In its April Baseline CBO had this to say about the Highway Trust Fund:
“Under CBO’s baseline projections, the highway and transit accounts of the Highway Trust Fund will have insufficient revenues to meet obligations starting in fiscal year 2015.”
When the they say “starting in fiscal 2015”, they mean September/October of 2014 – right around the corner.
Like the other TFs, current law requires a cut in spending when the TF falls to zero.
This is what Dept. of Transportation will do:
“Should a situation occur where FHWA cannot fully reimburse States, the agency may take some or all of the following actions:
Move from daily to weekly reimbursements
Align reimbursements with Trust Fund deposits (twice monthly)
Make proportional payments to States based on available Trust Fund cash”
These steps will limit construction across the country.
This should be very easy to fix (it’s not that much money). But this is an election year, and this is going to blow before election day.
Three solutions:
Increase taxes (gas)
Cut spending
Increase General Fund Transfer (deficit)
What’s the right solution??
I ask because the same thing will happen with the DI fund. It will hit zero in November of 2016 – right before the Prez election. So what happens with Highway could be a road map for DI.
DI is not highways. it is reasonable to pay for highways out of general taxes. we all use them. even if we don’t have cars.
DI might be paid for that way, but since it’s part of Social Security which has been paid for by the workers themselves for seventy years and works very well that way. And because the people who want to destroy SS consider that turning it into welfare is a good first step, it is rather stupid for “liberals” to be calling for turning it into welfare… that is pay for it by raising taxes “on the rich.” It won’t work.
DI’s cumulative shortfall by 2024 is $322 billion. Moreover that amount is pretty steady state since it only trends up in NOMINAL terms from $31 billion to $53 billion and most of that after 2020. While not an insigificant amount of money it represents around 1/3rd of ONE YEAR of our recent wars of choice and right about the same amount as the $310 billion in tax cut extenders passed by the House yesterday with no offsets at all. http://politicalticker.blogs.cnn.com/2014/04/29/republicans-pass-tax-breaks-but-dont-pay-for-them/
DI faces a relatively small structural shortfall that was fully apparent in the SS Reports more than a dozen years ago. For example this from the 2004 Report http://www.ssa.gov/OACT/TR/TR04/IV_SRest.html#wp199110
Table IV.A2.–Operations of the DI Trust Fund, Calendar Years 1999-2013
At that time the cumulative 25 year actuarial shortfall was 0.18% of payroll and the 75 at .62% of payroll. And are not that much different now. One way to fix the whole thing would be to disaggregate Northwest into its two constituents and devote the entirety of the first three or so increments of FICA increases to DI while holding off on OAS until it actually failed its own formal test. I’ll let Dale give his own dollars and cents but what this means is that properly addressing DI when it first failed its actuarial test would have meant maybe a dollar a week per employee and employer on a one time basis for the first 25 years and then maybe a similar boost every other decade or so.
DI is broke. DI has been broke for a decade. DI needs to be fixed. DI could have been fixed for a pittance. DI can still be fixed for a small fraction of the amount we are willing to spend on such things as Wars of Choice or for that matter (hi Ilsm!) on the single weapons program that is the F-35 Joint Fighter.
DI is important. (For one thng there is an excellent chance that I will end up on it before FRA). But in the scheme of things it is a financial sideshow. Its funding gap is long-term, structural and in the context of a $15 trillion econony a flea-speck.
“my numbers” are essentially the same as his. about a dollar or two a week increase now… but this is a one time fix. It will not be needed again for 20 or 50 years… if you can see that far ahead.
I prefer to emphasize the stupidity of not paying for it. You, dear reader, have a not insignificant chance of needing disability benefits yourself one day, and the private market is not the safest way to plan for it.
By all means avail yourself of private insurance if you can, but a whole nation can’t afford to do it that way.
I “don’t like” DI because unlike OASI it is not a need you can predict “for sure” for yourself, and unlike OASI it does need to be “needs tested,” which is a messy, expensive process…. exactly why we don’t want to turn OASI into “needs” or “means” tested. But I don’t really see any better way to do it, and mostly I don’t like that the liars and the ill informed confuse DI, and SSI, with OASI in order to confuse the public, and themselves, about the different natures of the programs and the fact that “Social Security” is not in any trouble at all… except from the liars and the ill-informed.
You can pay for your own Social Security forever. because you will be living longer, you will need to “save” a little more (in the form of the payroll tax), and because the economy is not expected to grow as it has done in the past, your “savings” for your longer retirement will need to be a little higher percent of your wages…. about two percent more eventually, but one tenth of one percent more… about eighty cents per week… per year until we get there. This is an amount of money you won’t even notice. But if you reach Social Security age without it being there, or without it being enough, or without you being able to get it without a “means test,” you are going to be very, very sorry.
And by remaining ill informed you are practically guaranteeing “it won’t be there for you”… because the liars will have won.
Is Angry Bear just an echo chamber? Or is it open to opposing views?
Well that depends. Like almost all blogs it’s commenting community tends to be insular and it is true that some people have been pushed off the Isle of Ursa Iratus by active and passive means. There re former regulars who wouldn’t touch foot here if you paid them and others who won’t be allowed to put a Paw down if they paid us.
