run75441 | March 2, 2018 9:12 am
I got an email from the Committee For a Responsible Federal Budget today.
It “shows” that the deficit/debt will grow dangerously over the next few years. So far so good.
But near the bottom of the analysis it states that the largest driver of the debt is Social Security.
This is a lie. Social Security has nothing to do with the deficit/debt. It does not borrow anything. It is paid for entirely by the workers who will get the benefits.
More than that, it suggests the Trump deficit may is in fact being created specifically to drive debt hysteria for the purpose of getting the people to accept gutting Social Security.
Social Security has an “actuarial deficit.” This is not the same as “the” budget deficit or the national debt. It is merely a statement that at the present FICA rate, SS will not take in enough money to pay the scheduled (and necessary) benefits beginning in about 2030.
The sane response to this would be to raise the FICA rate about 2% (gradually over time) to cover the expected costs of the retirements of those paying the “payroll tax.” This would amount to an increase of the tax of about a dollar per week per year while wages are expected to go up about ten dollars per week per year.
But who will tell the people?
“Social Security has an “actuarial deficit.”
I give them some credit for limiting their propaganda to something resembling the truth.
But these low life muggers have no clue what the economy will look like 2 years from now. And there are 6 of those two year periods before 2030.
And when times were better they all screamed for a tax cut.
My best example is President George W Bush’s tax cuts for 2002 when the baby boomers would begin to retire in 2007. Those surpluses could have been used to buy back old US government debt instead of using them for tax cuts.
They campaign for something which only a retiring Congressman will support. And retirements are few and far between.
And that will be the case far into the future.
it is important to understand that Social Security really has nothing to do with the budget deficit or the national debt at all. Within very broad limits it would function perfectly whatever the economy does… in fact, the worse the economy does the more important Social Security is.
It works by the same principle that saving for old age has always worked. Even when “saving” meant “taking care of your children” or “keeping gold coins under your mattress.” You have to put away enough money (or “credits) during your working lifetime in order to have enough to live on when you can no longer work.
What Social Security brings to the equation is that you are no longer left destitute if you have no children to take care of you, or if someone steals your gold coins, or if the economy goes to hell at the worst possible times and your stocks and bonds will no longer pay for your needs.
It does this by mandatory savings… because most people will not save enough… protected from inflation and market losses by pay as you go financing.
In some countries this can work by a “socialist contract” in which general taxes pay for an old age benefit.
In the united states it works better if the workers “save their own money” and the government merely oversees an insurance factor, such that those who end up after a lifetime of work and savings with not enough are paid an insurance benefit that comes out of the insurance premium paid for by all workers.
many visitors to this site get themselves totally confused by insisting upon narrow definitions of “saving” and “insurance’ in which they completely miss the point and nature of those things by adhering to a picture of the limited kind of commercial savings and insurance they are familiar with.
As long as the workers put aside, “save,” enough (through the payroll “tax”) to pay for a basic retirement, Social Security can work forever without regard to the government defict or national debt, or even the economy.
I don’t know much about the limits beyond which deficits or debt are “safe,” though I believe both are necessary at times and the hysteria about them is grossly misplaced. But I know they have nothing to do with Social Security, which borrows nothing and contributes to neither.
The Big LIars try to take an accounting entry (or lack of entry) by which the government more or less keeps track of money it borrowed FROM Social Security, to claim that SS is a major contributer to the debt. This is talking and thinking backwards. If I borrow money from my grandmother for “school expenses” and spend it on gambling and liquor, my grandmother is not responsible for my debt.
And just as , if grandmother is wise, she did not lend me more money than she can afford to lose, Social Security could continue forever even if the government never paid back the money it owes to SS.
I’m trying to come up with an abstraction that is able to alert progressive academics that a 94% de-unionized labor market is AUTOMATICALLY a 94% defective market. Something akin to the so-called natural rate of unemployment — which has a certain bar that mostly everybody recognizes. A “natural rate of collective bargaining” (NRCB)?
Let’s look a the US. Let’s say 20% of our workforce is in what could be called perfect competition condition — meaning they get paid about the max the ultimate consumer of their services would be willing to pay (near the top 1% a lot more). _Equal-gratification_ equilibrium. I would peg the expected coll barg rate should be close to 100% of those outside this perfect competition zone (effectively moving them into the perfect zone).
94% of the other 80% of the US labor force cannot bargain effectively without collective bargaining. I call that _split equilibrium_: labor takes whatever price it can get along the subsistence-plus/race-to-the-bottom wage scale.
High NRCB looks a lot like a lot of continental Europe — a lot like Germany or Canada. The NRCB measure could even point out something defective in the latter. And the Grand Canyon wide gap between other modern economy’s moderate NRCB deficiencies and the almost 100% defective American rate.
* * * * * *
AUTOMATIC solution: our coming Dem Congress can mandate union certification and re-certification elections in every private workplace; one, three or five years, plurality rules on the latter. Labor in other counties does not have to run the kind of almost impossible gauntlet that American employees do (unique in all the first world — and a lot of the second and third (Argentina and Indonesia even have sector-wide bargaining).
