A new report on SS from CBO is out today. Lots of information.
-If nothing gets done with SS, then in 2030 benefits get cut by 29%. SSA has this as 21% in 2034. A significant gap.
-CBO uses a chart. It appears that in 2027 the TF ratio falls below 1. We are in the ten-year solvency window.
-The Immediate and Permanent tax increase required to address the 75 year horizon is now 4.68% of taxable payroll. That’s about double what SSA says. The CBO estimate for the I&P tax required is $300B in 2017.
Readers should be warned that Krasting is reliably catastrophically wrong about the “bombshell’s” he relays to us.
Krasting did not like CBO reports when they were more optimistic than SS Trustees… the official body charged with reporting SS finances and projecting its future finances. but since CBO got a new head and its projections became more pessimistic than the official projections, he can’t get enough of them.
The CBO” projections are not meaningfully different from the Trustees… just wiggle a guessed parameter or two a tenth of a percent and you can go from gloom to doom in a few milliseconds of computer time.
but, for instance, if one tenth of one percent increase in the payroll tax each year from 2018 to 2028 can eliminate Trust Fund depletion entirely over that time (you’d need to raise the tax a few more tenths of a percent over the rest of the century to eliminate the projected actuarial deficit forever), using Trustees projections , it would be reasonable to guess that 29/21 of one tenth of a percent per year would eliminate the shortfall projected by CBO. this would mean that instead of an extra dollar per week increase in the payroll tax, it would take 29/21 of a dollar or $1.38 per week. This is NOT significant.
Krasting has no idea what “significant” means. He’s thinking of “significant digits” which has no bearing on the significance of the increase to the people who have to pay it. We’d be talking about an extra 38 cents out of a thousand dollar a week salary.
Moreover, in the absence of any details about what assumptions are made in the projections, how reliable they are, and the timing at which the cost increases occur, it is impossible even for me to give you any meaningful analysis of what the effect of the difference would be.
Krasting is in love with “immediate and permanent”… which is about the way he stops his car at a railroad crossing. None of the “gradual” stuff for him. In fact, proven fact, the Trustees projected shortfall (and “immediate and permanent” fix) can be met with the one tenth of one percent per year fix. Very likely so can the CBO projection, but as I said, i haven’t seen the detailed projections, so it is impossible to give a detailed analysis.
And please please try to remember that that extra dollar, or dollar and a half, a week buys you twenty years or more of retirement, and a lifetime of not having to worry about it. Precious.
was walking home one day in July after a hot day at the trading desk.
he saw that some little neighborhood girls had set up a lemonade stand.
“LEMONADE 5 cents”
cute, he said to himself.
that evening mom and dad had a talk with the little girls about the cost of lemons and ice and all that. so next day the girls changed their sign
LEMONADE TEN cents.
Walking home Krasting saw the new sign. “oh my god” he said, ”
the price has gone up 100%!!!”
so he ran all the way back downtown and put out a general message on the company teletype!
“BOMBSHELL!!
“PRICES DOUBLE”
“THE SKY IS FALLING”
“WE’RE ALL GOING TO DIE.”
“Prices of lemonade are doubling at the rare of 100 per cent per day. At this rate the price of lemonade will be 50 million dollars in just one month!”
I [not Krasting here] am sorry to say that this is actually a fair representation of Krastings comments, and thinking, here on Angry Bear over the past ten years. stay tuned for a report from across the aisle.
Coberly – Have you lost it? I provide a link to a report from CBO and you blame me because you don’t like the CBO results? Shoot the messenger?
You say:
Readers should be warned that
Krasting is reliably catastrophically
wrong about the “bombshell’s” he
relays to us.
What am I wrong about Coberly? And the business about the lemonade – are you nuts? Do you re-read the stuff you put up before you hit the button? You should do that. Save yourself some embarrassment.
What Coberly is doing is steering readers away from his dream. He thinks he can “fix” SS with his dollar a week talk. That is not correct according to CBO.
I want to be clear that both CBO and SSA measure SS by the same metric. They use the Immediate and Permanent analysis as the yard stick to answer the question “”How is SS doing?” I&P is not a policy option, it is useful in comparing how various options influence SS over time. That Coberly does not understand this confirms that he simply does not understand how policy makers speak of/write about SS.
I have a question for Coberly. Use the I&P set by CBO in this report. How many years of 0.2% tax increases are necessary to become equal to CBO’s 4.68% I&P? The answer is about 30 years.
Coberly, do you really believe that a plan to raise taxes every year for the next 30 has a chance of being passed? Answer – Not a chance!
Do you really believe the Repubs have a plan to save SS as it is for citizens? Not a chance. Repubs under Ryan will disenfranchise US citizens and pass the saving on to the 1% or < than 1 million taxpayers in that bracket. As far as the permanent fix (75 year picture) to resolve the issue, you really do not know it will or will not fix it. Things change along the way and just about every 7-10 years the economy does change. The issue is not SS, and it is getting Labor back to work. SS as an issue which goes away as revenue increases. You are using today's issues with revenue to bring about a change in fundamental SS which is just not needed over 75 years much less 30 years. It is a decade at a time and it is not to apply a permanent fix but to stretch it out year by year as the TF (which Repubs do not want to pay back. The TF was never meant to be this big.) is drained.
Run – I don’t think the Republicans have the answers. I do not agree with the recent Johnson proposal. (it can’t be all cut’s, it has to be a mix – including revenue increases).
I have no clue about the 75 year horizon. No one does. But a ten-year horizon is viable and necessary in my opinion. I say to all of you again – BASED ON THE CBO REPORT SS IS NOW INSIDE THE 10 YEAR WINDOW OF SOLVENCY.
The option of “Do Nothing” is not an option any longer. The option of a gradual increase of taxes for 30 years is not an option either.
This CBO Director makes Elmendorf look like a sweetheart. He raises the specter of entitlement debt for both Medicare and Social Security. He raises the specter of running out of funds for SS within the next 10 years when the TF is secure till 2034 when by law, Congress must act to either increase funding through the GF or increase payroll taxes to whatever it needs to be in 2034 or 18 years out if that is still the TF cash out time or they can cut benefits then. Acting on behalf of Congress, this CBO Director is a fear monger.
“[The CBO is] pretending that when we get to 2034 all of a sudden we will borrow a whole bunch of money to pay benefits, when nobody is talking about doing that. There are a dozen of expansion bills that have been introduced and all of them bring in additional revenue,” Altman said. “No one has suggested [funding Social Security through deficit spending] since the 1940s. No one on either side of this debate.”
This is not a small accounting matter. Our national conception of debt distorts the political debate by creating a climate of fear around a potentially bankrupt nation. In particular, a imminent monster debt casts a shadow over progressive policy proposals. Just this week, Senate majority leader Mitch McConnell is floating a budget deal that would cut Social Security benefits and raise the Medicare age.
“CBO estimates are often used as a kind of gold standard in these debates, and when they generate these out-year debt projections that are in the stratosphere, you see a lot of scare mongering based on those numbers,” said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, and former chief economist and economic adviser to Vice President Joe Biden. “I interact with politicians all the time who use the threat of future deficits and debt to block not just a progressive agenda but basic investments in public goods like infrastructure and education,” Bernstein continued.
Altman said the CBO’s score “puts pressure on spending. It’s really the conservative agenda to starve the beast…. It’s an attempt to force a crisis where there is no crisis.”
The CBO hasn’t gone rogue here, but rather it’s acting under order of Congress. The CBO confirmed to The Nation that its scoring convention is based on Section 257(b)(1) of the Balanced Budget and Emergency Deficit Control Act of 1985, which states that “funding for entitlement authority is assumed to be adequate to make all payments required by those laws.”
To get at the real picture, Congress could and should simply ask the CBO to correctly score these numbers, or at least note that this score is not consistent with current law.
That would remove a central talking point for austerity hawks who seek deep cuts in federal spending. So maybe we shouldn’t hold our breath. In the meantime, we need to realize that there really is no debt crisis.
Instead of the 440% debt increase the CBO shows,
The methodology used by the CBO to create these projections exaggerates the federal government’s long-term debt projection by as much as 440 percent, creating a phony fiscal crisis where none exists.
In reality, data provided to The Nation by Stephen Goss, chief actuary of the Social Security Administration, shows that starting in 2032 the federal government’s debt held by the public is on track to rapidly decline as a share of GDP, bottoming out at 40 percent. This is in stark contrast to the CBO’s sharply rising debt-to-GDP ratio, which peaks at 176 percent in 2090.
Bkrasting,
Either you raise the FICA tax (a smidgen at a time — ask Coberly) to keep up with growing SS outgo — or we raise the income tax (a bit at a time — or grow the deficit) and cash the bonds.
If we do the latter, what are we supposed to do with many trillion dollars worth of bonds in the TF — why did we ever accumulate them all in the first place? Whatever.
Please keep in mind — which should not be difficult for people on an economics blog; it should be the very first thing on their minds — that historically, per capita income doubles twice as fast as population. If not twice as fast as retiring population — which will level off at one retiree to two employees after 2050.
I have spent the last ten years (more or less) answering Krastings nonsense. My projections are those of the SSA Trustees, the official agency responsible for making such projections. That math that shows the projected “actuarial deficit” can be filled one tenth of one percent per year at a time is solid, and attested to by experts in the field, including (not for publication) CRFB, no friend of Social Security.
I have no way of knowing what CBO’s projections actually mean, but even assuming they turn out to be correct, you MUST stop and think what you are paying for:
A dollar a week (in today’s dollar / wage level) while wages go up a projected ten dollars per week. In other words you are getting richer even while paying the higher tax. And at the end you get your money back with interest to pay for a retirement that will last an expected 20 years or more, with a real income that is about twice as high as today’s.
Even if times turn out to be even worse than CBO projects, you are going to need SS MORE THAN EVER. SS is simply a way to transfer some of your earnings today to a future when you will need the money far more than you do today. You can live without that new car, or extra trip to vegas. You can’t live with no money for food or rent when you are old.
Asking Krasting to do the math is like asking a chicken to explain Col Sanders secret recipe. But the rest of you can and should do the math… even the very approximate math that tells you reasonably closely the scale and importance of what we are talking about.
Krasting, change the 0,2% (two dollars a week, combined tax increase) to 0.3%… a dollar and a half each… and see how long it takes to reach solvency even under CBO predictions.
Now, you are talking about a dollar and a half a week against 20 thousand dollars a year for over twenty years of your life… when you won’t be able to work.
I don’t expect you to understand this. I wish I could persuade the other people here to understand it and explain it to their friends, and then all of us explain it to Congress in words even they can understand.
