corn18
Thinks s/he gets paid by the post
- Joined
- Aug 30, 2015
- Messages
- 1,890
That's true financially, but not politically.
True dat.
That's true financially, but not politically.
I would hope the same for everyone's mother. Sadly, it hasn't always worked out that way.My hope would be that folks like you mother would be well taken care of in our society which likely can afford to do so.
No idea what you mean by "spade" remark here.I think it makes it too easy for the politicians to kick the can down the road and to avoid calling a spade a spade.
Not sure if someone pointed this out, (I may have missed a post) but Social Security is not SS. It is SSI. The "I" means Insurance. So when I see people talking about "getting" their money back it ignores the Insurance part of the equation. In particular disability insurance. All those years of paying in are not just building your old age benefit, they are "buying" you disability insurance. Insurance premiums are not something you get back So don't forget to subtract out yearly disability insurance premiums while calculating how much you "should" be getting back.
I'm not sure which liabilities are being kicked down the road under the current system that wouldn't be kicked down the road under pure paygo.
.... AFAIK, every change to SS that might reduce the future gap between revenue and benefits is politically unpopular. That's why we continue with the system we have.
(The only possible exception is raising the taxable cap. I believe I've seen at least one poll where that got more than 50% support.)
Even when I was working and would have paid more I favored eliminating the cap to help the survivability of the program.
Of course. This concept is an example of a key part of the "American Personality." Anytime one group can benefit at the expense of another, it's popular with the group that benefits! (Stand, remove your cap and place your hand over your heart!) ....
..... In addition, 59 percent went further, saying they would support eliminating the cap on taxable earnings entirely. .....
.... in the survey, people with incomes over $100,000, who would be singularly affected by raising the cap on income subject to the payroll tax, favored doing so by the same large majorities as for those who would not be affected.
There's always room to see things in different ways....... My own experience is that most people are in favor of what benefits them at the expense of others, especially related to taxes and gov't spending. I wish it was different. I guess it depends on what you mean by "many."While many people are so self-serving, many are not.
my sense is that those currently subject to the cap would be fine with eliminating it as long as their additional contributions count towards the calculation of benefits...:
.... The proposals I've seen wouldn't work this way. Folks making over the current cap, and thus paying more under the new proposals, would receive no additional benefits. They'd receive as though they contributed exactly at the cap. ....
There are competing proposals. See https://www.ssa.gov/oact/solvency/provisions_tr2017/payrolltax.html
The one you referred to is E.2.1 and would solve 83% of the gap if there were no additonal benefits.... see https://www.ssa.gov/oact/solvency/provisions_tr2017/charts/chart_run181.html
The proposal that I was referring to that removes the cap but allows additional benefits is E.2.2 and would solve 67% of the gap.
https://www.ssa.gov/oact/solvency/provisions_tr2017/charts/chart_run193.html
Pay as you go means self-funding and no borrowing... and that is what SS is... by law.
That is why when the surplus and interest run out in 2034 that benefits will be cut by ~25%... at that point you will get your wish... SS benefits will be limited to the then current year taxes.
and AARP will be out of business..........
Haven't Congress dipped into the surplus many times for general spending?
?? I'm not at all sure what you are saying. No person or entity can "keep the money" and also earn interest on that money. Interest is paid when you let someone >else< have the money, they pay you interest in exchange for the use of that money.No. Social Security keeps the money and earns interest by investing in U.S. Treasuries. However, a growing treasury will be a source of temptation for a spendthrift Congress.
Okay, I'll restate this. You are considering these options:It depends on how the paygo system is structured-- is the program size set by demand (by a set benefit for each retiree regardless of available funds) or by supply (available funds from a payroll tax determine the size of the benefits)? A demand based program would allow obligations to be pushed to the future (making promises that future workers work would have to pay for), a supply-bounded program would not. On a national level, only the total spending on retiree benefits would be determined by the available funds, the task of apportioning it to individuals could be done in any way that is desired. I'd expect that a system to highly favor those of modest working income would be chosen (aka "progressive").
Most of us (particularly on this site) are comfortable with supply-bounded spending during our working years and in retirement.
