2016: The National "Cry For Help"

[Eric the Green]

(01-04-2017, 01:20 AM)Warren Dew Wrote:

(01-03-2017, 04:36 PM)Eric the Green Wrote: Social Security and Medicare are not problems, and are not the cause of the debt. They are paid-for programs. Relatively speaking, Social Security is better paid for than Medicare, but basically it's the same deal.

False.  Social Security has unfunded liabilities of $32 trillion, not counting Medicare.  That dwarfs the nominal debt of $17 trillion or so.

I don't think so, from all I have heard. Tax payments have been diverted from social security for decades. That's why the "lock box" was discussed during the 2000 campaign. Even in spite of that, money won't run out from the trust fund until at least the mid-2030s. That's plenty of time for Democrats to get in and pop or raise the cap on income taxable for social security.

Saying these things about social security probably derives from the neo-liberal echo chamber, along with the meme that it's a "ponzi scheme." Utter nonsense; it's a program that works and will continue to work as long as the Republicans don't keep messing with it and stealing from it to pay for wars and tax cuts.

I would reverse your statement. Without income from social security tax, the debt would probably be something like $32 trillion instead of the nominal debt of $17.

[David Horn]

(01-03-2017, 09:20 AM)Warren Dew Wrote:

(01-02-2017, 03:35 PM)Eric the Green Wrote: I always dissent from that first picture. Boomers were statistically less inclined to support Reagan than other generations. They didn't make the decision to institute Reaganomics. The GIs and Silents did that, and the early and core Gen Xers were its most enthusiastic supporters as they grew up under it, and then kept it going.

The big bills that are being handed to the "kids" are from massive entitlement programs like Social Security and Medicare; they are more FDR and LBJ than Reagan.  Obviously boomers didn't do that since they weren't even alive at the time of FDR and most weren't voting in time for LBJ.

It really comes down to the GIs, who benefited from those programs much more than they paid in.  Handing bills down generation by generation worked as long as each later generation of payers was bigger, but boomers were really the last generation big enough to pay the tab.

The Millies are a larger generation than the Boomers, though the decisions made in the past will be burdens to them.  LBJ tried guns and butter, but is was Reagan and GWB who both cut taxes and increased spending they liked (typically transfers to the same people who got the tax cuts) that made the mess we have today.  As a nation, we can recover, but it won't be up to the Boomers to pay for it.  We'll be old or dead.

[David Horn]

(01-04-2017, 01:20 AM)Warren Dew Wrote:

(01-03-2017, 04:36 PM)Eric the Green Wrote: Social Security and Medicare are not problems, and are not the cause of the debt. They are paid-for programs. Relatively speaking, Social Security is better paid for than Medicare, but basically it's the same deal.

False.  Social Security has unfunded liabilities of $32 trillion, not counting Medicare.  That dwarfs the nominal debt of $17 trillion or so.

No, this accounting scheme that assumes future liabilities but not future credits or adjustments is nonsense on stilts.  No annuity program has the longevity and consistent liquidity of the OASDI system. 

We already know that human longevity increases over time, so adjustments are needed.  Likewise, birthrates are not consistent and must be accommodated.  In no case can this not be resolved by small adjustments if they are made far in advance ... like right now!  The cap on taxable income needs to be removed.  That will resolve everything identified at this point and some as yet undetermined future events as well.

[radind]

The view of the Social Security Administration.

Quote:https://www.ssa.gov/policy/docs/ssb/v70n...3p111.html

"As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.”…

[David Horn]

(01-04-2017, 02:38 PM)radind Wrote: The view of the Social Security Administration.

Quote:https://www.ssa.gov/policy/docs/ssb/v70n...3p111.html

"As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.”…

... or pop the cap on taxable earnings.  That's far more reasonable, and the earnings being added to the base are earned by the very people who have gained the most in the recovery.  Good all around.

[Anthony '58]

Since David mentioned GWB, the outcome of his tax-cut plan is probably what we will see in this next round of tax cuts: In 2001, the Democrats, using Al Gore's having won the popular vote as leverage, forced the Republicans to cut the bottom income tax rate from 15% for 10% in exchange for not filibustering the tax cuts on the rich.

This time around, the outright tax increases on single taxpayers working full time at less than $10 an hour, plus the tax hikes on the bottom 51% of all single parents, of the Paul Ryan tax plan, will be DOA in the Senate. Look for something like a new 8% rate on the first $3,000 of taxable income, plus a scrapping of the abolition of the personal exemption, to be part of the plan actually passed - and no "offset" in the form of scaling back the upper-income tax cuts is necessary because there is not even a pretense of making the tax cuts "deficit neutral."

[Eric the Green]

Rob the poor to give to the rich: the Paul Ryan approach.

[Ragnarök_62]

(01-05-2017, 02:01 PM)David Horn Wrote: <snip>

... or pop the cap on taxable earnings.  That's far more reasonable, and the earnings being added to the base are earned by the very people who have gained the most in the recovery.  Good all around.

