No Free Lunch Ignoring Social Security’s Timely Cheap Fix Costs You
Dale Coberly Talks Social Security . . .
For over ten years I have been telling anyone who would listen . . . about ten people . . . that the great “Looming Unfunded Twenty-Two Trillion Dollar Deficit! . . . stealing our children’s future,” reported in all the high-end news sources by all the high-end reporters, columnists, nonpartisan experts, serious people, and other liars turns out to be really, really small when you actually “do the numbers.”
At that time the honest numbers showed that raising the payroll tax one tenth of one percent per year (about one dollar per week) for a few years (while real wages were projected to rise about one full percent per year about ten dollars per week per year) would close the Social Security deficit entirely for as far as the eye can see . . . without being a “crushing burden on the young,” without raising the retirement age without cutting benefits, and without “taxing the rich” which Roosevelt warned us would let the rich destroy Social Security.
But, to work this tax increase would need to start whenever the Trustees Report projected that the Trust Fund would fall below the level required for a “prudent reserve” within ten years.
Well, we passed that date four years ago. No one listened.
But there is still time for a still painless and almost a cheap fix.
The long-range Social Security deficit can still be closed entirely as far as the eye can see by raising the payroll tax one tenth of one percent per year for a number of years. Only now the ultimate tax rate would need to be about four tenths of a percent higher than it would have been, had we begun raising it four years ago. And “per year” now means each year until 2045. Previously “per year” meant “no more than once a year, with no raise required on average every other year. And starting four years late would leave Social Security short of a “prudent reserve” for about ten years. This would not be a real problem, as the tax could always be increased a tenth of a percent or so in the event of a near term shortfall. But it would allow the non partisan expert liars an excuse to scream “Social Security is broke—flat bust” every year.for the next forty years.
OR
A better fix would be to raise the tax two tenths of a percent per year until 2033 starting in 2024. This would close the “short range financial inadequacy” as well as the long-range deficit entirely and forever. That’s about two dollars per week each year for ten years. The ultimate tax increase would be 4%.
Increasing the payroll tax by 4% is a number which can scare people who are scared by numbers. But in fact you would not feel it. It would not change your standard of living. Most workers would only see a two percent increase and would not notice it at all except for the non-partisan liars and politicians. While the tax rate is going up one or two tenths of a percent per year real wages are expected to go up one full percent per year. That is, by the time the tax increase reaches 4%, real wages will have increased about 40%. You will have more money in your pocket after paying the tax, and you would have paid for a retirement that starts when you are 67, or 62 if you value your time more than money and lasts the rest of your life.
I guarantee you will need it. At least you will be glad you paid for it. No one is going to pay it for you. Not the rich. Not the government. Not even the stock market…all of those things will find a way to make sure you pay for it (higher prices, lower wages, higher taxes, lower returns) . . . the only difference being that you won’t own your retirement: they will. So, they can tell you when you can retire. You won’t be able to retire when you want to even though you have already paid for it. “Oh, no,” they will say, “you owe us for more years of work,” even if they won’t give you a job.
And you will end up paying for it twice.
There may be other ways to tradeoff between higher taxes today and higher taxes tomorrow, but they don’t seem to me to be worth the bother…neither having enough benefit over the other to make a real difference.
For example, right there on the page of the Social Security Trustees Report the Trustees tell you that an “immediate and permanent” tax increase of 3.5% would pay for Social Security for the next seventy-five years. That’s about half a percent less than paying for it gradually over the next ten years. or about one percent less than paying for it more gradually over the next twenty years . . . while your income is going up.
Or you can wait ten years and not raise it at all until 2035 or so and then raise it 4% all at once and take a chance that the liars will not stampede the people into accepting benefit cuts or a higher retirement age.
And find a way to tell your congressmen that it is worth their jobs to listen to you.
Excellent article if you are talking about the finances of a business, individual, state or local government. But the federal government, being the issuer of the currency, has no such financial constraints. If you want to make an argument about the the spending leading to inflation, we can have a conversation about that.
Markg
No we can’t. I gave you some facts. You have an unproven fantasy.
Markg
Maybe I was too harsh. I am not good at diplomat-speak. I read Kelton and other MMT-ers. I was not convinced.