Back to the back: I cannot… will not… spend my time calculating every possibility Krasting or other half-a-thought person comes up with. Using the official projections, one tenth of one percent, each, per year increase in the payroll tax solves the problem for a price no sane person would even notice.
“are you nuts” this is Krasting’s way of saying “I don’t get it.” it’s a parable, Krasting.
“what coberly is doing is steering people away from his dream” i would have thought coberly would be the last person to steer people “away” from his dream. but when you can’t tell up from down, these things can get confusing to you.
“this is not correct according to CBO” actually, CBO does not address the dollar a week option. it would take the wind out of their sails.
“both CBO and SSA measure by the same metric… “immediate and permanent”… it is a yard stick not a policy option” precisely. then why does Krasting insist upon it as a policiy option? The “yard stick” can easily be shown to be mathematically the same as “so many dollars per week per year gradual raise in the tax.” the exact number of dollars or years might vary according to the predictions, but they WON’T VARY MUCH. You can scare people who are not numerate with percents that might differ from each other by “two hundred percent!” but when you find out that two hundred percent of one tenth of a percent is two tenths of a percent… or the difference between one dollar and two dollars out of a thousand dollars, you should be less scared. unless you are a Krasting “the sky is falling” chicken with his head cut off. no wait, how could a chicken with his head cut off be yelling… or thinking?
“Coberly… do you really believe…? Answer, not a chance!” well, actually I do really believe that … and the dollar a week tax increase is the only sane option. I can’t speak for the sanity of Congress.
“the option of a gradual increase …. is no longer an option” this we have on the authority of Krasting. therefore we should just not bother to try to explain the option to the people who will literally live or die according to what Congress comes up with. This is the “relax and enjoy it” school of thought, one which is easier for the Krastings of the world to beleive, than the victims.
I sincerely hope this is the last I will have to say about this today.
Dennis Drew – The assumption that CBO and SSA use (as do BK, Webb and Coberly) is that 100% of the TF bonds will be redeemed to make scheduled benefits between now and 2034. No one that I know of is suggesting a default on TF bonds. I think there is a near zero chance of a default. (There is no need to default, nor would there be any real benefit to defaulting and there might be a huge problem with other Gvmt debt if there was a default on TF bonds)
Some details from exhibit 6 of the Excel spread sheet attached to the CBO report.
CBO says that the SSTF Ratio will be 1.02 in 2026 and 0.77 in 2027.
So for those who believe that solvency for SS means a TF ratio >1 (Coberly) then you need to come up with a plan that deals with a date that is just 9 years away.
I came up with a plan ten years ago. It will work.
I also told everyone a year ago that it will probably need to be implemented (started) in 2018 in order to work as designed.
It will still work, not quite as elegantly, if it is started later. If started later, SS would fall into “actuarial insolvency” (TF<100) for a few years until the one tenth of one percent per year tax increases gradually brought the TF back to 100, but The TF would never go to zero, and SS could continue to pay benefits "as scheduled" forever. OR the tax increase could be slightly larger than one tenth of one percent per year and restore TF to 100 as quickly as you like with no strain on anyone. I prefer the one tenth percent and the "actuarial insolvency" over the larger increases, but you would see "the sky is falling" hysteria from you and your friends during the time it would take to restore "actuarial solvency" and the Congress would likely do something stupid.
one of the benefits of starting in 2018… or before, even this year… would be that the principle borrowed from the TF would never have to be repaid as the paper dollars and much of the interest would just be absorbed into the "iou's" that the TF maintains as a required reserve.
and, in case you forgot,
the CBO is NOT the official scorekeeper of the SSTF. My plan is based on the Social Security Trustees Report. They are the official scorekeeper.
So if they come out with an “actuarial insolvency” (TF projected to be less than 100 within ten years) this year instead of next year, then the NW plan SHOULD be activated immediately. and it will work just fine:
by raising the payroll tax one tenth percent each for worker and employer every year that Trustees project “short term actuarial insolvency.” It will “cost” the average worker about a dollar a week out of his thousand dollar a week paycheck, and he will get the money back with interest when he retires, or becomes disabled, or dies leaving dependents. Which is worth a lot more to him than a dollar a week per year.
i would suggest everyone here sit down and think about what Social Security is worth to them… in dollars per week… if it is the only way they can guarantee at least enough to live on should they reach retirement age and their other investments/savings fail them, or they become disabled or die leaving dependents before they have had a chance to save enough to support their families.
i suggest you be very conservative is estimating the chances of any of that bad luck happening. the thing is that if you put “too much” into SS and the bad luck does not happen, you still get the money back in real dollars with real interest. and it is seriously unlikely if you are on track to make a lot of money in investments that you would use the money you didn’t put into SS to invest to make more money: you would be earning an income high enough that you would more likely spend the SS money on a new car, or a trip to vegas, or otherwise just spend it on stuff you would never miss.
but if the bad luck happens… and for the nation as a whole the odds are extremely high that it will… of course you are smarter than average so your odds are better… but if it does, not having “enough” is going to really, really hurt.
currently if you are earning 50k, you pay about 60 dollars a week into SS. If things go as predicted… and the payroll tax is raised as i suggest… in twenty years you will be earning about 60k in real dollars and your SS would go up to about 72 dollars a week without the increase (but a projected 20% cut in benefits) or about 90 dollars per week with the suggested tax raise that would preserve benefits at the currently “promised” level. Note this is about 18 dollars per week more than the no-increase tax, but you are earning about 200 dollars per week more than you are today. I don’t think you’d miss that extra 18 dollars out of an increase of 200 dollars to a paycheck of 1200 dollars per week.
and considering what you are paying for, i think you would be willing to pay a lot more for the peace of mind… and the eventual income of course.
but i hesitate to suggest this to a people who can’t think in numbers, especially future numbers, and whose minds go crazy at the idea of a “tax.”
SSA is the official source of information? CBO just some hacks? I’m not so sure of that. We shall see in a matter of years who is more right. One says the TF ratio is <1 in 2027, the other says it will be <1 in 2032. That is a big (and important) difference. But either way it is not very far away from today.
Coberly – You pound the table about your "One Dollar per Week". You know that is not fair as that is the amount that might be an increase for just the first year. As a % of income it would go up every year for the next twenty.
I look at SS and the fellow who makes $1,000 a week. He is currently "paying" SS $124 each week and CBO is saying that number has to go up by an additional $47 a week. In a month he will pay $684 to SS. That's rent money! You could lease two cars for that. That's more than the grocery bill!
Yes – I include the employer portion. It is coming out of the employee's pocket – it should be included.
Another “bk” canard, that is like saying “productivity gains” are shared with Labor by capital owning companies when ever there is greater output. There is quite a bit of evidence this has not been happening as much as it should and the gains are kept by the capital owning companies. You can hardly make the argument the same companies would be sharing SS contributions with Labor if SS did not exist or ended. And even then, what percentage would they share?
You look at a way to line your pockets with the difference and through greater investments which would not have the same guarantee of being there for the lower income person in the end as SS does. You could care less about the person making $1000/week “bk.”
I have several family members making $50k a years. I care about them and everyone else. You know nothing about me but you can say silly stuff. It’s Christmas – drop the nasty talk.
If there were no SS tax what would happen to the incomes of all those who are self employed or live off 1099 income?? They would go up, over night, by 12.4%.
If by some magic the PR taxes went away for employers and employees I think that employee income would go up by something close to 6.2%
I do think the employee is paying for the employer portion. You’re free to disagree.
But consider this couple. She earns 60k of 1099 income. He is a self employed plumber who makes $80k.
As of today this couple is paying $17,400 a years in SS taxes. And if the CBO analysis is used, they would pay an additional $6,600. Run that is $24k a year. That is a down payment on a house. You and Coberly try to make this out to be a pittance. Serious money is involved for those that earn a modest living.
Run – do you not have a spouse? No income to speak of for you? If so, I could understand your perspective on this. But if you’re married, moderately successful at what you do, then SS is big bucks to you.
if the employees paycheck says gross pay $1000 per week, and he pays 60 dollars to FICA, his net is 960 dollars per week.
If you are going to say the employers contribution is “really” the employees money (that’s not the way the law is written) and that the employee “really pays” 120 dollars per week, you have to add that 60 dollars from the employers contribution to the employees paycheck
so the employee “really” makes 1060 dollars per week, and total FICA taken out is 120 dollars, leaving the employee with 960 dollars net.
No difference you see, except that your kind can make a big deal out of an imaginary “fact.”
in any case the employee is really, really gonna need that SS check when he gets old or disabled or dead with dependents.
as for the dollar a week per year, that’s the way i have been saying it for ten years. i know it adds up. i even wrote a longish column right here in front of your eyes today about it adding up to about 18 dollars a week while your income goes up two hundred dollars per week.
and ten i tried to make the case for those driven blind by numbers and money and taxes that you ought to be willing to pay a lot more than that to guarantee you will be able to retire when you need. i don’t expect you, Krasting, to understand that, but I hope other people can, and that they will explain it to their friends and Congressmen.
and it turns out its not a dollar a week every week for twenty years.
the very first dollar pushes back the date the Trust Fund “runs out.” and every dollar after that pushes the date back further and further, so that after a few years, you won’t need the extra dollar every year. that translate to “less than a dollar per week per year” in terms of today’s money at today’s wages.
by the end of the actuarial window that dollar per week would only be needed about once every ten years.
i wouldn’t expect krasting to understand this, heck, i wouldn’t even expect normal people to understand it. so i just stick with a dollar per week per year. close enough. very, very, close enough.
and you still have the problem of how else are you going to insure that you can retire when you need to?
krasting does us the favor of explaining what it’s all about. his imaginary couple is making 140,000 dollars per year. Because there are two people, and they are each their own boss, their FICA adds up to $17,360.
Sounds like a lot… cheap new car, down payment on cheap house.
but for people making 50k, each of them pays $3100 per year. not an insignificant amount of money. down payment on a cheap car, about 4 months interest on a new house.
so what happens to all that money: when they get old, or one of them dies or gets disabled, it turns into about 20,000 dollars a year income for 20 or more… maybe much more… years. or, say 400,000 dollars.
now, say, they live to be 65, and don’t get to collect this after a few years when they have only paid in about 10k or so. after 35 years (the legal base for calculating benefits. they will have paid in 108 thousand dollars. So, 400,000 dollars of benefits for 108,000 dollars of payments. yes, krasting think of what they could have bought with that hundred k over 35 years. instead of wasting it on food and rent when they are no longer working.
so look at the happy couple with each paying 8680 per year.(krasting wants to count both their incomes to come up with a whopping tax. this is more fun that assuming the employer really pays both halves (which in some cases if the employer is the same person as the employee, might be true) Assuming neither of them dies, and nothing happens to the 1099 income (how do you make 60k on 1099 income?) they will have paid in about 608 thousand dollars after 35 years.
