insolvency whatsoever, with the first one tenth of one percent increase (about eighty cents per week) due in about 2026.
Subsequent fiddling by the Trustees with their “assumptions” has gradually changed that to require the first installment to be due in 2017 to avoid any shortfall whatsoever by raising the tax that “one tenth percent…etc.”… still about eighty cents per week for each the boss and the worker, per year.
This isn’t good enough for some people. In their zeal to protect the worker from the full horror of an eighty cent per week per year increase in the tax, they are all calling for something else, from privatization to “scrap the cap.” I am thinking of calling “my” plan “the FDR plan”… because it is the only one that actually preserves the “worker pays” design that FDR insisted upon… to the point of revising his own Committee’s proposal.
But I wandered. What I was trying to say is that My point was not to make predictions, but simply to show what the Trustees predictions amounted to: a cost increase too small for sane people to notice. I… and Roosevelt… failed to reckon with the fact that people are not sane.
I cannot imagine a scenario where SS will not be the best way workers have to save “enough” for their retirement… whether that is low cost, high cost, or the intermediate cost that drives all the headlines. But the Petersons have sold us “doomsday,” and all the people seem to love that more than common sense.
Oh,
moving the first installment up about ten years does not change the number of installments…. the tax increase would still be needed for only about one year out of four on average over the next eighty years… but it does frontload the installments so that most of those increases would fall over the next twenty years
This is not unfair, but I have given up trying to explain it to people who think eighty cents is too much to pay for their longer life expectancy and are still mad about their sister getting the biggest piece of the burfday cake.
Urban l agree with you on almost everthing. But (and there is always a ‘but’) would add some fact checks.
in 2033 the oldest Boomers (1946) will be 87 and so statistically Shuffling Off to Buffalo (and Points Beyond). but trailing edge Boomers (1964) will be 69 and so more entering than departing the system. and projections in 1997 that had Depletion in 2029 made this a pretty odd kind of ‘pre-funding’. The truth is that the more informed participants in the 1983 deal (Ball, Myers, perhaps Moynihan and Dole) always knew there would be an inflection point in the 2010s.
As to Low Cost there was a time when actually numbers were coming in more in line with it than Intermediate Cost/ and back then I was a Low Cost champion. unfortunately economic performance reverted to the Intermediate cost projection and then some in the course of the 2007-8 recession. so much so that by the 2013 Report Low Cost did not project solvency. Only to have it restored under LC with the 2014.
As far as an uptrend in wages I have two things to say:
One. It would have the positive effects for solvency you suggest.
Two. From your lips to God’s Ear
Well
here’s that many a slip betwixt the lip and… god’s ear.
everybody i every heard of or from assumed the 1983 “fix” “fixed” the baby boom problem. and i find it hard to believe that Bob Ball did not know the actuarial reasons for why that was likely.
I think where Bruce gets his version is that he heard someone say that Ball said…. “oh, no, that’s not what we meant at all.” Now I am prepared to believe that Ball said that, but that’s not what he meant at all. Unfortunately not being a mind reader or a historian I can’t tell you what Ball had in mind. Very likely he may have meant that was not our “original” or “defining” purpose. On the other hand the whole deal was done by committee, and anyone who has ever worked with a committee knows that at any one time no one knows what the “reasons” of the other members are. And in this case, my understanding… based on reading… was that very few of the members were actually involved in the final decision.
Going from there to conclude that because the 1983 fix did not pay for all the benefits for the entire life of every boomer and therefore it “would have been a pretty odd kind of pre funding…” probably hasn’t had much experience with “pre-funding” anything over 75 years.. .which seems a pretty dubious prospect on its face.
But, oddly enough, the money from the Trust Fund began paying for part of the boomers benefits at just about the time the boomers began to retire. And is projected to continue to do so for about another twenty five years… just long enough to reduce the “extra” burden on the post- boomers, and possibly… i haven’t done the math… to roughly have succeded in having the boomers pay for their own “extra”…. beyond pay as you go… costs.