But if you write your best argument I am sure AB would run it as a post. I would respond. You might answer my objections. Or not. The burden of proof is on you.
Well if there is some “prudent reserve” level that is still years in the future, I guess the current level is imprudent.
Eric,
We will reach the imprudent level in 2029. That’s why where we are today “fails the test of short range financial inadequacy.” The Trust Fund will entirely run out of money…yes, “go broke” sometime around 2035. then you will see benefit cuts or a raise in the retirement age. Or you could raise the payroll tax today one or two tenths of a percent and avoid all that misery. Or a sensible person could.
Eric (cont)
actually Joel (below) is right. The Trust Fund would be broke, but Social Security would not be.
It can run forever on the payroll tax alone, just with reduced benefits. But as I am trying to show you, that would be a stupid way to procede when we can have decent benefits at a cost no sane person would even notice.
What is the “prudent reserve”? Fifty percent of one month’s projected disbursements? One hundred percent? I am quite suspicious of a claim that we’ll be at the prudent level 6 years before it is exhausted. Back of the envelop that on exhaustion benefits fall maybe 25% is six years is like 18 months of fully funding the system via redemption alone. Even if it is only 9 months, the implicit disruption to our economic life is so catastrophic that holding the reserve will prove useless as means to realize the redemption and distribute it would have vanished in the chaos. I’d wager quite a bit that this “prudent reserve” is so high that no model can possibly show its utility without simultaneously think a monsterous fall in US (and world) economic activity accompanied by normal levels of social stability. Not happening.
I’d wager quite a bit that this “prudent reserve” is so high that no model can possibly show its utility…
[ As Coberly has repeatedly shown, this is completely incorrect. ]
Dobbs
it’s not means testing. part of the beauty of SS is that it avoids means testing.
you are not paying an extra tax. other than SS all retirement income is taxed. SS just gives people who earn less in retirement a tax break. the gov figures that people who have “extra” income don’t need the tax break.
means testing means going to the government proctologist twice a year to have your assets checked. taxing your income is just an income tax: you don’t have to prove (be tested) anything.
Eric
the prudent reserve is one hundred percent of a year’s benefits. Your intuition about what works financialy is dead wrong, Read the Trustees Report carefully and you may get to see how it works.
I would take your wager if I thought you were honest or would even understand when you were proved wrong.
Eric:
I am going to delete your most recent comment on the post, “The NPR program, This American Life and Student Loans.” You must be on topic. You can post anything on Open Threads. The most recent being “Open Thread September 9, 2023 Where do Americans mingle the most?” Any off-topic comment on every Post detracts from the Post.
Social Security and the Federal Deficit
Economics Policy Institute – August 2010
Not cause and effect
(Could use updating.)
Briefing Paper #273
@Fred,
Since Social Security is funded by a separate mechanism, how would SS spending increase the debt?
As of Sep 30 2022 the Social Security trust Fund (SSTF) held $2.7 trillion in “assets”. Per Financial Audit of the Federal Debt (GAO 23-105586)
SSTF holds “special treasuries” which were exchanged for excess cash receipts from SS/FICA payroll taxes. The interest on these are paid in form of more “special treasuries.
As payroll receipts’ cash becomes less than outlays the special treasuries are “cashed” by selling treasuries to the public.
Publicly held treasuries interest is paid in cash…
paddy
the debt was not created by Social Security. It was created by Congress borrowing FROM Social Security. Cashing the treasuries actuall REDUCES the federal debt.
But thinking backwards is what they want you to do.
The “actuarial deficit” in Social Security accounting is NOT A DEBT. It is a simple statement that if we don’t raise the payroll tax we will not have enough money to pay the benefits people are counting on to save themselves from destitution when they can no longer work.
Even if there were no such thing as Social Security we would still need to save enough to have enough to live on in retirement. The payroll “tax” is the way we make sure we “save enough.” It has to be a “tax” because most people will not save enough on their own.”
Yes. The headline deficit was reduced by the excess cash from SS receipts.
For years SS kept deficit lower while building intra-government debt.
The GAO audits over the years are “interesting”
EPI was founded in 1986 by economists Jeff Faux, Lester Thurow, Ray Marshall, Barry Bluestone, Robert Reich, and Robert Kuttner. (Wikipedia)
The EPI looks (to me) to be ‘center-left’. As opposed to the AEI, which at best is ‘center-right’.
