TPMDC
Republicans And Democrats Lining Up Behind Major Changes To Social Security
Rep. Steny Hoyer (D-MD), Speaker Nancy Pelosi (D-CA) and Minority Leader John Boehner (R-OH)
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Is there a new, bipartisan consensus forming on Capitol Hill about whether (and how) to scale back Social Security benefits? A surprising number of signs point to "yes" -- and that has many progressives looking ahead a few months to what they believe could become a serious fight.
Several of the most powerful members of the House -- Republicans and Democrats -- have recently voiced real support for the idea of raising the retirement age for people middle-aged and younger as part of a larger plan to reduce long-term deficits, inching closer to what not too long ago was the third rail of American politics.
The strongest backer of this plan is House Minority Leader John Boehner, who recently told a Pennsylvania newspaper, "I think raising the retirement age going out 20 years so you're not affecting anyone close to retirement, and eventually getting the retirement age to 70 is a step that needs to be taken."
There's no big surprise there. The Republican minority in the House doesn't have a lot of power, but if Boehner had his druthers, he might well take things quite a bit further. He's the one, after all, who won't take Social Security privatization off the table if Republicans retake the House.
It's the Democrats who have progressives feeling queasy.
House Majority Leader Steny Hoyer explicitly put the idea on the table as well in a speech last month. "We should consider a higher retirement age or one pegged to lifespan," Hoyer said.
He echoed House Majority Whip James Clyburn, who put it this way: "With minor changes to the program such as raising the salary cap and raising the retirement age by one month every year, the program could become solvent for the next 75 years." One month a year may not sound like much, but if you're 30 years away from retirement, that adds up to almost three years.
In the House, though, Nancy Pelosi is the linchpin, and she's not nearly as enthusiastic as her colleagues. But, notwithstanding the enthusiasm gap, she also left the possibility of raising the retirement age on the table. When asked about it by TPMDC at her press conference last week, she criticized the plan, but mainly to say she disagrees with putting Social Security on the chopping block ahead of other measures. "Why they would start talking about a place that could be harmful to our seniors -- 70 is a relative age," Pelosi said. "Around here, there's not a lot of outdoor work or heavy lifting. But for some people it is, and 70 means something different to them. So in any event let's talk about growth, lets talk about how we can reduce spending, lets put everything, those initiatives: promoting growth, tightening the belt, looking at entitlements. But let's not start on the backs of our seniors."
There's one catch, though. Last week, Democrats included a rider to the supplemental war spending bill that will likely force the House to vote on a forthcoming fiscal reform plan, if the Senate passes it first. That package is being put together by President Obama's deficit and debt commission, and will be ready to go after the midterms. Pelosi had already pledged to give the package a vote, so perhaps nothing has really changed. But in a way, she also tied her own hands: if the Senate passes a broad tax-and-entitlement reform package at the end of this Congress and her own caucus is willing, she'll be hard-pressed to stop the Social Security reforms she thinks should come last.
Of course, that puts the onus on the Senate, which can't pass much of anything these days, especially if it includes tax hikes -- and any serious effort to pull the country back from the brink of fiscal crisis will have to include some of those. But if there's a fluke, or an unexpected decision on the part of 60 senators to hold hands and jump together, it could happen swiftly, with very little notice.
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Stroszek
July 7, 2010 9:15 AM
After gorging themselves on debt that will passed onto their children, the Me Generation will now pat itself on the back for showing a new sense of "fiscal responsibility" in their screwing over of their children.
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Stroszek
July 7, 2010 9:19 AM in reply to Stroszek
Here's a fairer proposal:
Raise payroll taxes or cut benefits for anyone who was of voting age during the Reagan Administration.
Why do we have to pay for the excess of the Baby Boomers?
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Bruce Webb
July 7, 2010 9:35 AM in reply to Stroszek
They raised taxes for everyone of voting age DURING the Reagan Administration. Which is why there is a $2.5 trillion Trust Fund largely extracted from that 'Me Generation'. We got stuck with higher FICA AND an increase in Full Retirement Age.
Boomers currently range in age from 46 to 64 years old. In 1980 we ranged in age from 16 to 34. Anyone who thinks that political policy in the 1980s was shaped by people under the age of 35 needs to think again. Hell Boomers are not even in control of Congress NOW, most of the power positions still be in the hands of the Depression/War babies.
The whole 'Blame the Boomers' narrative was a cynical construct and a central part of the 'Leninist Strategy' to undermine Social Security put forth in a Cato sponsored paper of that same name published in 1983 and authored by Stuart Butler and Peter Germanis
http://www.cato.org/pubs/journal/cj3n2/cj3n2-11.pdf
The centerpiece of the Leninist Strategy was to convince younger workers that Social Security was doomed, that the Trust Fund was a fraud, and that Boomers were at fault. The strategy on the whole worked to perfection with the results seen here.
Stroszek you need to read it and weep. Literally. It is a 15 pg 585 kb file that will outline the campaign that you swallowed hook, line and sinker. You were pwned and badly.
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Ann Arbor
July 7, 2010 10:37 AM in reply to Bruce Webb
+1. It was the Greatest Generation and Silent Generation that put the least into Social Secutiry and have gotten the most out of it.
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Bruce Webb
July 7, 2010 11:01 AM in reply to Ann Arbor
(This may double post, my first attempt seemingly got swallowed by the server)
Well sort of another myth. Because of the way initial benefits are set in proportion to lifetime Real Wage each generation has gotten a retirement check that buys a bigger basket of goods than the one before. Per Dean Baker and also Prof Rosser of JMU the projected check for the new retiree of 2040 would be in real terms 60% larger than the one that a similarly situated retiree gets today. As as Prof Rosser points out in what I cheekily call 'Rosser's Equation' (he doesn't mind) even if we do nothing and benefits are cut by 25% at TF depletion that 75% of 160% = 120%.
Meaning that some of those whining Gen-Xers up thread are WATBs crying because their check might only be 20% better than the one my mom gets today. BOO HOO HOO. Plus if they got their lazy slacker asses off the couch and grew the economy at the same rates the Greatest and Silent Generations did Social Security fully self-funds with no changes in tax or retirement age and with no changes to benefit formulas. It is called 'Low Cost' in the Tables, and among other things only requires ultimate Productivity at 2.0%
http://www.ssa.gov/OACT/TR/2009/V_economic.html#188118 and ultimate Real GDP at 2.9%
http://www.ssa.gov/OACT/TR/2009/V_economic.html#205214 both of which are not big numbers historically.
Gen-X! Want a 100% check! Work as hard as your grandparents did in the 50s and 60s. And stop whining about how they got some sort of free pass at your expense. Because the numbers tell us different.
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July 7, 2010 11:20 AM in reply to Bruce Webb
Well, the Boomers were usually high all the time and all got divorced, dumping the Gen X kids on the grandparents.
Gen X is not really right-wing, just thoroughly alienated from the whole system.
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Bruce Webb
July 7, 2010 11:32 AM in reply to Michael
Looks like we weren't the only ones high all the time.
Michael, put down that plastic bag and back away from that can of spray paint. Because I don't think huffing is your friend here.
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Tamarat
July 7, 2010 12:05 PM in reply to Michael
excuse me. I'm a boomer: am still married and have spent 30 years raising my children and 40 working outside the home. And I'm not that different from my friends.
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slb
July 7, 2010 5:36 PM in reply to Michael
Gen X is not really right-wing, just thoroughly alienated from the whole system.
And thoroughly spoiled, evidently, if you are any example.
You are a generational bigot. You have conjured a highly stereotyped version of the Baby Boom generation and generalized it to every member of the generation. You are way, way off base, punk.
I never took illegal drugs in my life. Nor have I abused legal substances. The same applies to my close friends. You know what else applies to a good many of us these days? Looking after elderly parents who are in ill health or suffering from senile dementia at just about the time that they had finished paying for college for their kids. Not for nothing are we also known as "the sandwich generation."
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EastWest
July 7, 2010 7:55 PM in reply to Michael
Poor babies.
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Scott in PacNW
July 7, 2010 12:07 PM in reply to Bruce Webb
Your anti-Gen X rant is touching but off base. Two important points:
1 - Social Security is solvent at least through 2040. After that, it can pay something like 65% of promised payout on a pay-go basis. That's with no change whatsoever.
2 - It's the rest of the budget that is big trouble, in large measure due to borrow & spend voodoo economics begun under Reagan -- and continued ever since.
Bottom line: Yes, Soc Sec tax was raised under Reagan, but politically that decade was toxic, and set the stage for Dubya's radioactive terms. We can blame all voters for the last 30 years and call it good.
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vickj
July 7, 2010 12:44 PM in reply to Scott in PacNW
Don't blame me. I never voted for Reagan, Bush I or Lil' Bush. They were all frauds, I said so at the time, and I can provide witnesses :) ...
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Steaming Pile
July 7, 2010 12:20 PM in reply to Bruce Webb
Growing the economy was a piece of cake for the Greatest and Silent generations. We have a little kerfluffle called the Second World War to thank for that.
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Bruce Webb
July 7, 2010 12:48 PM in reply to Steaming Pile
What did the Second World War last until 1965?
http://www.ssa.gov/OACT/TR/2009/V_economic.html#188118
Productivity 1960-1965 averaged 3.2%, Real Wage 2.0%, Real GDP 5.0%
and we don't even need a return to the Go-Go 60s, the numbers from 1995-2000 are good enough: 2.1% Productivity, 2.9% Real Wage, 4.1% Real GDP
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Consumatopia
July 7, 2010 11:01 PM in reply to Bruce Webb
What did the Second World War last until 1965?
Yes, actually, it took at least well into the sixties for our industrial competitors to catch back up with us after the destruction of World War II. While they were playing catch up, we were selling them the goods they needed to rebuild.
Not to mention that greater productivity in the sixties was mostly a matter of figuring out more ways to burn fossil fuels.
Or that we currently have 10% unemployment thanks to the tight money policies of our Boomer Fed chief. In other words, 10% of workers out there would like to work as hard as their grandparents did, but Boomers won't let 'em. We have to fight inflation--can't let anything happen to the nest egg, after all.
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July 7, 2010 12:43 PM in reply to Bruce Webb
"Boomers currently range in age from 46 to 64 years old. In 1980 we ranged in age from 16 to 34. Anyone who thinks that political policy in the 1980s was shaped by people under the age of 35 needs to think again."
The Boomers have since 1980 voted in a more conservative fashion than they did in the 1970s. The Boomers were the people who put Reagan in charge and bought into the 'Greed is Good' mentality of the 1980s.
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Bruce Webb
July 7, 2010 12:57 PM in reply to Rick
Got any numbers to support that?
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slb
July 7, 2010 5:37 PM in reply to Rick
The Boomers have since 1980 voted in a more conservative fashion than they did in the 1970s.
Not this one.
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Commie Dearest
July 7, 2010 1:13 PM in reply to Bruce Webb
Yes, it's all there for anyone who can read to see. The dismantling of the New Deal has long been a wet dream for the "conservatives" (read "rich people").
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George C
July 7, 2010 2:43 PM in reply to Bruce Webb
Actually, I think two ideas which will primarily affect the wealthy make sense:
1. eliminate the cap on income subject to the social security tax; and
2. increase the medicare premiums as beneficiaries go up the income scale (as retirees). No reason Bill Gates should pay the same $300 a month in medicare premiums as some poor guy who gets $25K a year.
I don't have the numbers, but seems to me #1 will really benefit the SS trust fund, and #2 will really benefit the medicare trust fund, and those who need both programs will get the benefit.
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Economides
July 7, 2010 5:23 PM in reply to George C
Bill Gates pays Medicare payroll tax on all his wages it is not capped. If he makes $10 mil/year in wages then he pays $145,000 in Medicare taxes. If you make 25,000/year then you pay $362 in Medicare taxes.
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slb
July 7, 2010 5:40 PM in reply to Economides
George C. was talking about the monthly premium charged to people enrolled in Medicare, not the Medicare portion of the payroll tax.
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Bruce Webb
July 7, 2010 6:40 PM in reply to George C
Couple of problems. First the Medicare Part B premium is $96.40 per month for individuals making under $85k or $170,000 for joint filers, not $300, with people earning more than that already paying a higher premium. Second Part B is optional, absent a change in the law Bill will just opt-out.
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George C
July 8, 2010 8:07 AM in reply to Bruce Webb
Bruce -- my point was the Medicare Part B premium for high income beneficiaries. For 2010, beneficiaries earning over $214,000 ($428,000 for married couples filing jointly) pay a maximum monthly premium of $353. (http://questions.medicare.gov/app/answers/detail/a_id/2261) Retirees with incomes that high can probably afford a more realistic premium.
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Consumatopia
July 7, 2010 11:38 PM in reply to Bruce Webb
They raised taxes for everyone of voting age DURING the Reagan Administration.
No, they raised FICA taxes during the Reagan Administration. We're still paying for the other tax CUTS you got in those days.
Look, I'm not bashing Social Security--you're right about SS, just looking strictly at the SS trust fund the older generations have done us just fine.
But if you start looking at the national debt, the Medicare trust fund (depleted by all the oldsters paying 60s/70s/80s Medicare taxes and receiving 2000s/2010s expensive medical care), the despoiling of the environment, and tight money policies that have kept wages growing slowly basically since the 70s, generations earlier than mine have screwed us over pretty damn well.
And then consider how many of them were demanding the government keep its hands off their Medicare while my friends are forgoing treatment for lack of reasonably affordable health insurance, and consider now that their preferred solution to Social Security seems to be to cut benefits for future retirees only--and you want to call my generation spoiled?
Hilarious.
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Marquis de SeaToShiningSea
July 7, 2010 9:53 AM in reply to Stroszek
Here is even a better proposal. Take the cap off FICA, but operate Social Security as if it were still there. By the way, it was the post-boomer generation that turned right. The boomers were just confused, the post-boomers loved their rightwing grandparents.
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Ben Alpers
July 7, 2010 10:52 AM in reply to Marquis de SeaToShiningSea
Here's an even better idea: stop trying to find a solution to a problem that doesn't exist.
As Paul Krugman reminded us again earlier this week, there is no crisis in Social Security.
This is an ideological war waged on the idea of a safety net by rightwing and "centrist" ideologues who care more about their precious market-oriented, neoliberal faith than about the well being of retirement-aged Americans.
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BedleySmutler
July 7, 2010 11:16 AM in reply to Ben Alpers
Perfect rebuttal, Ben.
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Mimi katz
July 7, 2010 11:18 AM in reply to Ben Alpers
Social Security is the least of our problems. The thing that will bankrupt us is the money spent on health care. The problem is with Medicare, but not with the benefits per se. The problem is with the incentive system that rewards overbilling and overtreating. Most of the health care dollars one spends are spent in the last yer of life, and much of the care ins intrusive and ineffective.
The real "entitlement" savings are in end-of-life care. Boomers need to educate themselves and talk to their parents, get advance directives signed and become familiar with the choices that will need to be faced. When the time comes, and it will, be prepared to let go. Understand that palliative care is often the best thing for both parents and children. A dignified death without lots of last-minute operations, CPR and tubes and ventilators. It is not too soon for Gen Xers to begin to understand the issue too, so you can help your parents and grandparents.
I am not being cynical or facetious. I've been through this with both of my parents who died in their 90s. I am furious at the GOP for politicizing this issue with their death panel nonsense, becasue they have made it so hard to address the issue. But if you are young and want to have the same kind of SS I enjoy, this is where the real savings are that could save SS if only people would face reality.
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Harry Truman
July 7, 2010 11:18 AM in reply to Ben Alpers
True that. The biggest problem is with Medicare and Medicaid and all of the abuses Congress built into those programs. The last one was under Bush, wherein seniors are provided with free or low cost drugs by the government, but the government has to pay retail for the drugs. Ostensibly this was to protect the "innovation" in the drug industry, but if you look at today's NYTimes, you will see that India will soon surpass us as a drug manufacturer. Also, doctors are refusing to take Medicare and Medicaid patients left and right because the reimbursement sucks— and it does. But nothing will happen on that because Congress is afraid of the Tea Party and their drug industry backers.
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Tamarat
July 7, 2010 12:15 PM in reply to Ben Alpers
You're right -- though I still stand by my "raise the cap" position. That would take us well past 2040.
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Steaming Pile
July 7, 2010 12:24 PM in reply to Tamarat
I would go with eliminating the cap and lowering the rate somewhat.
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chimpale
July 7, 2010 10:32 AM in reply to Stroszek
Bitching about a mass of people whose only common tie is that they were born between 1946 and 1964 is really fucking stupid.
If you're going to blame them all for policies, many of which were enacted by people older and younger than them, then I hope you'll be willing to reject everything that you have or use that was invented and produced by them, too.
I guess I should bitch about the baby boomers, too, for spoiling their kids rotten.
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cmaukonen
July 7, 2010 4:30 PM in reply to chimpale
I guess I should bitch about the baby boomers, too, for spoiling their kids rotten.
You got that right. Spoiled brats.