Possibly Bruce has better evidence that this is not the case, but it hardly seems worth the candle to me.
i think where Bruce
that last meaningless linelet showed up after i clicked “post comment.”
please ignore it wit
well, for some reason my computer is not showing me what is going to show up when it gets printed after i do my clicking.
http://www.forbes.com/sites/nextavenue/2014/08/07/the-real-social-security-crisis-service/
In short, y’all, don’t celebrate too soon. Just recently, SSA published a plan to gradually eliminate all public services except those that can be provided via the internet and a few teleconferencing interviews provided for claimants who have filed disability hearings and other appeals. So, you will just have to get any information you need from an online application instead of real live human beings down at your SSA office.
If you’ve been to an SSA office recently, you will already have experienced the long delays waiting for an interview or other problems that result from staffing and budget cuts. Rather than come right out and announce that they intend to abolish SSA as it now exists, top staff have recently published a vision statement for SSA as it will be in 2025–all online, no public contact offices, all the time.
So, if you have any issues you need to discuss with a claims or service representative in your local office, do it now. Otherwise, you can wait for the inevitable privatized local Government Benefits Office where you can pay, say, $50.00 to file your retirement claim. Pretty much online all the time too, but at least you can pay to talk to a real person. As you see, I am not a happy camper. But, you know, I have always been altogether too idealistic when it comes to public service. NancyO
‘As I understand it conceptually, the Trust Fund was intended to provide additional funds that would be necessary to meet the aggregate payouts needed for the “Baby Boom” generation. ‘
I would just note that this intention hijacks the function of providing a buffer for shorter term economic variations, recessions and bubbles.
If you look at the 1984 report, you can see that the trustees knew right away that the 1983 changes did not quite live up to a 75 year fix, much less a permanent one.
(And, yes, the cuts I was referring to are the Normal Retirement Age increases. I would not be surprised if 67 percent of Americans would not be able to identify an increase in NRA as a benefit cut in 1983 or in 2023, but it was/would be a cut)
“I think where Bruce gets his version is that he heard someone say that Ball said…. “oh, no, that’s not what we meant at all.” Now I am prepared to believe that Ball said that, but that’s not what he meant at all. Unfortunately not being a mind reader or a historian I can’t tell you what Ball had in mind.”
Dale this is what drives me crazy, you won’t speculate on what Bob Ball had in mind (though blithely assert “that’s not what he meant at all”) even as you just do your mind reading trick on me “I think where Bruce gets his version” and double down by claiming I am lazily just repeating something I heard. Well funny that is not where I got my information.
It turns out that Bob Ball was well in the process of completing his autobiography and actually had the very long chapter on the Greenspan Commission far enough along that his editor was able to have it in camera ready form. And because I knew people who knew Bob personally and had expressed views on the matter I was one of 25 people or so that got an advance copy of that chapter which was called “The Greenspan Commission: What Really Happened”. Now because it was pre-publication I wasn’t free to cite it openly but did draw upon it to make some posts and comments.
Well in the course of time this particular chapter of Ball’s autobiography did get published in independent form and is available for purchase, for example at this link by the publisher The Century Foundation:
http://tcf.org/bookstore/detail/the-greenspan-commission
So no I didn’t get my impression of Bob Ball second hand by half understanding what I “heard someone say”, instead I got it first hand in the voice and via the pen of Bob Ball. And you can too if you buy your own copy. If you would like a sense of what Ball was writing you could start with this excerpt from the book’s webpage:
“Ball wrote this account as a cautionary antidote to revisionist history. He warns: “To suggest that the Greenspan Commission provides a model for resolving questions . . . would be laughable if it were not so dangerous. . . . A commission is no substitute for principled commitment. Above all, we should not allow ourselves to fall into the trap of expecting miracles from another Greenspan Commission—by deluding ourselves into believing, mistakenly, that the first one was a great success.”
If I was myself a mind-reader I would likely assert that Dale was himself one of those who mistakenly thought that the Greenspan Commission was a great success along the traditional lines of “Tip’nRonnie made a deal for Boomer Retirement”. To which Dale would no doubt (and with no sense of self-conscious irony) object that I was creating a strawman and that I had no business speaking for him.