First, some history:

FDR Wrote:When President Franklin D. Roosevelt signed the Social Security Act into law 80 years ago this month, he said that while “[w]e can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life … we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”

Yes, that's 1 option.  Another option is adding non unearned income to the tax base. And another is to separate Medicare and go to single payer and use the "border tax" or a VAT to fund that. The VAT tax payments would be offset by the no longer needed health insurance company payments. I'm sure the Heritage Foundation just hates all of those ideas.

[Warren Dew]

(01-04-2017, 04:45 AM)Eric the Green Wrote:

(01-04-2017, 01:20 AM)Warren Dew Wrote:

(01-03-2017, 04:36 PM)Eric the Green Wrote: Social Security and Medicare are not problems, and are not the cause of the debt. They are paid-for programs. Relatively speaking, Social Security is better paid for than Medicare, but basically it's the same deal.

False.  Social Security has unfunded liabilities of $32 trillion, not counting Medicare.  That dwarfs the nominal debt of $17 trillion or so.

I don't think so, from all I have heard. Tax payments have been diverted from social security for decades.

I'm afraid you've heard from people who don't understand how the Social Security trust fund works, and probably don't understand finance at all.

The Social Security trust fund is currently at about $2.8 trillion, thanks to Reagan era changes and all the money boomers have pumped into the system.  That money is invested in special government bonds that have slightly more favorable terms than the bonds that you and I can buy.  Some conspiracy theorists refer to purchase of the bonds as "diversion" of Social Security funds, but that's only true if you think buying GM bonds in your IRA constitutes "diversion" of your money to GM.  You get the money back when you sell the bonds or when they mature.

The problem is that us boomers are now retiring.  We were sufficiently more numerous than the GIs and Siilents that we paid for to stack up some excess in the trust fund.  Unfortunately, the X and Millenial generations are not sufficiently more numerous than us even to keep up with our payments.  As a result, the trust fund is likely to be exhausted some time in the next couple of decades.  It would need another $32 trillion to avoid eventual exhaustion.

[pbrower2a]

The problem is that the economic elites who have been profiting by cutting wages have been getting gigantic incomes that are beyond the threshold for exemption from Social Security taxes.

[David Horn]

(01-06-2017, 09:27 PM)Warren Dew Wrote: I'm afraid you've heard from people who don't understand how the Social Security trust fund works, and probably don't understand finance at all.

The Social Security trust fund is currently at about $2.8 trillion, thanks to Reagan era changes and all the money boomers have pumped into the system.  That money is invested in special government bonds that have slightly more favorable terms than the bonds that you and I can buy.  Some conspiracy theorists refer to purchase of the bonds as "diversion" of Social Security funds, but that's only true if you think buying GM bonds in your IRA constitutes "diversion" of your money to GM.  You get the money back when you sell the bonds or when they mature.

The problem is that us boomers are now retiring.  We were sufficiently more numerous than the GIs and Siilents that we paid for to stack up some excess in the trust fund.  Unfortunately, the X and Millenial generations are not sufficiently more numerous than us even to keep up with our payments.  As a result, the trust fund is likely to be exhausted some time in the next couple of decades.  It would need another $32 trillion to avoid eventual exhaustion.

The $2.8T Trust Fund, which is a dubious construct, is adequate through 2037: 20 years.  Most of those years, X is the generation earning the most per capita, but is the smallest per cohort.  Boomers are joining the retired class, then moving on to their next engagement.  The net group will be X (smaller numbers) with Millies paying in.  Why do we need $32T beyond that, unless you are counting until the end of time.

[Eric the Green]

(01-06-2017, 09:27 PM)Warren Dew Wrote:

(01-04-2017, 04:45 AM)Eric the Green Wrote:

(01-04-2017, 01:20 AM)Warren Dew Wrote:

(01-03-2017, 04:36 PM)Eric the Green Wrote: Social Security and Medicare are not problems, and are not the cause of the debt. They are paid-for programs. Relatively speaking, Social Security is better paid for than Medicare, but basically it's the same deal.

False.  Social Security has unfunded liabilities of $32 trillion, not counting Medicare.  That dwarfs the nominal debt of $17 trillion or so.

I don't think so, from all I have heard. Tax payments have been diverted from social security for decades.

I'm afraid you've heard from people who don't understand how the Social Security trust fund works, and probably don't understand finance at all.

The Social Security trust fund is currently at about $2.8 trillion, thanks to Reagan era changes and all the money boomers have pumped into the system.  That money is invested in special government bonds that have slightly more favorable terms than the bonds that you and I can buy.  Some conspiracy theorists refer to purchase of the bonds as "diversion" of Social Security funds, but that's only true if you think buying GM bonds in your IRA constitutes "diversion" of your money to GM.  You get the money back when you sell the bonds or when they mature.

The problem is that us boomers are now retiring.  We were sufficiently more numerous than the GIs and Siilents that we paid for to stack up some excess in the trust fund.  Unfortunately, the X and Millenial generations are not sufficiently more numerous than us even to keep up with our payments.  As a result, the trust fund is likely to be exhausted some time in the next couple of decades.  It would need another $32 trillion to avoid eventual exhaustion.

What I heard is that the payments to Social Security were diverted to the general fund.