C
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oleeb
July 7, 2010 11:06 AM in reply to Stroszek
You don't have the slightest idea what you're talking about. The boomers have been paying extra into social security since 1983 to make sure we had enough money to pay for the benefits. Congress and the Presidents have chosen to spend all that additional social security revenue on the military. The solution is to now do what should have been done 30 years ago and that is to start making major cuts to the Pentagon's budget. I'd say a good start would be 50% over the next four years. Then we'd be back to the level of military spending we had when Clinton left office (and even that was very excessive).
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Joe Bob
July 7, 2010 1:41 PM in reply to oleeb
A greater contributor to the squandering of the SS trust fund was the Bush-era tax cuts (In fairness, it got plenty of Democratic votes too.). If not for the 2003 tax cuts, the overall budget picture would be very different. I’m all for cutting the DoD, but I say get the money back from where it went – primarily tax cuts for the 1%er’s.
Al Gore’s so-called lockbox doesn’t sound so silly now. That premise was to use budget surpluses to pay down government debt, free revenue that would be otherwise spent on debt service, and use that money to pay for SS benefits on a cash-flow basis for that much longer.
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vickj
July 7, 2010 12:54 PM in reply to Stroszek
So... let me get this straight:
A - Millions of jobs have been outsourced to benefit the tiny sliver of people at the top;
B - As a result, manufacturing is in the tank with the side benefit of busting unions, which benefits the tiny sliver of people at the top;
C - It has been stated that most of those jobs are not coming back;
D - Cons are against any aggressive move to renewable energy sources [which could provide jobs similar to those lost];
E - According to cons, collecting unemployment [or any kind of government assistance] is such a great deal that people won't work so they can just feed off the government;
Therefore...
F - I should starve an extra five years because you shouldn't disturb the income of that tiny sliver at the top, who should be able to use the American people as their own private Treasury?
'Splain that to me in a way that says that you're not just an asshole who likes playing 'King of the Hill'...
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Yosef 52
July 7, 2010 6:10 PM in reply to Stroszek
"Baby Boomer" is a meaningless, media-created nonsense term that is used to casually denigrate millions of people simply on the basis of their birth years. It's just another way to sweepingly generalize about other humans and ignore their individuality.
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markg8
July 7, 2010 9:35 AM in reply to Stroszek
Stroszel try again. O'Neill, Reagan and Greenspan doubled FICA taxes (Social Security and Medicare) in 1983 to pay for the "greatest" generation's payouts while at the same time saving for baby boomer retirement in the SS Trust Fund so it wouldn't bankrupt future generations. Those taxes are paid overwhelmingly by the poor and middle class. At the same time Reagan slashed taxes for the rich promising it would balance the budget by unleashing incredible prosperity and increasing government revenues. That scam never worked and now it's time to pay the bill.
I've been paying into Social Security since 1969. And now they want to change the rules again and screw the little guy and let the rich off the hook again. It's time they payed their fair share.
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Bruce Webb
July 7, 2010 9:43 AM in reply to markg8
http://www.ssa.gov/OACT/ProgData/taxRates.html
Slight correction. Rates went up by 50% between 1984 and 1990, they didn't double.
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NobleCommentDecider
July 7, 2010 11:33 AM in reply to markg8
Maybe TPM's Decider will chime in on this thread, if not we'll go to the real deal, what George W. Bush told America in 2005:
HE SAW THE MONEY WASN'T THERE, JUST PAPERS IN A DRAWER!
And you know you can trust George W. Bush to tell the truth, almost always, most of the time. CleverBulldog, MiddleClassBill and Rush Limbaugh can back me up on that belief.
The money/debt the Trust Fund IOU's represent can only be paid back if taxes are raised on the Bush Base, that is the Haves, and the Have Mores. Can't do that.
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Bruce Webb
July 7, 2010 11:43 AM in reply to NobleCommentDecider
Bush violated his oath to the Constitution right there. Those pieces of paper are legally backed by Full Faith and Credit of the United States.
Of course Bush famously claimed of the Constitution that "It is nothing but a goddamn piece of paper" So I guess there you go
http://www.capitolhillblue.com/artman/publish/article_7779.shtml
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condew
July 7, 2010 1:47 PM in reply to Bruce Webb
Why don't we default on the Treasury notes we sold to the Chinese and the Saudis first? Why is it OK to screw average Americans, but not wealthy nations?
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Consumatopia
July 7, 2010 11:21 PM in reply to Bruce Webb
The Constitution, at most, forces the Treasury to pay back the Trust Fund the money it owes.
But nothing stops the Trust Fund from just lending the money right back and cutting benefits or raising taxes instead.
The people who got taken hook, line and sinker were you folks back in '83. That FICA tax increase was just smoke and mirrors to use extremely regressive taxes to offset Reagan's tax cuts for the rich.
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An Outhouse
July 7, 2010 1:24 PM in reply to markg8
Actually, it may have kind of worked. The intention was to create a surplus to pay for the boomers. W. gave the surplus away to rich people cause it was 'unfair' to the rich taxpayers for the gov't to have a surplus.
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DownriverDem
July 7, 2010 10:15 AM in reply to Stroszek
Just as the Baby Boomers are getting ready to retire after paying in all these long years and with our tanked 401Ks, they best not screw us. They should raise the amount that can be taxed for SS. I don't mind working longer, but many employers consider anyone in the late 40s and 50s to be too old. We now hear that if you are unemployed employers don't want to hire you either.
Many Boomers are starting to collect at 62 since they can't find full time work.
What a mess! We aren't going away.
Most of us aren't rich either.
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kernel
July 7, 2010 1:46 PM in reply to DownriverDem
And I'll bet many oldsters have guns, and that doesn't mean they're republicans.
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slb
July 7, 2010 5:49 PM in reply to DownriverDem
I don't mind working longer, but many employers consider anyone in the late 40s and 50s to be too old.
Exactly so. Your current employer starts leaning on you to make way for someone younger (and cheaper), but no new employer is anxious to take on someone over 50, however well qualified they might be. All very well to raise the retirement age to 70, but how many employers are going to be willing to keep their employees on staff for that long?
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Geoff Johnson
July 7, 2010 10:57 AM in reply to Stroszek
Blaming an entire generation for anything is idiotic. I particularly like the replies here that say, "Quit blaming the boomers, actually it was this other generation that screwed us!" Problems faced by societies are never the unique creation of all people born in a 20 year time span, and anyone who can seriously make such an argument really has not thought the matter through.
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Bruce Webb
July 7, 2010 11:05 AM in reply to Geoff Johnson
The economists and politicians who pushed first Reaganomics and then Bushonomics were not Boomers. Just saying.
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ADad
July 7, 2010 11:27 AM in reply to Stroszek
I don't know where the misconception came from that the SS retirement age is 65. I'm a boomer, and my most recent SS statement says that my "full" retirement age is when I'm older than 66, but I don't receive the maximum monthly benefit until I'm 70. I could start taking benefits when I'm 62 (most boomers can), but it's substantially lower than at 66, which is substantially lower than 70.
BYW, I'll be goddamed if I'm going to accept raising the age of SS eligibility further. Social Security funding is in trouble because of the deficits created by Reagan, and any president named Bush. They reduced taxes on the rich the most while spending obscene amounts of money on the military-industrial complex that Eisenhower warned us about, and it didn't make us a damn bit more secure. Virtually all of our budgetary problems can be solved by letting the Bush tax-cuts on the wealthy expire, keeping the tax cuts on the poor and middle class in place, and raising the payroll-tax exemption limit. This isn't lefty thinking, it's just not ridiculous conservative "thinking" if you can call what conservatives do with their brains "thinking".
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Bruce Webb
July 7, 2010 11:38 AM in reply to ADad
http://www.socialsecurity.gov/retire2/agereduction.htm
'Full Retirement Age' as officially defined ranges from 65-67 depending on date of birth. For me it is 66 years 4 months. Anyone can increase their base retirement amount by working until 70, but FRA is still 65 for workers 63 and older and then increasing at a rate seen in the table.
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ADad
July 7, 2010 12:49 PM in reply to Bruce Webb
Understood. What I'm addressing is the notion that you retire at 65, and then hit the SS lottery. Many of us who have been contributing to the system for decades will still have to work until 70 to reach the maximum benefit. The federal government doesn't have the maneuvering room to fix the problem easily because Reagan and the Bushes spent 20 of the last 30 years racking up huge deficits (and debt service) that prevented cuts in income taxes for regular schmoes (instead of the rich) that might have made increases in payroll taxes (by the poor and middle-class) more palatable. The result is now an unnecessary class conflict between the older and the younger (as evidenced by this thread), when the real cause was a class war pursued by the rich and their lackeys in government against the poor and middle-class, which unfortunately now includes servile cowards like Steny Hoyer and the other weaklings in the Democratic party who--as usual--have already caved in to the Republicans because they're afraid that they might say "boo". In the mean time, the poor and middle-class fight their goddam wars, and the rich make money off of the conflicts while the government racks up even more obscenely huge deficits. GOP means "Government of the People"? Try "Government Offing the People". In my next post, I may allow myself to sound less cheerful, and more bitter.
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jeffgee
July 7, 2010 1:07 PM in reply to Stroszek
So you agree with a lot of corporate management that the boomers have had their day and should be put out to pasture in their 50s so the thirtysomethings can have the job for less pay? What could be better for the bottom line and the stock price? Face it, employees are considered expenses by corporations. Ever notice how a company's stock price goes up when layoffs are announced?
Nobody's hiring people in their 50s and 60s who are considered "overqualified" for low-pay jobs and ignored for professional jobs. It's bleak. I see it all around me.
Raising the retirement age is going to hurt a lot more people than raising the salary cap.
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Maritza
July 7, 2010 9:21 AM
I actually think that raising the retirement age SHOULD be on the table. Americans are living A LOT longer than they were when social security was firts enacted so it is reasonable to raise the age as Americans live longer.
I would rather raise the age then cut the amount that Seniors will get.
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An Outhouse
July 7, 2010 9:34 AM in reply to Maritza
You don't receive anything when you're dead and that seems to be the whole point of the calculation. There are many ways senior citizens contribute to society besides being wage slaves. Many seniors that I know find second careers as volunteers and providing stability to local civil organizations (churches, clubs, tutors, mentors, service organizations, Habitat for Humanity, etc).
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Maritza
July 7, 2010 9:36 AM in reply to An Outhouse
Many seniors aren't retiring at 65 any more. Many are working into their 70's and beyond.
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Marquis de SeaToShiningSea
July 7, 2010 9:57 AM in reply to Maritza
When you are pushing 70 you will have a different view.
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1audiofile
July 7, 2010 10:17 AM in reply to Maritza
AND many people cannot get a job in their 50s because companies are hiring younger workers and laying off older workers in their 50s. This is illegal but companies are doing it like crazy. It will be hard enough to make it without income to 65, but 70. Wait, I can sell my house and move to a smaller one. Oh wait, in the last 2 years my house lost $400,000 of equity. No help there. People need to stop thinking about the average number and look to the extremes. Those are the people who will be in trouble and on the street.
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numediaman
July 7, 2010 10:57 AM in reply to Maritza
They are retiring later because they have to, not because they want to. Moving the retirement age further back will be great for the banks when they take over the retirement system -- everyone pays in but fewer collect.
For those people who hate paying into the social security system because they hate seeing old people retire, well all I can say is that you are model Americans.
It completely blows my mind that so many are in favor of raising the retirement age. Is this progress? You want to see a bunch of geezers out on the street begging for minimum wage jobs? We should be lowering the retirement age, not raising it. A whole generation of Americans have completely bought into the idea that life should become harder over time, not easier. Do you really want to working fulltime at 69?
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anna am
July 7, 2010 12:35 PM in reply to Maritza
And who's hiring them? People I know who are 55, 56 can't find jobs. The headhunters just shake their heads.
So I'd really like to know what kind of work is going to be available to a generation that enforcedly has to work until they're 70? I mean, sure, if you're a partner in a lawfirm you can keep hanging out there till 70, but if you're a partner in a law firm you're probably not depending on social security to retire anyhow.
And what are people who actually do depend on social security going to do? How are they going to earn a salary until eligible age? How many jobs are there handing out samples of margarine and salad dressing in the supermarkets are there?
And do you really want to do that for ten years after you're aged out of the professional and semi-professional job markets?
This is all pretty fucked up.
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blkblt
July 7, 2010 10:39 AM in reply to An Outhouse
wasn't that the point of the original retirement age? I thought 65 was the average life span at the time. So SS was designed for the people who lived longer than they expected to.
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destor23
July 7, 2010 10:44 AM in reply to blkblt
And we can do better than that.
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Overreach THIS!
July 7, 2010 12:04 PM in reply to destor23
Good comment, Destor.
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Marquis de SeaToShiningSea
July 7, 2010 9:55 AM in reply to Maritza
I think it is time to reduce retirement age, like all the other civilized countries.
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anna am
July 7, 2010 12:41 PM in reply to Marquis de SeaToShiningSea
Yay you!
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Bruce Webb
July 7, 2010 9:55 AM in reply to Maritza
Increasing the FRA (Full Retirement Age) IS a benefit cut over a lifetime.
Social Security has been constantly adjusted over time to account for increasing longevity. Plus the whole idea that people are living longer after retirement than there were in 1935 is somewhat an illusion, it confuses the issues of life expectancy at birth and at 65. There has been a lot less change in the latter number than most people think, it was not true that most people just dropped dead at 65 years and 1 month back in 1936. The following Table only goes back to birth year 1940 but shows that people who reached the age of 65 could expect an average of 13 1/2 years in retirement. In 2008 that was up to 18 1/2. A big change but not as dramatic as you would think looking at the 'At birth' figure where in 1940 men could expect to live only to 70 on average.
http://www.ssa.gov/OACT/TR/2009/V_demographic.html#211851
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Mimi katz
July 7, 2010 11:31 AM in reply to Bruce Webb
I took SS at age 62 and took the reduced benefit. Even so I calculated that it would take 11 years to earn back the money I would forego by waiting until full retirement age, which for me was a few months over 65. The early retirement option needs to be there for people who are worn out by hard physical labor or who are just tired of working or who can't find a job after being laid off. You forego benefits for every month you retire early, but you also forego lots more if you die early.
Bruce is right about life expectancy. If you make it to 65, chances are you will last much longer. Retirement and nursing homes are full of people in their late 80s and 90s. The life expectancy gains have mostly been in the first 5 years of life.
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Overreach THIS!
July 7, 2010 12:06 PM in reply to Mimi katz
Good, educational comments for us. Thanks.
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Eric Jaffa
July 7, 2010 10:09 AM in reply to Maritza
If you get fired at age 58, how difficult do you think it's going to be to find a new job to last you until whatever you think the retirement age should be?
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1audiofile
July 7, 2010 10:13 AM in reply to Maritza
Yes, some are living longer. The problem is there is now severe Age bias in hiring at age of 55. Much more difficult to get a job even with skills and an excellent work history. Now some want to move the SS age from 65 to 70. What will people do with those extra 5 years when they cannot get hired for any meaningful job making decent money?
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rhytonen
July 7, 2010 12:18 PM in reply to 1audiofile
"....The problem is there is now severe Age bias in hiring at age of 55. Much more difficult to get a job even with skills and an excellent work history....."
Finally!
Someone recognizes the actual problem.
And it's not ability, but strictly cost/benefit analysis.
There are more and more kids coming out of school willing to work fewer available jobs for far less pay - that is, those few jobs still in this country.
BTW, KIDS - It's cheaper STILL to outsource them offshore.
You should be more up in arms over the allowance of these corporate atrocities than we are. How bad will it have gotten when YOU're older?
Or do you really think you can ALL be CEO's if you kiss **s long enough?
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Quackers
July 7, 2010 11:43 AM in reply to Maritza
It would be unconscionable to raise the retirement age when the job market for people 50+ is as bad as it gets. No one is hiring them, so what are people supposed to do to live while waiting it out to age 70? There are only so many openings for WalMart greeters.
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jeffgee
July 7, 2010 1:50 PM in reply to Quackers
…that pays $7-9/hr.
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freckles
July 7, 2010 5:25 PM in reply to jeffgee
I'm 51 & would jump at the chance of getting a $7-9 an hour job ANYWHERE.
SS benefits have already been changed for full retirement, back under Reagan in the 1980's.
The calculation of benefits has also been changed. It used to be based on the last 10 years "that you worked". Even if you had not worked 5 years before you started to draw. It was based on the LAST 10 years that you WORKED. Now it's based on the last 10 years before you draw. So, if you had a bad run & are out of work several years before you start to draw... you get screwed on the monthly benefit amount. The future retirees were screwed in the SS process in the 1980's. Looks like they intend to make it worse. The game was further rigged by the 401k scheme. We all pay into the 401k programs only to have the hedge funds & banks steal our money. Ponzi schemed... all of us.