Well two can play ‘tu quoque’ my friend. Which trap you might avoid by actually reading the source material for yourself. Like I did. Back in 2009 pre-publication. Before writing a series of posts on “The myth of pre-funding”, including some at Angry Bear. e.g.
Why the ‘Prefunding Boomer Retirement’ Myth is Dangerous http://angrybearblog.strategydemo.com/2009/02/why-prefunding-boomer-retirement-myth.html
Which carefully DOES NOT CITE Bob Ball’s as yet unpublished chapter but was informed by it. A tiny piece of my original post:
“The real goal of the 1983 Commission had nothing to do with the specific timing of Boomer retirement. ”
And I stand by it. For reasons outlined in the full April 2009 post.
http://canonicalthoughts.blogspot.com/
Social Security is probably the most successful program in Federal government history. Because of it the poverty rate for the elderly has gone from the highest to the lowest of any group, and now stands below 10%.
Bruce
and here is where I get my version:
Nancy J. Altman was there. She was assistant to Alan Greenspan who was the chair of the commission that produced the 1983 Social Security amendments.
This is what she said (page 242 “The Battle For Social Security,” 2005 John Wiley and Sons):
“Greenspan asked his assistant to have lunch with Ball and see if she could get a reading of where the Democrats stood. She reported back…
Ball knew that the 1990s would be a favorable time for Social Security. The generation of workers born during the Depression would be reaching retirement. That had been the era of low birth rates. At the same time, the post-World War II baby boom generration would be at the peak of its productivity and earnings potential But getting through the next eight years to the flush 1990s, especially if the rocky economy of the 1970s continued, would be a challenge.
Greenspan wanted to give the commission the best possible opportunity for compromise; Ball wanted to avoid another round of financing shortfall. The way to achieve both goals was through the use of very pessimistic assumptions.,,,
Both wanted to do more. Although the 1990’s would be well financed, the first baby boomers, those born in 1946, would turn 65 in 2011. The two men wanted to make sure that the program was in balance in the next century. Here they reached easy agreement, because the benchmark for solvency was well defined.
…The actuaries make three sets of assumptions: a high-cost set, a low cost set, and an intermediate set…
Policy makers routinely judged solvency based on the intermediate set of assumptions. If the commission could put Social Security in long-range actuarial balance for the entire 75 year valuation period, the program would be in balance into the late 2050’s. By that time, the youngest boomers would be in their nineties. Even if the actuaries’ projections proved optimistic, Congress would have decades to make midcourse corrections…
On April 20, 1983, President Reagan signed the …amendments into law…
The next trustees’ report, issued on June 27, 1983, announced that Social Security “will be able to pay benefits on time” for the full 75 year period, through 2057 — the year in which the youngest baby boomers… would turn 93.”
Now, it seems to me that Altman is very clear that paying for the boomers was definitely a major intention of Ball.
I am not sure that Bruce’s version is quite so clear.
I am reasonably sure that this will not resolve our disagreement. People tend to interpret “facts” according to what they want to believe.
I have a hard time understanding how when I explicitly remind my readers that I can’t read minds, my speculation about possible motives or misunderstanding about motives becomes “blithely asserting.”
But there you have it.
Meanwhile, I will blithely assert that playing “I have secret information which shows that everything you believe and everyone has always believed is wrong..” does not do the cause of saving Social Security any good.
and one needs to beware of giant leaps of logic such as concluding that the following quote from Ball in any way contradicts the proposition that the 1983 amendments were “intended” to help pay for the Boomer retirement.
““To suggest that the Greenspan Commission provides a model for resolving questions . . . would be laughable if it were not so dangerous. . . . A commission is no substitute for principled commitment. Above all, we should not allow ourselves to fall into the trap of expecting miracles from another Greenspan Commission—by deluding ourselves into believing, mistakenly, that the first one was a great success.”
or that pulling up depletion dates from the 2014 Report, or even the 1997 Report sheds any light on what the commission “intended” in 1983.
Moreover Ball’s expectation of a 2010 need for “correction” came after the compromises that got the amendments passed. It does not alter what the commission’s “intentions” were… and that 1983 Report does suggest that their intentions of funding the Boomer retiremetn were met at least for a time.
