2014 Social Security Trustees Report

JoeTheEconomist · Jul 30, 2014

joG said:
I haven't followed the US projections very carefully. But it was to be expected that projections would tend to be optimistic. Nobody wants to put himself under pressure.
One reason for the shortened period might also be that the birth rates have fallen more than was officially expected.

The decline has been fairly consistent. One of the big drivers recently is low interest rates. In 2012, the Trustees recognized about a trillion dollars of reduced projected interest income. The most optimistic assumption is that medicare can go to insolvency, and Social Security will be completely unaffected.

JoeTheEconomist · Jul 30, 2014

Slyfox696 said:
How does that make my assertion look optimistic, when it's EXACTLY what I've been saying over and over again?

Because you are misstating the Trustees. The Trustees have not said that Social Security can pay full benefits through 2032. The report says that there is about a 50% chance that it will last that long. The 2033 is an outcome in a normal economy. It is not a prediction much less a guarantee.

Slyfox696 said:
Why would we cut benefits today? That doesn't make any sense.

Why would you cut benefits to save yourself from cutting benefits? THAT'S complete non-sense. Your "the sky is falling" rhetoric is ridiculous. We have TWENTY YEARS of paying full benefits before we have to worry about cutting benefits (or, alternatively, raising taxes). Obviously we don't want to wait until the last minute, but we have TWENTY YEARS. We have plenty of time, especially when a change can essentially be made overnight.

It's neither, it's simply an accurate description of where we are at.

You have been reading your Dean Baker again, who is gifted at sliding words. "Why would you cut benefits to save yourself from cutting benefits? THAT'S complete non-sense" You aren't cutting benefits to save yourself benefits. We need to cut the benefits of people today to preserve the system for a completely different set of people. Pretending that these people are the same is gifted deception.

Waiting 20 years means that we inflict more pain on the future elderly. So if benefit cuts are OK with you, let's do it now.

Slyfox696 · Jul 30, 2014

JoeTheEconomist said:
Actually....

waiting 10 years will mean that the problem has grown.

Umm, no it wouldn't. The projections made are made with current law and our current situation in mind. The problem won't change, we'll just be one year closer to 2033.

joG said:
That was a well chosen word.

It sure would be nice if you'd just admit you don't know what you're talking about agree to do more research on it before blindly arguing the sky is falling.

JoeTheEconomist said:
Because you are misstating the Trustees. The Trustees have not said that Social Security can pay full benefits through 2032.

No, they said the Trust Fund won't become depleted until 2033. And the Trust Fund can only be depleted if expenditures exceed income. Thus, it's a simple thing to understand that, barring significant economic changes which can never be predicted, full benefits CAN be paid until 2033. Here, this may help:

The Social Security trust funds are projected to become exhausted in 2033, according to the 2013 Social Security Trustees Report. If Congress does not act before then, the trust funds would be unable to pay full Social Security benefits on time.

http://fas.org/sgp/crs/misc/RL33514.pdf

That clearly indicates the 2033 date indicates full payment of benefits until the Trust Fund runs dry.

The 2033 is an outcome in a normal economy. It is not a prediction much less a guarantee.

Of course it's not...it's just as conceivable we could experience an economic boom which would make the Trust Fund solvent for an additional 15 years, or it could happen we have a global economic collapse where it can't be paid next year.

But we're talking only about what we know. And, based on our current situation, it's not a problem for 20 years.

You have been reading your Dean Baker again

Who is Dean Baker and why would I read him?

"Why would you cut benefits to save yourself from cutting benefits? THAT'S complete non-sense" You aren't cutting benefits to save yourself benefits.

Umm, that's EXACTLY what you said. Let's take money we promised to people now and not give it to them, that way we can give it to another set of people we promised money (though, they wouldn't get what they are fully promised either).

Like I said, your comment is nonsense. Why take from people now, when we have 20 years to pass a law to preserve for future generations? So ridiculous.

We need to cut the benefits of people today to preserve the system for a completely different set of people.

:lamo

Why do you not understand the fact we have TWENTY YEARS before we have to worry about paying reduced benefits? The system isn't going anywhere. Even if the Trust Fund runs out tomorrow, those collecting Social Security will STILL get money, just less than they expect.

God, it amazes me how those who cry the world is ending the loudest seem to understand it the least.