In the end, pressure on guv’mint spending outside of Social Security (e.g. ‘deficits’) always raises concerns about Soc Sec. Always. Perhaps there is no ‘good reason’. It ain’t just me. Apparently it’s also the likes of Lester Thurow & Robert Reich.
Dobbs
it ain’t just you. Peter Peterson spent a billion dollars funding writers and non partisan expert liars to sow doubts about Social Security. He succeeded . As I think I mentioned elsewhere even Paul Krugman was fooled until Dean Baker set him straight.
Even smart people say stupid things.There is no reason to be ashamed of that. The problem begins when you know something is important enough to think about, but you put your fingers in your ears.
Dobbs
yes, the conventional wisdom is wrong, created entirely by a campaign of lies fed by the people who hate Social Security both because they think they can make more money selling you stocks, and because they know they have more power if they keep the poor desperate.
The ultimate share of GDP that goes to Social Security will be short of six percent. Not a huge cost to feed and house one third of the adult population…especially when you realize they paid for it themselves. Note that one third of the population is the same as woking forty years to save enough to live another twenty years in retirement…when you may not be able to work, or not want to work when you have saved enough (via Social Security “tax” to do something else with your life than make money for the boss.)
I’m Young. Why Should I Care About Social Security?
NY Times – Oct 14, 2022
One reason: You pay for it. And, despite what many Americans believe, it’s “definitely a misconception” that it will run out before you retire, experts say.
NY Times:
And as Dale Coberly continues to say, paying a few more bucks a week into FICA should be enough to fix it, by those who are still paying into it. (Sorry, I’m not convinced. That doesn’t seem plausible to me. It doesn’t effect me, but it does effect my kids, who whenever they are off working for themselves get to pay twice. Of this regressive tax. So let’s get into it about why it’s NOT really regressive, because it isn’t really a tax I guess.)
But I’m pretty sure that the extra income tax I pay from having ‘excessive’ IRA/401k income will help, somehow, even if it doesn’t go into Soc Sec directly. I don’t object to doing this. It’s a form of means-testing.
At least, it looks like paying a few extra bucks a week into FICA will maybe get recipients about 80 percent of what current benefits are, so that would be good.
Dobbs,
I’m sorry that you just don’t get it. Paying the extra few bucks will keep the benefits at one hundred percent of “promised.”
your kids are not paying twice, they are paying their full share. emplyees have half of their share paid by their boss, it had to be done that way for political and psychological reasons (bosses are too greedy to pay enough to cover costs of retirement unless the government forces them to.} Apparently your self-emplyed kids are too greedy to pay their employees enough to cover the cost of retirement insurance.
The work force is not shrinking. It is just not growing as fast as it used to when the growth in the worlk force enabled pay as you go to pay a higher rate of “interest” on FICA savings.
Payrolls are not growing as fast as they used to also because the employers control the wage-market. And the rich do not want the poor to have enough money to get uppity.
There is no reason automation could not INCREASE payrolls if employers were willing to share the increased productivity gains with their workers. That’s a function of power, not economics.
It’s not plausible, in that the work force will continue shrinking. Automation (and AI) will continue to reduce payrolls.
Dobbs
the big cry from the haters of Soc Security is that there will not be enough workers to pay for their own retirement..or, to provide the cash to cover the needs of the already retired (these two are the same thing, not two separate costs. the idea (theirs) is not so much the cost, but the lack of available workers to provide the needed services or make the needed products.
they are saying there won’t be enough workers. you are saying the workers won’t be paid enough (or have jobs..because of automation),
Dobbs
no ad hominem intended. it was supposed to be a funny way of explaining it.
Dobbs
see if this works for you: a regular employer pays his employee enough so his employee can pay his share of the SS tax, then he pays the emplyers share of the SS tax to the employees SS account.
So if your self employed kids pay enough to their employee so he can pay the employees share of the tax, then they pay the employers share of the tax…they will at the same time have paid for both the employees and the employers share of the tax and will not have to look elsewhere to get retirement insurance for themself.
i assure you my way of looking at this is the “correct” way. your way is the six year old’s way of feeling sorry for herself because her sister got the biggest piece of the burfday cake.