Mandated elections would AUTOMATICALLY become the hottest issue (maybe in a hundred years) by simple logistics, not even merit, for the simple reason it would affect virtually every single household and most to the core.
Why Not Hold Union Representation Elections on a Regular Schedule?
Andrew Strom — November 1st, 2017
[left this out]
Do not listen to Coberly. He is an idiot.
If the Social Security problem could be solved with” an increase of the tax of about a dollar per week per year” the Coberly plan would pass the House 435-0, and the Senate 50-0 and all the politicians would go back to their constituents bragging “I solved the Social Security issue for a dollar per week, reelect me” Why is this not happening? Coberly claims it’s because there is a bunch of liars. Ummm yeah.
Lets do some math. There are about 125M full time workers in the US so a dollar a week is $125M per week times 52 weeks = $6.5B per year. The Social Security Trust Fund, made up of IOUs from the Federal Government is $2.6T and scheduled to be exhausted by 2034 (17 years). 17 times $6.5B = $95.2B. Where does the other $2.5T come from?
Sammy does not remember
that the Deputy Chief Actuary of Social Security has confirmed that my one dollar per week raise each year keeps Social Security solvent as far as the eye can see.
he can’t seem to get his brain (i almost called it a mind) around the “per year” part of that. or that it does not go on forever but stops after SS income and outgo are balanced at a 2% total increase in the FICA contribution (what journalists call the “payroll tax.” But it’s not a tax: you get the money back about threefold when you will need it a lot more than you need it today… because of the magic of pay as you go financing.
I never used to believe that Sammy was getting paid to be a troll… I didn’t think anyone would pay anyone as stupid as he is for anything.
But recently I have learned that there is a whole army of people paid to say stupid things on the internet and keep saying them knowing that enough people will believe them if they hear them often enough, and that after other people hear them second and third hand they will think everyone believes them so they will believe them too.
There aren’t enough people here to matter, and none of them will do anything… can do anything…to save Social Security anyway. So give Sammy a hand. He wins. You lose.
“So give Sammy a hand. He wins. You lose.”
No, reality wins. You should try it.
By the way, you never answered my question: “Where does the other $2.5T come from?”
Your “question” makes no sense. The Trust Fund has nothing to do with the tax increase necessary to pay for scheduled future benefits.
You are just throwing numbers against the wall and hoping something sticks.
” The Trust Fund has nothing to do with the tax increase necessary to pay for scheduled future benefits.”
Hey we agree! The Trust Fund is irrelevant! You are not as much of a moron as I thought.
Finally, a breakthrough.
You say “moron” one more time and you are outa here. I assume your proposition is not to pay back the money borrowed by the nation to fund tax breaks to the 1% making greater than $500,000 annually and the low corporate rates which flourished sine 1983? Is this what you are proposing?
the correct arithmetic would be to take your 6.5 billion tax increase each year. multiply it by 20 years to get 130 billion tax increase after 20 years.
double this to include the employer’s share… so a 260 billion dollar tax increase. This is 4% of the then payroll of 6.5 trillion dollars (this “estimate” is not counting the growth in the economy or the effect of inflation. I do count those things in the “real” math.)
Because the tax is increasing every year it reduces the amount of the Trust Fund that needs to be applied to benefits to zero.
I don’t expect Sammy to understand this. His “math” proves beyond any doubt he knows nothing at all about Social Security finances.
And my “explanation” here hardly explains everything, but it should start any serious reader in the right direction to fill in the details and, for example, to allow for inflation and growth in the economy and growth in the population.
So why were you trying to prove my tax increase would not pay for the Trust Fund (which is money owed TO Social Security because it was borrowed FROM Social Security to keep your taxes lower than they would have been otherwise.
Sammy, this is psycho ward stuff. Your doctor has gone home for the day.
“And my “explanation” here hardly explains everything,”
It actually explains nothing. Where are you going to get the $2.5T?
Look you are outnumbered a 1,000,000 to 1. I am sympathetic as I am also an iconoclast. I take up hopeless causes based on principle….like maybe Trump could be President. However, in the face of withering facts, you should go back and reevaluate your position.
Go back to square one. Forgo all the insults and virtue signaling. Forget you are a social security recipient and therefore have a vested interest……..
Last comment is a non sequitur.
Just curious. If you leave out inflation as you claim you’re then why do you have to increase the SS tax?
Here’s another question leaving out inflation as you claim you do.
Assume linearly increasing wage over 35 years … pick 10k per year to $80k since inflation isn’t included. You can put this on an S shaped curve or linearly it doesn’t make any difference. in the average annual lifetime gross earnings.
In this example it would b an average annual earnings of $45k per year. Multiply by 35 years employment = $1.575 million. SS tax at 10% of gross then equals $157.5k. Divide by 15 years longevity = $10.5k/year SS benefit.