As one who expects “low cost”, it seems odd to me that Bruce insists upon “intermediate” cost projections, even as they change from year to year.
I think it is more reasonable to suppose that Altman, who was there, in a position to hear what Ball was saying, is right that the amendments were “intended” to fund the boomer retirement.
Since that is in fact what they have done… to a reasonable approximation and with a reasonable expectation of tiny “course corrections” over the subsequent fifty years… I think reasonable people might, in courtesy if nothing else… just assume that that’s what they meant it to do.
Such a fun philosophical argument.
My current elevation is 235 feet. At the ocean I am at zero. When I take the trip to the coast, I have no intention to increase my elevation to over 1500. It is just what I need to do to get there.
Unless I choose to describe it differently. 🙂
A look at chart F of the 1983 summary shows that the trustees knew that even their numbers showed getting through 75 years, that they would running into trouble again if nothing was done in between.
The problem with SS is that it has automatic benefit (cost) increases without automatic revenue increases. In 1983 they predicted a 65 year old man in 2060 would live another 17.9 years. Now they predict it will be another 21.3 years. SS needs to adjust, but the mechanism to make those adjustments is for Congress to act.
The pronouncement by Reagan was that SS was taken care of, but halfway through, it is now obvious that they had not come up with a 75 year autopilot, much less a perpetual one.
Arne:
It is not that simple. In your statement you talked about productivity gains to Labor not being there:
“The economic data available when I was in school was pre-Reagan. Median wages were keeping up with productivity. So, my personal data did not look like median data until 20 years after median data had started to change. I suspect this made it harder for me to notice that the median worker stopped keeping up with productivity 30 years ago.” This is one factor.
Another factor is the rise of jobs which do not pay as much as what automotive manufacturing jobs. We went from manufacturing oriented economy to a service oriented economy.
Finally, we are seeing a drop in Participation Rate since March 2000 when it hit 67.3%. I think much of that was due to ramp up for Y2K. If you follow at PR, in 1948 Men’s PR was in the 80-prcentile while women were 36 -percentile. Men dropped to the 75-percentile and women climbed to 60-percentile. More people paying into it; but, a lower percentage of the population. Maintaining a higher percentage of the population employed is important.
Everyone is fixated on Baby-boomers when we should be looking at the Millennials.
Arne
this is what the 1984 summary of the Trustees Report says
In the long range, this year’s projections
indicate that the program has an average actu-
arial deficit of 0.06 percent of taxable payroll
over the next 75 years, based on the
intermediate-B assumptions. This represents a
slight decline from the 0.02-percent surplus
shown in 1983, due mainly to projections of
more disability awards. The program remains
in close actuarial balance, however, based on
the intermediate-B assumptions, because the
estimated average income rate over the next
75 years equals 99.6 percent of the estimated
cial difficulties in the near future.
I don’t think you are trying to mislead us, but apparently you are strictly wrong about the 1983 Projections, and seem to have some trouble with the idea of “significant” about the 1984 projections… six hundredths of a percent over 75 years does not invalidate the “fixes SS for the Boomer Generation.”
and “perpetual autopilot” was NEVER an intention of the commission.
As far as I know, only coberly has proposed something like a perpetual autopilot: tax increase or decrease based on “short term actuarial solvency.”
you may be having a fun philosophical discussion, but that is exactly what i am trying to avoid here. just the facts ma’am.
Arne
A look at chart F in the 1983 summary shows that the Trustees thought they had fixed the baby boom problem… the surplus built up before 2020 more or less exactly matching the “deficit” from 2020 to 2057, by which time the Boomers would be actuarily dead.
You may have honest reasons for changing the point of the “debate” without bothering to mention that that’s what you are doing. but it hits my ear like one of the things I might expect from the Petersons.
NO one… least of all me… has ever argued that the 1983 fix fixed Social Security forever. A look at chart F shows that about a 4% increase in the tax would be needed after 2057. That date has now been moved up to about 2033. This does not represent a catastrophic failure of the commission, nor does it represent an injustice to those folk after even 2033 whose increased payroll tax will in effect be paying for their own retirement… however confused they might let themselves get about “pay as yo go.”
