Dale Coberly discussing the latest news on Social Security.
SOCIAL SECURITY, A BREAKTHROUGH? Dale Coberly
For years I have been trying to inform people that the great big, huge horrible “Looming Trillion Dollar Unfunded Deficit” in Social Security could be fixed forever with a one tenth of one percent increase in the Social Security tax whenever the Trustees projected “short range financial inadequacy. This would amount to about a dollar per week per year while wages are going up ten dollars per week per year and would be limited to an ultimate increase in the tax of about 2% of payroll.
No one seemed to care or even notice. Or understand.
But two days ago, The Fiscal Times reported;
Actuaries Weigh in on Social Security Shortfall
The Social Security system is facing a shortfall as its combined trust funds become depleted in 2034, which could result in a roughly 20% cut in benefits if Congress fails to act to correct the problem. A new paper from the American Academy of Actuaries takes a close look at the problem and provides a menu of options for policymakers as they work toward a solution.
Here are some of the options discussed by the actuaries:
*Increase the payroll tax rate by 25%. Raising the current payroll tax of 6.2% to 7.75% – for both workers and employers – would head off any benefit cuts. The increase could come all at once in 2034, but the actuaries recommend phasing in the increase starting in 2025. “Increasing the tax rate will be financially difficult for some people with very low income,” they write. “It would be less disruptive to employers and workers if increases in the tax rate were gradually phased in.”
In the Actuaries’ paper, they suggest that “gradually” there be a one tenth of one percent increase per year. The Actuaries do not suggest the “short range insolvency” trigger . . . which does not matter as we are already in the Trustees “short range insolvency” warning period.
Is this a breakthrough?
Yes . . . but no. if we cannot get the Congress to pay attention. What it does do for us is put the gradual small increase in the tax on the table from a source with credibility and a forum. What it does not do is explain what this means to the people who have to make the Congress pay attention.
I will try to explain what it means in comments below. I need your help to get the people to make Congress understand what it means.
So far, the Congress is still planning on a “Deficit Commision” which will cut or destroy Social Security without open debate or recorded votes.
The Big Liars win and the people . . . even “the young” . . . lose their security from desperate poverty in old age or disability.
Just a couple of notes before we get to comments:
A “25% increase in the tax” is misleading: it’s a 25% increase in a 6% tax . . . or about a 2% increase in payroll deduction. It’s not even a “tax” because you get the money back three times over or more when you need it.
Social Security has nothing to with the Federal Deficit or National Debt. It is paid for by the workers themselves.
Pay as you go is not “the young paying for the old.” It is the young paying for their future needs while they still have the money. This is ordinary finance: ALL finance is a transfer of money through time. All finance depends upon “future investors,” that does not make it a Ponzi scheme.
It is not paid for by the rich or “the government”. But the rich DO pay their fair share.
The highly paid “nonpartisan expert” liars have spent over eighty years confusing the people about this. That’s why it’s so hard to get them to understand the truth.
“Reforming Social Security Sooner Rather Than Later,” American Academy of Actuaries, October 2023