You’d get more respect from me if you’d cease ad hominem criticism.
We both want Social Security to last forever.
The issue with the ‘post reply’ button not working can be avoided if you are careful to close the ad window near it before attempting to post.
Eric
sometimes people don’t get my jokes, so maybe I am not getting yours, but the level of the trust fund right now is “better than prudent.” but it is on a path to reach “not prudent” and a few years after that “no funds.” saying it the level today must be imprudent because it will fall below prudent in the future makes no sense. either you don’t realize that or i can’t take a joke. but it’s the kind of “logic” i see in comments all the time that throw me into despair. so much so that i have come to think that at least global warming will make all this moot. if we survive at all it is going to be by taking care of each other. although anymore I don’t think we are even that smart.
Dobbs
thanks for the tip about closing the ad window. my pre-internet brain would never have thought of that.
i don’t think i feel “ad hominem” toward you. but your persistent refusal to understand what i am saying makes me feel a little “ad hominem” from you.
Dobbs
“doesn’t seem plausible”
don’t feel you are alone. back when I first did the math i communicated my findings to a “select” group of people who “defended Social Security.” some of them quite famous. One of them didn’t think my numbers were plausible..according to a back of the envelope calculation of his own. I told him he was wrong in my famously diplomatic way. hurt his feelings. and got myself banned from the group.
Since then the Deputy Chief Actuary has confirmed my calculations. So if you don’t trust me…or yourself…go ask her.
By the way, Paul Krugman did a back-of-the-envelope calculation of his own at about the same time. It took Dean Baker to show him he was wrong. He still doesn’t quite get the point.
This article in the NY Times is actually extremely informative.
I’m Young. Why Should I Care About Social Security?
NY Times – October 14, 2022
One reason: You pay for it. And, despite what many Americans believe, it’s “definitely a misconception” that it will run out before you retire, experts say.
Dobbs
shedden sounds like she knows what i know. she needs to be more explicit.
she says “small tweaks”. i say “raise the payroll tax 2% for workers and 2% for employers.”
the “it’s just the math” proves this.
I just noticed that when I go to click on “Post Comment” an ad grows out of nowhere and covers the post coment key so my click throws me into an advertising site.
i wonder if they think that annoying me will make me want to buy what they are selling.
shedden says SS will not supply all of your needs. actually it should. but it may not supply all of your wants.
not shedden, Indiano.
well, even when the experts are being good, they are still wrong. Social Security will run out of “enough” money to be reasonable retirement insurance in about 2035. Unless, that is, we raise our own “tax” (FICA savings) two percent (or four percent if that makes you feel better).
as for the young people who think SS is “dull”, that is why SS has to be a “tax.” the young are too stupid to know they will get old and the only reason SS won’t be there when they NEED it is because they didn’t “think about it.”
as for the boomers “depleting the fund”…the boomers paid for that fund themselves, just so the next(smaller) generation wouldn’t have to “top it up.” that “next” generation (today’s “young” (if 36 is young) have to raise their own tax because they are going to live longer than the boomers. and they can easily “keep up” with that. saving an extra percent while wages go up a real 40%…largely thanks to the economic infrastructure built by their parents.
@Fred,
“Current projections show that by 2035 the trust fund will be too diminished to sustain the level of benefits that people receive now.”
Yes, projected benefits will be reduced by 2035 if nothing is done. But that’s not the same as saying SS “won’t be around.”
Joel
yes, “if nothing is done.” I have just told the people here what needs to be done. They prefer to not know. They prefer their own private fantasies or the inconclusive ramblings of some weak-ass expert. who hasn’t bothered to actually “do the math.”
my post above was unedited. it doesn’t matter much except to my ego.
we could replace it with the edited version, but there isn’t much we can do about the readers.
i posted the edited version as a comment. readers who care might prefer it.
NO FREE LUNCH
IGNORING a SOCIAL SECURITY
TIMELY CHEAP FIX
COSTS YOU
For over ten years I have been telling anyone who would listen…that’s about ten people… that the “great big horrible Looming Unfunded Twenty-Two Trillion Dollar Deficit!” that is “stealing our children’s future,” as reported in all the high end news sources by all the high end news reporters, columnists, non partisan experts, serious people, and other liars, turns out to be really really small when you actually “do the math.”
