New Report: Expand Social Security

[SumDay]

I saw this in several news sources this a.m. (Washington Post, etc.) and thought it was interesting:

NEW REPORT: Proposal to Expand Social Security | NewAmerica.net

Many in Washington have pushed to cut Social Security, but a new report released today from the New America Foundation's Economic Growth Program advises the opposite strategy. The report argues that to truly deal with the nation's retirement security crisis and guarantee secure retirement for working Americans, the U.S. must expand Social Security and minimize the importance of private, tax-favored programs.

 

[ziggy29]

We face a contradiction in our economy. On one hand, demographics and rising life expectancies are putting more of a strain on SS and Medicare, so it makes sense to *raise* their eligibility age.

On the other hand, there aren't enough decent jobs out there for people under 62 as it is, so raising the eligibility age would partially be a transfer of money from one pocket to the other as savings in SS and Medicare costs are offset by increased unemployment checks, food stamps, PPACA subsidies and Medicaid among other things. Raising the age would significantly increase the number of "young old" who are in need of massive government assistance because they can't find a decent job and can no longer access SS at their age.

 

[gerrym51]

I read the report. No mention of where the money to do it will come from

 

[Midpack]

Interesting report with lots of good data/info, but it might be a tough sell for many reasons. And they bill themselves as "non-partisan."

One benefit of Expanded Social Security is that it would allow the total public retirement benefit for most Americans to be dramatically increased without increasing the payroll tax rate. Under our proposal, the two components of Expanded Social Security would be paid for by separate revenue streams. Social Security A would be paid for by payroll taxes. Social Security B, the new universal, flat benefit, would be financed by revenues other than payroll taxes – either general revenues or a dedicated tax or taxes.

http://growth.newamerica.net/sites/...hFreedman_ExpandedSocialSecurity_04_03_13.pdf

 

[Midpack]

I read the report. No mention of where the money to do it will come from

I'm not advocating their proposal at all but you're mistaken...pages dedicated to costs. Link to report above in post #4.

 

[gerrym51]

I'm not advocating their proposal at all but you're mistaken...pages dedicated to costs. Link to report above in post #4.

another tax

 

[ziggy29]

another tax

IMO, better than than more debt. Or possibly, better neither one of those at all. But at this point I'll take "tax" over "borrow", albeit reluctantly.

 

[gerrym51]

IMO, better than than more debt. Or possibly, better neither one of those at all. But at this point I'll take "tax" over "borrow", albeit reluctantly.

Ziggy,

i can afford another tax-but with the country's debt as it is we should apply tax inceases to the debt

 

[ziggy29]

Ziggy,

i can afford another tax-but with the country's debt as it is we should apply tax inceases to the debt

Don't want a political tangent, but I'd prefer new revenues to go to debt reduction as well. I'm mostly speaking in terms of what I perceive to be the reality here. And to expand SS, the money would have to come from somewhere. As I said, there is some offset with other social programs. For example, if you reduced the SS eligibility age to 55 or 60, you'd likely have considerably fewer people between 55/60 and 62 needing unemployment benefits, food stamps and Medicaid. It probably wouldn't be a complete offset, but it would surely offset some of the direct costs.

 

[heeyy_joe]

This would be an interesting way of converting savers (age 55+) in the workforce into spenders while having younger folks that are spenders move up the ladder and it puts more money in their pockets to spend a good portion of it. It is this kind of strategy that appears counter intuitive at first, but should result in a net increase in taxes collected as well as improving the economy by increasing money velocity. By the time this strategy gains favor, the demograhic advantage of such a program will have long passed I'm afraid.

 

[bUU]

Don't want a political tangent, but I'd prefer new revenues to go to debt reduction as well. I'm mostly speaking in terms of what I perceive to be the reality here.

How would you resolve the inherent inconsistency between lack of affordability of retirement and lack of sufficient jobs for the "young old" you alluded to? I'm a really big fan of debt reduction, in the abstract (which, not coincidentally, is the way it is usually advocated); I think it will solve a lot of problems. I would love to hear about ways to get there without overlooking the bodies we'd have to step over to get there along the way. Those proposals always seem to be presented in terms of how things will be better for everyone at the end of the path, but are there any proposals that keep things decent for everyone along the entire path?

I think when you say that you're speaking in terms of what you perceive to be the reality you really mean that you're speaking in terms of just dollars, i.e., making every thing add-up, with the right side of the equation equaling the left side. The issue is that the impact of these other factors are still reality.

 

[samclem]

The >only< thing that increases, in aggregate, our national wealth is increased national productivity. And increasing national wealth--the "size of the pie" is the only way to improve living standards overall. Any other scheme to take money from one person/generation/class and give it to another is not truly improving our lot.
So, will this approach improve national productivity?
-- It removes capital (savings) from the private sector (where it is used to improve productivity). Not good.
-- It will require higher taxes. News flash: We're broke!
-- It encourages productive workers to leave the workforce earlier. All the schemes to "make room for younger workers" or to spread the "available work" (as though it were a fixed amount) have been tried (see France for a look at the ongoing experiment: mandatory short workweeks, earlier retirement benefits, etc). How is that working out?
-- My favorite part: " Social Security B: a flat basic income for all elderly Americans that can be funded out of general revenues." Pretty breezy--I dig that passive voice!