That’s 23% of your average annual uninflated earnings to live on during retirement (2 persons normally) or $5.25k per year per person.
Think that works out to a livable wage without inflatin?
You’ll answer the last question with “the gov’t invests it for you so you earn interest,” right?
if there’s no inflation though, then what is the constant interest rate? or it it isn’t constant and if not what changes it and by how much each year?
And .. what are the left over funds in fact.. or are there any at all if population is constant. And if population is growing (a-la boomers for example) then the payouts will always exceed the SS tax payments, and in either case there’s bee nothing left over to invest anyway, so no interest income.
Next Question: Who pays the interest even if the there is something left over to invest? That would be people or business’s that borrow, right? In the end the US general taxpayer has to pay the interest on it, right? So the wage earner’s interest on investment is paid by other than the wage earner…. more by higher income earners in progressive tax system and very little if any by the lower wage earners, right?
Isn’t that what is called a general taxpayer subsidy?
And if the individual is responsible for making their own investments or savings on 10% of their income then hasn’t that been well proven in every society since SS began to never happen in fact because individuals don’t have that level of discipline? Or for those that do, then do banks pay the same interest on savings as the lenders to the treasury?… Answer: not by a long shot Or is the average wage earner capable of managing their own investments or do they have to pay for that service out of savings and what is the average price per dollar invested for that service on the open market? and then wouldn’t that cost reduce the net savings?
If the wage earning period is from age 20 to 65, and the average age to death is 15 years after age 65, then those paying into the system are = 3x (= 45 years payins to 15 years payouts = 3x payins per payout). So on a pay-go system that should leave a NET 2x wages paid into the system to earn interest as is being paid out, right. And that accumulating excess of pay-ins over payouts keeps increasing every year, right? Then that should mean every years payins accumulate to a greater and greater surplus with that surplus also creating more and more interest, right?
But then why would there ever be a reason to increase the SS tax rate if inflation doesn’t exist as you claim your calcs are based upon? .
PR for people > 55 years of age is up as I posted charts on this mostly because they can not afford to retire or like myself being well paid.
There is or at least there was something called productivity gains which I will not expain here and which occurs when Labor gains some of the increases resulting from productivity. The kicker here is capital has figured out a way to incur profits without Labor (CDS and naked CDS is one great example). We came close to solving that issue when they started to increase the tax on capital gains which pays no SS tax and can arbitrarily be kept out of the US.
You sound like a typical macro-economist who has never set foot inside a plant. Funny when I had to intercede for a manufacturing engineer at Economist’s View as the frequenters there never understood a word he was saying. When companies move overseas, is it because the amount of Labor decreases there or is the Labor paid that much less or is the cost of Labor smaller?
If there is a gain from off sourcing by lessening the cost of Labor, why shouldn’t this be taxed upon return of the product to the US? Could the need to increase the SS tax rate be because the inputs have decreased by taking business (general term) outside of the US and Capital gains void of Labor going untaxed? PR is down; but, it is down amongst the prime age group less than 55 years of age moreso than those >55 when looking at it historically.
Coberly is arguing with the naysayers and his points are valid. You happened to grasp one minor point and blow it up.
“I assume your proposition is not to pay back the money borrowed by the nation”
No, my position is that system reliance on the Trust Fund, by which $2.6T will have to be raised to pay scheduled benefits, makes the challenge much larger than a dollar a week. Understating the issue is a disservice.
SS has already said it will work and Coberly has said it needs to be implemented soon. What will stymie it will be the falloff from less of the population being employed and sharing (in both cases of employment and unemployment) in productivity gains. I believe Coberly has the service of a greater authority backing his argument as delivered by SS and economists. Repayment of the loans was always a given. How that repayment is applied to the populace is another matter. I tend to believe it should come from those who benefited the most from it. It is not you or I mostly.
I have to run and write some “stuff” on healthcare. Be polite, people will like you more.
I don’t think you understand what my issue is with Coberly’s understanding of the US SS system.
My record in my career stands. Spening nearly half my time inside mfg’ing plants, on mfg’ing lines for hours on end, bent over operators tables, working with operators to identify problems and mf’ging engineers to solve theirs all at lower costs and increased productivity while improving product quality. I pranced all over the globe in our mf’ging plants to solve plant mfg’ing problems — which were mostly due to inept management (whom I had overcome first) and more time with inept engineers and their “NIH”, and their always blaming operator error, etc. etc. or demanding loosening specs.
Accept that or call me a liar… either way doesn’t change it.
“The kicker here is capital has figured out a way to incur profits without Labor (CDS and naked CDS is one great example). We came close to solving that issue when they started to increase the tax on capital gains which pays no SS tax and can arbitrarily be kept out of the US.”
I’ve never said or implied otherwise, Run. You must be confusing me with somebody else… like a conservative somebody.
I’ve always stated that we should tax unearned income at standard rates AND that we should be taxing and paying overseas profits annually at standard corporate rates. But neither that has nothing to do with how we pay for SS benefits. Unearned income when taxed at standard income rates is nearly all well beyond the threshold CAPs and even if the threshold CAPS were unlimited then they wouldn’t receive benefits in proportion to their contributions under current SS law.