At that time actually doing the math showed that raising the payroll tax one tenth of one percent per year (about a dollar per week in today’s money) for a few years while real wages were projected to rise about one full percent per year (about ten dollars per week) would close the Social Security deficit entirely for as far as the eye can see…..without being a “crushing burden on the young,”. without raising the retirement age, without cutting benefits, and without “taxing the rich” which Roosevelt warned us would let the rich destroy Social Security.
But, in order to work, this tax increase would need to start whenever the Trustees Report projected that the Trust Fund would fall below the level required for a “prudent reserve” within ten years.
Well, we passed that date four years ago. No one listened.
But there is still time for a still painless and almost as cheap fix.
The long range Social Security actuarial defict can still be closed entirely as far as the eye can see by raising the payroll tax one tenth of one percent per year for a number of years. Only now, the ultimate tax rate would need to be about four tenths of a percent higher than it would have been.had we begun raising it four years ago. And “per year” now means each and every year from 2024 until 2045. Previously, “per year” meant “no more than once a year,” with stretches of years when no tax raise would be needed. Starting four years late would also leave Social Security short of a “prudent reserve” from 2031 to 2051-. This would not be a real problem, as the tax could always be increased a tenth of a percent or so in the event of an unexpected near term shortfall. But it would allow the non partisan expert liars an excuse to scream “Social Security is broke—flat bust” every year.for the next twenty-eight years.
OR
A better fix would be to raise the tax two tenths of a percent per year until 2033, starting in 2024. This would close the “short range financial inadequacy” as well as the “long range actuarial deficit” entirely and as far as the eye can see. That’s about two dollars per week each year for ten years. The ultimate tax increase would be 4% for the combined worker plus employer tax. Most workers would only see a total 2% increase over ten years.
Increasing the payroll tax by 4% is a number which can scare people who are scared by numbers. But in fact you would not feel it. It would not change your standard of living. Most workers would only see a two percent increase and would not notice it at all except for the non-partisan liars and politicians screaming about the crushing burden on the young.
While the tax rate is going up one or two tenths of a percent per year, real wages are expected to go up one full percent per year. That is, by the time the tax increase reaches 4%, real wages will have increased about 40%. You will have more money in your pocket after paying the tax , and you will have paid for a retirement that starts when you are 67 (or 62 if you value your time more than money) and lasts the rest of your life.
I guarantee you will need it. At least you will be glad you paid for it. No one is going to pay it for you. Not the rich. Not the government. Not even the stock market…all of those things will find a way to make sure you pay for it (higher prices, lower wages, higher taxes, lower returns).. the only difference being that you won’t own your retirement: They will.
So they can tell you when you are allowed to retire. You won’t be able to retire when you want to even though you will have already paid for it. “Oh, no,” they will say, “you owe us four more years of work,”…even if they won’t give you a job. And you will end up paying for it twice.
There may be other ways to trade off between higher taxes today and higher taxes tomorrow, but they don’t seem to me to be worth the bother…neither having enough benefit over the other to make a real difference.
For example,..right there on the page 6 of the Social Security Trustees Report, where the serious people and non-partisan experts can’t see it, the Trustees tell you that an “immediate and permanent” tax increase of 3.44% would pay for Social Security for the next seventy five years (ordinary workerrs would only see 1.72%. That’s about half a percent less than paying for it gradualy over the next ten years. or about one percent less than paying for it more gradually over the next twenty two years ….while your income is going up. This is what the serious people call “kicking the can down the road,” because of course all of us pay for our lifetiime supply of bread by putting the present value (about ten thousand dollars) in the bank…one that will reliably pay two percent real interest over the next 40 to 60 years.
Or you can wait ten years and not raise the tax at all until 2035 or so and then raise it 4% all at once, and take a chance that the liars will not stampede the people into accepting benefit cuts or a higher retirement age.
Please try to think this through carefully, and find a way to tell your congressmen that it is worth their jobs to listen to you.
Coberly:
The post is excellent; simply excellent, and will surely be worth repeating until the Social Security situation is completely clear to enough people to generate a proper funding increase.