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slb
July 7, 2010 6:07 PM in reply to freckles
The last 10 years? No, that's now how they do it:
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Progressive Party
July 7, 2010 9:21 AM
This may be the pathway to throw the "old Politics" out and usher in new politics as the Congress moves to undo Social Security in the name of debt reduction. This is the ultimate screws to the working class while we give away billions in oil subsidies and the defense continues to feed at the expense of middle class taxpayers. Obama will not stop this insanity so we will hopefully begin a tax payer revolt. It appears he endorses this move as "good politics"!
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Tim
July 7, 2010 9:43 AM in reply to Progressive Party
In my mind, this is the first shoe to drop following the Citizens United decision by the supreme court.
So now we see how this all plays out: The Supreme Court goes out of it's way to make corporate payola unhindered in the campaign process; Corporations have vastly more money than individuals to donate; Politicians realize that they absolutely cannot become re-elected against the will of the politicians; suddenly even democrats are for dismantling Social Security.
It retrospect, the 2000 election was a coup, perpetrated, in part by the Supreme Court. Bush pushed $7 trillion dollars from 120 million families (the median family income declined 5% during his first four years) onto 10,000 wealthy families creating a gravity effect in our politics that gave us a compliant Obama four years later. Bush put radical fascist jurist on the supreme court, and they gave us Citizens United.
America under Bush became a plantation. By the time Obama leaves, it will be a penal system. We are watching our country rot and fall apart right before our very eyes.
A revolution would be nice, but that requires communication and organization and that requires money, and you can see that none of these things are ever going to come back together.
My Brothers told me, when Obama was elected, that he would ruin the country. I quit talking to them at that point (they after all were republicans) but they turned out to be right.
I thought he was FDR, but he turned out to be a fusion of Hoover and Buchanon and Harding and the last emporer of China.
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Tim
July 7, 2010 9:49 AM in reply to Tim
Increasingly, because of Citizens United, the real executive of the United States might be the head of the U.S. Chamber of Commerce, an his side kick, Grover Norquist.
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Tim
July 7, 2010 7:56 PM in reply to Tim
I meant in that big post, politicians can't get elected against the will of corporations. (big mistake,ulp!)
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Clarance Vine
July 7, 2010 11:32 AM in reply to Tim
But the tigers come at night
With their voices soft as thunder
Les Miserables
Perfect, absolutely perfect! Reading my mind, best post I've read in a long time. And the false logic that "everything will turn out OK because it always does" will fall heaviest on the honest optimistic citizens who STILL put their trust in government. This is not just another recession, it is a deliberate and methodical dismantling of the "American way of life". A revolution is in order but they tell us we'll need a permit first - you know, "War on Terror" and all. We're fucked.
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oldperson
August 12, 2010 4:44 PM in reply to Progressive Party
No politician is going to do much just before an election. Our job is to keep watching them and raise so much hell that they will still be afraid to touch it. Especially Boehner who wants to extend the retirement age to 70, and privatize S.S. if he becomes Majority leader. At the same time he wants to extend the Bush tax cuts. A lovely man, don't you agree?
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realist
July 7, 2010 9:22 AM
Mustn't raise taxes on the wealthy to reasonable levels or stop making war without end — I know, let's instead work people till they drop!
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fsudirectory
July 7, 2010 9:29 AM
I don't really see whats wrong with raising the age that you are able to obtain benefits and I would be one of those affected the most, starting the workforce within the last few years.
The average life expectancy of an American has greatly increased since SS was put into place and the age of benefits should probably adjust based upon that.
What good is health reform to help people live longer if they aren't going to work a few extra years with the additional health they have been given, and just take SS for longer... It kind of turns into, well keep you alive longer and pay for you to hang out.
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Maritza
July 7, 2010 9:33 AM in reply to fsudirectory
I agree.
I suspect many Democrats also agree and that is why the Democrats really didn't hit Boehner on his raising the age to 70 in his infamous remarks instead hit him on calling the financial crisis an "ant".
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madmatt
July 7, 2010 9:39 AM in reply to fsudirectory
They raised the age in the mid 80's to prevent this problem, but then they took the money, gave it to the wealthy in tax breaks, and now don't want to pay it back.
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fsudirectory
July 7, 2010 9:42 AM in reply to madmatt
If they were to raise the age and then create a law that they cant loan money out of the fund, then, it would be much better.
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Bruce Webb
July 7, 2010 10:10 AM in reply to fsudirectory
Where would you have put the money instead? Almost all investments are in effect a loan, you give someone money, in return they promise to try to get you a reasonable return, and a piece of paper. In the case of Social Security that return was set in stone, backed by Full Faith and Credit of the United States, and in the form of a Special Treasury. Would we really be better off if all that excess FICA had been converted to Benjamins or gold bars and stored in some warehouse in Bethesda? Put into a bank somewhere at passbook rates? Or invested in Treasuries with set rates and maturities? Which is where they are.
http://www.ssa.gov/OACT/TR/2009/VI_cyoper_history.html#165676
Table VI.A5.—Assets of the OASI Trust Fund, End of Calendar Years 2007 and 2008
[In thousands]
The Treasury has never defaulted on the Special Treasuries in the Trust Fund. For example the Trust Funds were cash flow negative from 1972 to 1983 and the Treasury redeemed those bonds right down to the next to last dollar.
http://www.ssa.gov/OACT/TR/2009/VI_cyoper_history.html#159726
Table VI.A4.— Operations of the Combined OASI and DI Trust Funds,
Calendar Years 1957-2008 [Dollar amounts in billions]
Every penny ever sent to Social Security went right where it was supposed to, the belief that Reagan or any other President did something nefarious is just a different variation of the 'Phony IOU' narrative. Nobody has stolen anything from Social Security. Not yet. They just want you to believe the money is already gone. It isn't. Unless we collectively lose our political nerve and allow them to abrogate the Trust Funds.
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fsudirectory
July 7, 2010 10:27 AM in reply to Bruce Webb
It's been effectively used as a pile of money to use as a "loan" to generate future income for the program many of times, however, those loans have never been repaid.
If they are repaid via treasury printing money up, all that is doing is devaluing the dollar further.
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Bruce Webb
July 7, 2010 10:41 AM in reply to fsudirectory
Never been repaid? How about the years between 1972 and 1983 when Social Security was cash flow negative and the entire Trust Fund was redeemed down to a point where there were only 7 weeks of reserve?
http://www.ssa.gov/OACT/TR/2009/VI_cyoper_history.html#159726
For that matter the OAS (Old Age/Survivors) and DI (Disability) Trust Funds are legally separate and DI went cash flow negative in 2006, meaning that interest started being paid out in cash to fund benefits. Last year DI cost exceeded all income including interest meaning that the principal started being redeemed, i.e. those loans from DI are being paid back RIGHT EFFING NOW!.
http://www.ssa.gov/OACT/TR/2009/IV_SRest.html#273849
And these numbers from the 2009 Report underproject, the actual redemption of principal in the DI Trust Fund is running closer to $20 billion than the $10 billion projected. And nobody noticed. Because it is a non-story.
The enemies of Social Security are trying to convince you that future governments will be full of liars and thieves who will simply turn their backs on Full Faith and Credit of the U.S. and abrogate the Trust Fund. And they might be right, if you vote Republican and/or let the current Democrats get bamboozled by the Peterson Propaganda Parade.
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fsudirectory
July 7, 2010 10:59 AM in reply to Bruce Webb
There are other things such as allowing a more realistic path to citizenship, creating a larger worker base.
However, I still think that if people are living longer, SS should be delayed a little longer for those people, one way or another, and its not like this isnt going to affect me down the line.
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Mimi katz
July 7, 2010 11:47 AM in reply to fsudirectory
Read what Bruce posted above. People are living to be very old right now! The life expectancy at age 65 is only 5 years longer now than it was when SS started. That 5 years in life expectancy has ALREADY been taken care of with the raising of the "full benefit" age to 70 for younger people. There is no such thing as a 65 retirement age. There is a sliding scale of benefits from age 62 up to the full-benefit age for each age group, which you can find on the SS website or in your yearly SS statements. This would be a really radical departure if they are talking about taking away the reduced-benefit early SS option.
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Bruce Webb
July 7, 2010 12:20 PM in reply to Mimi katz
http://www.socialsecurity.gov/retire2/agereduction.htm
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fsudirectory
July 7, 2010 11:01 AM in reply to Bruce Webb
Also, once again, the only way to get those IOU's repaid is to print money or borrow it from abroad.
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Bruce Webb
July 7, 2010 11:28 AM in reply to fsudirectory
Except that we are already repaying it. And overseas holdings of Treasuries are a lot smaller than most people believe. Treasury tracks Major Foreign Holders of Treasuries here: http://www.treas.gov/tic/mfh.txt As of April, the last date available, the total holdings by Foreign Holders totalled $3.957 trillion, of which $900 billion is held by 'China, Mainland' (Brad Setser insists that the Chinese also own large amounts that fall under 'Caribbean Banking Centers' or in the Channel Islands (in the table included under 'United Kingdom'), so adjust that $900 bn to taste). This $3.9 trillion compares to the $8.4 trillion of total Debt Held by the Public (as opposed to Public Debt which includes Intragovernmental Holdings and totaled $12.9 tn) on that same date. http://www.treasurydirect.gov/NP/NPGateway.
So total Foreign holdings are around 45% of outstanding debt, a percentage that is not changing much over time. The widely expressed claim that we are totally reliant on the CCB buying our debt is overblown hysteria by the same people who are trying to convince you that we need to cut back on spending to placate the Invisible Bond Vigilantes.
And getting back to that Foreign Holders table. After they re-benchmarked in June, China's holdings were revised upwards to $916 bn and went to $940 bn in July. But since then has dropped to $900 billion. Meaning that those people who are freaking out because the Chinese might start selling can unclench. Because, holding Setser's theory aside for the moment, the Chinese have in the last year ALREADY dumped 5% of their holdings of Treasuries and the 10 year STILL hasn't budged.
Once again the standard narrative doesn't hold up well on encounter with the numbers.
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madmatt
July 7, 2010 10:25 AM in reply to fsudirectory
Fuck that, they stole the money needed to pay for the system, the money can be taken back from the people they gave it to. Why should I pay twice as much for their criminality?
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Tim
July 7, 2010 9:52 AM in reply to fsudirectory
Good luck finding work after your 45 years old.
I was a systems analyst for over 15 years. I haven't found work since I turned 45. I'm in Korea teaching the competition how to steal my job, by teaching them English.
Yes, I am angry and I am bitter.
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fsudirectory
July 7, 2010 10:43 AM in reply to Tim
Sorry dude, I got nothing that is going to change your situation, but, could you really imagine it being ok to pay someone SS for 40 years? I really can't, it just doesn't seem feasible.
There needs to be a way to incorporate older workers in the workforce more effectively.... but would older workers take a pay cut to perform the same task if they aren't moving up in the chain? At a point the skill set will plateau and so should the pay probably, or, they will just get a new person.
It's tough and seems the only way to guarantee some kind of financial success in the future is to plan appropriately, save, and start something on your own to get you a comfortable level of income (internet based job?). But, to do those things (not saying this is your case), one needs to have the drive, education, and skill set, which is hard to get while busy working.
There is no easy answer.
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slb
July 7, 2010 6:14 PM in reply to fsudirectory
could you really imagine it being ok to pay someone SS for 40 years?
What? You expect the average retiree to live to 105 at some point in the near future?
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slb
July 7, 2010 6:18 PM in reply to slb
Note that at present, the average life expectancy at 65 is a little over 18 years. How fast are you expecting it to reach 40 years?
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Tim
July 7, 2010 8:03 PM in reply to fsudirectory
It's called universal single payer health insurance. The prejudice against a worker over 45 is the result of insurance actuaries finding a correlation between aging and the cost of insurance. That makes them more expensive.
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jah627
July 7, 2010 10:29 AM in reply to fsudirectory
...so by your calculation, health care is just a clever way to put grandpa back to work? As in, "Pay for yourself, you old geezer. You may have worked your entire life, but its not enough."
Once upon a time, people had this crazy idea that after working their lives away, they'd someday be able to retire. That life, liberty and the pursuit of happiness might someday have their day. But no. We are too cheap, and selfish. "Now that you live longer, keep working." What a slogan.
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fsudirectory
July 7, 2010 10:48 AM in reply to jah627
Think about this from a realistic perspective, and not one of cynicism and shit talking.
If average life expectancy goes up 5 years due to increase levels of health, that's 5 more years that SS and Medicare will need to pay out to those individuals.
If someone is then better able to work for a few more years due to their health, why wouldn't they contribute?
You know how you stem that, you save. If you are concerned at 25 you wont get your SS benefits until 70 vs 62, you plan and save additional money to get you across that gap if you decide you dont want to work those years.
Now, its not something everyone can do (many jobs dont permit the excess cash needed) and its not easy, i acknowledge that, but neither is supporting millions of people for an additional 5 years of life and sometimes personal responsibility is where its at.
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jah627
July 7, 2010 11:09 AM in reply to fsudirectory
Well, of course you are right -- if life expectancy, which is a collective statistic, goes up, then collectively, we should pay more. That seems like a good bargain for society -- longer life vs higher cost -- and for me too. I want to live.
But here's where it all goes wrong, "If someone is then better able to work for a few more years due to their health, why wouldn't they contribute?" Most people do continue to work. Many choose to do so. But forcing individuals, who have faithfully paid into SS their entire lives, to work based on a collective statistic is just wrong.
As for the rest, "plan and save..." nice words, good plan, but I don't see any safety net, just the essence of selfish privatization. "Take care of yourself because I don't feel like paying for it" ignores the power of millions to help millions. Maybe we should all be self-sufficient islands, but we're not.
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Tim
July 8, 2010 1:16 AM in reply to fsudirectory
Another way to deal with this is to grow.
Look we can pay trillions for useless wars to kill foreigners, we can pay a few billion to help our people live.
It's simply a matter of priorities.
They go to endless war over the one time death of 3,000 people - but 41,000 people dying year in and year out for lack of insurance that is a birth right in poorer countries than our own?
I'm sorry, but it's just a matter of priorities. It doesn't cost that much to make these systems work.
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oldperson
August 12, 2010 4:06 PM in reply to fsudirectory
In my neck of the woods, the obits show a cluster of deaths from the late 70s to the middle 80s. There are a few who make it to the 90s and a few more in their 50s and 60s who die of cancer, the youngest ones are usually taken by auto accidents.
A neighbor who opted to work to age 70, died at 75 from Altheimer's. His widow is getting a nice check.
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pol
July 7, 2010 9:32 AM
I think we should raise the salary cap to $150,000, or perhaps remove it altogether.
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converse
July 7, 2010 9:46 AM in reply to pol
Exactly. Raise the cap on the 6% of workers making more than $106,800 and SS is paid for. Simple, painless solution.
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Bruce Webb
July 7, 2010 10:19 AM in reply to converse
Painless? That represents a 12.4% increase in top rates. You think it is easy as pie to just roll back Bush II, Bush I, and the second round of Reagan tax cuts?
Who bells that cat?
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madmatt
July 7, 2010 10:28 AM in reply to Bruce Webb
fuck them, they want the good ol days, well the good ol days had 70% tax rates onthe upper class scum...lets put it back there.
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Ann Arbor
July 7, 2010 10:55 AM in reply to Bruce Webb
The effective income-tax rate on the top 1% of earners is 4 percentage points lower now that it was in the Reagan years. (About 22.5% versus 26.5%). They can afford to pay more -- maybe not 12% more but a hefty chunk.
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Bruce Webb
July 7, 2010 12:16 PM in reply to Ann Arbor
Well I am with MadMatt, the middle class was thriving back when the top rate was 70% and has been taking it in the shorts ever since rates were lowered. But given that people are bitching and moaning about even returning to Clinton era rates, which is what somewhat less than a 4 point increase, the idea that the rich will just accept even a modest increase that would be devoted to SS is ludicrous.
Last Friday CBO released a Report scoring 30 different policy options for Social Security. Links here:
http://www.angrybearblog.com/2010/07/cbo-scores-social-security-policy.html
I extracted the key table as a JPG: http://2.bp.blogspot.com/_fjW71B3WLTQ/TC3Bs2undtI/AAAAAAAAAYI/PQiTSfBitWo/s1600/CBO-SS+options+Fig+1.jpg
They score six different options for raising the cap for covered earnings. They show the 75 year gap between revenue and cost at 0.6% of GDP. Lifting the cap entirely and taxing at 4% closes that by half (0.3%). Raising the cap to $250,000 and taxing the full rate closes it by 0.5% , but only if those additional contributions get you no extra benefit. They also score a bunch of benefit cut proposals, you can try your own game of mix and match cafeteria plans.
But the simplest plan is to preserve the system as is and raise FICA by a total of 2.0% over 20 years. This represents only a fraction of projected Real Wage increases over that same period, meaning that while your tax rate ends up higher that is swamped by the projected bigger basket of goods your remaining check will buy. And this fix backfills the entire gap at 0.6%. If we assume the employer/employee split this implies a reduction in take home of 0.05% per year. Which even if your Real Wage is truly stagnant is pretty much a flea-bite. Do the math, for the median income household of say $50k this represents a tax increase of $25 per year.
