Social Security: The Cost Of Doing Nothing

[imagep]

Actually it is gonna happen, for the simple reason that it is not the least politically viable. The least politically viable is Medicare and Social Security for those that need it. Americans will have no problem kicking multi-millionaires off of Social Security in order to protect the checks of the lower-middle-class.

However, unfortunately, people also lack the ability to discount risk well, and so they are only likely to even do that once it is already too late.

Which is why any political answer to social securities' problems must find a way to guarantee the continuation of the benefit, despite the fact that the government will not have the money to make good on that guarantee as it currently stands.

No one is going to want to give up their social security, not even the rich. They earned it, they paid for it, they feel that it is owed to them, that they deserve it, and they ain't giving it up.

What I can see happening is making the retirement age a little older, or to start subsidizing social security a little out of the general treasury fund.

 

[JoeTheEconomist]

So now the $2.5 Trillion surplus that American workers paid into SS is adding to our debt? How ridiculous. Borrowing the money to pay off the T bills that SS owns might raise our deficit but it comes right off our DEBT.
Cashing in T bills lowers our outstanding debt. Isn't that what you want?

You are struggling with the difference between deficit and debt. One measures indebtedness and the other measures net cashflows. They are different things, and clearly you do not see the difference.

The point was that "SS hasn't added a penny to the deficit". I provided a fact-check to dispute it. Your point isn't close.

 

[cpwill]

No one is going to want to give up their social security, not even the rich. They earned it, they paid for it, they feel that it is owed to them, that they deserve it, and they ain't giving it up.

Well.... yeah. And the Greeks don't want what is happening to them, either. Want is irrelevant here. We aren't going to have the ability to give it to them. It doesn't matter what they feel, the math is not going to be effected by their feelings, no matter how strongly you feel them or how justified you feel in doing so.

What I can see happening is making the retirement age a little older, or to start subsidizing social security a little out of the general treasury fund.

:shrug: neither of those will save you.

Firstly, we are already subsidizing Social Security out of the General Fund to the tune of about $31 Bn - and that amount is already projected to rise rapidly over the next decade. It is possible that we could continue to absorb those outflows from the General Fund. If we assume that we get rid of Medicare entirely. If we keep Medicare, however, then that program (along with Medicaid and the Obamacare subsidies) will take all of the available monies, leaving nothing for Social Security. So seniors who want to keep their Social Security that they earned, payed for, etc., are free to do so so long as they are therefore willing to give up Medicare. Good luck selling that one.

Secondly, raising the retirement age A) is extraordinarily bad for our lower-income workers, who are least likely to work in professions where they can continue to labor at older ages (meaning that you are explicitly screwing over poorer Seniors in order to benefit wealthier Seniors) and B) isn't going to reduce expenditures enough to save these programs.


Oh. And it's worth noting that all of this ignores the fact that SSDI has exploded since the Great Recession, and is now scheduled to run out of money and have to shift to cutting payments in THREE YEARS.

 

[imagep]

Well.... yeah. And the Greeks...

Greece isn't a monetarily sovereign country, thus it's not a good choice in comparisons.

What you are suggesting is that we should essentially turn social security into a means tested welfare system. I believe that welfare tends to lock people into poverty by removing their incentive to be more productive. Any time that you means test something, you create an incentive to not do something, in this case it would be to not save or invest, as doing so may reduce or eliminate the benefit that you paid for. "Why the heck should I save anything when doing so will cause me to loose income"

 

[iguanaman]

You are struggling with the difference between deficit and debt. One measures indebtedness and the other measures net cashflows. They are different things, and clearly you do not see the difference.

The point was that "SS hasn't added a penny to the deficit". I provided a fact-check to dispute it. Your point isn't close.

Anything added today to the deficit by SS is nothing but money that was subtracted from the deficit and added to the debt in earlier years. It doesn't change the end result because SS is PAID FOR by law.

 

[WhyNotWhyNot]

No one is going to want to give up their social security, not even the rich. They earned it, they paid for it, they feel that it is owed to them, that they deserve it, and they ain't giving it up.

What I can see happening is making the retirement age a little older, or to start subsidizing social security a little out of the general treasury fund.