And they will EACH get a pension of at least 23k for at least 20 years, so about 92000 dollars.
920 thousand dollars for a payment of 609,000 dollars. Oh, the crime of it. think of all the Lexuses they could have bought, or trips to Vegas! the mind boggles. And of course with that 1099 income they don’t really need the SS money. They could live on that 60 k and just burn the 46,000 dollar a year SS checks.
And this is the same old scam the enemies of SS have been running for 80 years: add up the amount you pay and pay, or better, the amount 200 million people pay and pay, and you can get some pretty scary numbers and rely on people neither checking the numbers nor understand what 200 million people make over 75 years, or have to pay (each) to live for twenty years in retirement, or more.
No, no, never let them think about what they get… unless you can twist numbers to make them think they “could have got more”… at the friendly present value bank.
dear people. i don’t expect Krasting to get this. i’ve been telling him the truth the whole truth and nothing but the truth for ten years. but he keep searching for “facts” he can scare you with.
it’s one tenth of one percent, each, for about twenty years.
not all of the twenty years are “the next twenty years.” the rate of tax increase begins to slow, and slow dramatically after about ten to (now) about fifteen years.
the reason for the “(now)” is that if the tenth of a percent (per year) when needed had been started ten years about, it wouldn’t have been needed until about 2026, and then not every year after that.
the ultimate increase to about 2% (each) hasn’t changed over ten years. even the “immediate and permanent” of about 1% each would require another 1% at the end of 75 years.
the trouble with immediate and (sort of) permanent is that at first people will be paying more than they expect to get back, and by the end of the 75 (not so permanent) years they will be paying less.
similary, the problem with waiting until 2032 or so until the TF runs out and making a sudden 2% (each) increase, besides the shock value, is that between now and then the people who will evntually get the benefits will not be paying enough for them.
“gradual” does have a certain boiling the frog value, but that’s only because the frog is too dumb to understand that it’s easier to pay a little now and more later when you have more to pay it with, than to pay a lot now that you don’t need to pay yet. or wait twenty years and ask your kids to pay what you should have been paying all that time.
saying the Trustees Report is the official scorekeeping for SS
is not the same as calling CBO a “bunch of hacks.”
but Krastings logic system has never been good at fine distinctions.. like between “true” and “false.”
and there is no important difference between 2027 and 2032 and “the DEATH DAY OF SOCIAL SECURITY TRUST FUND”
it merely means a few tenths of a tenths of a percent difference in the cost of raising the tax enough to meet expenses. or a few years difference in the time of raising the tax “all at once.”
say the increase needed will be about 20 dollars per week. five years at 20 dollars a week would be about 5000 dollars. This is a little over 1% of what you will get back from SS.
still better to pay it a dollar a week per year at a time for most of the next 20 years.
paying it gradually now, pushes back the day of Trust Fund depletion after 20 years to… forever.
i am still worried about that couple making 140 thousand dollars per year.
can’t understand how they could get by in life deferring 17k and have to live on only 123 thousand.
maybe because unlike the 50k earner, or the 25k earner, who have to load only sixteen tons a day, they have to load 50 tons a day. and that takes a lot of groceries to keep up their strength.
so why in gods name and all fairness should they have to defer part of their income just in case their business, or their health, goes blooey and they arrive dead broke in midwinter at age 65 and no one will give them a job at any price, and the rest of us would have to support them out of charity.. a charity to which they never contributed a dime in their life.
oh, the injustice! the cruelty! o-pressed so hard they could not stand…
just in case krasting missed it: with SS they get their money back in time to pay for their retirement.
without SS if their luck holds no problem.
without SS if their luck does not hold, the rest of us will have to support them.
but of course, their luck will hold. it’s proof that they are better than you are.
i new a guy in my town whose business suddenly became obsolete and wiped him out. leaving him only his SS to live on. but he kept writing to the newspaper complaining about how unjust the SS “tax” was.
just because they’re rich, or were rich, doesn’t mean they are smart.
and we notice that Krasting ignores the official scorekeepers of SS– that bunch of hacks — and tells us that his friends at CBO are calling for a 6000 dollar a year increase in FICA.
he likes this better than the 280 dollar a year increase called for by the NW plan. because, after all, as Krasting tells us, Congress will never go for a tax increase.
it’s true the NW tax increase will eventually equal…. more or less…. the CBO increase (after all, the groceries the tax pays for are what they are. no way to get around the cost of living…you, know, actually staying alive. But by the time the NW plan equals the CBO increase, the income of Krastings friends will have increased by 28,000 dollars a year to 168 thousand.
so the 24000 (total) FICA tax is really going to hurt them. trying to live on 144,000 a year, while putting away 24,000 to eventually pay their over a million dollars in retirement benefits (two people at 28k per year times 20 years,) all adjusted for inflation.
What about itemizing? Do you think one can deduct SS taxes as an expense? Sorry that is not the case. SS comes off the top and it is not a deduction on the bottom.
If you don’t know that, then you never have itemized.
Run – So you are sympathetic. You are paying 12.4% of your wages to SS and you probably will have to pay more in the future and get smaller benefits to boot. And you like this?
You are correct that 71% of the population makes less than $50k. But take a closer look at the numbers.
-14% of workers make less than $2,100 a year (These folks are part of your 50k base, but really they are not in the workforce)
-22% of all workers make less than $7,500 a year.
-37% of all workers make less than $17,500 a year.
What this means is that more than 1/3 of workers are really not putting in regular hours. So when you throw out numbers about 71% of the population you are falling for numbers that have been spun for you. Many of those in your calculation are working less than two months a year. This is by choice. These results skew what is going on with wages for those who actually go to work for 50 weeks a year,
you have to set aside 12.4% of your wages (including the boss’s share) in order to save enough, at a real interest equal to growth in the economy. to have enough to pay for your basic needs in retirement.
i am very happy about this.
but then i did not make a million dollars in bond trading and have hindsight to tell me i did not need to set aside anything in Social Security.
Go talk to some people making 30 k or 50k or 80k even… if they are old enough to have started thinking about retirement…. and see if they can explain it to you.
“you have to set aside 12.4% of your wages (including the boss’s share) in order to save enough, at a real interest equal to growth in the economy. to have enough to pay for your basic needs in retirement.
yes, after about twenty years. while wages will go up over 20%. so at the end of the day you have more dollars in your pocket after setting aside enough to live on when you are too old to work, or you get disabled, or for your family to live on if you die.
is there anything more important you could be spending the money on?
just to put that in numbers for those who suffer from pecent paresis:
today you have an income of 50k per year or a thousand a week. you pay 62 dollars a week for SS. If you insist that the 62 dollars your boss pays is “really” your money, than you have to add that 62 dollars to your income… therefore you make 1062 dollars per week. either way, after you pay SS “tax” you have 938 dollars a week to live on (including paying your other taxes).
20 years from now your expected income will be about 1200 dollars per week. of that you will pay under present tax rates about 74 dollars, leaving you with 1126 to live on… and the $148 goes into SS… that is, your savings for your retirement. you will get the money back, in real dollars, with an “interest” that depends on how rich you are by then.
if the tax goes up to 16.4% combined, you would see your 1200 dollar paychec reduced by $98 leaving you with 1100 dollars to live on and 200 dollars to go into SS to save for your retirement. you will get the money back in real dollars plus interest.
not that with the higher tax you still have more in your pocket after the tax than you have today.
As time goes on, the tax rate will NOT increase, but your real wages will, so you will have more and more money even while putting an extra 2% of your paycheck into your savings for your old age.
Seems to me you have to be pretty stupid to feel robbed by this. Or just suffer from the kind of blind greed that is not good.
“yes, after about twenty years. while wages will go up over 20%.”
You keep making that assertion, and I am glad you have such optimism, but that optimistic projection has not happened in the last three decades:
——————————-
[After] adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1979, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today.
A similar measure, “usual weekly earnings” of employed, full-time, wage and salary workers, tells much the same story, albeit over a shorter time period. In seasonally adjusted current dollars, median usual weekly earnings rose from $232 in the first quarter 0f 1979 (when the series began) to $782 in the second quarter of this year (the most recent data available). But in real terms, the median has barely budged over that period.
——————————- http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/
Even the real wages of the 75th percentile have barely budged.
Others (not you) have argued that rising wages will boost receipts. But the fact is that the bulk of those increased wages went to those people earning more than the Social Security Wage Base.
i go by the Trustees projections. the official projections.
they show a growth over the last twenty years of about 1% real wage differential per year, as I think you point out the last time we visited this sub-subject.
in any case, suppose wages do not grow. but your retirement expenses do. so much that it requires you to save about 16% of your gross earnings… safe from inflation and other possible losses… in order to have enough to meet your basic needs when you retire?
if you say “the stock market,” i say poor people cannot afford to gamble their life savings. most of them don’t want to. they prefer a sure thing.
and i can tell you that when i earned a hell of a lot less than a thousand dollars a week i did not miss an extra 5% taken out of my paycheck and saved for my retirement.
stop whining.
you are getting answers here because i still hope someone else might see them and think. i haven’t seen any evidence that you will. and i am done playing with you for tonight.
i am not optimistic at all, but i have to go by the official numbers.
and you have to go by what look to me like a fudged PEW report… notice all the cute qualifiers.
and while spotting trivial … uniimportant… differences, you keep missing the big point:
WHATEVER happens people are going to need… want… to insure they can retire. There is no better way for them to do that. And if the average wage goes DOWN, the people will need SS even more than they do now. It would make sense for them to put aside FIFTY PERCENT,or more, of their working wages if that is what it was going to take for them to pay for their basic needs when they can no longer work.
try actually thinking about that.
i actually don’t know how much of the grain crop Joseph collected each of the seven fat years, but if it had to cover seven lean years, it might have been half… more or less depending on how fat and how lean was expected.
“It would make sense for them to put aside FIFTY PERCENT,or more, of their working wages if that is what it was going to take for them to pay for their basic needs when they can no longer work.”
that’s why Social Security has to be a mandatory savings and insurance contribution (a tax if you will).
most people are not smart. even smart people are not smart.
it is very easy to think “i need that money today to buy X. I can save tomorrow.” or “if i invest that money today in X i will get rich.”
in the world of normal experience these are NOT irrational choices. even the kind of capitalism that destroys the earth under our feet is not “irrational” in terms of ordinary human experience: we don’t know what tomorrow will bring, so any advantage we can seize today will put us in a better position to survive (stay ahead) tomorrow.