Who in their right mind wouldn't buy three more years of retirement for 50 cents a week? Why don't you ever see this option discussed? Because Bush deliberately took it off the table in 2001 and nobody had the cojones to put it back on. Because 'tax increase' is just too scary. On the other hand cutting your benefits by 20% and/or tying you to the plow until you are seventy is just fine.
Ten cents every work day. Fifty cents every work week. Twenty-five dollars every work year. Per official CBO scoring. That is all it takes.
And having paid for our own future retirement workers can demand the wealthy pay for all the rest of the debt and spending they ran up while enjoying those tax cuts. Because a 50 or 70% top rate with proceeds put towards other social and economic justice goals sounds good to me. We want their money, we just don't need it for Social Security.
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SchrodingersCat
July 7, 2010 12:14 PM in reply to Bruce Webb
It wouldn't be 12.4% increase on workers. They only contribute half that amount - 6.2%. The other half is contributed by employers.
Now, if one wants to make an argument that it will eventually come out of the employee's check anyway - fine - but let's all be factual about how the system actually works.
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Bruce Webb
July 7, 2010 12:23 PM in reply to SchrodingersCat
The people who argue for Social Security benefit cuts overlap pretty neatly with those who insist that the true incidence of the entire 12.4% 'really' falls on the worker. I don't necessarily agree but it is pretty standard dogma among classical economists.
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Bruce Webb
July 7, 2010 12:26 PM in reply to SchrodingersCat
Plus many people in those brackets are self-employed and so already pay both halves.
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Tim
July 7, 2010 9:53 AM in reply to pol
At the very least, it should float with inflation (not that there's any of that these days).
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Marquis de SeaToShiningSea
July 7, 2010 10:01 AM in reply to Tim
Tim, are you awake? It does.
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condew
July 7, 2010 2:25 PM in reply to Marquis de SeaToShiningSea
Last year they said there would be no inflation adjustment to Social Security checks because there was no inflation. Then they said Medicare premiums were going up (no inflation?), so, actually, the Social Security checks would be going down.
No inflation, but medical costs went up. How is that no inflation?
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madmatt
July 7, 2010 9:36 AM
Thats right guys, go invalidate all those IOU's put in the SS "lockbox" and then lets see how well your bonds sell. And all this is courtesy of Barack the scumbag in chief who created this commission out of thin air.
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atlliberal
July 7, 2010 9:36 AM
They should all have to work for two weeks, either doing manual labor (bricklayer, roofer etc) or retail work (cashiers have to stand for 8-10 hours a day, stockers lift heavy boxes) before voting on this. There's a big difference between retiring from congress with 4 day work weeks, house doctor and gym and plenty of downtime and retiring as a Registered Nurse, Mechanic, or construction worker.
Once they have done the actual work for two weeks, maybe they'll have a realistic idea of what the retirement age should be.
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July 7, 2010 9:38 AM
Those who think this is a good idea must imagine that working when you are 68 is gonna be fun. The rising tide of stupidity in this nation is killing people every day and now the Generation 'Dumb@ss' want to put their grannies out in the street.
I think when President 'Corporate Stooge' actually touches the third rail he will most likely resemble a chunk of charcoal. After all we can all see what a great job he and the 'Blue Dogs' are doing in the Gulf, eh?
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Tim
July 7, 2010 9:58 AM in reply to Philip
Well, this is a country that will go to war, make that two wars, when a handful of people manage to kill 3,000 Americans but are perfectly okay with 50,000 or more Americans dying needlessly for want of health insurance, so as to allow a small clique of private health insurance corporations to make super-monopoly profits.
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Tim
July 7, 2010 9:59 AM in reply to Tim
That's 50,000 every year - or - 500,000 every decade.
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condew
July 7, 2010 2:32 PM in reply to Tim
It's kind of like why we use dispersants on the oil spill; they make the polution even worse, but less visible; and appearance is all that matters to BP.
So the 50,000 who die from lack of medical care at home are OK, because they are dispersed, invisible.
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JohnW1141
July 7, 2010 9:42 AM
I would start in that cesspool of waste, corruption, and conflicts of interest, the Pentagon.
The 2010 budget request for the Department of Defense includes $533.8 billion in discretionary budget authority to fund base defense programs and $130 billion to support overseas contingency operations, primarily in Iraq and Afghanistan. That's $663.8 billion.
I'd many close bases around the world and bring the troops home, let them support the local economies where they will be based.
I'd institute Single Payer health insurance.
I'd repeal all laws that allow off shore banking to avoid taxes.
I'd repeal all loopholes that allow some corporations to avoid paying any taxes.
I'd cut the number and size of many congressional committees.
I'd repeal the law that allows hedge fund managers who make tens of millions annually but pay only 15% tax.
I'd raise the early retirement age of Social Security, at least to 63, and look at making adjustments ever 10 years or so.
I'd take the income cap off how much people pay into SS. Comparatively, all that most of the cap does is give the wealthiest among us another favorable tax benefit.
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Bwakfat
July 7, 2010 10:47 PM in reply to JohnW1141
John for Prez
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LisB
July 7, 2010 10:52 PM in reply to Bwakfat
Amen!
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BrightLightsBigCity
July 7, 2010 9:43 AM
Why not tie Social Security to the retirement plan for the Congressman who draw a check from their elected service. Of course that would be similar to having health insurance for everyone that parallels the health coverage that Boehner,Cantor, Barton, DeMint, Hatch, etc enjoy at taxpayer expense.
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oldvet
July 7, 2010 9:44 AM
We should take the cap off income entirely. If you are earning, you are paying
into SS. Raise the retirement age? Just try getting a job when you are 50, never
mind 65 or 66. To raise the retirement age at the same time that job outsourcing
and de facto age discrimination is rampant is just plain nuts. If Pelosi and Obama
sign on to this, then I'm an ex-Democrat. Not sure what I'll be then...except screwed.
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dhatch999
July 7, 2010 9:46 AM
Where's the news here?
Boehner will always support cutting Social Security. Hoyer long ago said he would be willing to do it. Clyburn's remarks are pretty innocuous considering what the Republicans want. And Pelosi has always been opposed to going after SS before other things are put on the table.
Put a big scary headline on it and pretend it's news?
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splashoil
July 7, 2010 9:47 AM
My best friend postponed his retirement until 65 after his 401k took a hit. He retired in February and received his first SS check. He was also enrolled in Medicare. In March he took an overdue vacation in Mexico. When he got back home, he did not feel well. He was diagnosed with pancreatic cancer. He passed away July 3.
Please stop talking about a "realistic idea of what the retirement age should be." The Cat Food Commission needs to be on our radar!
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Clarance Vine
July 7, 2010 11:48 AM in reply to splashoil
Old age is not guaranteed. I want to slow down. Been running hard (66 yrs old) my whole life. And some day you'll want to slow down. Please remember, for you too, old age is not guaranteed.
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slb
July 7, 2010 6:24 PM in reply to splashoil
I can't tell you how many times I have seen that sort of thing happen to people I have worked with.
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readytoblowagasket
July 7, 2010 9:47 AM
TPM is finally waking up to what Obama has been saying all along. Like in January 2009:
What the fuck did you think he meant when he said this?
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T Groan
July 7, 2010 10:03 AM in reply to readytoblowagasket
but you see Obama is a democrat and on propaganda sites such as this, the democrat party is the party of light, happiness, and all things good.
Once the democrats start attacking social security you'll see other propaganda sites and their mindless devotees (freerider etc.) praising whatever action obama supports.
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destor23
July 7, 2010 10:49 AM in reply to readytoblowagasket
Yep, he meant what he said. What was once a promise is now a bargain. And we're all falling for it.
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Clarance Vine
July 7, 2010 12:24 PM in reply to readytoblowagasket
Hey, cut us some slack. After 8 years of having to listen to the village idiot, we were all easy marks. Don't forget, Mr. Obama also IMPLIED promises of 'reform' - details to follow. We were fucked either way.
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slb
July 7, 2010 6:28 PM in reply to readytoblowagasket
Of course, by January 2009, it was too late to do anything about it anyway. But that statement just confirmed to me all of the reasons I was skeptical about Obama, even after he was the Democratic nominee. But skeptical or not, he was still a far better choice than McCain.
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mans_best_friend
July 7, 2010 9:53 AM
Unless you magically create additional jobs, raising the retirement age means fewer jobs for young people. How, exactly, does this help?
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cwnidog
July 7, 2010 9:55 AM
Why not cut a "defense" budget that's as big as the rest of the world's put together?
As usual, the corporatists leave the rest of us fighting over the scraps.
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moodypeterg
July 7, 2010 10:02 AM
Just raise the damn retirement age. The system wasn't designed for a society where people live as long as they live today.
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1audiofile
July 7, 2010 10:25 AM in reply to moodypeterg
This is NOT TRUE. The Social Security system anticipated that people would live longer and accounted for that in the original design of the system. This is one of the false bumper sticker slogans that is simply not true. Pretty smart guys in the 30s who put this system together.
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Mimi katz
July 7, 2010 11:57 AM in reply to moodypeterg
It was designed precisely for that and adjusted in 1983 when FICA taxes were raised to fund the Boomers retirement. Life expectancy at age 65 is only 5 years more now than when SS began. The "full benefit" age has been raised to account for that already. The real savings we need are in Medicare, not SS.
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Clarance Vine
July 7, 2010 1:56 PM in reply to moodypeterg
You got it - "live longer work longer". Great slogan! Stroke of genius.
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georgecs
July 7, 2010 10:05 AM
Sorry, but the hard core left wing crybabies on here need to get a serious grip.
When Social Security was enacted they didn't pick 65 as a retirement age out of thin air. They picked it because the average person died at 67, so two years of full benefits was all the average person got - not 25 or 35 years worth. Raising the partial benefits age from 62 to 63 or the full benefits age from what(?) 67 to 68 is no damn big deal. If it protects the program for another three quarters of a century then fucking do it.
And lefties need to immediately stop their sanctimonious bellowing about selfish "rethugs" who only want to screw over their children and grandchildren if they themselves aren't willing to lift a finger to help, instead whining, "what about meeeeee??"
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Bruce Webb
July 7, 2010 10:27 AM in reply to georgecs
Well methinks you need a remedial lesson in demography. You have confused life expectancy at birth where the figure was indeed close to the 67 you cite, and life expectancy at age 65 where the number was around 13 years. As noted this table only goes back to birth year 1940 but there wasn't that much change between 1936 and then. You have fallen victim to some cross between an urban myth and innumeracy.
http://www.ssa.gov/OACT/TR/2009/V_demographic.html#211851
People are living longer in retirement today, about 50% longer (13 years 1940, 18 2008) and not the 1250-1750% your 2 year/25-35 years suggests.
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georgecs
July 7, 2010 11:33 AM in reply to Bruce Webb
Okay. A jump from 13 years to 18 years is give or take a few points a 50% increase.
But on what fucking planet is a jump from 13 years to 25 years and increase of 1250%? I can't even give you the benefit of the doubt and say you meant 125% because that's not right either. And where you got 1750% I'll never know.
few things are more hilarious than the mathematically challenged pointing out other people's mistakes in math. Absolutely hilarious.
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Bruce Webb
July 7, 2010 12:33 PM in reply to georgecs
Add a course in remedial math.
"They picked it because the average person died at 67, so two years of full benefits was all the average person got - not 25 or 35 years worth"
2 years to 25 years works out as a 1250% increase. It only looks funny. Call it 12.5X to 17.5X if that makes you feel better.
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georgecs
July 7, 2010 1:08 PM in reply to Bruce Webb
I missed the last half of your final sentence. I'll add remedial reading comprehension to my summer school list.
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1audiofile
July 7, 2010 10:28 AM in reply to georgecs
Well MEEEEE cannot get a job in my 50s due to age bias in hiring. I have worked all my life in good jobs, but they simply are not hiring people in their 50s. I was recently on a plane with a woman who was an internal recruiter for a company. She said she could not confirm their was age bias in hiring, but then said the oldest person in her company was 37.
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georgecs
July 7, 2010 11:38 AM in reply to 1audiofile
"Well MEEEEE cannot get a job in my 50s due to age bias in hiring."
Based on that sentence, I wouldn't hire you either. That sentence reveals a perpetual victim, a man who (darn) just can't get a break, everyone is out to screw, and who has all kinds of skills if only those (smart-ass young) assholes knew their balls from their hat. You have a bad attitude and a chip on your shoulder. You don't hide it very well online, so I'm guessing you ooze frustration and anger and resentment in person.
Good luck with that.
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madmatt
July 7, 2010 10:32 AM in reply to georgecs
spoken like a scumbag who has no problem with his children and gkids being corporate slaves, but only if he can punish old people today!
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georgecs
July 7, 2010 11:24 AM in reply to madmatt
And do you think your pathetic infantile words carry any weight whatsoever? Scumbag? I'm a "scumbag" because I'm realistic enough to admit that we cannot keep printing money into fucking oblivion?
Spoken like a true fucking crybaby me, me, me, mine, mine, mine. How are you any different than the corporate bastards out to get their hand son every last dime in this country?
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condew
July 7, 2010 2:43 PM in reply to georgecs
Scumbag was my thoughts exactly. Does the phrase "I've got mine, so screw you", creed of the Libertarian, strike a cord with you?
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georgecs
July 7, 2010 3:38 PM in reply to condew
"I've got mine, so screw you."
Typical crybaby bullshit red herring. Everything is so simple when you're an idiotic adolescent, isn't it? Let me explain something to you. I didn't just "get" mine. I fucking worked for it. I make a good salary in a job I don't love but you know what? That's what being a fucking adult is. You have responsibilities and you live up to them, something crybaby hard core lefties simply cannot comprehend.
I also understand that asking everyone to make a small sacrifice is a whole hell of a lot better than sticking your fingers in your ears and hummming "lalalalala" hoping the fucking problem goes away, all the while holding out your hand looking for "yours."
On top of which, the more money we print the more worthless it becomes and the less we all have. If you weren't such an unwashed left over fucking hippie waiting all your life for a god damned handout you would understand the meaning of the words work, sacrifice, and community.
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condew
July 7, 2010 3:58 PM in reply to georgecs
So it OK, then, to screw the people who also worked hard and contributed for some 50 years, and just say "sorry, government is broke, you're screwed, and I don't care." Just so you aren't inconvenienced in any way.
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georgecs
July 7, 2010 4:41 PM in reply to condew
Ah yes, there it is, the shrill misinformed histrionic ranting of the crybaby. Who the fuck said anything about screwing anyone you moron?
let me ask you a question. Suppose you make $100 a week. And you spend $105. After a week, you owe $5, after a month, $20, and in a year you owe $260. Now unless you're a complete moron, your mommy gives you money to cover the difference or you simply ignore your debts, you're going to have to cut back slightly for a while to recoup that debt. And the longer you wait, the worse it's going to be.
Of course, idiotic crybabies like you who grew up getting everything handed to them - medals and trophies just for showing up and being told "good job" when you lose cannot possibly imagine sacrificing a single thing, since it's all about me, me, me. Think asshole. Maybe I'm NOT talking about screwing anyone, but instead everyone making a small sacrifice so that we all have social security benefits in the long run. Jesus, if crybabies like you were around in the 1940s we'd all be speaking German right now.
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Sir T
July 7, 2010 10:55 AM in reply to georgecs
Wrong. They picked 65 because that was the retirement age originally layed down by Otto Von Bismark.
Look him up.
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Clarance Vine
July 7, 2010 12:19 PM in reply to Sir T
He would if he could read. Let's not waste time on georgie, he's young and full of himself.
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georgecs
July 7, 2010 2:04 PM in reply to Sir T
"layed down"?! Seriously? I'm supposed to take you half wits as adults when you cannot even spell?
And btw, this from the Social Security website moron:
One persistent myth about the German program is that it adopted age 65 as the standard retirement age because that was Bismarck's age. This myth is important because Germany was one of the models America looked to in designing its own Social Security plan; and the myth is that America adopted age 65 as the age for retirement benefits because this was the age adopted by Germany when they created their program. In fact, Germany initially set age 70 as the retirement age (and Bismarck himself was 74 at the time) and it was not until 27 years later (in 1916) that the age was lowered to 65. By that time, Bismarck had been dead for 18 years."
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slb
July 7, 2010 7:07 PM in reply to georgecs
I don't notice that your own analysis upthread was so very brilliant -- you committed significant demographic and mathematical errors. So maybe you don't want to be calling people morons for a common misspelling.
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Sir T
July 7, 2010 9:13 PM in reply to georgecs
Really.
http://www.answers.com/topic/otto-von-bismarck
" Old Age and Disability Insurance Bill of 1889
The Old Age Pension program, financed by a tax on workers, was designed to provide a pension annuity for workers who reached the age of 65 years. At the time, the life expectancy for the average Prussian was 45 years."
Of course that could be wrong, but why they would change the system to make it kick in earlier and therefore be more expensive in the middle of the First World War (look it up) is beyond little ole me.