I’m not one tiny bit opposed to SS and in fact believe benefits are far less than they should be. But that has zero to do with anything related to my issue with Coberly’s understanding and pure unsupportable beliefs about SS financing..
because the actuarial deficit has nothing to do with inflation. it is caused mostly because people are going to be living longer, and also because real growth in wages will be slower than in past.
pay as you go financing automatically solves the inflation problem.: future taxes like future benefits will both be paid in the same inflated currency. and “interest” on your tax will come automatically from growth in the economy…(current taxes come from a larger pool of money than the one you paid your taxes from, so other things being equal the same tax rate pays a larger benefit in future than collected in present. (other things are not equal… aforementioned growth in life expectancy, lower growth in incomes.)
and my career including having to correct the calculations and programs of people who did not understand the problem.
i could write a correct program in minutes. i could not unravel the errors of people who don’t understand the problem in days or years.
you are fooled by your experience in what you think is a related profession into thinking you understand the problem. you don’t.
i have explained it in depth many times. i even have the endorsement of the deputy chief actuary of social security.
you are not a sammy, but you are profoundly wrong. and it is irritating that you assert your superior knowledge in the face of that endorsement of my work by the actuaries office.
i wish i could explain it to you, but i am not going to live long enough.
The Trust Fund is currently being paid back to the people who contributed to it. Social Security has a payout schedule that favors low lifetime earners… that’s its insurance function.
As a matter of accidental fact (i did not design it, it came out of the nature of “pay as you go” with the needed gradual tax increase… it was discovered in the numbers and pointed out to me by Bruce Webb, who may no longer be with us.) … as a matter of fact, IF a gradual tax increase is started this year the Trust Fund PRINCIPLE never has to be paid back… it just stays on the book as a paper debt matching the one year’s reserves required by SS prudent policy.
It goes from about a three year reserve today (created by the Boomers for the Boomers) to a one year reserve, not by being paid down, but by the growth of the population (and therefore the size of the “one year’s reserves.”)
I used to say the Trust Fund was not important to SS. It’s not, but it has taken hold of the popular “mind,” because it’s “running out” gets shouted about every year. IT was always supposed to run out… as it paid for what it was designed to pay for… the Boomer retirement.
What I overlooked was that the natural consequences of raising the tax to pay as we go enough to avoid “actuarial deficit” would automatically mean that nothing need be drawn out of the Trust Fund.
No one is hurt by this. The boomers get the retirement they paid for. The people after the boomers will get the retirement they pay for. (as long as the tax is raised enough to pay the benefits they will need themselves…. and all future generations will need, barring some very improbable circumstances (invasion from Mars, plague that wipes out a whole generation of “the young”…
The killing of SS by private enterprise lunatics or killing of SS by far left lunatics who win an election and “demand the rich pay”.. these are much more likely ways of destroying Social Security… and any hope the workers have for an assured (insured) way to retire when they are too old to work. As will happen even to “the young.” But shhh… the young don’t know that yet.
“i even have the endorsement of the deputy chief actuary of social security.”
The Deputy Chief Actuary makes the same oversight as you do: he treats the Special Treasuries as cash. To be fair to him, how to raise the money to redeem them is outside of his scope of responsibility.
But, for you, who claims he has solved the Social Security problem, it is not outside the scope of your analysis. You can’t just say “a dollar a week” will solve it when we also have $2.6T to raise.
Any plan will work if you have $2.6T in cash. Even no plan would work. Your willful ignorance about this explains why you are out of step with every other analyst. You are obfuscating this, which is another word for lying
As I expected
Sammy is back
repeating his lies… stupidities… in the hope that someone will think he is saying something and repeat it to themselves until they too believe it.
All I can do is say again that the Trust Fund has nothing to do with the problem. The problem is the need to raise the payroll tax to a level at which it will provide the money needed to pay for a basic retirement.
my discovery is only that it turns out to be not a lot of money… you would never feel it, or even notice it if the Big Liars did not keep screaming llies and distortions.
I have given brief explanations of that here, and fuller explanations many times on Angry Bear. And the Deputy Chief Actuary is not a fool: when she says that one tenth of one percent (each) per year for about twenty years keeps Social Security “solvent” for as far as the eye can see, she knows what she is talking about.
I merely also point out that the one tenth percent tax increase each year happens while your paycheck increases about one full percent each year. You will be better off after paying the tax increase both in money in your pocket to spend now, and money in your retirement which you will need when you are too old to work.
and that’s it, Sammy, your doctor has other things to do today.
You have a knack for generalizing without any basis in fact to justify your generalizations.
You haven’t answered my questions yet either though (answer each in turn, please). You said your calcs are net of inflation. Then why have SS tax rates increased by a factor of 6.2 since start? Post 65 longevity hasn’t increased by 6x. Anbd if boomers paid into it then their benefits were paid for according to your beliefs so it shouldn’t cause any others to pay more to cover them (because you say inflation isn’t part of your basis for increasing SS tax rates.