Actually we didn't pay for OUR future SS distributions. What we paid for was OUR PARENTS' SS distributions. That is really the underlying problem - the scheme only works as long as the next generation is able (and willing) to pay enough - betting that they too will be covered by succeeding generations. It is sort of like betting that a rising stock market will always rise further. We know it isn't true - and some people lose when the market corrects. Some people will lose in the inevitable social security correction. The political problem is, "How will the loss be distributed?" If we do nothing, the trust fund will run out in the early 2030's and SS will only be able to distribute income as it is received (pure cash flow). Initially the income will be sufficient to pay out about 75% for the pre-crash distributions - and it will decline slowly after that unless we have a positive demographic change. Doing nothing will mean that everybody receiving SS payments at the time will get the reduction equally - and all future generations will receive equally reduced benefits. Raising the eligibility age has a similar effect in that it uniformly reduces total benefit payments to all individuals except those that are currently receiving them. It's attraction is that it keeps the monthly income up.

 

[haymarket]

Says the guy who wants to take what we spend on the military and give it to people who aren't working...talk about screwing over the next generation. Raise their taxes and leave them defenseless? Somehow I'm the one who's supposed to feel guilty?

:thinking

Could you please be good enough to reproduce my post in which I advocated the various things you claim I did?

 

[haymarket]

Deny all you want - I quoted your post - you lied. You directly lied just like your chosen dictator.

Your first accusatorial post made no sense.

Your latest one makes even less.

 

[haymarket]

Most people who have a headache caused by a brain tumor do not view the headache as their problem, nor will treating the headache make their problem go away.:doh

You seemed to have confused this with a medical thread.

 

[haymarket]

No - I am singling out our entitlements because A) they are the drivers of our deficit and B) they are going to become even more so in the very near future, threatening the fiscal stability of our government.



They have already done so - and the DOD is currently scheduled for some pretty serious cuts. Time for other programs that are actually the financial threat to face the same.

As for defense - we already spend more than the next five, six seven - maybe even ten nations put together. Small cuts from record high levels of moneys spent are hardly what you make them otu to be.

And all spending drives the deficit and I already told you how we can cover the shortfall in SS.

 

[CalGun]

So you wrote everyone should pay taxes but then said only those making money - and you deny you wrote that even though I pointed out your posts that directly stated it - are you obama in real life - say something and ignore it?

Your first accusatorial post made no sense.

Your latest one makes even less.

 

[haymarket]

What, exactly, do you mean by freezing benefits? Using the same average SS monthly benefit today as in 2000 would save many billions, but make living on that amount ($300/month less) very hard to do.

What I am referring to is to keep the current maximum payout plus a modest inflation allowance. When people propose taxing all moneys for FICA, defenders of the wealthy come back and say that such a plan would drastically increase the maximum benefit. So under my proposal, we would retain the current maximum benefit plus a modest inflation allowance.

 

[haymarket]

So you wrote everyone should pay taxes but then said only those making money - and you deny you wrote that even though I pointed out your posts that directly stated it - are you obama in real life - say something and ignore it?

I said everyone making dollar one and up. Just who would NOT be included in that? Everybody makes at least one dollar a year.

 

[FederalRepublic]

Could you please be good enough to reproduce my post in which I advocated the various things you claim I did?

You want to raise taxes and cut military spending in order to have more money to give to people who are not working. I'm not going to reproduce all the quotes of you saying this. There are too many to list.

 

[FederalRepublic]

You seemed to have confused this with a medical thread.

So you're bad at arithmetic, problem identification, and understanding analogies. You got a raw deal, my friend.

 

[haymarket]

You want to raise taxes and cut military spending in order to have more money to give to people who are not working. I'm not going to reproduce all the quotes of you saying this. There are too many to list.

Thank you for admitting you are not honest enough to produce any quotes from me where I state what you claim I did. That clears that up.

 

[haymarket]

So you're bad at arithmetic, problem identification, and understanding analogies. You got a raw deal, my friend.

Lets see the proof of any of that. What we have found is you are rather bad at saying what you mean to say and trying to pretend to be a wit only to have you fall far short by half.

 

[JoeTheEconomist]

Fail. Your individual answer has no merit in how tax breaks for corporations produce jobs - we were talking corporate tax breaks not individual one's. Nothing stopped you from ignoring the break for buying an air conditioner. A new air conditioner means more efficiency, less electricity used, and lower cost of electricity for all - including businesses that might determine how many people they can hire based on how much they have to pay for power. (I did in my business).

The corporate breaks do not create jobs either. Corporate taxes are passed on to the consumers like any other cost. Corporate tax breaks accomplish nothing but resource shifting. If I give a tax break to oil & gas, you will have more oil and gas operations. On the other side, you will have an offsetting shortage. The Government does not create jobs - unless you think that the people in govt are just smarter than we are.

I could have ignored the incentive, but why would I. I changed my priorities from paint to air conditioning. No job was created. All of the efficiency and lower costs and all of it, suggests that you think that the government is smarter than the market. Without this or that tax cut, no one would be able to figure out that less electricity would cost less.