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xargaw
July 7, 2010 10:15 AM
So if they raise the retirement, does that mean that they will soon raise the Medi-care age, which will raise health care costs for every American in the country. Between 65-70, Americans use a lot of health care and insurance companies will gouge people in that age demographic. If there is a reduction in SS in the Obama Administration, the GOP will turn right around and blame the Democrats for the cuts even though they have been pushing it for decades. The Democrats just get dumber and dumber.
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DownriverDem
July 7, 2010 10:18 AM
See how universal health care would solve the problem? Like Canadians like to say, when we are out of work, at least we don't have to worry about health care.
Americans are sure foolish.
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Sir T
July 7, 2010 10:59 AM in reply to DownriverDem
America. Shooting yourself in the foot and then blame everyone else because they are not bleeding out the foot. Fuck yeah!
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July 7, 2010 10:32 AM
Not only should they raise the income cap (around $500,000 per person seems reasonable), gains on investment transactions not included in retirements funds should be taxed as well. Most high end compensation is in stock and other perks which right now aren't helping the fund.
Add that to a .1 cent per share (yes, 1/10th of one percent) per share transaction fee on all stocks and you will also work to reduce the deficit as well as calming some stock market volatility (at minimal cost to non-institutional traders)
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Texar
July 7, 2010 10:34 AM
Enough.
Raise the cap and let's be done with the so-called Social Security "problem."
Any questions?
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destor23
July 7, 2010 10:47 AM in reply to Texar
Yes there's a question. Social Security payments are calculated based on the amount of Social Security income you make during your working years. That calculation is capped as well. If we eliminate the cap, shouldn't we also calculate benefits based on earnings above the cap? And wouldn't that make the whole thing a wash?
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Bruce Webb
July 7, 2010 12:39 PM in reply to destor23
No. Because there is a certain amount of transfer from high earners to low built in. CBO last week scored six different cap increase options with and without corresponding benefit increases. I extracted it into this jpg:
http://2.bp.blogspot.com/_fjW71B3WLTQ/TC3Bs2undtI/AAAAAAAAAYI/PQiTSfBitWo/s1600/CBO-SS+options+Fig+1.jpg
To my surprise simply eliminating the cap and allowing benefit increases backfills the gap exactly. Though I would want to look at how the actual new top benefit would be set.
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destor23
July 7, 2010 12:49 PM in reply to Bruce Webb
Wow. So you could eliminate the cap but also pay people higher benefits and still save money for the system? That's kind of awesome.
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kgb999
July 7, 2010 11:23 AM in reply to Texar
Screw that. If I don't get the benefits, I shouldn't be forced to pay them for the assholes who are currently entering retirement (who, ironically are the same assholes proposing this scheme).
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DCCyclone
July 7, 2010 10:41 AM
I don't really have a problem with these ideas. This is exactly what was done in the early 80s, and Ronald Reagan and Tip O'Neill from opposite extremes of the ideological spectrum agreed to it. I don't think it's any burden at all to raise the retirement age by 3 years over a long period of time. And it's certainly no burden to raise the salary cap on social security taxes, since it's a regressive tax anyway and raising the cap actually is much more progressive.
It's wrong to conflate fiscally responsible ideas like these with the extreme idea of abolishing social security as many Republicans favor.
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destor23
July 7, 2010 10:46 AM in reply to DCCyclone
There's nothing fiscally responsible about these ideas. We have a surplus in the Social Security trust fund that's meant to pay for this demographic shift. We should use the surplus and then allow more immigrants into the country to create a larger base of people. We should really be talking about expanding benefits not cutting them.
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willia451
July 7, 2010 10:50 AM
What a joke. GW thought the Republicans would go along with SS reform and privatizing parts of SS. Not!!!
And now you think the dems are going to go along with something like that? LOL!!!
I'll believe it when I see it actually happen.
I can hear it now. "Bail out Wall Street and cut SS ??? Impeach. Impeach. Obama is the devil."
This is all so much mid-term election year brew ha ha because of the limited success of conservative talking points about the deficit.
We'll see what happens next year. But it’s very hard to take seriously at the moment.
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splashoil
July 7, 2010 10:52 AM
TPM has finally woke up and decided to report on this topic. Thanks! Here is a good primer:
http://seminal.firedoglake.com/diary/58695
I hope there will be more light shed on the Cat Food Commission here.
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Sir T
July 7, 2010 11:22 AM in reply to splashoil
Ahh, its always nice to see a link to the left's version of Redstate. Hamsher gonna partner with extreme right wingers on this too?
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woundedduck
July 7, 2010 10:53 AM
There are a lot of third rails, but raising the retirement age to 70 isn't one of them. Two ACTUAL third rails are military spending and removing the FICA cap, but ain't no politician gonna grab those monsters.
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destor23
July 7, 2010 10:55 AM
So sad to see Democrats on this site defending this garbage, calling it "fiscally responsible" and otherwise playing into the hands of the people who would use this to, once again distribute wealth upward.
In 2005 Bush tried to privatize Social Security -- the first step in its destruction. Democrats rallied to defend a popular program. They didn't offer cuts or compromises, they just said no. We need the same unity now, seemingly against our own party. Just say no to these cuts.
Tell the government that Social Security as it exists now, is a priority. If they can spend a trillion dollars over ten years on war they can spend a trillion shoring up the trust fund. If they can swoop in with a trillion dollars for TARP they can swoop in with a trillion dollars for Social Security.
That's that. Just say no to Social Security cuts.
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condew
July 7, 2010 2:53 PM in reply to destor23
Exactly.
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oleeb
July 7, 2010 11:03 AM
This is all because Obama supports cuts to Social Security like the rest of the Republicans and he has signaled it a number of times in his fetish about "entitlement reform" without, of course, ever mentioning that we might have plenty of money if we weren't spending a trillion dollars annually on a malignant imperial military machine we don't need and that doesn't make us safe. If they try and screw the people on social security then they can all go straight to hell! Progressives would be stupid not to get pledges right now from Obama, Pelosi, Reid and every other Democratic member of Congress pledging iron clad not to support any cutting of benefits or raising of the retirement age any further. If they don't make this public pledge then they should not be supported at all in the fall. Waiting until after the election is just what the corporate Democrats and their allied Republican buddies want.
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destor23
July 7, 2010 11:07 AM in reply to oleeb
I agree entirely. Obama needs to step up and say that benefit cuts and raising the retirement age are not on the table.
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kgb999
July 7, 2010 11:19 AM in reply to destor23
Right. The guy who put together the debt commission these asshats are going to use to justify their actions? ROTFLMAO. Theater my friend, and not even very convincing theater.
America is so much worse off with Democrats in charge! It takes a Democrat to destroy Social Security. The GOP would never have been able to pull it off. The Democrats would have destroyed them for it.
Now who looks out for the people? Nobody.
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condew
July 7, 2010 2:58 PM in reply to kgb999
Yes, Republicans know all about destroying things from within; it why they want to be in charge of this government that they hate so much.
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Clarance Vine
July 7, 2010 2:28 PM in reply to destor23
Yup, just like he did with the Public Option! Fat chance. But he will "lawyer talk" it for sure.
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TJ21
July 7, 2010 11:04 AM
The White House can score major points by pushing back on this now. Deficit reduction means nothing with a 10% unemployment rate.
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thomas1
July 7, 2010 11:10 AM
ladies and gentlemen, boys and girls
I don't know how to break this to you but they've already raised the retirement age. When I signed up for SSAN in 1963 full retirement was at 65. My full retirment won't kick in until I'm 66. It's not bad for me because I'm pretty well paid and sit on my ass, but if I worked construction or was a waitress etc. I'm pretty sure I'd have a fork in me well before 65.
Much of this (not all) can be done by removing the cap. Those who can best pay and benefit the most should pay. But I guess that's so-shall-ist thinking. With the demise of unions and pensions - and now the tanking of our 401K's - people will become even more dependent on their check.
I'll be able to do some part-time work because I'm a consultant but this will generally be an exception. Comport in old age is going to be history.
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thomas1
July 7, 2010 11:16 AM in reply to thomas1
that's "comfort" in old age. someone get me a proof reader
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TeddyKGB
July 7, 2010 11:18 AM
I must not be a very good progressive, because something has to be done about Social Security for the long term. It's akin to stopping Saturday mail delivery; it'll take a little while to get used to, but it makes financial sense.
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destor23
July 7, 2010 11:20 AM in reply to TeddyKGB
Something was done about Social Security long term. That's why there's a $2.7 trillion surplus to get us through this.
But if you want to do more, I'm all for it. Pull our troops out of Iraq and Afghanistan and for the next 10 years put every dime we spend annually on those wars into the trust fund and invest it for future retirees. It's budget neutral and will add another trillion (or more) to the fund over a decade.
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TeddyKGB
July 7, 2010 11:24 AM in reply to destor23
Sorry to have to tell you this, but any time anyone, Democrat or Republican, talks about "trust funds" or "lockboxes", they're either willfully misinformed or lying. Government accounting doesn't work that way.
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destor23
July 7, 2010 11:26 AM in reply to TeddyKGB
The bonds must be paid. Anything less, and this include benefit cuts or changing the terms of the payout, is a default. Not legally but certainly morally.
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truth > spin
July 7, 2010 11:36 AM in reply to destor23
This is such a one-way thought, destor.
Imagine that you bought an insurance product that promised to pay you X dollars in the future. If that day came, and they only paid you 75% of X, you'd rightly be annoyed.
But isn't it the same thing if half way to that day, you were then told that in order to get those same X dollars that you now must pay double the premium and that you have no way to opt out or get your initial investment back?
My point is that that always coming back to the taxpayer is the other side of the same coin as cutting benefits.
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destor23
July 7, 2010 12:53 PM in reply to truth > spin
I agree. But we don't necessarily need to charge people more, either. The government has the money to take care of this they just have to make it a bigger priority than invading places.
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truth > spin
July 7, 2010 1:57 PM in reply to destor23
The government doesn't really have any money. We do, which we allow the government to collect from us for mutual benefit.
That aside, it is still the case that the demographic realities are such as to require massive changes.
We simply can not swim against the facts that when the program started the average lifespan was equal to the age at which benefits would start and that there were several dozen workers for each retiree. As we all know, we now regularly live several decades after retirement and have less than 4 workers for each beneficiary.
And these mandatory programs dwarf even the pentagon's budget.
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Bruce Webb
July 7, 2010 6:32 PM in reply to truth > spin
Well that ignores a couple of things.
One Social Security started as two programs: Title 1 and Title 2. Until around the early 50s Title 1, essentially a welfare program equivalent to mode SSI was the bigger program and drew its income from the General Fund, to which of course workers were contributing. Title 2, the insurance based plan we know as SS today didn't even start paying any continuing benefits until 1940. In order to calculate the actual number of retirees supported per worker you would have to combine the benefiary populations of Title 1 and Title 2 together and not just the latter as your calculation does.
Plus you actually have to look at total dependency ratios which combine retirees and minor children and take that as a ratio to workers. If you do you see that we are never projected to get to the same ratios as we saw in the early 1960s.
Also as I pointed out several times on the thread you are confusing longevity at birth for longevity at age 65, taking the latter the differences are not 'massive'.
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Bruce Webb
July 7, 2010 1:09 PM in reply to truth > spin
The scheduled benefit is just that, it is not a promise and there is a Supreme Court case backing that up.
And 76% is just one estimate, CBO has it at 80%, and both have some fairly pessimistic assumptions in both their economic and demographic models. If as a people we decide that the scheduled benefit is in fact the sweet spot we can target revenue and/or economic policy in a way that brings it about. For example Social Security would be in a lot better shape if Real Wage hadn't flattened under Bush, there was a time when even the Trustees projected TF Depletion at 2042 and CBO had it at 2049. Pursue worker friendly economic policy (say actually enforcing wage laws) and ensure that future gains from productivity are equitably distributed instead of overwhelmingly being gobbled up by capital and executive compensation and this problem solves itself.
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truth > spin
July 7, 2010 2:03 PM in reply to Bruce Webb
I agree, Bruce. There is no enforceable promise that the benefit level or the taxation required be at any certain point. For that matter, there is no enforceable requirement that the program exist.
And I also agree that revenue growth along side spending restraint is the way out of this. Exactly how to grow the whole pie so that whatever percent is taken ends up being sufficient is one of the big problems of course. But it does no one any good to put our heads in the sand and say there isn't a problem.
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TeddyKGB
July 7, 2010 11:26 AM in reply to TeddyKGB
And boasting about a surplus is pretty meaningless unless you also talk about future liabilities. $2.7 trillion, assuming it's left alone, will cover the boomers until they croak?
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destor23
July 7, 2010 12:01 PM in reply to TeddyKGB
No. But it buys us a lot of time.
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Bruce Webb
July 7, 2010 12:55 PM in reply to destor23
In 2037 Boomers will range in age from 73-91. CBO pegs TF depletion even later. The mortality tables suggest the Boomer strain on SS will rapidly recede after that.
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jah627
July 7, 2010 11:47 AM in reply to TeddyKGB
The Post Office is considering stopping Saturday delivery because there are alternatives -- from email to UPS and FedEx -- that ameliorate the cutback. What program or initiative do you see Out There that would take up the slack for stopped Social Security checks?
Does anyone -- Democrat, Republican, or independent -- think its easy (or, in this economy, even possible) for 65 year olds to get a job that covers the loss of SS checks? Or maybe they should all be put on ice for 5 years while they wait?
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July 7, 2010 11:23 AM
Why is it that the biog banks on Wall Street can get a blank check from Congress, but when it comes time to do anything for the common people who do all the work in this country, suddenly its a big problem.
Could it have something to do with the fact that so many pols in both parties are bought and paid for by big business interests?
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mwfolsom
July 7, 2010 11:23 AM
Folks its time we admit it Obama ain't out friend and its time we yanked the Dems chains in DC. Pelosi, Hoyer, and Clyburn are all traitors to the Democratic cause and need to be replaced.
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tinsk
July 7, 2010 11:26 AM
I think the Democrats need to be pragmatic about this and turn it to a victory. Pointing fingers and assigning blame may give you a good visceral felling, but it accomplishes nothing.
There is one simple fact. Those receiving Social Security (and Medicare)benefits today are receiving more back than they contributed (plus interest)and more than those currently paying into the system. This is due in part to costs of living combined with extended life expectancy. It's pretty simple math that it will go broke.
3 things need to be done, albeit gradually and incrementally. #1 Raise the minimum benefit starting age. #2 Raise the payroll cap. #3 Means test benefit payments to recipients where nobody receives back LESS than what they contributed. But the wealthiest will not receive back MORE than they paid in.
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Bruce Webb
July 7, 2010 1:28 PM in reply to tinsk
Maybe you could show that math.
Each generation of retiree has gotten a better real benefit than the generation behind it when measured as a basket of goods. And the tax increases needed have always been a fraction of the Real Wage increase over that time. Reducing everything to ROI kind of ignores that the standard of living of today is largely built on the productivity of people who didn't have one car per household adult and whose kids didn't have their own bedrooms with their own TVs.
Social Security is set up so that retirees share in whatever overall growth in Real Wage occured in their lifetimes on the assumption that whether low or high wage that they contributed to the productivity that enabled that Real Wage increase.
Or as I like to summarize the argument: What the hell did the Greatest Generation ever do for us? Besides fighting and winning WWII? Bitching because Grandpa gets a bigger slice of the current pie than would be the result of calculating his precise economic contribution is kind of a tight ass way of approaching the world.
Remember Rosser's equation: 75% of 160% = 120%. Under the current projections the retiree check after TF depletion will still be 20% better than a similarly situated retiree gets today. And small steps can get that 75% back up towards the full schedule. Gen-X is NOT being screwed on this deal, the idea that they are in the result of a very clever marketing campaign which was published under the title 'Achieving a 'Leninist' Strategy' in 1983. Google 'butler germanis leninist strategy'. I just did and the pdf of the article popped up in the top two places.
Basically almost everyone under 45 and many over it simply got pwned by Cato into believing a bunch of counter-factual narratives. Including this 'backwards transfer' one.
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truth > spin
July 7, 2010 2:23 PM in reply to Bruce Webb
Bruce, I am very interested in reading more about Rosser's 160% theory. I've tried to come up with it myself, but can't find it anywhere. Any chance you can point me to it? Thanks in advance!
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Bruce Webb
July 7, 2010 5:54 PM in reply to truth > spin
Well I got it right from Barkley (Prof. Rosser) and have had it confirmed by Dean Baker and even an opponent of Social Security Andrew Biggs. Barkley blogs on Econospeak while Dean has Beat the Press (now hosted at his center CEPR). I am afraid a search on it might be a little circular only turning up stuff from my blogs, plus it gets a little messy because Barkley's father for whom he was named was quite the famous mathematician so searches on 'Rosser' and 'Equation' are likely to run you kind of far afield.
Okay I found something from CBO: http://www.cbo.gov/doc.cfm?index=4380&type=0
The Future Growth of Social Security: It's Not Just Society's Aging
(the 'not just' referring precisely to this increase)
"The remaining 45 percent of the rise in spending is due to a projected increase in the real value of Social Security benefit checks. Under the trustees' assumptions, the purchasing power of the average earner's benefits at retirement is expected to nearly double between now and 2075.