And… thanks for pointing it out… it appears that Ball’s concern about a need for “an inflection point in the 2010’s” very likely was more about what would happen after 2057 than a need to correct for the “failure” of the commission to intend to fix SS for the Boomers. Here I… even I… have been arguing for an “inflection point” in the 2010’s to ease the transition to the higher tax rate likely needed after, now, 2033.
But some folks seem to think we have plenty of time to wait and see.
I do not know what secret knowledge you and Bruce have, but based on what you have shown here, none of it has any logical connection with what the commission “really” intended.
coberly,
When I write two posts in a row, you are expected to understand that they may need to be read separately. Since you have trouble with the one, let me be clear. You cannot determine the intent of the 1983 changes by one of the results when there are multiple results. Therefore the discussion of the intent is not a factual discussion, it is you and Bruce guessing.
Bruce
gives us two citations to support his argument. one is to a book review which gives us the quote he gave, which i have shown logically has nothing to do with the question of the intent of the commission, or the amendments as enacted. it expresses Ball’s dislike of the commission as a way of dealing with the problem.
Something I entirely agree with, especially as it was written at the time of the Bush commission to save Social Security by destroying it.
“only coberly has proposed something like a perpetual autopilot”
Wow.
“You may have honest reasons for changing the point of the “debate” ”
Wow, again. coberly gets to control the discussion on any post having to do with SS, even if it is not his post or even if he was not the first one to comment.
coberly decides
Arne
that is just stupid. I am not trying to control the debate. I was only pointing out that you shifted the point of your comment without making clear to readers that is what you were doing. this changing the subject in midstream is the kind of thing the Petersons do to confuse people and make them think they have made a point that they haven’t.
as for “only coberly”… you left of the “as far as i know..” if you know of another plan with a perpetual autopilot, please share your knowledge.
The second citation Bruce gives us to support his argumetn was… to himself.
Well, that might be okay. His 2009 AB article says many interesting things.
The big trouble I have with it is that it calls the “myth” of the intention of the 1983 fix is that it allows the bad guys to say “the government stole the money intended for the boomers.”
No doubt it is true that the bad guys say that. But generally I don’t think it’s a good idea to stop telling the truth because the bad guys are lying about it.
No one stole the trust fund…. even if Bruce thinks that the Trust Fund isn’t really there to be stolen until it reaches it’s target ratio of 100% of “next year’s benefits.”
The money is there from the first dollar, available to be borrowed… and to eventually be repaid to do what it was “saved” for in the first place.
I am sorry this has descended into a personal fight. Social Security deserves better.
Arne
I was not guessing. I quoted heavily from someone who was there, in a position to know what Ball was saying.
In general I don’t think it is wise to assume that the other guy has a responsibility to know when you have changed the terms of the debate.
The only “two posts in a row” that I see are the ones about “philosophical discussion,” which is a philosophical discussion, and the one about chart F in the 1983 Report summary… which no one but a Talmudic scholar would “recognize” was a change in subject from your earlier comment about the 1984 Report summary, or that “running into trouble” was not a continuation of the argument that the ’84 Report showed “the trustees knew right away…” or that either of these comments was not intended to be an assertion that the 1983 fix “was not intended to fund the baby boomers”
I think you are floundering.
I am saying it does not matter what the intent was.
The rate at which they projected the trust fund would drop indicated a need for further changes well before 2060.
(Of course, I am making a judgement call regarding timing which is consistant with asserting that by 1983 they had waited too long.)
Dale,
Perhaps I am unreasonably disapointed that you are unaware that I posted the analysis of my own plan with triggers about a month before Bruce unveiled his Northwest Plan version.
Arne
I did not know that. Could you send a link?
To be honest I did not know that you and Bruce had consulted on the “northwest plan.” I thought it was entirely the product of my playing around with a spread sheet after i noticed that the average tax increase that would be needed over the 75 year window was about 20 cents per week per year.