Mervyn King (former head of Bank of England) refers to this as the Prisoners Dilemma (famous problem in game theory) and “radical uncertainty”. I recommend the book (End of Alchemy). I also recommend Kahneman and Tversky ‘s work on human understanding (or lack of it) of simple principles of “chance.” I do not know if they arrive at my idea bout the simple understanding (errors) correspond to rational choices in the real world (as opposed to the coin tossing world) but you would benefit from reading about it and thinking about it.
i have just paid you a high compliment. whether you can live up to it is another thing. don’t be distraught if you can’t. even i can’t live up to it except once in a while. i don’t know how people cope with their own knowledge of their own inadequacy. it should not be something that makes you “feel bad,” but you still have the problem of making sense of a world you (and I) do not fully understand, and may have less understanding (of parts of it at least) than the next guy.
good luck. [btw i did not fail to notice that some of your comments recently have been perfectly sane and correct and that you were kicked around by my friends…. there is the problem of tribalism which we all, apparently, are subject to. Even when we are aware of it enough to not like it. I would say “to our shame,” but the sad fact (for me) is that even I have (finally) had to learn when to keep my mouth shut when the “tribe” is wrong…. it’s a matter of survival. i try to make up for it, and so far, at least, have not participated in any actual lynchings.
this still leaves me wishing, most ardently, that you would not sandbag my posts with trivial side issues.
INSURANCE, however, is a proper term. (I notice that you use the phrase, “insure that you can retire,” rather than “ENSURE that you can retire.” The FICA tax is a payment to INSURE that one can retire, while one invests to ENSURE that one can retire.)
If I can make a recommendation to you, read Picketty’s Capital in the Twenty-First Century. https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617 You will find that his main thesis is fundamentally flawed, but the historical data he provides is illuminating, and his projections are thought-provoking. Despite the theoretical flaw, the data make it worth the read.
i don’t know what to do about you. you suffer from word-stickiness. a mandatory contribution is not an oxymoron
ORIGIN late Middle English (denoting a tax or levy): from late Latin contributio(n-), from Latin contribuere ‘bring together, add’ (see contribute ).
even without this little help from the dictionary you need enough flexiblity of brain to see that words point at something, they are not the thing itself. in this case i was pointing at first the contribution… i contribute to my own welfare, i contribute to my savings. i contribute to my investment plan. or i contribute to the government (via taxes). but i was also pointing at why the contributions need to be mandatory.
there is no oxymoronism there. just a way of bringing into focus what is actually happening in the real world. you seem to get stuck with your ideas about what is pfffree will and what is government “force.”
it’s pretty much the attittude of a two year old (terrible twos) or a fourteen year old who insists he’s old enough to drive and no, he doesn’t need insurance, or even to fill up the tank.
here is a hint for you… i don’t like being forced any more than you do.l maybe less. but i can;t see how to avoid “force” in the affairs of men. because not all criminals wear a black mask. without the force of law we would have the force of man vs man. i am pretty sure the latter would cost you more. try to remember that government was instituted among men to help the rich keep their money. only after the american revolution did the idea take shape that men created governments to protect them from evildoers and elected (hired) representatives to manage government, and made checks and balances to (try to) keep government from becoming worse than what it was designed to prevent.
similarly, paying FICA is saving. you put your money in a “bank”, and your guarantee of getting it back is actually better than any other place you could put it. not perfect, as some poor dumb immigrant communist found out at the height of the mccarthy red scare. but that isn’t likely to happen to “all of us” at once, unless we are stupid enough to vote for a president and congress who will destroy the program.
now, me, i don’t care much about the difference between insure and ensure, except that i think insure involves some legal concepts that ensure does not. those legal concepts might be important.
back when i was in college… freshman… i ran into people who thought each word had a special meaning and if you were smart enough you would know it, otherwise otherwise. i found those people very tedious, and was a little grateful to find out in later years that people who studied “linguistics” agreed with me. but only a little grateful because i already knew i was right. and if linguistics experts had insisted upon pedantry and ‘grammar’ i would have written them off as idiots.
so, like my friends in first grade (college) you have a choice: agree with me and be smart. otherwise, otherwise.
i won’t have time to read Picketty. other things in my life are more important. but anything you can say in 25 words or less i would probably think about… for 25 seconds or less. or maybe more, depending.
“[I can’t] see how to avoid ‘force’ in the affairs of men. [Because] not all criminals wear a black mask. [Without] the force of law we would have the force of man vs man. [I] am pretty sure the latter would cost you more. [Try] to remember that government was instituted among men to help the rich keep their money. [Only] after the [American Revolution] did the idea take shape that men created governments to protect them from evildoers and elected (hired) representatives to manage government, and made checks and balances to (try to) keep government from becoming worse than what it was designed to prevent.”
All true, but that has nothing to do with Social Security or FICA taxes or retirement.
“[Paying] FICA is saving. you put your money in a ‘bank’, and your guarantee of getting it back is actually better than any other place you could put it.”
That is total bunk and you know it. There is no “bank” into which one puts one’s money, nor does any of the FICA taxes “contributed” belong to the “contributor.” The odds of a 25-year-old’s seeing any of the money he “contributes” is less than 80%. https://www.ssa.gov/oact/STATS/table4c6.html
What other “investment” has such a high default rate?
“[I] don’t care much about the difference between insure and ensure….”
If you do not understand the difference between ensuring one’s life and insuring one’s life, I’ve got some insurance to sell you.
“[Back] when i was in college… freshman… [I] ran into people who thought each word had a special meaning and if you were smart enough you would know it, otherwise otherwise.”
They probably knew how to capitalize too. Yes, words do each have special meanings, and those meanings are changed by those who are ignorant of them and by those trying to deceive others.
“[Anything] you can say in 25 words or less i would probably think about….”
Words are countable — so that should be, “twenty-five words or FEWER.” 😀
The words on the cereal box were “25 words or less.” Language is what people say, not what some grammarian says. I learned that… after years of getting A’s on grammar and spelling tests… just in time to avoid becoming a pedant and fool.
actually, i do not know it is bunk. what is a “bank.”? i would say, jesus, warren, you can’t be that stupid. but over many years of reading stuff on the web, i have to admit most people are that stupid.
i think i mentioned a difference between insure and ensure, let’s hear it.
and don’t accuse me of trying to deceive others. it makes me mad. i am the ONE person here who is trying to UNDECEIVE others. You, like most people have fallen in love with your deceiver and your deception.
my little essay on force had everything to do with your incorrect understanding of the word “contribute.” also you serious problem with government “force” especially where your precious money is concerned.
i find a it doubtful that 20% of 25 year olds will be dead by age 65. but in any case they’d be dead so they don’t need to collect on their retirement insurance. you see, it’s insurance against getting old without enough money to pay for your basic needs when you can no longer work. if you are dead, you don’t need themoney.
consider the people who never live to collect on their fire insurance. are they being robbed? or do you just have trouble with the concept of insurance?
my computer will not access ssa.gov. if i remember when i am near another computer i will try to look it up. but remember what i said about insurance. that’s the point.
meanwhile i am beginning to feel like you are deliberately wasting my time.
i still can’t access ssa.gov but i did think about it. here’s your 25 scons worth.
the statistic does not mean 20% of people who pay their SS tax will die before age 65. it means that 20% of people who paid any SS tax at all will not live to collect the full present value of their tax.
this is intentionally designed to be misleading. unfortunately your 25 seconds is up. basically what i said about the “insurance” above is the reason why the statistic is beside the point.
“[The] statistic does not mean 20% of people who pay their SS tax will die before age 65. [It] means that 20% of people who paid any SS tax at all will not live to collect the full present value of their tax.”
Since you cannot access the site, how do you know what it says?
Actually, it DOES say that less than 80% of 25-year-old men are expected to live to 67. (Did you forget that their full retirement age is not 65?) But let’s back that down to 62 — their current early retirement age. Twenty-five-year-old men have a 14% probability of not making it to early retirement at age 62.
“[Basically] what [I] said about the ‘insurance’ above is the reason why the statistic is beside the point.”
I agree. It is INSURANCE. FICA taxes are NOT savings, and calling them savings is either delusion or deception.
And since when is someone’s being stupid a valid reason for forcing him to do something he does not want to do?
“And since when is someone’s being stupid a valid reason for forcing him to do something he does not want to do?”
Because like healthcare, I do not want to pay for them and some form of forced retirement funding is essential. You are being an ass and playing cat and mouse. Enough . . .
i think Run meant to say “forced retirement SAVINGS is essential”
you are forced to pay for them… if they get old without enough to live on..for the same reason you are forced to stop at stop signs and forced to pay taxes for the army that defends you: the country would not survive without a government forcing us to pay for what we need to succeed in this together. millions of people starvng on the street would not be good for business.
i obviously don’t KNOW what the ss article SAID. but i could reconstruct the argument from what i know about what has been said before by people like Andrew Biggs. I think a 14% chance of dying before 65 still sounds too large, but i don’t actually know. in the meanwhiile some of those people will have died with dependents who will collect MORE than the worker will have paid in. and even more important is the FACT that
SOCIAL SECURITY IS INSURANCE
you don’t get to get your premiums back if you die before you have the fire. but buying fire insurance is still prudent.
how many people collect far more than they paid in (even in “present value” because they live a lot longer than “average”?
if you had asked these questions once there would be a reason to answer you, but you keep mousing around looking for ways to score points with arguments and “facts” that don’e address the real problem:
how can ordinary workers insure that they can save enough of their own money to meet basic needs when they can no longer work?
“[You] are forced to pay for them… [because] the country would not survive without a government forcing us to pay for what we need to succeed in this together.”
We did quite well for over 150 years without Social Security.
——————————————
“I think a 14% chance of dying before 65 still sounds too large….”
And I think a 1.2% projected growth rate sounds too large, but as you said, we “have to go by the official numbers.”
——————————————
“[I] think Run meant to say ‘forced retirement SAVINGS [are] essential.’”
That is not Social Security.
——————————————
“SOCIAL SECURITY IS INSURANCE”
We are in violent agreement on that point. It is insurance. It is not a savings program.
A new report on SS from CBO is out today. Lots of information.
-If nothing gets done with SS, then in 2030 benefits get cut by 29%. SSA has this as 21% in 2034. A significant gap.