Thank you for the persistence.
Notice that the defense budget will very soon reach the $1 trillion dollar level. A little reduction in the defense budget would free funds to repay the Social Security Trust Fund.
https://apps.bea.gov/iTable/?reqid=19&step=2&isuri=1&categories=survey#eyJhcHBpZCI6MTksInN0ZXBzIjpbMSwyLDNdLCJkYXRhIjpbWyJjYXRlZ29yaWVzIiwiU3VydmV5Il0sWyJOSVBBX1RhYmxlX0xpc3QiLCI1Il1dfQ==
August 30, 2023
Defense spending was 55.6% of federal government consumption and
investment in April through June 2023. *
$970.9 / $1,747.4 = 55.6%
Defense spending was 20.8% of all government consumption and
investment in April through June 2023.
$970.9 / $4,686.3 = 20.7%
Defense spending was 3.6% of GDP in April through June 2023.
$970.9 / $26,798.6 = 3.6%
* Billions of dollars
To be completely clear, we are now spending $970.9 billion dollars a year on defense, and this amount will be quickly increasing. Limiting this a little for the sake of Social Security really is reasonable.
ltr
thank you for the encouragement.
but we definitely do NOT want to take money from defense..or any of “the budget” to pay for Social Security. Social Security works because it is paid for by the workers who will get the benefits.
This is practically a law of nature. Welfare is fine and necessary and good, but it is not a good way to pay for ordinary needs. Retirement is an ordinary need. Even when back in the stone age your kids were your “social security” you still paid for it by raising them and building the barns and fences that would make it easier for them to afford to help you in old age. and of course, helping you would set an example for their own kids when they got older.
but we definitely do NOT want to take money from defense..or any of “the budget” to pay for Social Security.
[ I was very, very clear.
The Social Security Trusty Fund was drawn down to pay for budget items. So, of course, the Trust Fund can be repaid as promised from what would be ordinary budget items. This was precisely what was promised when the drawn-downs occurred.
I am entirely correct. ]
Welfare is fine and necessary and good, but it is not a good way to pay for ordinary needs….
[ The promise and need is to repay the Social Security Trust Fund that was set up for Social Security but used for ordinary budget items.
Simple and clear and having nothing to do with welfare.
I am entirely correct. ]
@ltr,
“The promise and need is to repay the Social Security Trust Fund that was set up for Social Security but used for ordinary budget items.”
The Trust Fund was invested in US treasuries, by law. This money, lent to the US gov’t, must be repaid with interest. Ultimately, the Trust Fund was and is being “used” on SS benefits.
I suppose you could say it was “used for ordinary budget items” in the sense that your passbook savings account is “used” by the bank for ordinary loans. But that’s an accounting formality. When you want to withdraw your money, you will get it back. Likewise, the SS Trust Fund will get its money back when the treasuries mature.
Joel:
You are adding detail. Yes, the funds are in special treasuries drawing interest which is probably far less than the current mortgage rate. Whata you think? Maybe it could be used to fund mortgages at a better rate than what exists now and also better than Treasuries? Just a thought.
The notation is added somewhere to fund something and then when needed, the treasuries are redeemed, which I believe is happening now. No big piggy banks and funds are taken out of the economy for the future.
ltr
Joel is entirely correct.
The Trust Fund, like all Trust Funds lends “idle money” to someone who needs current cash. Later, that someone pays back the Trust Fund with interest. That is exactly what is happening with the Social Security Trust Fund. It actually started paying down the principle and accumulated interest last year. It has been using current interest to pay for current expenses since around 2010 if memory serves (which it often doesn’t).
Bill
the special treasuried pay the same interest as the average of other treasuries of the same date. lately that has been about 2%. historically it has been about 5%
I really think it does not help us to keep coming up with ideas that would “improve Socal Security.” all it does is play into the hands of the enemies who want to sow doubt about Social Security and government in general.
Lets brace up and get the Congress to let us pay the huge staggering cost of keeping it what it is…about one or two dollars per week per year for a few years while incomes are going up from about a thousand dollars per week to about fifteen hundred dollars per week over the same time.