And oh, btw, the birth rate increased 25% from 1940 to start of boomer generation in 1946…. from the boomers start to it’s precipitous decline beginning in 1958 the birth rate it only increased by 4.1% and from then in 1959 to 1969 it decreased by.29.4%… and from then to present it’s dropped by another 17%. so it’s not possible for current worker to pay more into the system than they take out over 15 years after age 65 or 66 or 67 and have a livable SS benefit without including inflation uplifts — but you said you didn’t use inflation.
So since 1959 (end of boomer’s high birth rates) to present the birth rate has dropped continuously by 41%. after having grown by only 4% from beginning of boomers in 1946. Before the boomers though, the birthrate had increased by 25% from it’s low point in 1937/38.
This has nothing to do with the actuarial based values if you aren’t including inflation’s effects as you have said you haven’t by the starte of the boomer generation after birth rates had already risen 25% the SS tax rate only increased by 1% from 2%. (see table under “History” in this link)
By the time the starting boomers began working (assume age 20 for SS contribution purposes) in 1966 the contribution rate increase to 7.7% from 3%.. a factor of 2.5x to cover the boomers peak birth rate period of 4% over the prior growth in birth rates???? And you say you’re not using inflation’s effects?
And Sammy is correct about the Chief SS Actuary.. he has no responsibility to come up with the cash to cover anything. He makes his best actuarial assumptions (invariably adjusted to underestimate the actuals as they turn out in fact — which is also a politically inspired effect) about future and then congress has to act or not or increase rates less or more or delay them or advance them, which is a pure political ball-game over which nobody has any control at all. This was in fact Roosevelt’s major reason for opposing the pay-go system in the first place — but he couldn’t get Congress to go along (obviously because congress wanted to insure it could use SS as political tool). This was not at all unknown at the time.
I have been trying to be nice to you. Far from making generalizations I have solved the problem in detail with attention to all relevant factors.
It is you who are making meaningless calculations and then demanding i waste my time answering meaningless questions.
and by the way, I did NOT say i “don’t use inflation.” I said I ignored inflation for the purpose of making a simple demonstration of Sammy’s error.
Then I pointed out that pay as you go financing finesses the inflationi problem.
and inflation has nothing to do with the increase in SS rates over the years. That is an artifact of the system starting out with about 40 payers for every retiree… simply because the tax was applied to (most) all workers, and benefits were given (another simplification to illustrate the point) only to retirees who had paid into the system… about 1/40th of the working population per year. The system matured at about 3 payers per retiree a number of years ago, with that fact obscured by the rise of the baby boomer population and the need to create a Special Trust Fund level so the Boomers would not get a windfall (more benefits than the paid for) and the post Boomers would not be stuck with a “generational unfairness” by having to pay more than their fair share to “pay as we go” for the Boomers.
Not because of the Boomers, but because we are all going to be living longer, the new cost of Social Security will be “paid for by two workers per retiree.” This is nothing but a way to say each retiree will pay enough tax over 40 years to pay for about 20 years in retirement.
I don’t expect you to understand any of this. You have failed to understand… or even read… what I have tried to explain so far. I expect this, but I am tired of hearing you accuse me of ignoring the “facts”. You don’t know the facts,
You are descending into Sammyism.
this is just so you will know i read your latest.
i try to be kind to children and old people who have lost their faculties.
but i can’t spend all day answering nonsense.
Remember Reagan’s increasing the SS start age from 65 to 67 over a period of years? That was supposed to, according to the actuarial inputs by SS, and the committee under Greenspan, make SS solvent forever How’d that work out?. Just one of many successive “actuarially” incorrect use of assumptions.. all of which for some “strange” statistical reason are always coming in on the wrong side of reality. Which means the estimates are always politically biased to the wrong side of reality as they relate to SS contributions and outlays..
Since there are only 4 major variables, and only one of them is birth rates which are reasonably decent estimates, then the other three are in composite biased to the wrong side of reality:
Earned income employment rates, Treasury rates, and Inflation rates. You can add a host of others as well —- net immigration rates, distribution of values of earned income levels, longevity growth rates after retirement age, among them.
And btw, birth rates are only decent estimates until they aren’t which turns out to be one of the long term swingers in the pay-go system.
For anyone still inclined to think Longtooth has said something sensible:
the actuaries take into account all of the factors he mentions. that’s what they do. it’s their job.
and in fact they predicted the growth in the population and the increasing life expectancy to a decimal place.
the Reagan SS fix did not raise the tax enough to cover the infinite future because the Congress did not like tax raises in general, And there was no point in doing so before the money was actually needed.
It’s a shame no one thought of (? maybe someone did) scheduling future tax increases, or gradual increases. It would have saved a lot of nonsense and political hot air over the decades.
But Longtooth doesn’t know any of this. He makes it up his head.