-CBO uses a chart. It appears that in 2027 the TF ratio falls below 1. We are in the ten-year solvency window.
-The Immediate and Permanent tax increase required to address the 75 year horizon is now 4.68% of taxable payroll. That’s about double what SSA says. The CBO estimate for the I&P tax required is $300B in 2017.
The link:
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/52298-socialsecuritychartbook.pdf
Readers should be warned that Krasting is reliably catastrophically wrong about the “bombshell’s” he relays to us.
Krasting did not like CBO reports when they were more optimistic than SS Trustees… the official body charged with reporting SS finances and projecting its future finances. but since CBO got a new head and its projections became more pessimistic than the official projections, he can’t get enough of them.
The CBO” projections are not meaningfully different from the Trustees… just wiggle a guessed parameter or two a tenth of a percent and you can go from gloom to doom in a few milliseconds of computer time.
but, for instance, if one tenth of one percent increase in the payroll tax each year from 2018 to 2028 can eliminate Trust Fund depletion entirely over that time (you’d need to raise the tax a few more tenths of a percent over the rest of the century to eliminate the projected actuarial deficit forever), using Trustees projections , it would be reasonable to guess that 29/21 of one tenth of a percent per year would eliminate the shortfall projected by CBO. this would mean that instead of an extra dollar per week increase in the payroll tax, it would take 29/21 of a dollar or $1.38 per week. This is NOT significant.
Krasting has no idea what “significant” means. He’s thinking of “significant digits” which has no bearing on the significance of the increase to the people who have to pay it. We’d be talking about an extra 38 cents out of a thousand dollar a week salary.
Moreover, in the absence of any details about what assumptions are made in the projections, how reliable they are, and the timing at which the cost increases occur, it is impossible even for me to give you any meaningful analysis of what the effect of the difference would be.
Krasting is in love with “immediate and permanent”… which is about the way he stops his car at a railroad crossing. None of the “gradual” stuff for him. In fact, proven fact, the Trustees projected shortfall (and “immediate and permanent” fix) can be met with the one tenth of one percent per year fix. Very likely so can the CBO projection, but as I said, i haven’t seen the detailed projections, so it is impossible to give a detailed analysis.
And please please try to remember that that extra dollar, or dollar and a half, a week buys you twenty years or more of retirement, and a lifetime of not having to worry about it. Precious.
you see, Krasting
was walking home one day in July after a hot day at the trading desk.
he saw that some little neighborhood girls had set up a lemonade stand.
“LEMONADE 5 cents”
cute, he said to himself.
that evening mom and dad had a talk with the little girls about the cost of lemons and ice and all that. so next day the girls changed their sign
LEMONADE TEN cents.
Walking home Krasting saw the new sign. “oh my god” he said, ”
the price has gone up 100%!!!”
so he ran all the way back downtown and put out a general message on the company teletype!
“BOMBSHELL!!
“PRICES DOUBLE”
“THE SKY IS FALLING”
“WE’RE ALL GOING TO DIE.”
“Prices of lemonade are doubling at the rare of 100 per cent per day. At this rate the price of lemonade will be 50 million dollars in just one month!”
I [not Krasting here] am sorry to say that this is actually a fair representation of Krastings comments, and thinking, here on Angry Bear over the past ten years. stay tuned for a report from across the aisle.
Coberly – Have you lost it? I provide a link to a report from CBO and you blame me because you don’t like the CBO results? Shoot the messenger?
You say:
Readers should be warned that
Krasting is reliably catastrophically
wrong about the “bombshell’s” he
relays to us.
What am I wrong about Coberly? And the business about the lemonade – are you nuts? Do you re-read the stuff you put up before you hit the button? You should do that. Save yourself some embarrassment.
What Coberly is doing is steering readers away from his dream. He thinks he can “fix” SS with his dollar a week talk. That is not correct according to CBO.
I want to be clear that both CBO and SSA measure SS by the same metric. They use the Immediate and Permanent analysis as the yard stick to answer the question “”How is SS doing?” I&P is not a policy option, it is useful in comparing how various options influence SS over time. That Coberly does not understand this confirms that he simply does not understand how policy makers speak of/write about SS.
I have a question for Coberly. Use the I&P set by CBO in this report. How many years of 0.2% tax increases are necessary to become equal to CBO’s 4.68% I&P? The answer is about 30 years.
Coberly, do you really believe that a plan to raise taxes every year for the next 30 has a chance of being passed? Answer – Not a chance!
bk:
Do you really believe the Repubs have a plan to save SS as it is for citizens? Not a chance. Repubs under Ryan will disenfranchise US citizens and pass the saving on to the 1% or < than 1 million taxpayers in that bracket. As far as the permanent fix (75 year picture) to resolve the issue, you really do not know it will or will not fix it. Things change along the way and just about every 7-10 years the economy does change. The issue is not SS, and it is getting Labor back to work. SS as an issue which goes away as revenue increases. You are using today's issues with revenue to bring about a change in fundamental SS which is just not needed over 75 years much less 30 years. It is a decade at a time and it is not to apply a permanent fix but to stretch it out year by year as the TF (which Repubs do not want to pay back. The TF was never meant to be this big.) is drained.
Never understood this 75 years out business — what it means to whom.
Why don’t we have projections or whatever for lots of other things 75 years out. Anyone want to cobble together a list? :-O
Run – I don’t think the Republicans have the answers. I do not agree with the recent Johnson proposal. (it can’t be all cut’s, it has to be a mix – including revenue increases).
I have no clue about the 75 year horizon. No one does. But a ten-year horizon is viable and necessary in my opinion. I say to all of you again – BASED ON THE CBO REPORT SS IS NOW INSIDE THE 10 YEAR WINDOW OF SOLVENCY.
The option of “Do Nothing” is not an option any longer. The option of a gradual increase of taxes for 30 years is not an option either.
bk:
This CBO Director makes Elmendorf look like a sweetheart. He raises the specter of entitlement debt for both Medicare and Social Security. He raises the specter of running out of funds for SS within the next 10 years when the TF is secure till 2034 when by law, Congress must act to either increase funding through the GF or increase payroll taxes to whatever it needs to be in 2034 or 18 years out if that is still the TF cash out time or they can cut benefits then. Acting on behalf of Congress, this CBO Director is a fear monger.
Instead of the 440% debt increase the CBO shows,
https://www.thenation.com/article/why-is-the-cbo-concocting-a-phony-debt-crisis/
This is a Republican phony crisis as supported by a politically driven CBO Director.
Bkrasting,
Either you raise the FICA tax (a smidgen at a time — ask Coberly) to keep up with growing SS outgo — or we raise the income tax (a bit at a time — or grow the deficit) and cash the bonds.
If we do the latter, what are we supposed to do with many trillion dollars worth of bonds in the TF — why did we ever accumulate them all in the first place? Whatever.
Please keep in mind — which should not be difficult for people on an economics blog; it should be the very first thing on their minds — that historically, per capita income doubles twice as fast as population. If not twice as fast as retiring population — which will level off at one retiree to two employees after 2050.
I have spent the last ten years (more or less) answering Krastings nonsense. My projections are those of the SSA Trustees, the official agency responsible for making such projections. That math that shows the projected “actuarial deficit” can be filled one tenth of one percent per year at a time is solid, and attested to by experts in the field, including (not for publication) CRFB, no friend of Social Security.
I have no way of knowing what CBO’s projections actually mean, but even assuming they turn out to be correct, you MUST stop and think what you are paying for:
A dollar a week (in today’s dollar / wage level) while wages go up a projected ten dollars per week. In other words you are getting richer even while paying the higher tax. And at the end you get your money back with interest to pay for a retirement that will last an expected 20 years or more, with a real income that is about twice as high as today’s.
Even if times turn out to be even worse than CBO projects, you are going to need SS MORE THAN EVER. SS is simply a way to transfer some of your earnings today to a future when you will need the money far more than you do today. You can live without that new car, or extra trip to vegas. You can’t live with no money for food or rent when you are old.
Asking Krasting to do the math is like asking a chicken to explain Col Sanders secret recipe. But the rest of you can and should do the math… even the very approximate math that tells you reasonably closely the scale and importance of what we are talking about.
Krasting, change the 0,2% (two dollars a week, combined tax increase) to 0.3%… a dollar and a half each… and see how long it takes to reach solvency even under CBO predictions.
Now, you are talking about a dollar and a half a week against 20 thousand dollars a year for over twenty years of your life… when you won’t be able to work.
I don’t expect you to understand this. I wish I could persuade the other people here to understand it and explain it to their friends, and then all of us explain it to Congress in words even they can understand.
Back to the back: I cannot… will not… spend my time calculating every possibility Krasting or other half-a-thought person comes up with. Using the official projections, one tenth of one percent, each, per year increase in the payroll tax solves the problem for a price no sane person would even notice.
short comments on Krasting
“are you nuts” this is Krasting’s way of saying “I don’t get it.” it’s a parable, Krasting.
“what coberly is doing is steering people away from his dream” i would have thought coberly would be the last person to steer people “away” from his dream. but when you can’t tell up from down, these things can get confusing to you.
“this is not correct according to CBO” actually, CBO does not address the dollar a week option. it would take the wind out of their sails.
“both CBO and SSA measure by the same metric… “immediate and permanent”… it is a yard stick not a policy option” precisely. then why does Krasting insist upon it as a policiy option? The “yard stick” can easily be shown to be mathematically the same as “so many dollars per week per year gradual raise in the tax.” the exact number of dollars or years might vary according to the predictions, but they WON’T VARY MUCH. You can scare people who are not numerate with percents that might differ from each other by “two hundred percent!” but when you find out that two hundred percent of one tenth of a percent is two tenths of a percent… or the difference between one dollar and two dollars out of a thousand dollars, you should be less scared. unless you are a Krasting “the sky is falling” chicken with his head cut off. no wait, how could a chicken with his head cut off be yelling… or thinking?
“Coberly… do you really believe…? Answer, not a chance!” well, actually I do really believe that … and the dollar a week tax increase is the only sane option. I can’t speak for the sanity of Congress.
“the option of a gradual increase …. is no longer an option” this we have on the authority of Krasting. therefore we should just not bother to try to explain the option to the people who will literally live or die according to what Congress comes up with. This is the “relax and enjoy it” school of thought, one which is easier for the Krastings of the world to beleive, than the victims.
I sincerely hope this is the last I will have to say about this today.