When Bruce introduced me to NASI as “co-author” of the plan, I was surprised, but actually grateful because I knew that on my own I would never have been able to introduce it to anyone with any credibility whatsoever.
As Ihave tried to explain from time to time I have no people skills whatsoever. I am just someone who can occasionally see to the bottom of a problem that eludes the experts. After awhile I get tired of arguing with people, experts or not, who haven’t bothered to think carefully even after they have been given good reasons to do so. And if they are rude to me I tend to be rude back.
http://angrybearblog.strategydemo.com/2009/05/time-for-clarity-income-vs-cost-six.html
“Over the next couple of days I’ll be rolling out what I am tentatively calling the Northwest Plan for Fixing Social Security, ‘Northwest’ because the three current contributers happen to live in the Pacific Northwest. But before doing so I want to lay out some of the conceptual differences underlying various discussions of Social Security Crisis. ”
Christ Arne and I not only CONSULTED on Northwest I NAMED it. Unless you have some earlier reference. In fact Arne and I had to drag you to the ‘trigger’ concept away from your fairly simple minded insistance of just starting the phased in increase in the first year and not varying it thereafter. If it was all you we would have called it the “Coberly Plan” and I wouldn’t have even allowed the NASI people ot attach my name. In point of fact I had to insist that YOUR name be given priority, because originally they were going to credit the whole thing to me. Because just about all of it originally appeared in posts by me at The BruceWeb and Angry Bear.
Unfortunately it seems that most of the Comment threads on the Angry Bear Social Security Series of 2008-9 were lost, because that is where you and I and then Arne fought all this out in detail. But no it wasn’t all you.
Which might be shown by this early post in that Series titled:
Soc Sec XI: Seven good questions by Reader Arne from May 2008
http://angrybearblog.strategydemo.com/2008/05/soc-sec-xi-halo-ate-my-homework.html
Which drew this response by me which may have been the first suggestion of an actual ‘trigger’:
“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.”
Bruce
this is unseemly. I don’t give a damn who gets credit for the northwest plan. you certainly named it and brought it, and me, to the attention of NASI.
I remember being a little surprised at the time that I had “collaborators” but I thought the point was to put before the people the information that they could pay for their own Social Security forever with a tiny, gradual raise in the tax.
I am still perfectly willing to recommend you for that statue on the mall. But I get worried when you and Arne say things that undermine the concept.
Bruce
I have looked at your old posts. While it is clear that you had been doing a lot of work on Social Security, I don’t see anything there that clearly anticipates a gradual tax increase, much less one triggered to the short term actuarial insolvency projection. I don’t even see anything that clearly points at the smallness of the tax increase that would be required even if introduced all at once at “Trust Fund Depletion.”
This is not to say you weren’t thinking along those lines. My own thinking was evolving… from “fifteen dollars a week” all at once…. to 20 cents a week per year “on average”… to “one tenth of one percent” (eighty cents per week) per year. But I don’t see anything that looks like a “trigger” until I look at my own spreadsheets from early 2009, where as far as i remember the concept emerged quite naturally from my saying to myself.. “what if…?”
Again, this is far, far from denying your role, or even Arne’s roll, though I had never heard of Arne until I saw his name next to mine as co-author in the NASI note. But please don’t say that you had to drag me to the concept “away from my simple minded insistence…” That is insulting and not true, and not borne out by what evidence exists in the record.
If you want to claim credit for putting the thing at the feet of NASI and for championing it over the years, I am more than willing to grant that the “idea” occurred to you and was developed by you and Arne independently with my modest input merely being the spreadsheet that showed clearly exactly how it would work according to the Trustees own projections.
But I don’t even need to claim credit for that. I’d be happy if you and Arne would just continue to champion your idea and not undercut it with “well maybe… we could just raise the retirement age a little”, or “tax the rich a little”, or hope for “low cost” a little, or agree with Blahous that SS “really” affects the deficit…
There is a war going on. We are losing it badly. It doesn’t help for us to be fighting among ourselves.