 

[ERhoosier]

IMHO SS has generally worked pretty well for 70+yrs. It should be considered separately from the US national debt in general. SS was begun in the Depression as a mandatory savings program paid into a Trust Fund, NOT as a general gov't tax program. Remember when SSAN meant Soc Sec ACCOUNT NUMBER? SS was meant to provide only a basic level of subsistence, and it was expected that folks would save more on their own. As the Social Security Board said in 1939- "It is impossible under any social insurance system to provide ideal security for every individual. The practical objective is to pay benefits that provide a minimum degree of social security—as a basis upon which the worker, through his own efforts, will have a better chance to provide adequately for his individual security."
Social Security History
Radical expansion of SS beyond that original goal, particularly during a weak economic recovery, is not worth risk to either SS or the general economy. Unfortunate fact is the SS Trust Fund is only backed by an entity (US Gov't) which is now nearly $17 TRILLION in the hole. Major economic growth is the only hope of reducing that debt. As Greece illustrates, raising taxes without economic growth is a sure way to destroy an economy- including its retirement payment system

 

[ziggy29]

How would you resolve the inherent inconsistency between lack of affordability of retirement and lack of sufficient jobs for the "young old" you alluded to?

Never said I was smart enough to know the answer. I just know the conflict exists.

 

[seraphim]

I'm not eligible for SS, so if money starts coming out of the general fund, I am now supporting other people's retirement plans, while they have never contributed to mine. And the money can only come from a tax increase. O lucky me....

 

[BLS53]

In the past, the government has used various buy outs and early retirement packages to shape the military and certain civil service occupations. I believe the postal service is offering something along those lines now. Given the current unemployment rate, and it's impact the greatest on both ends of the age scale, it would be interesting if SSA came up with such a plan. I suppose big brother thinks the military and federal workers are smart enough to manage a reduced benefit, but the general population is not. The logic being they would have to bail people out twice, when the reduced SS benefit came up short at some point.

 

[ziggy29]

And here we see what's happening already to the "too young to retire, too old to get hired" generation:

http://www.nytimes.com/2013/05/03/health/suicide-rate-rises-sharply-in-us.html

The most pronounced increases [in the suicide rate -- z29] were seen among men in their 50s, a group in which suicide rates jumped by nearly 50 percent, to about 30 per 100,000. For women, the largest increase was seen in those ages 60 to 64, among whom rates increased by nearly 60 percent, to 7.0 per 100,000.

Ages 50 to 64 -- exactly the age groups today's economy is discarding like trash -- too old (and perceived as too expensive) to hire, but not yet able to collect retirement income. They still need to work, but no one will hire them.

Raising the SS age to 70 would probably just expand the high-suicide age band up to 70. And it would increase the amount of other social spending needed to keep them afloat - unemployment, food stamps, Medicaid...

It doesn't feel like the money is there to expand the program, but in any event unpleasant decisions lie in the future. If we are so determined to hold the line on spending programs -- and there are some decent economic reasons for it -- we have to continue to expect the increase in human misery exacted on the middle class, which is increasingly exhibiting "downward mobility" in a way not seen since the 1930s...

 

[samclem]

If we are so determined to hold the line on spending programs -- and there are some decent economic reasons for it -- we have to continue to expect the increase in human misery exacted on the middle class, which is increasingly exhibiting "downward mobility" in a way not seen since the 1930s...

On the other hand, it wasn't spending programs that gave us a prosperous middle class in the first place.
We can't redistribute our way to prosperity--not between "classes" or between generations.

 

[seraphim]

Same old tripe to make higher income earners pay more to increase payout percentage for lower income earners. Let the higher earners keep some of their money, but they dont need THAT much more. Reduce tax deferrals to $5k a year, hitch I guess means elimitating HSAs, scalable payroll tax rates where the higher income pay a higher percentage in return for fewer benefits, taxing capital gains/unearned income at same level as income, and let the general tax fund cover everything else - which means higher income taxes for everyone, decreasing programs elsewhere, or higher deficit spending. Did I miss anything? And I'm only half way through the document.

 

[Hamlet]

The problem is that for about 30-40 years, the size of the pie has been increasing steadily, but the share of the pie going to the bottom half of the population has been shrinking just as fast.

If that increased productivity no longer translates into higher wages, we have a serious problem.

As an example, if productivity was the only thing that mattered, we'd feel better off today than we did in 2006. National GDP is higher, and we're producing those goods with fewer people than we were using in 2006. The problem is that the majority of the country is doing worse.

I'm not advocating for the expansion of SS, but it is more complex than just simply increasing productivity. Right now, productivity is making our most serious problem (unemployment) worse.

The >only< thing that increases, in aggregate, our national wealth is increased national productivity. And increasing national wealth--the "size of the pie" is the only way to improve living standards overall. Any other scheme to take money from one person/generation/class and give it to another is not truly improving our lot.