Dennis Drew – The assumption that CBO and SSA use (as do BK, Webb and Coberly) is that 100% of the TF bonds will be redeemed to make scheduled benefits between now and 2034. No one that I know of is suggesting a default on TF bonds. I think there is a near zero chance of a default. (There is no need to default, nor would there be any real benefit to defaulting and there might be a huge problem with other Gvmt debt if there was a default on TF bonds)
Find something else to worry about.
b
Some details from exhibit 6 of the Excel spread sheet attached to the CBO report.
CBO says that the SSTF Ratio will be 1.02 in 2026 and 0.77 in 2027.
So for those who believe that solvency for SS means a TF ratio >1 (Coberly) then you need to come up with a plan that deals with a date that is just 9 years away.
Good luck!
Krasting
I came up with a plan ten years ago. It will work.
I also told everyone a year ago that it will probably need to be implemented (started) in 2018 in order to work as designed.
It will still work, not quite as elegantly, if it is started later. If started later, SS would fall into “actuarial insolvency” (TF<100) for a few years until the one tenth of one percent per year tax increases gradually brought the TF back to 100, but The TF would never go to zero, and SS could continue to pay benefits "as scheduled" forever. OR the tax increase could be slightly larger than one tenth of one percent per year and restore TF to 100 as quickly as you like with no strain on anyone. I prefer the one tenth percent and the "actuarial insolvency" over the larger increases, but you would see "the sky is falling" hysteria from you and your friends during the time it would take to restore "actuarial solvency" and the Congress would likely do something stupid.
one of the benefits of starting in 2018… or before, even this year… would be that the principle borrowed from the TF would never have to be repaid as the paper dollars and much of the interest would just be absorbed into the "iou's" that the TF maintains as a required reserve.
and, in case you forgot,
the CBO is NOT the official scorekeeper of the SSTF. My plan is based on the Social Security Trustees Report. They are the official scorekeeper.
So if they come out with an “actuarial insolvency” (TF projected to be less than 100 within ten years) this year instead of next year, then the NW plan SHOULD be activated immediately. and it will work just fine:
by raising the payroll tax one tenth percent each for worker and employer every year that Trustees project “short term actuarial insolvency.” It will “cost” the average worker about a dollar a week out of his thousand dollar a week paycheck, and he will get the money back with interest when he retires, or becomes disabled, or dies leaving dependents. Which is worth a lot more to him than a dollar a week per year.
i would suggest everyone here sit down and think about what Social Security is worth to them… in dollars per week… if it is the only way they can guarantee at least enough to live on should they reach retirement age and their other investments/savings fail them, or they become disabled or die leaving dependents before they have had a chance to save enough to support their families.
i suggest you be very conservative is estimating the chances of any of that bad luck happening. the thing is that if you put “too much” into SS and the bad luck does not happen, you still get the money back in real dollars with real interest. and it is seriously unlikely if you are on track to make a lot of money in investments that you would use the money you didn’t put into SS to invest to make more money: you would be earning an income high enough that you would more likely spend the SS money on a new car, or a trip to vegas, or otherwise just spend it on stuff you would never miss.
but if the bad luck happens… and for the nation as a whole the odds are extremely high that it will… of course you are smarter than average so your odds are better… but if it does, not having “enough” is going to really, really hurt.
currently if you are earning 50k, you pay about 60 dollars a week into SS. If things go as predicted… and the payroll tax is raised as i suggest… in twenty years you will be earning about 60k in real dollars and your SS would go up to about 72 dollars a week without the increase (but a projected 20% cut in benefits) or about 90 dollars per week with the suggested tax raise that would preserve benefits at the currently “promised” level. Note this is about 18 dollars per week more than the no-increase tax, but you are earning about 200 dollars per week more than you are today. I don’t think you’d miss that extra 18 dollars out of an increase of 200 dollars to a paycheck of 1200 dollars per week.
and considering what you are paying for, i think you would be willing to pay a lot more for the peace of mind… and the eventual income of course.
but i hesitate to suggest this to a people who can’t think in numbers, especially future numbers, and whose minds go crazy at the idea of a “tax.”
SSA is the official source of information? CBO just some hacks? I’m not so sure of that. We shall see in a matter of years who is more right. One says the TF ratio is <1 in 2027, the other says it will be <1 in 2032. That is a big (and important) difference. But either way it is not very far away from today.
Coberly – You pound the table about your "One Dollar per Week". You know that is not fair as that is the amount that might be an increase for just the first year. As a % of income it would go up every year for the next twenty.
I look at SS and the fellow who makes $1,000 a week. He is currently "paying" SS $124 each week and CBO is saying that number has to go up by an additional $47 a week. In a month he will pay $684 to SS. That's rent money! You could lease two cars for that. That's more than the grocery bill!
Yes – I include the employer portion. It is coming out of the employee's pocket – it should be included.
whoa, whoa:
Another “bk” canard, that is like saying “productivity gains” are shared with Labor by capital owning companies when ever there is greater output. There is quite a bit of evidence this has not been happening as much as it should and the gains are kept by the capital owning companies. You can hardly make the argument the same companies would be sharing SS contributions with Labor if SS did not exist or ended. And even then, what percentage would they share?
You look at a way to line your pockets with the difference and through greater investments which would not have the same guarantee of being there for the lower income person in the end as SS does. You could care less about the person making $1000/week “bk.”
Run – Whoa Whoa
I have several family members making $50k a years. I care about them and everyone else. You know nothing about me but you can say silly stuff. It’s Christmas – drop the nasty talk.
If there were no SS tax what would happen to the incomes of all those who are self employed or live off 1099 income?? They would go up, over night, by 12.4%.
If by some magic the PR taxes went away for employers and employees I think that employee income would go up by something close to 6.2%
I do think the employee is paying for the employer portion. You’re free to disagree.
But consider this couple. She earns 60k of 1099 income. He is a self employed plumber who makes $80k.
As of today this couple is paying $17,400 a years in SS taxes. And if the CBO analysis is used, they would pay an additional $6,600. Run that is $24k a year. That is a down payment on a house. You and Coberly try to make this out to be a pittance. Serious money is involved for those that earn a modest living.
Run – do you not have a spouse? No income to speak of for you? If so, I could understand your perspective on this. But if you’re married, moderately successful at what you do, then SS is big bucks to you.
bk:
and they do not not itemize?
krasting
if the employees paycheck says gross pay $1000 per week, and he pays 60 dollars to FICA, his net is 960 dollars per week.
If you are going to say the employers contribution is “really” the employees money (that’s not the way the law is written) and that the employee “really pays” 120 dollars per week, you have to add that 60 dollars from the employers contribution to the employees paycheck
so the employee “really” makes 1060 dollars per week, and total FICA taken out is 120 dollars, leaving the employee with 960 dollars net.
No difference you see, except that your kind can make a big deal out of an imaginary “fact.”
in any case the employee is really, really gonna need that SS check when he gets old or disabled or dead with dependents.
as for the dollar a week per year, that’s the way i have been saying it for ten years. i know it adds up. i even wrote a longish column right here in front of your eyes today about it adding up to about 18 dollars a week while your income goes up two hundred dollars per week.
and ten i tried to make the case for those driven blind by numbers and money and taxes that you ought to be willing to pay a lot more than that to guarantee you will be able to retire when you need. i don’t expect you, Krasting, to understand that, but I hope other people can, and that they will explain it to their friends and Congressmen.
and it turns out its not a dollar a week every week for twenty years.
the very first dollar pushes back the date the Trust Fund “runs out.” and every dollar after that pushes the date back further and further, so that after a few years, you won’t need the extra dollar every year. that translate to “less than a dollar per week per year” in terms of today’s money at today’s wages.
by the end of the actuarial window that dollar per week would only be needed about once every ten years.
i wouldn’t expect krasting to understand this, heck, i wouldn’t even expect normal people to understand it. so i just stick with a dollar per week per year. close enough. very, very, close enough.
and you still have the problem of how else are you going to insure that you can retire when you need to?
krasting does us the favor of explaining what it’s all about. his imaginary couple is making 140,000 dollars per year. Because there are two people, and they are each their own boss, their FICA adds up to $17,360.
Sounds like a lot… cheap new car, down payment on cheap house.
but for people making 50k, each of them pays $3100 per year. not an insignificant amount of money. down payment on a cheap car, about 4 months interest on a new house.
so what happens to all that money: when they get old, or one of them dies or gets disabled, it turns into about 20,000 dollars a year income for 20 or more… maybe much more… years. or, say 400,000 dollars.
now, say, they live to be 65, and don’t get to collect this after a few years when they have only paid in about 10k or so. after 35 years (the legal base for calculating benefits. they will have paid in 108 thousand dollars. So, 400,000 dollars of benefits for 108,000 dollars of payments. yes, krasting think of what they could have bought with that hundred k over 35 years. instead of wasting it on food and rent when they are no longer working.
so look at the happy couple with each paying 8680 per year.(krasting wants to count both their incomes to come up with a whopping tax. this is more fun that assuming the employer really pays both halves (which in some cases if the employer is the same person as the employee, might be true) Assuming neither of them dies, and nothing happens to the 1099 income (how do you make 60k on 1099 income?) they will have paid in about 608 thousand dollars after 35 years.
And they will EACH get a pension of at least 23k for at least 20 years, so about 92000 dollars.
920 thousand dollars for a payment of 609,000 dollars. Oh, the crime of it. think of all the Lexuses they could have bought, or trips to Vegas! the mind boggles. And of course with that 1099 income they don’t really need the SS money. They could live on that 60 k and just burn the 46,000 dollar a year SS checks.
And this is the same old scam the enemies of SS have been running for 80 years: add up the amount you pay and pay, or better, the amount 200 million people pay and pay, and you can get some pretty scary numbers and rely on people neither checking the numbers nor understand what 200 million people make over 75 years, or have to pay (each) to live for twenty years in retirement, or more.
No, no, never let them think about what they get… unless you can twist numbers to make them think they “could have got more”… at the friendly present value bank.
dear people. i don’t expect Krasting to get this. i’ve been telling him the truth the whole truth and nothing but the truth for ten years. but he keep searching for “facts” he can scare you with.
some typos above, and likely some brain-o’s
i am confident enough in the calculations i made when my brain was younger to let it stand pending honest correction.
i am no longer at my best calculating numbers, or typing them, rapidly off the top of my head.
make the best of it.
it’s one tenth of one percent, each, for about twenty years.
not all of the twenty years are “the next twenty years.” the rate of tax increase begins to slow, and slow dramatically after about ten to (now) about fifteen years.
the reason for the “(now)” is that if the tenth of a percent (per year) when needed had been started ten years about, it wouldn’t have been needed until about 2026, and then not every year after that.
the ultimate increase to about 2% (each) hasn’t changed over ten years. even the “immediate and permanent” of about 1% each would require another 1% at the end of 75 years.
the trouble with immediate and (sort of) permanent is that at first people will be paying more than they expect to get back, and by the end of the 75 (not so permanent) years they will be paying less.
similary, the problem with waiting until 2032 or so until the TF runs out and making a sudden 2% (each) increase, besides the shock value, is that between now and then the people who will evntually get the benefits will not be paying enough for them.