Dale, thank you for the time and effort you put into this. Many people think they will never need SS since they save and put money into a 401K etc. I was once one of those Libertarian I will take care of myself and F the government. I then contracted a disease which killed my liver requiring a million dollar transplant which was successful At age 45 I lost everything except my life and it took me to age 50 to recover health wise enough to work again. I focused heavily on paying off a mortgage which I did in 8 years but was never able to significantly save to recover a 401K balance had that not happened. Without SS my wife and I would be living a much different lifestyle and I have much more empathy for the working poor than I did 21 years ago prior to my health issues. I fear the politics of today will not allow a sane solution like you propose but maybe I am wrong about that.
Garry
thanks. I wish I could pay you to tour the country and tell that story at Rotary Clubs and country churches.
@Garry,
Good post. The libertarian Madonna, Ayn Rand, took Social Security and Medicare.
Sorry Joel
I can not upvote you!
Garry:
You were in the trash. Pulled you out, dusted you off. and placed you amongst the tribe. You have been around a while (2011?). Welcome back!
It sounds like you have had a rough go of it. I hope your health continues to improve or is at least stable. You are correct on SS. It is the one thing that will “always” be there. Medicare should be in the same category, The problem with it, is the profit motive in commercial healthcare and the pseudo-Medicare program called Medicare Advantage. Advantage for who? Corporate healthcare . . .
Both my wife and I worked till we were seventy-seventy-one and maxed out. On that we have a good monthly income. This is something not guaranteed with an IRA or even a company retirement plan which judges have denied to employees because of company failures or takeovers. It is important and something most do not realize as such until they get to the working end of the line.
run75441
Dan, I have just 1 question for you. During the pandemic the federal government sent out unemployment checks of $600 per week, millions of $ in ppp forgiven loans, etc, etc. Where did the government get the money for that spending, and if it can “afford” that kind of spending why can’t it do the same to fully fund Social Security regardless of any Trust fund balance?
Markg
like i keep saying MMT is what all modern governments already do. But they need to lie about the debt in order to prevent money from being spent on the poor….so that it can be spent on the rich. if we had explicit MMT the same people would be making the decisions only they would say “but the inflation” instead of “but the debt.”
also..it is important that people pay for their own needs. i hate to sound like a Republican, but depending on money from heaven or “the government” for regular needs is bad for people, and won’t be tolerated by the people who “make” the money. the reason i hate to say that is because the Republicans use it as an excuse to cheat the workers and refuse to pay for the ordinary needs of a nation…which includes a reasonable level of prosperity for all the people.
Mark:
That is not Dan (edited):
It is Dale Coberly. My friend Dan passed away a couple of months ago. He gave me a legacy. His wish or legacy was for me to keep Angry Bear a going site and to be noticed. We are pretty simple. We do not charge fees, neither do we do drives to fund Angry Bear, and we make no money.
The idea or calling of Social Security is it belongs to the people. If they fund it out of their contributions, they own it, and no one can take it away from them. Doing MMT grants political influences the power to alter its purpose. Some well-established and educated people refuse to accept this simple idea of ownership by the people paying into it.
And the politicians are all eager to alter SS from its original purpose of providing a retirement safety net, although a small one, for all people. The efforts to raise the age are meant to decrease the numbers of people receiving it. We could do such but I believe it should only occur after if we raise the age for senators and representatives to receive their retirement healthcare and pensions. They should experience and live in the same manner as they decide for their constituents to live. It too would reduce the costs.
I can not make the argument the same as Bruce Webb might make here. It is unfortunate that we lost him also. I do understand the concept both he and Dale have presented.
Bill
thank you. keep making that point. you do it better than i do.
After contributions to Social Security were increased in 1983 to build a Trust Fund surplus, part of the surplus was used a number of times to pay for ordinary budget appropriations. The Congressionally withdrawn funds were supposed to be completely repaid to Social Security, but to my knowledge were not repaid.
ltr
seemy above comment saying the same thing: interst from the Trust Fund has been used for some years now to make up for the shortfall between taxes in and benefits out. Last year was the first year that they had to start drawing down the principle (and accumulated interest).
it’s all very normal finance, but the liars have been sayng hysterical things about it so the people willl think it is ‘broken” or “stolen” and accept the changes they propose that would kill it entirely. unless you have made a point of studying this, it is very unlikely you would see through the lies. that’s what i am trying to help you do here.
oh, it almost doesn’t matter what lies they tell…anything to make you distrust “government” which is their real project. when private money does everything, private money will run your life and you won’t even have a vote.