I thought it would be unkind to point it out at the time, but a few days ago Longtooth told us he was born within a few months of VE day, and that he was 76. Both of those things can’t be true.
Keep that in mind when he tells you his facts about Social Security.
I won’t be back.
For awhile anyway, if i can manage it.
To keep Coberly honest:
My comment less than 2 hrs earlier than his Mar 4, 4:19 comment was short and stated:
“He [ss actuary] makes his best actuarial assumptions (invariably adjusted to underestimate the actuals as they turn out in fact — which is also a politically inspired effect) about future and then congress has to act or not or increase rates less or more or delay them or advance them, which is a pure political ball-game over which nobody has any control at all. This was in fact Roosevelt’s major reason for opposing the pay-go system in the first place — but he couldn’t get Congress to go along (obviously because congress wanted to insure it could use SS as political tool). This was not at all unknown at the time.”
It’s always been up to congress. This is the ss law.
“I thought it would be unkind to point it out at the time, but a few days ago Longtooth told us he was born within a few months of VE day, and that he was 76. Both of those things can’t be true.”
Obviously if anybody knows when VE day was. Did Coberly ask which was the case? Like maybe 76 was a typo? Or Maybe I didn’t’ know when VE day was? Was the difference even significant in the context the comment I made… I don’t correct insignificant typos that take up space for no good reason.
But to correct the typo it’s a few months before VE day.
Or was it VJ day? Hmmm.
Coberly, didn’t I already comment specifically that congress decides whether to follow the actuarial estimates or not for political reasons before you repeated it saying:
“because the Congress did not like tax raises in general, And there was no point in doing so before the money was actually needed.”
We already knew that “Reagan SS fix did not raise the tax enough to cover the infinite future…” which is what I’d already pointed out. But that’s not what he or congress told the public the age increases would do.
But can you show me the link(s) that show congress didn’t use the actuarial estimate of the required SS tax contribution rates when the age of full retirement was increase up to 67, or that the Greenspan commission didn’t use them and decided not to? Or that Reagan said he wouldn’t sign the change in the law unless the new SS tax rate was reduced from the actuarial estimates of the required SS tax rate or that the Greenspan Commission over-rode the actuaries basis? Or that the actuary’s basis was in fact an estimate that didn’t understate again.
Because what we were told is that it would fix the SS insolvency for the 75 year outlook (which is the actuary’s furthest projection into the future). Let’s see now.. 1984 + 76 years =. 2060. And in 2017 we were told it would be insolvent in 35 or 36 years even though we raised the contribution rate again after 1984.
Lets see now. 2017 +36 = 2053 and **even much earlier** if the contribution rate had remained what it was when we were told the age increases of full eligibility would fix it.
“REPORT OF THE NATIONAL COMMISSION ON SOCIAL SECURITY REFORM. JANUARY 1983. The National Commission on Social Security Reform (informally known as the Greenspan commission after its Chairman) was appointed by the Congress and the President in 1981 ..”
The Greenspan commission made different (lower future inflation rates) than the actuarial long term (75 years) plus added the tax on SS benefits which went directly into the SSA funds (not to mention the age increases). From those changes made by the Commission’s own estimates, they recommended the SS tax rate increases that have been in effect since then to present (capped at 12.5% for all years from 1990 into the future. Congress just rubber stamped all of the
Commissions recommendations in 1984.
But with those commission’s own numbers, we have increasingly found that the 75 year insolvency is down to 35 or 36 years (according to the actuary’s estimates), so clearly the commissions assumptions on future inflation rates were understated relative to the actuaries assumptions and were thus way over -optimistic.
Yet congress has failed to act — either by increasing the SS tax rates again or by reducing benefits or future retirees again, or some combination of both.
So here we are yet again… the estimates and assumptions they’re based on are always … ALWAYS…. in the wrong direction.
In the 1983 case it wasn’t congress that failed to use the actuary’s recommendations, but some other political appointees instead…. the Greenspan commission. But since then it’s been congress’s failure to follow the actuary’s recommendations, OR the actuary’s estimates themselves… and we don’t know exactly how much is due to which body without going through every year’s new actuary recommendation and Congress’s changes in the law. A useless endeavor btw, since the answer is immaterial — the estimates or basis by either actuary or congress have been WRONG in the WRONG DIRECTION to maintain solvency for the long term actuarial period (75 years)..
The pay-go system has never remained solvent and has always been a political game foisted on the public -with increases after increases after increases in contribution rates and income CAPS along with reductions in benefits.
Which is precisely why Roosevelt and his administration were opposed to the Pay-Go /SS system that Congress enacted anyway. But better some type of SS system in 1939 than none at all, so he didn’t veto it.
So what is the real point of this?
That Coberly has never understood that the public has always subsidized SS benefits by paying the costs of interest on any excesses lent by the Trust Fund to collect interest income to fund SS benefits of labor’s contributions (including employers share) which are always insufficient to maintain solvency.