I was actually surprised that Bruce did not ask before attaching my name to the Northwest plan.
http://adastra1960.blogspot.com/2009_04_01_archive.html
Here is a post to my attempt to show how tax rates could be raised gradually to maintain scheduled benefits. It is based on raising the rates enough to limit how fast the trust fund was drawn down. Not surprisingly, the results are (were at the time) essentially the same as the increase by .1 percent as needed trigger (since both target maintaining the TF at 100 in the long run).
My search through old posts today was to see if my memory matched the record.
http://angrybearblog.strategydemo.com/2009/04/time-to-move-beyond-nothing-on-social.html
which came a few days after my post on my own blog, was pivotal in my thinking, but I could not find the precursor and the comments are gone, so it does not jog my memory as much as I might like. It does contain references to both Arne and coberly. That tells me that I should have memories of coberly before Bruce presented the NW Plan, but I confess that I don’t.
“if you and Arne would just continue to champion your idea and not undercut it with ”
My idea is that SS is a program by workers for workers that insures retirement income. It is Pay As You GO because it works and because nothing else was going to in 1935. I believe that most workers don’t really understand SS, but that there are people who want to destroy it.
I do not believe that the precise numerical details are critical in order to maintain SS as by workers/for workers, but I do believe that changing it too much is an invitation to destroy it. Thus, it needs to stay PAYGO, stay with capped payroll taxes, stay with COLAS, stay with …, stay with numerical details that can be described as adjustments rather than as “reform”.
I believe that allowing the TF to be depleted would be a disaster that would detroy SS even though I understand that the numbers show that beneficiaries would still be “better off” than beneficiaries today. Thus, we need to make changes.
You cannot make changes unless you can get enough people to agree. If we can get more people to agree by incorporating ideas that remain true to a PAYGO program by workers for workers, then we should look favorably on those ideas because it will save SS. If incorporating ideas would open the door to destroying SS, then we need to reject them even if the idea is favored by people who think they are supporting SS.
I will continue to chamion my idea, but I will allow my idea to change as needed to get enough agreement to become one that can actually save SS.
Arne thanks for that AB link to my post from April 2009. Because it does identify the pivot point at which there were three plans: Bruce’s “Nothing”, Coberly’s and Arne’s. Which I might summarize as “Not yet” vs “Right now – and take it off the table” vs Arne’s more nuanced plan to key increases to maintain a 100 TF Ratio. Which ultimately got labeled as ‘Triggers’.
As to why I asked that Arne be added to Northwest, well people in DC were poised to reference a plan I had dubbed ‘Northwest’ under my name alone. This would have been horribly unfair to Coberly (because NW was largely me abandoning ‘Nothing’ in favor of a Coberly-centric plan) but also I thought unfair to Arne who had cut the difference between my “Not Yet” and Coberly’s “Now” to suggest an adjustable schedule of FICA adjustments dependent on actual failure of SocSecs actuarial test for solvency. And I didn’t have the time or maybe even the means to run this credit by Arne, because the NASI piece was essentially going to print. So Northwest got cited in the order Coberly, Webb, Larson.
And Dale I have admitted over and over that your ideas formed the core of what became know as Northwest. And in fact conceded that me accepting Northwest meant abandoning my own plan of “Nothing” in favor of a plan that had gradual increases at its core. I did so with some reservations, but recognized that you had moved off your initial insistence on immediate action in favor of the kind of contingency introduced mostly by Arne. But you are insisting that the only thing of importance is your core concept and no the move to Triggers.
Which just evokes my favorite quote: “Everything is simple if you ignore the complexities”. Which you seem to have done in your mental reconstruction of NW. Instead it emerged in Spring 2009 at Angry Bear having some roots at the BruceWeb and Ad Astra.
Now it may be that Arne wasn’t fully aware of Dale or Dale of Arne before both appeared in comment threads in the early posts of the Angry Beat Social Security Series. Seems to me that I had encountered both of you in places like DeLong and MaxSpeak. But there is no question that there was cross fertilization of ALL our ideas and plans here at Angry Bear. And that the NW Plan was forged out of that.
Now it is reasonably fair for Dale to see NW as ‘Coberly Modified’. But as he points out his version wasn’t getting any traction anywhere before some DC people picked up the discussion at Angry Bear and the BruceWeb. And it is certainly true that NW was NOT just a Coberly work product. Leaving open the question of allocating credit.