But in the defense of the Angry Bears while we may be irascible and it being good advice to “Don’t Poke the Animals With Sharp Sticks” we really are voraciously hungry for the meat called ‘Data’ (at least if it comes with ‘Sourcing’).
So if you deploy numbers and sourcing and are willing to advance cases based on both you are welcome to Isle Ursa Iratus. Now you might get cuffed around a little and better be prepared to give as good as you get, after all even Mama Bears play rough if you threaten their cubs. Still there is room for outsiders to claim ground. But nobody just gets to we’d ashore and declare themselves Ursus Rex because they got an A in Econ 1 back in the day. Not even or especially if that came at the GMU Mercatus Center or the U of Chi Business School. You got to have more than that of you want to mix it up here. And then have a thick pelt along with your sharp (data tipped) claws.
Shorter version: talking points ain’t either data or reasoned arguments. No matter how obvious they seem to you. That is the key to winning Angry Bear is “convincing” and not “explaining”. Because we have mostly heard the explanations.
Bring It Would Be Bruins! The Resident Bears WelcomeYou! Sure with Bared Teeth and Claws! But Still!
Blather, platitudes, supposition, conjecture, etc. are just that, meaningless. Charon will escort you out the door. Bring a coin to pay for safe passage please.
“They are societies in which every life counts. In which every life is truly, fully lived.”
What US does not need to build is the $1500B F-35! Or keep 11 super carrier steaming around the world wearing out reactors and airplanes enforcing the empire.
GAO is all over the military industry complex seeing 5 root causes of corruption that I have seen in polite terms in testimony given 30 Apr.
i agree with you about the “real” stuff. i just don’t think that SS should be paid for by the rich. it works much much better if we pay for it ourselves.
this does not mean i don’t think the rich need to pay for the stuff they use… like highways… and war toys… and bank failures…
i’d be all in favor of higher taxes on the rich until “The Deficit” is no longer being used to scare people into “austerity.” but not to pay for SS.
In its April Baseline CBO had this to say about the Highway Trust Fund:
“Under CBO’s baseline projections, the highway and transit accounts of the Highway Trust Fund will have insufficient revenues to meet obligations starting in fiscal year 2015.”
When the they say “starting in fiscal 2015”, they mean September/October of 2014 – right around the corner.
Like the other TFs, current law requires a cut in spending when the TF falls to zero.
This is what Dept. of Transportation will do:
“Should a situation occur where FHWA cannot fully reimburse States, the agency may take some or all of the following actions:
Move from daily to weekly reimbursements
Align reimbursements with Trust Fund deposits (twice monthly)
Make proportional payments to States based on available Trust Fund cash”
These steps will limit construction across the country.
This should be very easy to fix (it’s not that much money). But this is an election year, and this is going to blow before election day.
Three solutions:
Increase taxes (gas)
Cut spending
Increase General Fund Transfer (deficit)
What’s the right solution??
I ask because the same thing will happen with the DI fund. It will hit zero in November of 2016 – right before the Prez election. So what happens with Highway could be a road map for DI.
The CBO Baseline:
http://www.cbo.gov/sites/default/files/cbofiles/attachments/43884-2014-04-Highway_Trust_Fund.pdf
Easy cut the pentagon to 2% of GDP, about in half.
Reduce income taxes, and raise same amount of money in gas and SS/DI/medi taxes (raise the income limit).
No new taxes, and reduce waste in military industry complex.
krasting
highway is not disability insurance.
but since you asked, if we as a people are unwilling to pay for what we need, we will have to do without. we won’t like it.
ilsm
DI is not highways. it is reasonable to pay for highways out of general taxes. we all use them. even if we don’t have cars.
DI might be paid for that way, but since it’s part of Social Security which has been paid for by the workers themselves for seventy years and works very well that way. And because the people who want to destroy SS consider that turning it into welfare is a good first step, it is rather stupid for “liberals” to be calling for turning it into welfare… that is pay for it by raising taxes “on the rich.” It won’t work.
http://www.cbo.gov/sites/default/files/cbofiles/attachments/43890-2014-04-Social_Security_Trust_Fund.pdf
DI’s cumulative shortfall by 2024 is $322 billion. Moreover that amount is pretty steady state since it only trends up in NOMINAL terms from $31 billion to $53 billion and most of that after 2020. While not an insigificant amount of money it represents around 1/3rd of ONE YEAR of our recent wars of choice and right about the same amount as the $310 billion in tax cut extenders passed by the House yesterday with no offsets at all.
http://politicalticker.blogs.cnn.com/2014/04/29/republicans-pass-tax-breaks-but-dont-pay-for-them/
DI faces a relatively small structural shortfall that was fully apparent in the SS Reports more than a dozen years ago. For example this from the 2004 Report
http://www.ssa.gov/OACT/TR/TR04/IV_SRest.html#wp199110
Table IV.A2.–Operations of the DI Trust Fund, Calendar Years 1999-2013
At that time the cumulative 25 year actuarial shortfall was 0.18% of payroll and the 75 at .62% of payroll. And are not that much different now. One way to fix the whole thing would be to disaggregate Northwest into its two constituents and devote the entirety of the first three or so increments of FICA increases to DI while holding off on OAS until it actually failed its own formal test. I’ll let Dale give his own dollars and cents but what this means is that properly addressing DI when it first failed its actuarial test would have meant maybe a dollar a week per employee and employer on a one time basis for the first 25 years and then maybe a similar boost every other decade or so.