Coberly:
interest from the Trust Fund has been used for some years now to make up for the shortfall between taxes in and benefits out. Last year was the first year that they had to start drawing down the principle (and accumulated interest).
it’s all very normal finance…
[ This is perfect. ]
ltr
you may be my first convert. at least the first person to change their mind after i explained something. it makes me feel better.
@ltr,
They haven’t been repaid (yet) because there’s still a Trust Fund surplus and that surplus is invested in US treasuries, as by law it must be. As the Trust Fund is depleted by paying the benefits of the boomers (which is why it was created in the first place), those treasuries will mature (money repaid). US treasuries are backed by the full faith and credit of the US gov’t.
The SS Trust Fund is a creditor of the US gov’t. So is China; China is one the United State’s largest creditors. China expects to be repaid, just like SS expects to be repaid. If the time comes when the US reneges on its debts, those dollars aren’t going to mean much anyway.
Joel Eissenberg:
They haven’t been repaid (yet) because there’s still a Trust Fund surplus and that surplus is invested in US treasuries, as by law it must be….
[ Excellent explanation, all through. Thank you. ]
Joel Eissenberg:
They haven’t been repaid (yet) because there’s still a Trust Fund surplus and that surplus is invested in US treasuries, as by law it must be….
[ This explanation is entirely relevant to a complaint that Paul Krugman has been making about Chinese domestic investment and saving being too high and so limiting Chinese economic growth. Krugman however is wrong, as will soon become clear.
The need for investment in China is exactly to provide for higher future growth when China has been increasingly confronted by repeated and persistent American attempts to undermine Chinese growth. These efforts became clear with the Wolf Amendment in 2011 which was meant to prevent a Chinese space program by cutting off relations of the Chinese with NASA.
The Wolf Amendment of course failed, and China now has a profoundly successful space program. China however is still subject to fierce growth undermining attempts by America…. ]
@ltr,
This thread is about Social Security, not Chinese-American politics. I only mention China because it, like the SS Trust Fund, holds US debt. If the US defaults on SS Trust Fund debt, it will destroy the dollar as the world’s reserve currency, because it will also default on billions of other loans.
Please do not continue to hijack this thread. I will delete any further off-topic comments.
Hi coberly, Good to see you are still staying on top of this. Many have wandered away.
Anna:
Perhaps, you do not recognize run75441. I recall your comment on my post ‘Set things right again’ (Ken Burns).
I am not so sure my response was in direct relation to your comment.
I made the moniker change as I attempt to fill the large shoes Dan asked me to fill just days before he died. Dan was my friend.
I felt run75441 has/had lived long enough and it is/was time to adjust my commentaries from the past through to today with a moniker people may recognize. It is still “hard to scrutinize the trees and then integrate them into a forest” called Angry Bear. Hope you hang around and comment.
Best
Bill (run75441)
Anna Lee
faltering, but i have nowhere to go. so every morning i come out to the park and climb up on my soapbox and practice my speeches to the birds.
i have, with a few exceptions utterly faied to interest anyone in the fact that they can keep Social Security the way it works just by paying for it the small extra it needs…they need… to pay for their longer life expectancy after they can no longer work.
It almost feels like a conspiracy among “the elite” but i come to Angry Bear and see that nope, “the people” don’t care about it either.
you can’t see it, but several of my own comments have been deleted from my own post by the new management…not because they hate Social Security but because they hate my telling them to be nice to their customers.
sorry to whine, but that’s the way it is.
I remember your name, but i can’t remember what we talked about.
Dale:
That is simply not true Dale . . , I have taken up your cause since Bruce.
You have my support on the issues in advocating Social Security. I can mount a sound argument rebutting most of the naysayers. Even the biggies.
Yes, some of your comments have disappeared. I look in the trash and do not find them.
Sometimes things are deleted by accident. I have lost comments too and just by hitting the wrong key or thinking I hit post when I did not. Or editing and getting distracted.
You have my apology. Let it go please.