“gradual” does have a certain boiling the frog value, but that’s only because the frog is too dumb to understand that it’s easier to pay a little now and more later when you have more to pay it with, than to pay a lot now that you don’t need to pay yet. or wait twenty years and ask your kids to pay what you should have been paying all that time.
the krasting mind at work:
saying the Trustees Report is the official scorekeeping for SS
is not the same as calling CBO a “bunch of hacks.”
but Krastings logic system has never been good at fine distinctions.. like between “true” and “false.”
and there is no important difference between 2027 and 2032 and “the DEATH DAY OF SOCIAL SECURITY TRUST FUND”
it merely means a few tenths of a tenths of a percent difference in the cost of raising the tax enough to meet expenses. or a few years difference in the time of raising the tax “all at once.”
say the increase needed will be about 20 dollars per week. five years at 20 dollars a week would be about 5000 dollars. This is a little over 1% of what you will get back from SS.
still better to pay it a dollar a week per year at a time for most of the next 20 years.
paying it gradually now, pushes back the day of Trust Fund depletion after 20 years to… forever.
i am still worried about that couple making 140 thousand dollars per year.
can’t understand how they could get by in life deferring 17k and have to live on only 123 thousand.
maybe because unlike the 50k earner, or the 25k earner, who have to load only sixteen tons a day, they have to load 50 tons a day. and that takes a lot of groceries to keep up their strength.
so why in gods name and all fairness should they have to defer part of their income just in case their business, or their health, goes blooey and they arrive dead broke in midwinter at age 65 and no one will give them a job at any price, and the rest of us would have to support them out of charity.. a charity to which they never contributed a dime in their life.
oh, the injustice! the cruelty! o-pressed so hard they could not stand…
just in case krasting missed it: with SS they get their money back in time to pay for their retirement.
without SS if their luck holds no problem.
without SS if their luck does not hold, the rest of us will have to support them.
but of course, their luck will hold. it’s proof that they are better than you are.
i new a guy in my town whose business suddenly became obsolete and wiped him out. leaving him only his SS to live on. but he kept writing to the newspaper complaining about how unjust the SS “tax” was.
just because they’re rich, or were rich, doesn’t mean they are smart.
and we notice that Krasting ignores the official scorekeepers of SS– that bunch of hacks — and tells us that his friends at CBO are calling for a 6000 dollar a year increase in FICA.
he likes this better than the 280 dollar a year increase called for by the NW plan. because, after all, as Krasting tells us, Congress will never go for a tax increase.
it’s true the NW tax increase will eventually equal…. more or less…. the CBO increase (after all, the groceries the tax pays for are what they are. no way to get around the cost of living…you, know, actually staying alive. But by the time the NW plan equals the CBO increase, the income of Krastings friends will have increased by 28,000 dollars a year to 168 thousand.
so the 24000 (total) FICA tax is really going to hurt them. trying to live on 144,000 a year, while putting away 24,000 to eventually pay their over a million dollars in retirement benefits (two people at 28k per year times 20 years,) all adjusted for inflation.
Run – You bring up a question of Itemizing?
What about itemizing? Do you think one can deduct SS taxes as an expense? Sorry that is not the case. SS comes off the top and it is not a deduction on the bottom.
If you don’t know that, then you never have itemized.
Yes, I have been self employed and it comes off the top. It is worth 15% to them in a reduction.
71% of the population makes $50,000 or less per year. http://www.washingtonsblog.com/2015/10/goodbye-middle-class-51-percent-of-all-american-workers-make-less-than-30000-dollars-a-year.html Payment per month at 40 quarters or 10 years at $50,000 per year is ~$1800/month http://www.aarp.org/work/social-security/social-security-benefits-calculator/?cmp=RDRCT-SOCI_JUNE15_011#/step1 The most you can get paid right now at 66 is ~$2600/month. Provided the set aside was not voluntary, what is your plan? And you had better include Part A and Part B at 80% also.
Run – So you are sympathetic. You are paying 12.4% of your wages to SS and you probably will have to pay more in the future and get smaller benefits to boot. And you like this?
You are correct that 71% of the population makes less than $50k. But take a closer look at the numbers.
-14% of workers make less than $2,100 a year (These folks are part of your 50k base, but really they are not in the workforce)
-22% of all workers make less than $7,500 a year.
-37% of all workers make less than $17,500 a year.
What this means is that more than 1/3 of workers are really not putting in regular hours. So when you throw out numbers about 71% of the population you are falling for numbers that have been spun for you. Many of those in your calculation are working less than two months a year. This is by choice. These results skew what is going on with wages for those who actually go to work for 50 weeks a year,
https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2015
yes, Krasting, we have talked about this before:
you have to set aside 12.4% of your wages (including the boss’s share) in order to save enough, at a real interest equal to growth in the economy. to have enough to pay for your basic needs in retirement.
i am very happy about this.
but then i did not make a million dollars in bond trading and have hindsight to tell me i did not need to set aside anything in Social Security.
Go talk to some people making 30 k or 50k or 80k even… if they are old enough to have started thinking about retirement…. and see if they can explain it to you.
“you have to set aside 12.4% of your wages (including the boss’s share) in order to save enough, at a real interest equal to growth in the economy. to have enough to pay for your basic needs in retirement.
That is going up to 16.4%.
Warren
yes, after about twenty years. while wages will go up over 20%. so at the end of the day you have more dollars in your pocket after setting aside enough to live on when you are too old to work, or you get disabled, or for your family to live on if you die.
is there anything more important you could be spending the money on?
just to put that in numbers for those who suffer from pecent paresis:
today you have an income of 50k per year or a thousand a week. you pay 62 dollars a week for SS. If you insist that the 62 dollars your boss pays is “really” your money, than you have to add that 62 dollars to your income… therefore you make 1062 dollars per week. either way, after you pay SS “tax” you have 938 dollars a week to live on (including paying your other taxes).
20 years from now your expected income will be about 1200 dollars per week. of that you will pay under present tax rates about 74 dollars, leaving you with 1126 to live on… and the $148 goes into SS… that is, your savings for your retirement. you will get the money back, in real dollars, with an “interest” that depends on how rich you are by then.
if the tax goes up to 16.4% combined, you would see your 1200 dollar paychec reduced by $98 leaving you with 1100 dollars to live on and 200 dollars to go into SS to save for your retirement. you will get the money back in real dollars plus interest.
not that with the higher tax you still have more in your pocket after the tax than you have today.
As time goes on, the tax rate will NOT increase, but your real wages will, so you will have more and more money even while putting an extra 2% of your paycheck into your savings for your old age.
Seems to me you have to be pretty stupid to feel robbed by this. Or just suffer from the kind of blind greed that is not good.
or else you are just trying to annoy me and waste my time.
“yes, after about twenty years. while wages will go up over 20%.”
You keep making that assertion, and I am glad you have such optimism, but that optimistic projection has not happened in the last three decades:
——————————-
[After] adjusting for inflation, today’s average hourly wage has just about the same purchasing power as it did in 1979, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today.
A similar measure, “usual weekly earnings” of employed, full-time, wage and salary workers, tells much the same story, albeit over a shorter time period. In seasonally adjusted current dollars, median usual weekly earnings rose from $232 in the first quarter 0f 1979 (when the series began) to $782 in the second quarter of this year (the most recent data available). But in real terms, the median has barely budged over that period.
——————————-
http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/
Even the real wages of the 75th percentile have barely budged.
Others (not you) have argued that rising wages will boost receipts. But the fact is that the bulk of those increased wages went to those people earning more than the Social Security Wage Base.
i go by the Trustees projections. the official projections.
they show a growth over the last twenty years of about 1% real wage differential per year, as I think you point out the last time we visited this sub-subject.
in any case, suppose wages do not grow. but your retirement expenses do. so much that it requires you to save about 16% of your gross earnings… safe from inflation and other possible losses… in order to have enough to meet your basic needs when you retire?
if you say “the stock market,” i say poor people cannot afford to gamble their life savings. most of them don’t want to. they prefer a sure thing.
and i can tell you that when i earned a hell of a lot less than a thousand dollars a week i did not miss an extra 5% taken out of my paycheck and saved for my retirement.
stop whining.
you are getting answers here because i still hope someone else might see them and think. i haven’t seen any evidence that you will. and i am done playing with you for tonight.
Almost, but not quite — 0.89% over the last 5 economic cycles.
But somehow, they project 1.2% for the next 75 years.
Obviously, they share your optimism.
i am not optimistic at all, but i have to go by the official numbers.
and you have to go by what look to me like a fudged PEW report… notice all the cute qualifiers.
and while spotting trivial … uniimportant… differences, you keep missing the big point:
WHATEVER happens people are going to need… want… to insure they can retire. There is no better way for them to do that. And if the average wage goes DOWN, the people will need SS even more than they do now. It would make sense for them to put aside FIFTY PERCENT,or more, of their working wages if that is what it was going to take for them to pay for their basic needs when they can no longer work.
try actually thinking about that.
i actually don’t know how much of the grain crop Joseph collected each of the seven fat years, but if it had to cover seven lean years, it might have been half… more or less depending on how fat and how lean was expected.
“It would make sense for them to put aside FIFTY PERCENT,or more, of their working wages if that is what it was going to take for them to pay for their basic needs when they can no longer work.”
And yet, most put away little or nothing.
that’s why Social Security has to be a mandatory savings and insurance contribution (a tax if you will).
most people are not smart. even smart people are not smart.
it is very easy to think “i need that money today to buy X. I can save tomorrow.” or “if i invest that money today in X i will get rich.”
in the world of normal experience these are NOT irrational choices. even the kind of capitalism that destroys the earth under our feet is not “irrational” in terms of ordinary human experience: we don’t know what tomorrow will bring, so any advantage we can seize today will put us in a better position to survive (stay ahead) tomorrow.