[pbrower2a]

Social Security is basically a pay-as-you-go system predicated upon the idea that every generation will do at least roughly as well as its predecessors in economic results. It was designed in part to get elderly worker, generally unproductive and accident-prone, out of industrial work while allowing them some modicum of independence. That is a good deal -- enough that younger workers generally do not complain about having to pay payroll taxes. Young people do not want to be responsible for their parents. They have other concerns -- like doing their jobs competently and taking care of their own children.

Medicare exists in part because for-profit medical insurance companies did not want the elderly as customers. It is a commonplace that the last year of a person's life is more expensive in medical costs than all preceding years. No insurance company wants that sort of customer.

[Bob Butler 54]

(01-08-2017, 01:05 AM)pbrower2a Wrote: Social Security is basically a pay-as-you-go system predicated upon the idea that every generation will do at least roughly as well as its predecessors in economic results. It was designed in part to get elderly worker, generally unproductive and accident-prone, out of industrial work while allowing them some modicum of independence.  That is a good deal -- enough that younger workers generally do not complain about having to pay payroll taxes. Young people do not want to be responsible for their parents. They have other concerns -- like doing their jobs competently and taking care of their own children.

Medicare exists in part because for-profit medical insurance companies did not want the elderly as customers. It is a commonplace that the last year of a person's life is more expensive in medical costs than all preceding years. No insurance company wants that sort of customer.

Social Security was also an emergency measure that followed the stock market crash.  A lot of people were heavily invested in the market, and their retirement programs had just vanished in a puff of overly leveraged investments.  This put the already retired in dire straights at a time when those of working age were having problems finding a job.  Something had to be done.  Something was done.  It is easy to wish that something else had been done.  Alas, the country is stuck today with what seemed expedient at the darkest financial moment in US history.

I'm not suggesting a particular fix, but we ought to occasionally remember the history.

[Warren Dew]

(01-07-2017, 11:44 AM)David Horn Wrote:

(01-06-2017, 09:27 PM)Warren Dew Wrote: I'm afraid you've heard from people who don't understand how the Social Security trust fund works, and probably don't understand finance at all.

The Social Security trust fund is currently at about $2.8 trillion, thanks to Reagan era changes and all the money boomers have pumped into the system.  That money is invested in special government bonds that have slightly more favorable terms than the bonds that you and I can buy.  Some conspiracy theorists refer to purchase of the bonds as "diversion" of Social Security funds, but that's only true if you think buying GM bonds in your IRA constitutes "diversion" of your money to GM.  You get the money back when you sell the bonds or when they mature.

The problem is that us boomers are now retiring.  We were sufficiently more numerous than the GIs and Siilents that we paid for to stack up some excess in the trust fund.  Unfortunately, the X and Millenial generations are not sufficiently more numerous than us even to keep up with our payments.  As a result, the trust fund is likely to be exhausted some time in the next couple of decades.  It would need another $32 trillion to avoid eventual exhaustion.

The $2.8T Trust Fund, which is a dubious construct, is adequate through 2037: 20 years.  Most of those years, X is the generation earning the most per capita, but is the smallest per cohort.  Boomers are joining the retired class, then moving on to their next engagement.  The net group will be X (smaller numbers) with Millies paying in.  Why do we need $32T beyond that, unless you are counting until the end of time.

Spoken like someone who doesn't expect to live to 2037.  Boomers aren't that big a group, by the way; the issue is that the birth rate has subsequently stabilized, so neither X nor millenials nor any subsequent generation is expected to significantly outnumber the previous generation on a per year basis.  What's really playing havoc with Social Security is the demographic transition.

(01-08-2017, 01:05 AM)pbrower2a Wrote: Social Security is basically a pay-as-you-go system predicated upon the idea that every generation will do at least roughly as well as its predecessors in economic results.

Also on strong continued population growth, and, originally, on the idea that many people wouldn't live long enough to collect, life expectancy in the 1930s being around 62.

[The Wonkette]

(01-03-2017, 09:39 AM)Bob Butler 54 Wrote: Not to say I would wish to have been born in my father's time.  His free tour of Italy provided by the government in 1944 to 1946 didn't sound like a lot of fun.  I was just old enough to avoid Vietnam.  I'd say my timing was good enough to be very pleased with.

Did you father stay in Italy after Europe surrendered?

[SomeGuy]

I am leery of hopping into purely political discussion, but I am going to have to second popping the cap on taxable income.

[Bob Butler 54]

(01-09-2017, 12:25 PM)The Wonkette Wrote:

(01-03-2017, 09:39 AM)Bob Butler 54 Wrote: Not to say I would wish to have been born in my father's time.  His free tour of Italy provided by the government in 1944 to 1946 didn't sound like a lot of fun.  I was just old enough to avoid Vietnam.  I'd say my timing was good enough to be very pleased with.

Did you father stay in Italy after Europe surrendered?

For a little while.  There wasn't enough shipping to get everyone home instantly.  While they were there, the US military was able to help somewhat with helping the natives recover.  For example, my father was Army Signal Corp.  There were enough downed phone lines and ruined central offices to keep him occupied until the USS Yorktown showed up to give him a ride home.