Rising Benefit Levels
The computation of a person's initial Social Security benefits is automatically linked to the general rise in wages in the economy. Under rules put into effect in 1979, benefits of newly eligible recipients are based on a formula and earnings records that are adjusted for wage growth. Those adjustments, referred to as wage-indexing, are designed to keep the ratio of initial benefits to preretirement earnings--that is, replacement rates--approximately the same from one group of new recipients to the next."
Figure 3 shows this in graphic form with real benefits rising in 2003 dollars from $14,000 in 2003 to around $18,000 in 2040 to $25,000 in 2075. This isn't quite 40% but demonstrates the principle. Anyway the CBO study explains it better than I can, I was more or less working of Barkley and Dean's authority here.
But the combination of rising Real Wage and constant replacement rate gets you to the conclusion we need.
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truth > spin
July 7, 2010 7:57 PM in reply to Bruce Webb
Thanks Bruce, I appreciate the thoughtful response.
The information that I did find didn't seem to use an apples to apples comparison with respect to real wage growth, so I'll read this CBO report over to see if it make more sense to me.
I understand the basic point about the program using wage growth and not cost of living growth, so I don't think I am far off. If this turns out to be valid, I think it would be very important.
Again, thanks for the reply.
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Bruce Webb
July 7, 2010 8:38 PM in reply to truth > spin
Well thanks for taking a data based approach to this. It is a pleasure to find someone actually willing to engage with the numbers. I post regularly on Social Security over at econoblog Angry Bear. And me and Coberly could use someone like you keeping us on our toes on the numeric front.
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truth > spin
July 7, 2010 11:27 AM
The number of factual errors in the comments above is one of the main reasons why doing anything about Social Security or any of the other difficult (but not impossible) problems is so difficult.
I always hope that people could sit down and agree that the problems are X,Y and Z and that the options are 1, 2, 3, and 4, each of which would have certain pros and cons...
But instead we get misinformation at an even faster velocity.
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condew
July 7, 2010 3:17 PM in reply to truth > spin
The big problem I see is nobody in office is ever talking about solving even part of the problem with increased revenues, they only ever talk about benefit cuts like raising the retirement age to unrealistic numbers.
Yeh, we can all point to the exceptional 90-year-old, still working, still productive; but that is the EXCEPTION. What about the 62-year-olds whose health rarely lets them do anything but sit at home near their oxygen generator?
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truth > spin
July 7, 2010 4:36 PM in reply to condew
I agree, any real solution will include more revenue, less spending and structural/administrative reforms.
But until voters stop punishing politicians who talk about the hard choices and rewarding those who are glib with these serious issues, nothing significant will happen.
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Bruce Webb
July 7, 2010 6:20 PM in reply to truth > spin
I have yet to see a politician who talks about 'hard choices' actually discuss the full range of those choices. The simplist solution is in my mind nearly ideal, an initial fix to Social Security can be had by raising FICA by 0.30% devoted to DI and then no changes to OAS at all until 2026 when under IC assumptions a new series of 0.2% increases would be needed, if that is the economy performed down to the rather dismal long term assumptions of Intermediate Cost.
But Bush took any tax based increase off the table when he established CSSS (Commission to Strengthen Social Security) in 2001, in my mind because I think his people knew that if asked to accept a payroll fix of 2% spread out over 20 years as opposed to working three extra years or taking guaranteed benefit cuts that some people might have done the math.
People generally don't believe it but you can fix SS with a tax increase of pennies per week per year. If we assume the employer/employee split and increase each share by 0.05% of payroll each year for 20 years you backfill the entire projected 75 year gap. We have spreadsheets showing this on a slightly different increase schedule but CBO's Policy Options Report from last Friday confirms it. (Link and summary http://cboblog.cbo.gov/?p=1142 or whole 1.8MB PDF http://www.cbo.gov/ftpdocs/115xx/doc11580/07-01-SSOptions_forWeb.pdf ) See Option 2.
Until a simple FICA increase is considered at least as part of the solution and workers given an informed choice between ALL the options I am going to try to continue to punish the 'hard choices' folk. Because not all the choices are in fact hard.
0.05% of $50,000 is $25/year reduction in take home. Sure it grows another $25/year for 19 years but if you can't get an annual raise of 50 cents a week you are even more pitiful than Dagwood Bumstead.
I have dumfounded even Social Security policy professionals with this one, they simply never stopped to do the arithmetic of a phased in increase. We call our version of this the Northwest Plan for a Real Social Security Fix, you can google it, I just did and the first nine links were relevant.
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Vertigo
July 7, 2010 11:28 AM
"That package is being put together by President Obama's deficit and debt commission, and will be ready to go after the midterms."
Folks, THAT little factoid is what TPM, its readers and progressives generally need to be focusing on. Just exactly what are Obama and Rahm up to here? Is this not a stealth effort, probably cooked up by their Wall Street paymasters, to slip social security privatization and other conservative "reforms" past the American people before anyone knows what hit us? Why isn't TPM covering this like white on rice the way it did a few years ago when Bush tried to foist SS privatization on the public and was beaten back? At whose behest was this "commission" created, who made the rules (e.g., zero transparency) and why are they trying to accomplish what Bush could not, by attaching the "reforms" to another piece of legislation? If light -- and heat -- aren't shown on this and fast, it will be too late and we'll all have to suffer with another initiative designed by, and to benefit, Big Business and conservatives.
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Continuum
July 7, 2010 11:29 AM
Someone needs to explain to me, why the Republicans were able to give huge tax breaks to the billionaires and super wealthy during the Repulican Bush administration.
But, now under a Democratic Congress and President, we now have to screw the middle and working classes.
Isn't time to start a third, genuinely progressive party because surely the Democratic party is no longer up to the task.
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SocialJusticeForAll
July 7, 2010 11:30 AM
Keep funding abortion and promoting other anti-life activities and you’ll continue to reap what you sow.
Pretty tough to have a growing government and rising standard of living when the country’s birth replacement rate is so low—I’m guessing more immigration is only answer, but it takes a generation or two for the children of immigrants to generate real, taxable wealth.
SS reform is not the answer—social justice, intact families, and traditional marriage are the building blocks.
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skylar
July 7, 2010 11:47 AM in reply to SocialJusticeForAll
Abortion does not contribute significantly to the rate of change of population. Women in advanced industrial societies have fewer children. It's as simple as that. Rather than fight this trend, we should abandon the idea of endless expansion in a finite world and begin to considers ways in which we can achieve a stable, self-sustaining population and economy.
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SocialJusticeForAll
July 7, 2010 12:35 PM in reply to skylar
Nice words, Skylar, but I am not convinced that it is so simple.
Where is the peer-reviewed macroeconomic study that supports, “a stable, self-sustaining population and economy?” In other circles, I keep asking to see one, maybe the TPM crowd can help. And are you intentionally leaving out an improved standard of living or was that just an over sight?
Europe is not the answer—along the 4th of July theme for the week—“Life, Liberty, and the Pursuit of Happiness.” – in a well-ordered manner -- is a start.
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public.takeover
July 7, 2010 11:36 AM
Is anybody--like corporate, mainstream, or independent journalists--going to take the trouble to explain to the American people--since Congress seems oblivious to reason--that Social Security has nothing to do with the deficit?
As with almost all other issues, the rest of the world has figured out the deficits are mainly caused by the 80s-00s tax cuts, but American politicians and news media are playing "hear no-see no-speak no" truth on the issue.
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Lord Mike
July 7, 2010 11:46 AM
Well, that will be the end of the Democratic Party. The base will completely revolt if this comes to pass.
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cokids
July 7, 2010 11:59 AM in reply to Lord Mike
End of the Dem party AND the Repub party...finally! Maybe it's time?
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cokids
July 7, 2010 11:50 AM
Judging by the length of this comments section, I'd say that SS is just as lively a third rail as it ever was!
People seem to have bought that life expectancy is lengthening; not shortening, but haven't I read recently that we aren't going to continue to live as long as we now do? What about obesity? What about diabetes? Don't we stand to lower life expectancy in the next several years and if so, then what?
And what ever happened to the idea of taxing income beyond the current cut-off amount?....can't remember what it's called. I've read that would 'fix' the current shortfall!
Taxes? What taxes? 'Tax' is a dirty word!
Oh, and what about that military budget which is the largest in the world? In fact, it's larger than the rest of the world's military budgets combined!! Can't we shift some of that money to SS?
This again show those of us who wish to see that there is really not much difference between the two parties. Do we truly have a two party system or just slight variations within a one party system?
Time to throw ALL the bums out? Maybe!!
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WNCBlue
July 7, 2010 11:50 AM
Another question I have is to what extent any possible shortfall in SS is due to middle class and working class wage stagnation. Real wages for the majority of working Americans have held steady for a couple of decades now. At the same time, the wealthiest, whose incomes have risen steadily, are paying a smaller and smaller portion of their incomes into the system.
Could we even pretend there was a shortfall if real wages had risen at the same pace as the incomes of the top 5%?
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slb
July 7, 2010 6:57 PM in reply to WNCBlue
Actually, I think middle-class wages have fallen in real terms over the last couple of decades.
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Cliff Hendroval
July 7, 2010 11:50 AM
I don't have the exact figures - Bruce Webb would probably have them, as he's the best analyst on this subject I've seen anywhere - but throughout the history of the SSA the salary cap has covered roughly 90% of all Americans. Recently, though, because of inflation and the skewing of wages towards the top end of the spectrum, only ~83% of Americans are under the salary cap now ($106,800, IIRC). Raising the salary cap back to the point where 90% are covered (ISTR that means around $180,000) would relieve any need to raise the retirement age any more than it already has been.
The only problem here is that Barack Obama and his financial advisers (like all the other pols in America) are hell-bent on transferring money from the lower- and middle-classes to the oligarchy.
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WNCBlue
July 7, 2010 12:05 PM in reply to Cliff Hendroval
Well, if anyone has it, I'd love to hear how much of our total household income falls under the cap.
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Bruce Webb
July 7, 2010 1:49 PM in reply to Cliff Hendroval
83% of covered earnings, which isn't the same thing as household income. Perhaps the best explanation you can get of Social Security is from a publication put out by CBO last Friday:
Social Security Policy Options (1.8 MB pdf) Along with explaining the system as it stands it also scores 30 different policy options including a variety of revenue and benefit cut measures.
I extracted the key table as a JPG:
http://2.bp.blogspot.com/_fjW71B3WLTQ/TC3Bs2undtI/AAAAAAAAAYI/PQiTSfBitWo/s1600/CBO-SS+options+Fig+1.jpg
CBO scores a return to a 90% level as backfilling 0.2% points of the 0.6% of GDP overall 75 year gap. Option 5 p. 18.
It is important to note that they limit this to 'covered earnings', which is to say wages. I don't see any scoring of an extension of Social Security to earnings that are not covered, for example anything that can be considered a return on capital, they don't score what could be raised by taxing billionaires.
So as stated this option solves around a third of the problem, a result consistent with SSA scoring of the LMS plan which includes the same proposal.
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MarciaJ720
July 7, 2010 11:52 AM
Nobody has taken into consideration that with 2/3's of the country either overweight (and half of those are obese) that the life expectancy rates in America will be decreasing.
Medical expenses will rise but our mortality will be lowered, probably by 8 to 10 years within the next 30 years.
BTW, the United States of America is no more. The Corporation of America has taken its place.
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Overreach THIS!
July 7, 2010 12:16 PM in reply to MarciaJ720
Your last gratuitous blast be what it may, the rest I think you're getting a bit carried away. Fat piggies will find a non-lethal way to grab fourth helpings of dessert as technology progresses.
And BTW, there is no agreement whatever on what is overweight and what is obese, so let's please end the conceit that these words have any definite meaning. *Many* pros will call a person one pound above desired weight "obese."
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Tamarat
July 7, 2010 12:12 PM
The simplest and fairest method of ensuring the long term survival of Social Security is to remove (or at lease raise) the ceiling on how much income is taxed. There is no reason that someone making $1 million per year should pay the same as someone making about $100,000 per year.
If that's not enough to keep Social Security viable, then sure, raise the age, but very very slowly. They've already done this before (we can't retire until age 66).
And it wouldn't hurt to have amnesty for undocumented workers, get them valid social security cards and have them pay into the system. Good for the workers, good for the retirees.
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anna am
July 7, 2010 12:53 PM in reply to Tamarat
"The simplest and fairest method of ensuring the long term survival of Social Security is to remove (or at lease raise) the ceiling on how much income is taxed. There is no reason that someone making $1 million per year should pay the same as someone making about $100,000 per year."
Exactly.
Unfortunately I don't think it would fly. Cheap gas and low taxes: the foundations upon which American politics stand (or fall).
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truth > spin
July 7, 2010 2:33 PM in reply to Tamarat
Actually, there is a very good reason why they should pay the same: because they will receive the same.
The Social Security program that people always think about is more an insurance system than a proper welfare program. What we get out of it is supposed to bear some relationship to what we put in, which is why your benefit formula computes your income over the required number of work periods.
The cap on the tax side (premium) is there because there is a cap on the benefit side (annuity payout).
Unless you want to remove that cap too or you want to make the program more like welfare (risking the loss of middle class popular support), then you have to keep the earnings cap in place.
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slb
July 7, 2010 7:03 PM in reply to truth > spin
And someone upthread was saying that raising the cap would still take care of the shortfall even if there were a proportional rise in the cap on benefits.
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Bruce Webb
July 7, 2010 7:40 PM in reply to slb
Six different cap increase options scored by CBO. Two that increase benefits along with contributions, four that don't.
http://2.bp.blogspot.com/_fjW71B3WLTQ/TC3Bs2undtI/AAAAAAAAAYI/PQiTSfBitWo/s1600/CBO-SS+options+Fig+1.jpg
I don't support any cap increases, for reasons I won't bore you with. But if you did the combination of a total cap lift but that also lets contributers benefits increase hits the sweet spot with a score of 0.6% of 75 year GDP or exactly the amount of the gap projected by CBO.
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truth > spin
July 7, 2010 8:08 PM in reply to Bruce Webb
I think this is among the viable options or at least part of any good plan.
I do wonder what the inevitable political reaction would be the first time someone runs a story noting that Bill Gates' Social Security check under this system would be $25,000 per month or whatever it would compute out as. I fear the backlash would result in a means testing or other back door cap, which would circle us back to the place where SS would become more of a welfare program than a social insurance system.
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coberly
July 7, 2010 12:14 PM
the loudest commenters here are the most ignorant. "simple math" does not show that we must raise the retirement age, or do any of the other things on the table. the real math shows that an increase in the payroll tax of twenty cents per week each year would enable the people paying the tax to retire at the normal age with the same benefits as today.
and it is obscene that you would think that people who can and do pay for their own retirement should keep working. they are not taking anything away from you.
if you think otherwise, you have been fooled by people who spend big money to fool you.
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sean
July 7, 2010 12:15 PM
Hummm...let's see bipartisianship cooks for a while then...suddenly and shockingly to our ever so easily shocked and startled media...it disappears like a pulled rug...egg will look good on Boner's face tan.
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sangsue
July 7, 2010 12:24 PM
I was born in 1965 so I'm either in the Baby Bust or Generation X, take your pick. Call my cynical but I never counted on SS being around when I hit "retirement age" which to me was a nice pipe dream. No pension so retiring is a fantasy. There won't be any Medicare by that time either so whatever money I can put into my 401K will probably used either for medical care or to bury me.
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Bruce Webb
July 7, 2010 2:04 PM in reply to sangsue
There is a reason why you believe Social Security will not be around. Because what may be the most successful marketing plan in history, rivaling that which sold people on Iraqi WMD, was put in place in 1983.
In the wake of the 1983 compromise legislation that came out of the Greenspan Commission a bitterly disappointed group of people who had hoped to kill SS outright were gathered by Cato in June to brainstorm a plan for the next opportunity to strike at SS. One major product of that effort was outlined in a paper by Stuart Butler and Peter Germanis under the title (as shown in the TOC): Social Security Reform: Achieving a 'Leninist' Strategy
www.cato.org/pubs/journal/cj3n2/cj3n2-11.pdf
It outlines a plan that has three major planks: one, reassure those in or approaching retirement that their benefits will not be touched; two, convince younger workers that in contrast Social Security will not be there for them; and three, blame the Boomers. And it worked to perfection, in fact if you read 'Leninist Strategy' you will see every talking point in any Right assault on Social Security, with the message discipline familiar among the Right, the plan was adhered to with the results seen here:
Baby Busters/Gen-X convinced SS will not be there for them. At all. The whole thing is brilliant really. Dishonest and evil yes, but brilliant. Basically you have been had.