Mervyn King (former head of Bank of England) refers to this as the Prisoners Dilemma (famous problem in game theory) and “radical uncertainty”. I recommend the book (End of Alchemy). I also recommend Kahneman and Tversky ‘s work on human understanding (or lack of it) of simple principles of “chance.” I do not know if they arrive at my idea bout the simple understanding (errors) correspond to rational choices in the real world (as opposed to the coin tossing world) but you would benefit from reading about it and thinking about it.
i have just paid you a high compliment. whether you can live up to it is another thing. don’t be distraught if you can’t. even i can’t live up to it except once in a while. i don’t know how people cope with their own knowledge of their own inadequacy. it should not be something that makes you “feel bad,” but you still have the problem of making sense of a world you (and I) do not fully understand, and may have less understanding (of parts of it at least) than the next guy.
good luck. [btw i did not fail to notice that some of your comments recently have been perfectly sane and correct and that you were kicked around by my friends…. there is the problem of tribalism which we all, apparently, are subject to. Even when we are aware of it enough to not like it. I would say “to our shame,” but the sad fact (for me) is that even I have (finally) had to learn when to keep my mouth shut when the “tribe” is wrong…. it’s a matter of survival. i try to make up for it, and so far, at least, have not participated in any actual lynchings.
this still leaves me wishing, most ardently, that you would not sandbag my posts with trivial side issues.
except my own.
“except my own” referred to my lynching, not my trivial side issues.
the line was misplaced by the peculiar way my computer or AB’s keeps track of and displays what has been typed.
“[That’s] why Social Security has to be a mandatory savings and insurance contribution (a tax if you will).”
First of all, MANDATORY CONTRIBUTION is an oxymoron. To CONTRIBUTE is to GIVE. If it is mandatory, it is a taking, not a giving.
http://www.dictionary.com/browse/contribute?s=t
Neither is paying the FICA tax SAVING.
INSURANCE, however, is a proper term. (I notice that you use the phrase, “insure that you can retire,” rather than “ENSURE that you can retire.” The FICA tax is a payment to INSURE that one can retire, while one invests to ENSURE that one can retire.)
If I can make a recommendation to you, read Picketty’s Capital in the Twenty-First Century. https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617 You will find that his main thesis is fundamentally flawed, but the historical data he provides is illuminating, and his projections are thought-provoking. Despite the theoretical flaw, the data make it worth the read.
warren
i don’t know what to do about you. you suffer from word-stickiness. a mandatory contribution is not an oxymoron
ORIGIN late Middle English (denoting a tax or levy): from late Latin contributio(n-), from Latin contribuere ‘bring together, add’ (see contribute ).
even without this little help from the dictionary you need enough flexiblity of brain to see that words point at something, they are not the thing itself. in this case i was pointing at first the contribution… i contribute to my own welfare, i contribute to my savings. i contribute to my investment plan. or i contribute to the government (via taxes). but i was also pointing at why the contributions need to be mandatory.
there is no oxymoronism there. just a way of bringing into focus what is actually happening in the real world. you seem to get stuck with your ideas about what is pfffree will and what is government “force.”
it’s pretty much the attittude of a two year old (terrible twos) or a fourteen year old who insists he’s old enough to drive and no, he doesn’t need insurance, or even to fill up the tank.
here is a hint for you… i don’t like being forced any more than you do.l maybe less. but i can;t see how to avoid “force” in the affairs of men. because not all criminals wear a black mask. without the force of law we would have the force of man vs man. i am pretty sure the latter would cost you more. try to remember that government was instituted among men to help the rich keep their money. only after the american revolution did the idea take shape that men created governments to protect them from evildoers and elected (hired) representatives to manage government, and made checks and balances to (try to) keep government from becoming worse than what it was designed to prevent.
similarly, paying FICA is saving. you put your money in a “bank”, and your guarantee of getting it back is actually better than any other place you could put it. not perfect, as some poor dumb immigrant communist found out at the height of the mccarthy red scare. but that isn’t likely to happen to “all of us” at once, unless we are stupid enough to vote for a president and congress who will destroy the program.
now, me, i don’t care much about the difference between insure and ensure, except that i think insure involves some legal concepts that ensure does not. those legal concepts might be important.
back when i was in college… freshman… i ran into people who thought each word had a special meaning and if you were smart enough you would know it, otherwise otherwise. i found those people very tedious, and was a little grateful to find out in later years that people who studied “linguistics” agreed with me. but only a little grateful because i already knew i was right. and if linguistics experts had insisted upon pedantry and ‘grammar’ i would have written them off as idiots.
so, like my friends in first grade (college) you have a choice: agree with me and be smart. otherwise, otherwise.
i won’t have time to read Picketty. other things in my life are more important. but anything you can say in 25 words or less i would probably think about… for 25 seconds or less. or maybe more, depending.
“[I can’t] see how to avoid ‘force’ in the affairs of men. [Because] not all criminals wear a black mask. [Without] the force of law we would have the force of man vs man. [I] am pretty sure the latter would cost you more. [Try] to remember that government was instituted among men to help the rich keep their money. [Only] after the [American Revolution] did the idea take shape that men created governments to protect them from evildoers and elected (hired) representatives to manage government, and made checks and balances to (try to) keep government from becoming worse than what it was designed to prevent.”
All true, but that has nothing to do with Social Security or FICA taxes or retirement.
“[Paying] FICA is saving. you put your money in a ‘bank’, and your guarantee of getting it back is actually better than any other place you could put it.”
That is total bunk and you know it. There is no “bank” into which one puts one’s money, nor does any of the FICA taxes “contributed” belong to the “contributor.” The odds of a 25-year-old’s seeing any of the money he “contributes” is less than 80%. https://www.ssa.gov/oact/STATS/table4c6.html
What other “investment” has such a high default rate?
“[I] don’t care much about the difference between insure and ensure….”
If you do not understand the difference between ensuring one’s life and insuring one’s life, I’ve got some insurance to sell you.
“[Back] when i was in college… freshman… [I] ran into people who thought each word had a special meaning and if you were smart enough you would know it, otherwise otherwise.”
They probably knew how to capitalize too. Yes, words do each have special meanings, and those meanings are changed by those who are ignorant of them and by those trying to deceive others.
“[Anything] you can say in 25 words or less i would probably think about….”
Words are countable — so that should be, “twenty-five words or FEWER.” 😀
Actually Warren
The words on the cereal box were “25 words or less.” Language is what people say, not what some grammarian says. I learned that… after years of getting A’s on grammar and spelling tests… just in time to avoid becoming a pedant and fool.
actually, i do not know it is bunk. what is a “bank.”? i would say, jesus, warren, you can’t be that stupid. but over many years of reading stuff on the web, i have to admit most people are that stupid.
i think i mentioned a difference between insure and ensure, let’s hear it.
and don’t accuse me of trying to deceive others. it makes me mad. i am the ONE person here who is trying to UNDECEIVE others. You, like most people have fallen in love with your deceiver and your deception.
my little essay on force had everything to do with your incorrect understanding of the word “contribute.” also you serious problem with government “force” especially where your precious money is concerned.
i find a it doubtful that 20% of 25 year olds will be dead by age 65. but in any case they’d be dead so they don’t need to collect on their retirement insurance. you see, it’s insurance against getting old without enough money to pay for your basic needs when you can no longer work. if you are dead, you don’t need themoney.
consider the people who never live to collect on their fire insurance. are they being robbed? or do you just have trouble with the concept of insurance?
my computer will not access ssa.gov. if i remember when i am near another computer i will try to look it up. but remember what i said about insurance. that’s the point.
meanwhile i am beginning to feel like you are deliberately wasting my time.
warren
i still can’t access ssa.gov but i did think about it. here’s your 25 scons worth.
the statistic does not mean 20% of people who pay their SS tax will die before age 65. it means that 20% of people who paid any SS tax at all will not live to collect the full present value of their tax.
this is intentionally designed to be misleading. unfortunately your 25 seconds is up. basically what i said about the “insurance” above is the reason why the statistic is beside the point.
“[The] statistic does not mean 20% of people who pay their SS tax will die before age 65. [It] means that 20% of people who paid any SS tax at all will not live to collect the full present value of their tax.”
Since you cannot access the site, how do you know what it says?
Actually, it DOES say that less than 80% of 25-year-old men are expected to live to 67. (Did you forget that their full retirement age is not 65?) But let’s back that down to 62 — their current early retirement age. Twenty-five-year-old men have a 14% probability of not making it to early retirement at age 62.
“[Basically] what [I] said about the ‘insurance’ above is the reason why the statistic is beside the point.”
I agree. It is INSURANCE. FICA taxes are NOT savings, and calling them savings is either delusion or deception.
And since when is someone’s being stupid a valid reason for forcing him to do something he does not want to do?
Warren:
“And since when is someone’s being stupid a valid reason for forcing him to do something he does not want to do?”
Because like healthcare, I do not want to pay for them and some form of forced retirement funding is essential. You are being an ass and playing cat and mouse. Enough . . .
“I do not want to pay for them….”
And why should you be forced to?
Warren
you are being an ass.
i think Run meant to say “forced retirement SAVINGS is essential”
you are forced to pay for them… if they get old without enough to live on..for the same reason you are forced to stop at stop signs and forced to pay taxes for the army that defends you: the country would not survive without a government forcing us to pay for what we need to succeed in this together. millions of people starvng on the street would not be good for business.
i obviously don’t KNOW what the ss article SAID. but i could reconstruct the argument from what i know about what has been said before by people like Andrew Biggs. I think a 14% chance of dying before 65 still sounds too large, but i don’t actually know. in the meanwhiile some of those people will have died with dependents who will collect MORE than the worker will have paid in. and even more important is the FACT that
SOCIAL SECURITY IS INSURANCE
you don’t get to get your premiums back if you die before you have the fire. but buying fire insurance is still prudent.
how many people collect far more than they paid in (even in “present value” because they live a lot longer than “average”?
if you had asked these questions once there would be a reason to answer you, but you keep mousing around looking for ways to score points with arguments and “facts” that don’e address the real problem:
how can ordinary workers insure that they can save enough of their own money to meet basic needs when they can no longer work?
please give us a break. we are tired of you.
“[You] are forced to pay for them… [because] the country would not survive without a government forcing us to pay for what we need to succeed in this together.”
We did quite well for over 150 years without Social Security.
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“I think a 14% chance of dying before 65 still sounds too large….”
And I think a 1.2% projected growth rate sounds too large, but as you said, we “have to go by the official numbers.”
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“[I] think Run meant to say ‘forced retirement SAVINGS [are] essential.’”
That is not Social Security.
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“SOCIAL SECURITY IS INSURANCE”
We are in violent agreement on that point. It is insurance. It is not a savings program.