DI is broke. DI has been broke for a decade. DI needs to be fixed. DI could have been fixed for a pittance. DI can still be fixed for a small fraction of the amount we are willing to spend on such things as Wars of Choice or for that matter (hi Ilsm!) on the single weapons program that is the F-35 Joint Fighter.
DI is important. (For one thng there is an excellent chance that I will end up on it before FRA). But in the scheme of things it is a financial sideshow. Its funding gap is long-term, structural and in the context of a $15 trillion econony a flea-speck.
Bruce Webb is right.
“my numbers” are essentially the same as his. about a dollar or two a week increase now… but this is a one time fix. It will not be needed again for 20 or 50 years… if you can see that far ahead.
I prefer to emphasize the stupidity of not paying for it. You, dear reader, have a not insignificant chance of needing disability benefits yourself one day, and the private market is not the safest way to plan for it.
By all means avail yourself of private insurance if you can, but a whole nation can’t afford to do it that way.
I “don’t like” DI because unlike OASI it is not a need you can predict “for sure” for yourself, and unlike OASI it does need to be “needs tested,” which is a messy, expensive process…. exactly why we don’t want to turn OASI into “needs” or “means” tested. But I don’t really see any better way to do it, and mostly I don’t like that the liars and the ill informed confuse DI, and SSI, with OASI in order to confuse the public, and themselves, about the different natures of the programs and the fact that “Social Security” is not in any trouble at all… except from the liars and the ill-informed.
You can pay for your own Social Security forever. because you will be living longer, you will need to “save” a little more (in the form of the payroll tax), and because the economy is not expected to grow as it has done in the past, your “savings” for your longer retirement will need to be a little higher percent of your wages…. about two percent more eventually, but one tenth of one percent more… about eighty cents per week… per year until we get there. This is an amount of money you won’t even notice. But if you reach Social Security age without it being there, or without it being enough, or without you being able to get it without a “means test,” you are going to be very, very sorry.
And by remaining ill informed you are practically guaranteeing “it won’t be there for you”… because the liars will have won.
As this is an Open Thread.
Is Angry Bear just an echo chamber? Or is it open to opposing views?
Well that depends. Like almost all blogs it’s commenting community tends to be insular and it is true that some people have been pushed off the Isle of Ursa Iratus by active and passive means. There re former regulars who wouldn’t touch foot here if you paid them and others who won’t be allowed to put a Paw down if they paid us.
But in the defense of the Angry Bears while we may be irascible and it being good advice to “Don’t Poke the Animals With Sharp Sticks” we really are voraciously hungry for the meat called ‘Data’ (at least if it comes with ‘Sourcing’).
So if you deploy numbers and sourcing and are willing to advance cases based on both you are welcome to Isle Ursa Iratus. Now you might get cuffed around a little and better be prepared to give as good as you get, after all even Mama Bears play rough if you threaten their cubs. Still there is room for outsiders to claim ground. But nobody just gets to we’d ashore and declare themselves Ursus Rex because they got an A in Econ 1 back in the day. Not even or especially if that came at the GMU Mercatus Center or the U of Chi Business School. You got to have more than that of you want to mix it up here. And then have a thick pelt along with your sharp (data tipped) claws.
Shorter version: talking points ain’t either data or reasoned arguments. No matter how obvious they seem to you. That is the key to winning Angry Bear is “convincing” and not “explaining”. Because we have mostly heard the explanations.
Bring It Would Be Bruins! The Resident Bears WelcomeYou! Sure with Bared Teeth and Claws! But Still!
Bruce:
Blather, platitudes, supposition, conjecture, etc. are just that, meaningless. Charon will escort you out the door. Bring a coin to pay for safe passage please.
Run,
I will put a coin on Bruce’s eyes at the bier.
Coberly,
Hi!
The societies we should build have infrastructure, and DI.
http://blogs.hbr.org/2014/05/5-dirty-secrets-about-the-u-s-economy/
“They are societies in which every life counts. In which every life is truly, fully lived.”
What US does not need to build is the $1500B F-35! Or keep 11 super carrier steaming around the world wearing out reactors and airplanes enforcing the empire.
GAO is all over the military industry complex seeing 5 root causes of corruption that I have seen in polite terms in testimony given 30 Apr.
GAO 14 563T on 30 Apr 14 pages 6 onward.
http://www.gao.gov/assets/670/662837.pdf
ilsm
i agree with you about the “real” stuff. i just don’t think that SS should be paid for by the rich. it works much much better if we pay for it ourselves.
this does not mean i don’t think the rich need to pay for the stuff they use… like highways… and war toys… and bank failures…
i’d be all in favor of higher taxes on the rich until “The Deficit” is no longer being used to scare people into “austerity.” but not to pay for SS.