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sangsue
July 7, 2010 2:59 PM in reply to Bruce Webb
Perhaps. But at least I'm not blaming the Baby Boomers. And the reason why I figure SS won't be there is not because of what anyone says. It's because of the trend I see. State workers are being forced to work for minimum wage. Companies raided people's pensions. We've lost 26 million jobs so far. I just don't see how there will be anything left in 20 years, when I'm technically retirement age. And I'm not a troll, I admit I'm pragmatic but not a Repubican. I just feel that since there has yet to be a politican of any stripe who hasn't had their campaigns funded by Wall Street and the banks, sooner or later, one of those pols will raid that money or just phase SS out altogether.
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Bruce Webb
July 7, 2010 6:51 PM in reply to sangsue
Well that is what we have elections for. If people get access to the actual numbers and realize the goods they are being sold via the 'Leninist Strategy' we might get some backlash. At not just against Republicans, Steny Hoyer should know better, or at least his staff should have someone who can use a calculator and read some data tables.
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sangsue
July 8, 2010 3:23 AM in reply to Bruce Webb
Sorry it took a while to respond. The way I see it, the only way all that finegling stops is if the only money the pols could accept was equal public funding. I'm not holding my breath on that. Until that happens, the exorbitant amount the pols need to run a campaign will guarantee the need to get into bed with Big Business and their lobbyists. I hate it but that's the truth.
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crazycarnypoptart
July 7, 2010 12:26 PM
I know everyone hates raising taxes but if we raise fice by a dollar a paycheck(if you are paid every two weeks.) then that would add an additional 3.6 trillion in the trust fund annually
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crazycarnypoptart
July 7, 2010 12:27 PM
I mean fica
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Bruce Webb
July 7, 2010 2:19 PM in reply to crazycarnypoptart
$26 per worker x 190 million Americans 18-64 gets you somewhere near $50 bn a year. Adjust that for total labor participation and you probably get to something like $36 billion. Somehow a couple of extra zeros seem to have slipped in.
http://www.ssa.gov/OACT/TR/2009/V_demographic.html#167717
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crazycarnypoptart
July 7, 2010 10:15 PM in reply to Bruce Webb
sorry I was using paul ryan's calculator.
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scavok
July 7, 2010 12:27 PM
Something doesn't smell right here. Why is a bipartisan group of Congresscritters calling for drastic changes to Social Security this close to an election where voters are already pissed off at incumbents?
I think Congress is going to try to avoid electoral defeat in November by "saving" Social Security at the last minute.
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destor23
July 7, 2010 12:35 PM in reply to scavok
They don't plan on actually doing anything until after the election. That's when the Bipartisan Debt committee will make its unctuous and untrustworthy recommendations.
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Kuro
July 7, 2010 12:32 PM
I get that people are living longer and we need to make adjustments ect. What really bugs me is that we can seemingly spend endless amounts of money on war. What we need to do is scale back defense spending and end these stupid wars. We need to stop electing Republicans too, they are the biggest spenders of them all. Not only do they spend but they spend on stupid things that do not sever our society, like tax cuts for the top 2% and war.
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Lucieann
July 7, 2010 12:34 PM
What are these Democrats thinking??? Are they that queasy about the midterm coming up that they have to act like John McCain and appease the Right-wing of their base??!! I know what Congress can and should cut? That would be defense spending. The Pentagon budget is so swollen it is about ready to burst. A lot of domestic programs like Social Security and Medicare ect. would be saved.
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Backcountry
July 7, 2010 12:46 PM
If the Democrats want to ensure they will be the minority party after the midterms they should embrace this crap.
Wanna know hot to "fix" Social Security? Just eliminate the salary cap and make people like Bill Gates pay on his entire income. Problem solved.
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rltroxel
July 7, 2010 12:54 PM
What are we ALL thinking? Why is it anyone's God-given right to retire in their early 60's? I don't care if SS is not really in trouble. I don't have to rehearse here the original reasons 65 was selected as the appropriate age for full SS benefits. Nor do I need to talk of the increase in lifespan since that decision. Why do we think we get to loaf for 20 years before we die? Our whole culture is geared to entertainment and relaxation, which is part of why we're getting our butts kicked in the world.
And don't call me a troll. I just chased a door-to-door GOP operator from my door telling him that he and his ilk are assholes!
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destor23
July 7, 2010 12:58 PM in reply to rltroxel
Oh come on... our whole culture is geared towards entertainment and relaxation? Then why on Earth do Americans work longer hours than just about anyone else in the world? Why do we have fewer vacation days and holidays? How do you explain, year after year, the amazing productivity of the American worker.
The point of life is not to work yourself into the grave. That all of this amazing economic growth has led to a contraction rather than an expansion of leisure time is proof of the greatest sham ever concocted against the average person.
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rltroxel
July 7, 2010 1:07 PM in reply to destor23
Who is this "we" you're talking about that has fewer vacation days and less free time? And less than what? I have a job that requires work every day of the week, nearly every week of the year, and I don't mind that. I get free time, but I don't spend it watching Survivor, American Idol, or playing Fantasy Football. Most people I know build their lives around what they do in their time off – whether evenings or weekends – and have little commitment to their jobs or doing them well. Our society as a whole has lost our hunger to produce, even as our productivity rates have increased.
But the bottom line is, why should we want to retire when we're 60, barring health problems? There is too much to do. I'm 59 and plan to work until I'm at least 70.
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destor23
July 7, 2010 1:15 PM in reply to rltroxel
If you want to work until you're 70 you should. But we have fewer vacation days and less time off than workers in Continental Europe. We are one of the world's only advanced economies that doesn't mandate paid vacation days.
If you want to live for your work that's fine. But I don't get why you expect other people to. Nor how you square the logical fallacy of your argument. Isn't our ever increasing productivity proof enough of the hunger to produce?
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rltroxel
July 7, 2010 1:30 PM in reply to destor23
It's proof that we're being _forced_ to produce more by companies that refuse to hire more workers. That is typical for a recession, and that is when our productivity numbers have jumped.
I don't think this is an especially good time to be pointing to the European model of mandated vacation days as the ideal.
The issue is not whether people should be permitted to retire at a particular age – people can retire at 30, for all I care – but whether there should be public funding of that. The idea of SS was to keep people from being destitute int heir old age. I also think that public pensions (and my wife and I are each future beneficiaries of a public pension) need to raise their eligibility age. Even if one could be fully-vested after 30 years as (say) a police officer, the notion of being eligible to retire on public funds at that point is ludicrous. Sure, I can understand no longer wanting to do a particular job, but funding people not working makes no sense in a country fighting for its place in the world market.
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destor23
July 7, 2010 1:44 PM in reply to rltroxel
Actually you'll find amazing productivity gains during the 90s boom as well, when unemployment was quite low. It's not just about force it's about the amazing ingenuity, talents and drive of the American worker. These are things that should be rewarded.
As for retiring with a pension after 30 years -- that's part of your compensation. It's the deal you made. I'll do this for 30 years for this amount of money plus a pension. Those deals were negotiated in good faith and should be paid. The police officer who retires after 30 years is taking nothing from the public they are merely collecting on deferred compensation.
The same can be said of any Social Security recipient which is why we should oppose the government's attempt to renegotiate its promises midway through.
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coberly
July 7, 2010 2:10 PM in reply to rltroxel
rixotel
social security is not "public funding". people pay for their own retirement.
the cost of retiring at a nominal 65, and living another 20 years on average, would require a tax increase of about 20 cents per week per year, during that time wages will go up 10 dollars per week per year.
you may want to opt out of this insurance plan, but you would not be wise. it was made mandatory because most people are not wise. cutting it will be a tragedy.
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slb
July 7, 2010 7:21 PM in reply to destor23
Then why on Earth do Americans work longer hours than just about anyone else in the world? Why do we have fewer vacation days and holidays? How do you explain, year after year, the amazing productivity of the American worker.
Thank you!
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Bruce Webb
July 7, 2010 8:00 PM in reply to slb
Boxer the Horse in Orwell's Animal Farm could explain exactly how that works. At least before they sent him to the knackers.
http://www.orwelltoday.com/horsedeath.shtml
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ohyeathatsright
July 7, 2010 12:59 PM
People live longer and work longer--I certainly expect to and I certainly am affected by this change. I support this move to raise the cap to 70 so long as other characteristics of the trust are unchanged.
All of you that are quoting 5 additional years of life expectancy are using older data--the pace of innovation in life extension technology has rapidly increased over the last few years and most models don't take that into account.
Those of you that are saying "there is no emergency" are missing the point. We should be happy that our government is attempting to mitigate an issue before it actually becomes an emergency. The only argument you have from this perspective is that they should be spending time on other issues.
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Bruce Webb
July 7, 2010 2:36 PM in reply to ohyeathatsright
Do you have better models than those of the demographers and actuaries of Social Security and CMS? Can you point to any data in the following tables that are clearly underestimating future longevity?
http://www.ssa.gov/OACT/TR/2009/V_demographic.html#210005 Table V.A3.—Period Life Expectancy
http://www.ssa.gov/OACT/TR/2009/V_demographic.html#211851 Table V.A4.—Cohort Life Expectancy
People have a hard time understanding that the Social Security Reports are as much a study in demographics and they are in economics. If you think they have it wrong point out where and how. Saying "most models don't take that into account" doesn't cut it, we are not basing this on "most models", we are basing it on a particular model, or actually range of models since the Office of the Actuary produces a separate one for each of the three Alternatives.
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ohyeathatsright
July 7, 2010 5:29 PM in reply to Bruce Webb
The evidence you cite is only estimated since 2006 and doesn't take into account the significant technological advancements of last few years. I cannot point to new studies since they haven't been done yet, not to mention that the market readiness of many of these technologies will not be there for many years to come.
These studies often include a disclaimer (for the record, I didn't look for it in your examples) that they are based on current mortality patterns and assumes they will remain the same. However, there are a lot of factors that go into these calculations, decreasing infant mortality makes LE numbers go up. Less people smoking cigarettes will too. These are both trends we're seeing today.
Obesity drags it down (debatable, yes), but there is a ton of money being pumped into obesity drugs, treatments and procedures. Death from old age is becoming obsolete. You will soon be able to afford a supply of new organs lab-grown from your own stem cells.
You could also look at other countries like Japan where women on average live to 86. Our initial LE actuaries didn't look at other countries but the world is shrinking rapidly due to a dramatic increase in communications technologies worldwide. Hypothetically this will lead to a more uniform knowledge transfer around medical and holistic treatments for those in their waning years.
Of course there are many things that could totally derail this too. For example, a world food shortage caused by global warming may lead to a significant decrease in LE.
It's all up in the air, but that doesn't mean we should wait 30 more years to see what happens and then have another legislative 'emergency' where the original intent of the bill becomes increasingly perverted by the charged politics of the hour (ie, health care and finserv reform).
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Bruce Webb
July 7, 2010 6:57 PM in reply to ohyeathatsright
The Office of the Chief Actuary builds in trend improvements into their projections, if you don't have evidence that their ultimate numbers have not already captured those actual gains, you really don't have anything.
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ohyeathatsright
July 7, 2010 7:01 PM in reply to Bruce Webb
You're still ignoring the point. Are you suggesting we wait for 2040 to revisit this issue?
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Bruce Webb
July 7, 2010 7:31 PM in reply to ohyeathatsright
No actually we have a plan based on what we call Triggers.
Under the Trustees methodology the Trust Fund are considered in 'actuarial balance' any time they are projected to have more than 1 year of reserves in each of the years of the projection period, where 'Short Term' is defined as 10 years, and 'Long Term' as 75. So if the TF is projected to drop below a Trust Fund ratio of 100 (where 100 equals one year of reserves) in say 2036 then it would fail the Short Term test in 2027, moreover the risk of this would generally become pretty clear a few years earlier, in this example say in 2024. Under the Northwest Plan for a Real Social Security Fix you would put in place a scheduled series of phased in increases equal to the payroll gap at the point of failure. And then adjust the schedule each year, moving those increases in or out as necessary to match the new information. And since even one year of reserves means probably three years of full benefit payments (because payroll taxes continue to pay most of the benefit) your actual planning threshold is around fifteen years or so.
Under 2009 projections the Trigger is tripped in 2026, at which time a plan put in place several years earlier, or even now, goes into effect and slowly phases in increases in order to eliminate a shortfall not actually to occur for maybe 13 years.
We don't need to wait until actual TF depletion in 2037 or 2040 to act, on the other hand there is no pressing reason to do anything in 2010, especially given the uncertainties in the projections. It might be worthwhile to enact the actual Trigger mechanism into law right away, because that would show that under almost any set of circumstances we had 'fixed' Social Security even as actual changes in rates wouldn't be triggered for 15 years. But failure to act RIGHT FRICKING NOW is not a problem, you can show that 'Nothing' was mathematically the perfect plan for Social Security since 1997 given that the cost of a payroll fix has shrunk from 2.23% to 2.01% and Trust Fund Depletion pushed back from 2029 to 2037. Now it is true that SS was in better projected health in around 2004 with TF depletion set for 2042 and the payroll gap down to 1.92%, still inactivity since then has not put us at a disadvantage vis a vis the situation in the 1997 Report.
We (which includes commenter Coberly up thread) have thought this through and run the numbers.
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ohyeathatsright
July 8, 2010 11:16 AM in reply to Bruce Webb
Thanks for the insightful response Bruce. Point taken and I like your idea about immediately enacting those triggers.
I remain steadfast in my belief that over the next 2 decades, we will see a dramatic increase in LE technologies that are financially accessible to the middle class. Consequently, just as we've been able to push the carrying capacity of the earth, we'll be able to push the carrying capacity of our bodies beyond natural limits. Just look at Dick Cheney!
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slb
July 7, 2010 7:35 PM in reply to ohyeathatsright
All of you that are quoting 5 additional years of life expectancy are using older data--the pace of innovation in life extension technology has rapidly increased over the last few years and most models don't take that into account.
And where are you getting your data? From the Census Bureau, "Average Number of Years of Life Remaining by Sex and Age: 1989 to 2006" ( http://www.census.gov/compendia/statab/2010/tables/10s0103.pdf )
Life Expectancy at 65
Overall:
1989-1991 - 17.3 years
1999-2001 - 17.8 years
2006 - 18.5 years
Men:
1989-1991 - 15.1 years
1999-2001 - 16.1 years
2006 - 17.0 years
Women:
1989-1991 - 19.0 years
1999-2001 - 19.1 years
2006 - 19.7 years
Is your data newer than 2006? Because about 5 years additional life expectancy since the 1930s seems to be what the data were saying in 2006. And looking at the breakdown by sex, I would wonder if the law of diminishing returns wouldn't lead to the conclusion that there may be a natural limit of about 20 years. The life expectancy of women has not been pushed out nearly as dramatically as that for men.
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ohyeathatsright
July 8, 2010 11:17 AM in reply to slb
Please see my posts above with Bruce. Thanks for the comment.
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Meteor
July 7, 2010 1:00 PM
The "defense" budget, much of it hidden, is bloated way way out of proportion, beyond usefulness and beyond reason. Cut it way back because it is the single most threat to this country's financial stability.
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Viva!America!
July 7, 2010 1:01 PM
I see the FDL fear mongering has spread pretty quickly. So a congress that has been called incompetent and obstructionist and an administration that is accused of doing things half-assed is now going to be making all these sweeping and rock-your-world changes to SS?
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destor23
July 7, 2010 1:06 PM in reply to Viva!America!
Is it that fanciful to believe, based on what Obama, Pelosi and commission members have said that there will be some cut to Social Security benefits and that these people will all support it?
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Viva!America!
July 7, 2010 1:26 PM in reply to destor23
You and a lot of the Left have spent the past year and a half calling Dems weak, the GOP obstructionists, and the administration un-serious. Claiming that neither group wants to make any serious changes whatsoever - NOW up and down this thread and throughout the blogosphere, these same people are telling me I need to start pulling out my hair because they are really serious this time? Wasn't it just a couple of weeks ago that Greenwald accused Dems of only caring about their majority with the rest of you nodding in agreement? You think gutting SS or pissing off a very reliable voting bloc is going to help them do that? Give me a break. You all fear and loathe manipulation by politicians but don't even see when its being done by your own peers and the media. What exactly is any of this hyperventilating going to accomplish?
Let me know when the recommendations are released. I'm not going to engage any longer in a discussion where people's cynicism and imaginations trump common sense and facts.
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destor23
July 7, 2010 1:45 PM in reply to Viva!America!
I guess we'll discuss it in December.
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Clarance Vine
July 7, 2010 2:02 PM in reply to Viva!America!
Hey Viva, go find freerider and Chammy and do your Obamabot thing. We're having a great discussion here.
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Bruce Webb
July 7, 2010 2:54 PM in reply to Viva!America!
Well when 14 of 18 Commissioners are already on record suggesting Social Security needs to be cut I am thinking waiting for the recommendation might be just a little too late, particularly since the rule is being set up that the whole package is guaranteed an up or down vote where voting it down will be cast as being in simple denial.
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Long Memory
July 7, 2010 1:04 PM
Let's put the cart back where it belongs: BEHIND the horse. This proposal ain't never gonna happen. I thing the GOP looks at the Dems in charge and says "Y'all lead the way. We're with you on this." And when it comes right down to it they'll find some lame-ass excuse to pull back. And they'll just happen to have commercials queued up that say "The Democrats were ready to screw you out of your Social Security until Republicans stood up to them."