Unless the government is smarter than the market, it cannot create jobs.

 

[JoeTheEconomist]

Greece isn't a monetarily sovereign country, thus it's not a good choice in comparisons.

What you are suggesting is that we should essentially turn social security into a means tested welfare system. I believe that welfare tends to lock people into poverty by removing their incentive to be more productive. Any time that you means test something, you create an incentive to not do something, in this case it would be to not save or invest, as doing so may reduce or eliminate the benefit that you paid for. "Why the heck should I save anything when doing so will cause me to loose income"

You should remind him that SS is already means-tested with a test that reaches up to 1/3rd of retirees.

 

[iguanaman]

Why are your posts obsessed with violence?

You said you would starve them to death. I was being merciful.

 

[JoeTheEconomist]

Anything added today to the deficit by SS is nothing but money that was subtracted from the deficit and added to the debt in earlier years. It doesn't change the end result because SS is PAID FOR by law.

Immigrants are required BY LAW to get appropriate paperwork. By your logic, we have no undocumented immigrants - It is BY LAW.

The FactCheck says that you are wrong, and maybe you should share this wisdom with them. FactCheck is pretty generous because it doesn't even mention the direct subsidies like the EITC or the 250 billion of support in the form of the payroll tax holiday. How was the $250 billion "subtracted was subtracted from the deficit and added to the debt in earlier years." FactCheck doesn't mention that SS provides an incentive for people to retire earlier - which means that they will have lower income taxes. It fails to recognize that payroll taxes compete with income taxes. As we raise payroll taxes for SS, we are less able to raise income taxes to lower the deficit.

Again, tell FactCheck how wrong they are.

 

[FederalRepublic]

Lets see the proof of any of that. What we have found is you are rather bad at saying what you mean to say and trying to pretend to be a wit only to have you fall far short by half.

There's 37 pages of proof on this thread alone. Pick any of your posts and I'd say there about a 1 in 4, maybe 1 in 5, chance that you'll find proof of at least one of the three. Have fun with that.

 

[haymarket]

There's 37 pages of proof on this thread alone. Pick any of your posts and I'd say there about a 1 in 4, maybe 1 in 5, chance that you'll find proof of at least one of the three. Have fun with that.

your post 337 about me

Raise their taxes and leave them defenseless?

Yes, I advocate raising all Americans taxes. But where did I advocate leaving the nation defenseless?

Please produce that post.

 

[cpwill]

As for defense - we already spend more than the next five, six seven - maybe even ten nations put together.

What an interesting figure. What was the strategic resource-alignment study from which you derived it?

...because it looks like you just made it up without having any particular idea what you were talking about.

Small cuts from record high levels of moneys spent are hardly what you make them otu to be.

As I have demonstrated to you ad nauseum (almost as many times as I have had to demonstrate to you that I'm willing to cut defense including benefits), defense is currently anywhere but a record high.

And all spending drives the deficit and I already told you how we can cover the shortfall in SS.

No, you didn't. You gave me a formula that would provide (with a - ridiculously optimistic - static scoring model) us with an 85% solution for a $28 bn deficit, that A) does not cover the shortfall even today and B) sure as hell doesn't even come close to covering the shortfall tomorrow.

If I'm going to reduce benefits for our low-income elderly off the baseline, as you suggest, I expect to get something better in return than "and this maybe will put off the collapse by a grand total of six months!!!."

 

[cpwill]

Greece isn't a monetarily sovereign country, thus it's not a good choice in comparisons.

:shrug: a reduction in benefits is a reduction in benefits, whether you do it through nominal or real cuts. You think that our low-income elderly are going to be alright dealing with COLA raises of 0.5% when inflation is 15%?

What you are suggesting is that we should essentially turn social security into a means tested welfare system.

No. I am suggesting that that is the most likely outcome. My proposal has nothing of the sort, except inasmuch as Social Security is already means-tested due to the depreciating return on income.

I believe that welfare tends to lock people into poverty by removing their incentive to be more productive

I tend to agree with you. How do you propose that a 67 year old former construction worker with a high-school education and a half-dozen non-working major body parts grasp those boots with which he can pull himself up?

Any time that you means test something, you create an incentive to not do something, in this case it would be to not save or invest, as doing so may reduce or eliminate the benefit that you paid for. "Why the heck should I save anything when doing so will cause me to loose income"

Which is why I propose mandated savings.

However, that is less likely to pass than simply reducing the payouts to the upper income. Which will happen first. Then when that doesn't work? :shrug: then we have to start making the tough choices. Because "Warren Buffet doesn't need Social Security" will be comparatively pretty easy.