.IF I accept your hypothesis that congress would only cut benefits at the middle and upper income levels
I wouldn’t call them proposals, simply because they aren’t being considered by policy makers right now. More like “options”.There are competing proposals.
This is a point that most people miss. The payout (PIA) is indexed to the national wage index, but the funds are invested in Treasury bonds (special ones) whose rates track CPI. If the wage index rises faster, then by definition additional funds external to the SS trust to offset not only longevity, but also the faster growth of wage index over CPI.It depends on how the paygo system is structured--
I wouldn’t call them proposals, simply because they aren’t being considered by policy makers right now. More like “options”.
I know, a nit. ...
Since the SS payroll tax could also be adjusted at the outset if we go to true paygo, (rate, removal of cap, etc) it's not necessarily true that under case A future retirees would get lower benefits than they get today. As we've seen, it wouldn't take >major< changes to increase revenues to match benefits. But, yes, if we keep the SSI payroll taxes as they are now, benefits in the aggregate would need to be cut.Okay, I'll restate this. You are considering these options:
A. Fix the tax rate, flex the benefits every year to match taxes.*
B. Fix the benefits, flex the tax rate every year to match the benefits.
In case A, retirees in the future will get lower benefits than retirees get today.
In case B, workers in the future will pay higher taxes than workers pay today.
True. But the annual flow of funds from the federal budget to SS recipients (through redemption of the special bonds in the trust fund) also stops. This, at least in theory, frees up funds for need-based assistance for seniors at that time, and many at the low end would probably qualify if they took a 25% cut in their SS checks. I'd prefer to avoid all the costs and "incentives" that go with that and instead meet the needs of low-income seniors through SSI, but that may not happen.Note that if congress makes no changes, our current program turns into A with equal percentage deductions for all retirees.
?? I'm not at all sure what you are saying. No person or entity can "keep the money" and also earn interest on that money. Interest is paid when you let someone >else< have the money, they pay you interest in exchange for the use of that money.
In the case of SS, the excess SSI taxes which were collected when the program ran a surplus were used to buy special government bonds. The US government spent the money that it received from the Social Security Administration. SS gets paid interest by the USG (i.e from taxpayers, from more borring, etc) , and now that SS is redeeming the bonds in order to pay benefits to recipients, the money for those redemptions also comes from the US government (i.e. from taxpayers, from borrowing, etc).
The US government spent the extra money that was collected. As a practical matter, it could be argued that there was little alternative.
Social security doesn't own the money, it holds the bonds, which are a promise to pay by the USG. It is a significant difference, because when the federal government delivers that payment it is an expenditure on their (our) part. And that is aleady happening every year. If there were Swiss francs, gold bars, hog bellies, private equities, or something else of value in that trust fund (instead of obligations of the USG) then we wouldn't be having these annual expenditures (but those holdings would cause other problems!).Quote:
Social Security still owns all that money and earns interest on it.
Social security doesn't own the money, it holds the bonds, which are a promise to pay by the USG. It is a significant difference, because when the federal government delivers that payment it is an expenditure on their (our) part. And that is aleady happening every year. If there were Swiss francs, gold bars, hog bellies, private equities, or something else of value in that trust fund (instead of obligations of the USG) then we wouldn't be having these annual expenditures (but those holdings would cause other problems!).
Social Security has its own separate tax base and trust fund. Money comes from payroll taxes (FICA) and interest from investing in treasury bonds. Social Security is off budget. The interest is paid by the federal government to the Social Security fund.
By then, they will BE Mom & Dad. Their children will be paying into the system.A lot of them now say, "I don't mind paying SS tax because it goes to Mom & Dad." But when their own Mom & Dad die, they won't be so eager to pay that tax for other people's Mom & Dad.
Exactly, thanks.Those are special, non-marketable Treasury securities.
When any redemption occurs, it requires the issuance of new, marketable debt to cover the current year shortfall.
It does not show up as an expense on the annual budget, but does add to the total federal debt outstanding in the market.
The SS Trust Fund is little more than an actuarial placeholder; what really matters is the current deficit of expenditures over receipts.
It's Politics! .... When does our government worry about fixing a problem that 'Might' Happen 20 years from now? They seemed to have no problem just passing a Tax Cut that put us another 1.5 Trillion in the hole Currently.