As to precursors.
I suggest the May 2008 Angry Bear post which appeared under the title SocSec XI: Seven Good Questions by Reader Arne was the point when I openly acknowledged Arne’s important contribution and was a full 11 months in advance of Arne’s April 2009 post at Ad Astra. And since Dale was omnipresent in the comment threads of the entirety of that original series of posts that ultimately got dubbed ‘The Angry Bear Social Security Series” (46 posts) I find it odd that he didn’t recognize Arne or vice versa.
But certainly Arne changed my thinking on the whole subject with his “Seven Good Questions”. As did Dale with his persistent insistence on his preferred solution at that same point in time. Which is why I see the whole effort as a synergistic collaboration that evolved over the course of 2008-9.
On the other hand it isn’t much concern to me in 2014 if Dale doesn’t remember Arne or Arne remember Dale as NW came to fruition. All that does is make me the synthesist, coordinator, and publicist.
“Le Nord-Ouest Ces’t Moi”
Well, people remember things differently. What a surprise.
And they construe things differently. Again, who knew?
I read the posts Bruce refers to and I don’t see anything that hits me in the eye as a “triggered” plan. I concede after reading Arne’s post on his own blog that he was at least approaching the concept. But clarity counts. Or ought to count.
I also very much concede that Bruce works harder than I do, and I have always been willing to grant him his claim to “the Northwest Plan”. (though i certainly don’t remember “consulting” with anyone about it.)
But I get irritated when he says that he and Arne had to drag me away from my simple minded insistence on an immediate fix.
But here is the bottom line: for all Bruce’s work, and all my “clarity,” and all of Arne’s actually superior understanding (compared to most people) of the Social Security “problem” none of us has made a damn bit of difference to the understanding of the people, or the politicians, or the press.
As far as I can tell from Arne’s comment immediately above, he thinks that an eighty cents per week increase in the tax might be “too much”… so he proposes a compromise: “forty cent tax increase and granny gets to work an extra year.” While Bruce seems to accept that eighty cents per week will solve the problem, he gets “sick of hearing it” and has wandered back into “lets wait for low cost to save us.”
I cannot understand why people who claim credit for a “plan” abandon it because they think someone else will use it as an excuse to kill Social Security (they don’t need an excuse) or just because it’s “rude” to insist upon it and hurt the feelings of, or just bore, those who have their own favorite plan.
I really want to just quit. The argument is not fun. But I hate to run out on all those future grannies just because the fight is harder than I thought it ought to be.
oh, for what it’s worth… the new projections make “triggered” moot.
to keep SS from ANY short term actuarial insolvency the one tenth of one percent per year increases would have to begin essentially immediately and continue for essentially the next twenty years.
this is not an unfair burden on anyone, but given the way people think, it will be hard to convince them of that. It’s still eighty cents per week per year to pay for your eventual longer retirement at a benefit level you won’t regard as miserable. You won’t notice the eighty cents, even if your wages do not go up the eight dollars per week per year as projected. and of course if your wages go up more than that, the increase in the tax rate will not be needed.
despite my forced contribution to “northwest” dragged by Bruce and Arne from my simple minded … I am not married to any particular schedule or rate of tax increases. I, first, only SHOW what the Trustees Projections mean in terms that a worker can understand. And I DO insist that the safest way people have to save for at least “enough” to retire on is to pay for it themselves, not rely on “the rich” or the tooth fairy, or even “the economy” (which is the best solution for SS, but NOT one you can RELY on.) I think I’ll call it the FDR plan.
Arne
thanks for the reply and the link. I see what you were getting at. So I will concede that you also had a triggered plan at about the same time.
Also, I agree… as far as I can tell… with what you call your idea in the comment above.
Where we depart, I think, is that you seem willing to “compromise” before and reasonable or even honest proposal is put up by the enemy.
And you may have a very different idea about the relative “cost” of forty cents per week per year vs. “another year in the pen”… which is the way I view raising the retiremetn age.
We ought to be friends. But I will remain quite fierce about some things.