I'm just saying it would be a lousy idea to trust those sorry Republican bastards.
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slb
July 7, 2010 7:39 PM in reply to Long Memory
And if the GOP wins a majority in the House?
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Sniffit
July 7, 2010 1:07 PM
"I think raising the retirement age going out 20 years so you're not affecting anyone close to retirement, and eventually getting the retirement age to 70 is a step that needs to be taken."
Translation: "We have no intention of actually cutting spending...just yelling baout it incessantly...so we've decided that reducing the amount of your money we give back after taking it from you is the way to go, so we can keep spending the rest on bullshit and ass massages. Fuck you middle-class. Fuck you."
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destor23
July 7, 2010 1:18 PM in reply to Sniffit
Yes. And also, who wants to hire a 65 year old ass masseuse?
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johnnydoughey
July 7, 2010 1:18 PM
Choices folks...
Nations can put their money into the war effort (Grmany, Japan, China, Russia...)
or put it into social programs (witzerland, Norway, Canada...)
Guess where this once great nation now puts its money?
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Clarance Vine
July 7, 2010 2:15 PM in reply to johnnydoughey
Exactamundo. Want to "save" everything on your list America:
Simple - end both wars today - save 12.5 Billion per mo - and a few lives. And while you're at it bring the MIC to it's knees - cut the Pentagon defense budget 5% a year for 5 years. Now that's a good start. We'll be awash in cash! Guaranfuckingteed!
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Dr. Tettrazini
July 7, 2010 1:19 PM
This whole thread is useless drivel. All of this nonsense is just rightwing cover for the past administrations unfunded war profiteering. How many billion dollars down the rabbit hole?
Wake up and smell the gun powder..........
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jacks45
July 7, 2010 1:23 PM
Like it or not, change is in order and will ultimately come to pass. The retirement age will have to be raised to account for our longer lifespans. Period.
But before that comes to pass I would hope that the few remaining principled Democrats and Progressives would demand that consideration be given to several cost-containment measures such as eliminating the FICA wage cap and means-testing SS benefits. And, while they are at it, lets have an honest debate about whether this country truly needs or can continue to afford a defense establishment that costs more than the rest of the world combined spends each year.
The really scary financial story is Medicare and Medicaid and the black hole that is developing while nobody seems to be paying any attention. But then the whole healthcare biz is a colossal scam. Witness: I had a triple bipass 7 years ago. The sticker price was $74,000 all in. A co-worker just had his heart attack but he was treated with a stent. Now a bipass and a stent are vastly different: one is highly invasive the other not so much. But my co-worker's sticker price came in at - drum roll please - $84,300! And Blue Cross/Blue Shield paid with nary a whimper. How the hell can that be?
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destor23
July 7, 2010 1:35 PM in reply to jacks45
It really doesn't have to be raised. Nor do benefits need to be means tested. The system is solvent. If it worries you, cut the Pentagon budget and put the savings into a trust for Social Security. It's all about priorities.
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condew
July 7, 2010 3:49 PM in reply to destor23
"Means Testing" -- now there's a way to really screw the middle class. You've been working and saving for 50 years, hoping to add to Social Security and provide yourself with a decent retirement and BAM! Some bleading heart decides that you've save enough that you don't need your Social Securiy. So all your saving just ends up meaning you get the same retirement struggle as if you never saved a dime.
Economists like to whine about how Americans should save more, but you get more of what you reward, and we are always ready to punish savers. Economic downturn? cut the rate on CDs to 2%. Medicare costs a problem? use a "sliding scale", so if you have some savings, you pay more. Social Security Problem? Just stiff the middle class.
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destor23
July 7, 2010 4:10 PM in reply to condew
It's true. Means testing punishes savers. It's also entirely unnecessary.
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An Outhouse
July 7, 2010 5:28 PM in reply to destor23
We did that once (funded a trust). Georgie W. gave it away to rich people. But there is no reason not cut defense and tax rich people to make up whatever the difference at the moment is. If you create a surplus, it will be distributed to rich people again.
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coberly
July 7, 2010 2:22 PM in reply to jacks45
jack45
the heartbreaking thing is that people who are the most ignorant are the most sure of themselves.
to account for our longer lifespans Social Security would need only to raise the payroll tax an amount equivalent to 20 cents per week per year while wages are going up ten dollars per week per year.
and yes i have done the math. and yes it has been checked by the people whose job it is to check such things.
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rmwarnick
July 7, 2010 1:28 PM
There is no Social Security crisis. This is about Wall Street trying to rob our payroll taxes.
Congress could cut military spending by one percent to save the same amount, but that's not even considered.
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truth > spin
July 7, 2010 2:17 PM in reply to rmwarnick
If only this were true. Total defense spending has run from $300 billion in the low end years to $700 billion in the high end years over the past decade or so. So 1% of that would be no more than $30 to $70 billion.
The shortage that we will face in just the OASI portion of the SSA accounts alone are a 10 times order of magnitude. And the gap in HI and SHI (Medicare) portion is going to be worse.
Changes in discretionary spending, including defense, is the equivalent of rearranging the deck chairs on the Titanic. The very nature of the entitlement programs and our demographic shifts are the issue.
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condew
July 7, 2010 4:08 PM in reply to truth > spin
If you figure a 70 billion a year cut in defense over a 70 year period like Social Security uses, that's 4.9 trillion, more than enough.
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truth > spin
July 7, 2010 4:39 PM in reply to condew
Event that isn't close to enough, sadly.
Read the trustee report if you are interested: http://www.ssa.gov/OACT/pubs.html
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Bruce Webb
July 7, 2010 7:11 PM in reply to truth > spin
How do you figure? The 75 year 'unfunded liability' is scored at $5.3 trillion. 75 x $70 billion =$5.25 trillion.
http://www.ssa.gov/OACT/TR/2009/IV_LRest.html#267528
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truth > spin
July 7, 2010 7:54 PM in reply to Bruce Webb
From the trustee report:
The key is that the $5.3 trillion figure is in present value, which means you'd need to put all that money in an account now to let it accrue the interest over and counteract inflation of 75 years.
Keep in mind if you trimmed $70 billion from defense spending per year over 75 years, only that first year's savings would be PV.
If you use a financial calculator and plug in 75 years for your period, use the payment amount of $70 billion per period and add an interest rate (since we are talking about government spending, we should use the rate we now borrow at which is ~ 4% on the 30 year note), you'll calculate that $5.2 trillion collected over 75 years is really only worth about $1.7 trillion today in present value.
So the shortfall is $5.3 trillion and we can come up with $1.7 trillion from the pentagon. It's not an insignificant sum to be sure, but as I said in my comment, it leaves us far short. You'd need to more than triple that cut to address the shortfall.
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Bruce Webb
July 7, 2010 8:31 PM in reply to truth > spin
PV gives me headaches, so I guess I have to take your word for it.
But it seems that $70 billion per year not adjusted for inflation would represent an ever smaller percentage of defense spending over that same time period. Per this Table left unaddressed total Cost of Social Security in current dollars in 2085 would be $26 tn.
http://www.ssa.gov/OACT/TR/2009/VI_OASDHI_dollars.html#168452
Assuming inflation treated Defense in the same fashion as Social Security, where cost in 2010 are roughly equal at around $700 billion, then a 10% diversion from Defense in 2085 would be a savings of around $2.6 trillion. Or since Social Security is projected to go from 4.8% of GDP to 6%, we could theoretically hold defense equal to its current share and get that down to maybe $1.8 trillion. That year.
I mean don't you have to also compound that 10% of 2010 defense cost for inflation PRIOR to applying that interest rate? That is $70 billion plus 75 years of assumed interest first year, $70 billion times inflation times 74 years of assumed interest second year and so on?
Maybe not, my training is in Medieval History so who knows, but somehow I expect a 10% diversion from defense spending compounds a little differently than your argument holds.
But like I said I never quite got PV, if you have the time to calculate what a 10% diversion of the total defense budget would score between now and 2085 I will try to work my way through it.
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Unionman
July 7, 2010 1:51 PM
Congress, especially the majority of democrat representatives, have grown so impervious to reelection threats (thank the same Congress for implementing a corrupt electronic voting apparatus which could provide these same individuals perpetual reelection) they have become mere errand boys for the wealthy and corporate America.
Congress, over the years has raided the SS fund with a promise that such loans would be repaid, with interest, thus, made whole. $2.5 trillion later Congress has submitted its soul to individual wealth and corporate america. Apparently, the protestation of their owners have convinced congress to amend the ss fund without cost to them.
There is no problem with the fund, except the $2.5 trillion owed the fund by our govt. Now, the govt. obviously has no intent, nor had the intent, to repay the fund as promised. So, create a scenario of critical failure and have the corporate media indoctrinate the populace, expecting the vast majority of anti-government, anti-public school funding illiterate voters to believe and accept this fantasy. Can't happen? What better example than the tea baggers.
Notice how these corrupt politicians dance around the one effort that will impact the fund positively. Yet, to opt for this effort results in an incontinent congress. The cowardly democrats, especially those debauched blue dogs, and conservative republicans refuse to discuss, let alone introduce, language that removes the earning caps from income.
Apparently the democrats were castrated by GW Bush's 9/11 episode. Once the anthrax terrorist struck these democrats would do anything but challenge Bush, especially on taxes. With congress's assistance Bush enacted a massive tax cut, overwhelming favoring the wealthy, convinced these same democrats to fund an illegal war as well as one of questionable legality. Further Bush convinced these democrats to exclude the cost of these wars from his budget.
We engage two wars, provide a massive tax cut, and unleash corporate war profiteering and expect what? Paradise? Because SS is a social program these mendacious politicians know they can expect neither massive campaign funding as corporate america provides nor the multitude of perks said corporate provides, from SS receipents. Its as if these odious individuals have discovered an issue which allows them an illusory demonstration of courage, determination and bipartisanship to collectively resolve a threatened institutional program; which is nonexistant.
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PennyDreadful
July 7, 2010 8:20 PM in reply to Unionman
It's DEMOCRATIC representatives.
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al24
July 7, 2010 1:51 PM
This (Social Security "reform") will go over real well with voters. What is with our idiot politicians? Fix one of the thousands of things that are broken in the world.
Social Security is fine. Leave it alone.
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condew
July 7, 2010 2:03 PM
Every time Republicans advocate something dispicable, something that should get them thrown out permanently, there is some God Damn Consevadem there to give them cover and make it all sound reasonable.
I don't know that there is anything that could get me to vote for a Republican again, but if Demacrats gut Social Security, I won't be voting for them. either.
I'm ashamed to say Steny Hoyer is my congressman. I don't know who bought him, but somebody has. He's never asking for campaign contributions. Never needs money. Always saying the progressive things are too hard to do, like the public option. Bought. Sold out.
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GeneralRipper
July 7, 2010 2:04 PM
> ... but FRA is still 65 for workers 63 and older ...
WRONG! I'm solidly over 63, and my FRA is 66.
"Facts are stupid things."
- Ignoramus Rex
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Bruce Webb
July 7, 2010 2:48 PM in reply to GeneralRipper
http://www.socialsecurity.gov/retire2/agereduction.htm
People born from 1943-1946 which is to say people 64-67 have a full retirement age of 66. So I was off by a couple of years.
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Clarance Vine
July 7, 2010 6:52 PM in reply to Bruce Webb
That's correct. I'm 66. And you're forgiven. Nice input today. Good to have 'facts'. BTW, what was hardly discussed, myself being an example, I cannot AFFORD to retire. Also, don't know of anyone around my age who is playing golf or walking on the beach every day. Another myth.
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tatere
July 7, 2010 2:33 PM
"any serious effort to pull the country back from the brink of fiscal crisis will have to include [tax hikes]"
Heh! You're such a kidder.
PS "the brink of fiscal crisis"? really? "50 years from now the deficit might be more than we like" is a brink? brinks are a lot wider now than they were in my day, i tell you what. that's like saying that Las Vegas is on the brink of the Pacific Ocean.
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July 7, 2010 3:26 PM
Republicans AND Democrats. BAD FOR AMERICA!
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cmaukonen
July 7, 2010 4:39 PM in reply to Mark
The man knows.
C
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freckles
July 7, 2010 4:39 PM
Here's my plan.. Cut Government salaries 50%. Cut Government pensions 50%. Let the Governement workers make the same 12980's pay as the general middle class does. Deficit problem... solved.
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cmaukonen
July 7, 2010 4:40 PM
How can you tell when Congress is robbing you blind ?
When it's in session.
C
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bw
July 7, 2010 5:43 PM
Any cuts or raising the retirement age to Social Security would result in a major revolt against both parties. Social Security is not in trouble if politicians would keep their hands off the trust fund and stop using the money for other programs. GOP Minority Leader John Boehner wants to take money from the Social Security Trust Fund to pay for the war in Afghanistan. Social Security is fully funded by the taxes we and business pay into this fund.
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acf_ma
July 7, 2010 10:16 PM in reply to bw
bw: There you have, in a brief sentence, the difference between Republicans and Democrats as concerns budgets and spending. Republicans, regardless of their cries for smaller government and cutting spending, are really just opposed to what Democrats want to spend money on. As they have shown each time they controlled the government, they were quite willing to break the bank with their spending - on wars, and tax cuts for the wealthy - to the point of creating massive deficits and expansion of the national debt. It was during those periods that you heard the line "Deficits don't matter". OTOH, when Democrats were in control, such as now, we got "We've got to get this deficit under control". The real problem is that the Republicans don't like what Democrats spend the money on, and they especially don't like not having the say on what we spend on. Everything else is spin, confusion, and failure to identify what the real problem is.
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jlover
July 7, 2010 6:21 PM
i love it !! the best topic in weeks.....thank you guys for this wonderful discussion
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des
July 7, 2010 9:41 PM
My preferred way to handle any "crisis" in SS funding is to return to the tax rates of the Truman/Eisenhower years. High marginal income tax rates are, apparently, very good for business expansion as the CEOs, unable to take home billions in profits, actually used the money to good purpose and invested it in their companies. Shocking idea!
As that's most unlikely to occur, I think Bruce Webbs' "trigger" plan is the most sensible. As were ALL his posts on this subject.
And anyone who imagines that ANY Congress will cut SS benefits, before or after an election; that faux cynicism went out of style in the 20s...20 CE, that is.
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johnnydoughey
July 8, 2010 12:58 PM
I believe those who are paid from our military budget live in every congressional district in this nation... and put lots of reelection money and future jobs for those congressmen away for their votes. They also get their meals and trips paid for by these same people.
On the other hand, commoners who actually live on Social Security as their single source of income cannot even afford to eat out themselves, let alone pay for a $100 lunch for their representative.
Guess who gets paid back, folks...
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Mr_Darrell
July 8, 2010 1:22 PM
The OASDI portion (6.2% employee and 6.2 % employer) hit 12.4% (combined) in 1990. (It was 8.4 % in 1970.) Assuming a fixed $40,000 income for the entire 20 year period, total payments are $99,200. Most people work more than 20 years and over a lifetime may have higher income, so the amount may be higher.
Upon retirement, and on a yearly basis, allow the retiree to select his payment, including zero and a maximum (IRS RMD value based on life expectancy.) No taxes are due on any payment until the withdrawal exceeds $99200. Any amount remaining is paid to your heirs, upon death. After the amount $99200 is exceeded, 100% of all benefits are now taxed at regular income rates. This would reduce withdrawals and allow a portion to be passed to heirs. Also eliminate the spouse offset. Since most spouses work,why take a reduced payment so the spouse can get a 50% benefit??
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July 9, 2010 3:18 PM
Why should anyone be surprised by this? It merely serves to confirm the fact that our bought and paid for government is indeed comprised of a two-headed, one party system, the Corporate Party. The fallacy of democrat vs. republican exists in name only to provide an illusion of difference and an illusion choice. While in fact, they ALL serve the same corporate masters in furthering the same agenda.
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July 9, 2010 5:28 PM
Eliminating the cap on social security would bring in enough extra revenue that we could exempt the first $25,000 dollars of income from workers and the employers. this would be a $1500 dollar tax deduction on every working class American. Every mom and pop business would receive $1500 per employee talk about a jump start top the economy.
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Red XIV
July 10, 2010 1:16 PM in reply to Rachel
And we'd still have enough money left to ensure that Social Security is solvent forever.
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Kassndra
July 14, 2010 1:04 PM
We gotta stop blaming each other when the truth is so simple. Our government has allowed the corporations to steal everything we've got; and they are going to continue to do so. there is really nothing we can do.
Pick your poison R=cyanide D= arsenic
but now they've got us all armed we can sure do the work for them if we don't quit blaming the victims...the poor the old, the disabled and the out of work.
It's "gang aft angly" here pretty soon; are we going to hang together, or are we going to hang alone?
Stop listening to the blame game on each other WE didn't' create this mess, but we sure don't have to do their work for them.
we're ALL gonna need each other's help. Let's DO it!
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