And this general tax payer subsidy is required because the basis of the system was decided by congress to be a Pay-Go system that could not ever possibly account for any future changes in the critical variables— inflation predominantly, but also employment wage distribution changes, employment rate changes, and treasury interest rates which are a function of global conditions independent of the US. .The fact is that these estimates and assumptions have always been too optimist with respect reality… otherwise on average they would equal reality since flipping the coin every year would provide a mean 0, normal distribution of error.
Whether the error is always biased to the wrong side by the actuary’s assumptions, or a 2 year special study by a commission (how many more of these will there be I wonder?) or by Congresses political games — all of which deceive the public — is beside the point.
Coberly beieves that by gradually increasing the contribution rates again this will solve the problem.
Coberly, my advice is to take a look at the ever present gradually increasing contribution rates we’ve had since the get-go. Why don’t they work … ever???? Why do you think increasing them gradually some more will change anything????? The Pay-Go system will never be solvent, hence require one generation receive more benefits per dollar contributed than the ones following it and even far less benefits when benefits are also directly reduced. Besides that it will always be used as political tool, which makes it even worse.
“I don’t correct insignificant typos that take up space for no good reason.”
That would explain most of your comments.
My own days of “typos” are upon me, and my own senile dementia is coming up fast. I hope someone will stop me before I start writing hopeless nonsense and making snide remarks about the people who still know what they are talking about.
And yes, I can anticipate sammy’s reply to this.
Let me give everybody, including Coberly a clue.
My children’s generation (now 40 or a bit older or younger) have zero confidence in receiving SS benefits even remotely as good as mine, and I learned belatedly that mine were not even remotely as beneficial as my parent’s generation (born in the 1910 – 1920ish time frame) in real terms. My generation lost a year of onset of benefits.. my younger brother loses another year, and for my benefits I pay an income tax on top of that .. a further reduction in benefits per dollar contributed.
My son’s and daughter’s generation pay much closer attention to SS plans and solvency dates and changes in contribution rates and CAPs than I did because there are no such thing anymore as defined pension plans, even by the most profitable company’s.
Their 401ks of those that can afford to use them, or even offered to them put them fully bearing all the risk of long term real market equity market rates. They’re counting their 401k chickens long before they hatch.. and hoping! … betting on the come. Those that can’t afford to contribute much to their 401k’s or aren’t even offered them (both those groups comprise over 50% of 60% of the working population) are going to be living at poverty levels or close to them after they retire.
No pensions, low income levels thus lower and still decreasing SS benefits per dollar contributed doesn’t bode well for over half our population when they retire. And that doesn’t bode well for the US in general.
“Let them eat cake.” Queen Marie-Antoinette (attributed)
Coberly if you want to think I’m mentally diminished even remotely that’s fine with me. you make up your own fictions to suit your own interests all you want — it’s no skin off my nose.
“I hope someone will stop me before I start writing hopeless nonsense and making snide remarks”
Don’t worry. I’ll leave this one alone :).
RE your “clue.”
You are not telling me anything I don’t already know — in general, not about your family specifically.
It is true they will pay more… because they are going to live longer and will need more money to pay for a longer retirement… they cannot count on being able to work longer, and because it is their money they should not be prevented from retiring even if only because they “want to.” That’s important, because I am proposing that Social Security remain “worker paid.” That is the only way to prevent being forced to work, if they can find a job, when they wanted to retire and could have retired if they had saved enough (through FICA.)
And they will pay more per dollar of benefit because the growth of workers wages is not expected to be as high as it has been in the past. That growth of real wages is what provides the “real interest” from Social Security.
Inflation may have been the problem in 1980-83. It has not been the problem since then. The normal working of pay as you go finesses the inflation problem. But it was not able to solve the rapid inflation and unemployment of the 80’s. As I understand it, the Reagan (Greenspan, Tip O’neill et al) “fix” solved the problem by raising the tax rate high enough to cover expected inflation for the short term and provide a way for the boomers to pre-pay part of their expected higher costs (because of higher retiree to worker ratio) of retirement.
There was no reason to raise the tax beyond that level at that time. All it would have done was increase the hysteria about SS costs, and raise the Trust Fund to a very high level… and no doubt encourage government borrowing.
There was a projection of 75 year solvency at that time. I do not know what went wrong with that. But we have gotten 35 years of solvency and expect to get about 50 years of solvency by the time another fix is needed. That fix should be another tax raise. If that tax raise in 2030 or so is about 2% each, the problem should be solved “for the forseeable future” : life expectancies will not increase forever, and presumably the rate of wage growth will stabilize at a lower-than-the-past level but still about 1% per year real.
Where you go wrong is to take your limited knowledge and, i have to say, complete lack of logic and project it onto your political feelings to make up nonsense stories about what the problem “really” is and the motives of the Trustees, or Congress, or Coberly that are both wrong… wildly wrong… and offensive.
I did not expect you to note that I did not accuse YOU of senility, I pointed out one very clear “typo” and invited readers to consider that when they considered other claims you make. And I referred to my own onset of senility.
But not to be cute, yes I think your lack of any recognizable logic, your inability to take into account the honest explanations i have tried to give you, and your gratuitous insults does not give me great faith in the quality of your thinking.
But I generally agree with your politics.. a largely emotional response to a lifetime of watching lying politicians reliably screw the common person to enrich the already rich… and not subject, in general, to the fairly fine grain losses represented by “typos”… even seven paragraph typos.
And the serious despair and frustration i feel in writing this, knowing you will extract some bizarre misunderstandings from my best efforts to both explain how SS really works and to explain why your insults finally provoke me to be less kind than i would like to be.
And your children, bright as they might be, are “following closely” the lies and misrepresentation and third hand misunderstandings that have become conventional wisdom in America thanks to a billion dollar Big Lie campaign… and the general shallowness of even the “meritocrats,” not to say the gross stupidity of the reporters and columnists who cover them.
You are not going to understand SS without actually examining carefully the Trustees Report and doing the rather simple but necessary arithmetic that solves the problems you mention.
But don’t expect a permanent solution. An invasion from Mars, environmental catastrophe, or the looming Trump economy may make even pay as you go impossible.
Well let me add something that I cannot “prove.”
The unreliability of other pension plans suggests to me that increasing the size of Social Security (benefits) would be a good idea…. as long as the workers pay for it themselves (by raising their own “tax”).
“make the rich pay their fair share” as “demanded” by people calling themselves progressives is just a sure way to drive even the honest rich into the camp of the people who want to destroy SS utterly, and have always known that turning it into welfare is their best first step.
(the “rich” already pay their fair share of SS as insurance in case they turn out not to be rich when they are ready to retire. those who remain rich until they retire get a lower return on their money (but still a larger absolute pension reflecting the large “tax” they have paid as a percent of their wages up to the cap) with the extra amount going to those whose lower lifetime wages left them unable to save enough (through the SS “flat” tax) to have enough to retire on even at a minimal standard of living.)
but none of that stops the shouting from both sides.
and doesn’t even lead the people here to think carefully or find a way to explain to the people how they can keep their social security for themselves and their children forever… by paying for it themselves as they always have… and as generations going back to Cro Magnon have always paid for “retirement.”
According to your comment March 4, 2018 12:10 pm your take on things comes down to what you consider to be “fair and just”. which also happens directly coincide with might makes right. I won’t argue that “might makes right”, but only with the perception of what “right” means.
anyone who considers “fair and just” to “coincide with “might makes right”.” is beyond any persuasion i can think of.
which saddens me. i spent more of this weekend worrying if i had been unkind to you and whether there was a way persuade you to actually read the Trustees Report carefully, with a pencil.
By suspecting senile dementia I was actually paying you the compliment of assuming you once had at least some kind of intelligence. But between the Sammy’s (the insane right, presumably too young to be senile) and the insane left it is evident that one need not be senile to be unable to think clearly.
near as i can guess you are saying that “might makes right” is what underpins the cap on the payroll tax. even though the payroll tax is paid by the rich as well as the poor.. a flat tax up to the point where it ceases to be an honest value (as insurance). then you would seem to have no clue that “make the rich pay” is an appeal to the potential “might” of the left to force “the rich” to do what you think is “right”… which would be to pay for your retirement.
would it be right to force them to pay for your groceries, your shoes, that new car you need…?
and just so you know i know
there is an outfit that calls itself the Committee for a Responsible Federal Budget which tells damned lies about Social Security. They not only don’t want to raise the cap, they want to cut your benefits to zero.
Me, I am just trying to keep Social Security the way Roosevelt designed it” worker paid “so no damn politician can take it away from them.”
and my contribution, aside from trying to remind people that SS, being worker paid, has nothing to do with the Federal Budget Debt, is to point out (mathematically) that those workers can pay for their longer life expectancy (the cause of the SS “actuarial deficit” by increasing their FICA contribution the equivalent of one dollar per week.
The CRFB prefers to call this “12 Trillion Dollar Unfunded Defict!”.. or at last look “82 Trillion Dollar Debt!”.
They are lying. And you, eat it up. Construct your own bizarre story around their lies, and your moral certainty that…. that what? that the mighty make right? and try to kill me because all i have is a few honest numbers that show the rich can pay for their own Social Security.
I find it hard to ignore you. It reminds me of a novel I read once in which the hero enters into an argument with the devil, and finds the devil not constrained by honesty, reason, or even plausibility… he just keeps repeating insane lies with what appears to be a devilish design to drive the hero insane.
instead of favoring me with all of your “ideas” that never seem to go anywhere, try, if you can, get your kids to help you, to focus on the following two facts
Social Security is paid for by the workers who get the benefits. They get a fair return on their money.
The cost of closing the “actuarial deficit” is one tenth of one percent per year for about 20 years (less if done in response to Trustees Projection of “actuarial insolvency” (Trust Fund falling below one year reserve within the next ten years.)
That’s really all I am saying.
And that’s all I have to say.