So if benefit cuts are OK with you, let's do it now.

Way to completely misunderstand again. I never said benefit cuts are OKAY, I said that even if the Trust Fund runs out, the elderly are STILL going to get money. The idea that Social Security is just going to cease to exist is nonsense and it's the same nonsense I took you to task on the last time you created one of these misleading threads. What I cannot figure out is if you truly don't understand what you're talking about or if you're intentionally trying to push a false narrative about the existence of Social Security. I'd like to think you're intelligent enough to understand how things work, but I'd much rather think you're not creating FUD threads with malicious intent.

At the end of the day, you're making statements of untruth. And your recommendation that we cut benefits now is asinine when we have TWENTY YEARS to pass legislation to make it so future generations will get the money promised to them.

joG · Jul 30, 2014

Slyfox696 said:
Umm, no it wouldn't. The projections made are made with current law and our current situation in mind. The problem won't change, we'll just be one year closer to 2033.
It sure would be nice if you'd just admit you don't know what you're talking about agree to do more research on it before blindly arguing the sky is falling.
No, they said the Trust Fund won't become depleted until 2033. And the Trust Fund can only be depleted if expenditures exceed income. Thus, it's a simple thing to understand that, barring significant economic changes which can never be predicted, full benefits CAN be paid until 2033. Here, this may help:

http://fas.org/sgp/crs/misc/RL33514.pdf

That clearly indicates the 2033 date indicates full payment of benefits until the Trust Fund runs dry.

Of course it's not...it's just as conceivable we could experience an economic boom which would make the Trust Fund solvent for an additional 15 years, or it could happen we have a global economic collapse where it can't be paid next year.

But we're talking only about what we know. And, based on our current situation, it's not a problem for 20 years.

Who is Dean Baker and why would I read him?

Umm, that's EXACTLY what you said. Let's take money we promised to people now and not give it to them, that way we can give it to another set of people we promised money (though, they wouldn't get what they are fully promised either).

Like I said, your comment is nonsense. Why take from people now, when we have 20 years to pass a law to preserve for future generations? So ridiculous.

Why do you not understand the fact we have TWENTY YEARS before we have to worry about paying reduced benefits? The system isn't going anywhere. Even if the Trust Fund runs out tomorrow, those collecting Social Security will STILL get money, just less than they expect.

God, it amazes me how those who cry the world is ending the loudest seem to understand it the least.

Way to completely misunderstand again. I never said benefit cuts are OKAY, I said that even if the Trust Fund runs out, the elderly are STILL going to get money. The idea that Social Security is just going to cease to exist is nonsense and it's the same nonsense I took you to task on the last time you created one of these misleading threads. What I cannot figure out is if you truly don't understand what you're talking about or if you're intentionally trying to push a false narrative about the existence of Social Security. I'd like to think you're intelligent enough to understand how things work, but I'd much rather think you're not creating FUD threads with malicious intent.

At the end of the day, you're making statements of untruth. And your recommendation that we cut benefits now is asinine when we have TWENTY YEARS to pass legislation to make it so future generations will get the money promised to them.

Why are you so resistent to expertise?

Slyfox696 · Jul 30, 2014

joG said:
Why are you so resistent to expertise?

I'm not, that's why I keep coming back to the official government statements about Social Security. I rely on how the Social Security's website explains Social Security works. I rely on government reports which clearly state we have nearly 20 years to change benefits and/or taxes to keep the Trust Fund solvent to the point of continuing to pay full benefits.

I guess the question becomes why are you, someone who has already admitted their ignorance of the subject, so resistant to expertise?

joG · Jul 30, 2014

Slyfox696 said:
I'm not, that's why I keep coming back to the official government statements about Social Security. I rely on how the Social Security's website explains Social Security works. I rely on government reports which clearly state we have nearly 20 years to change benefits and/or taxes to keep the Trust Fund solvent to the point of continuing to pay full benefits.

I guess the question becomes why are you, someone who has already admitted their ignorance of the subject, so resistant to expertise?

To rely on government to explain its expensive problems might prove to have been rather naive. Also you might miss some very important aspects of the macroeconomic challenges the country faces, if you look only into separate boxes as presented by different government departments.

Slyfox696 · Jul 30, 2014

joG said:
To rely on government to explain its expensive problems might prove to have been rather naive.

Says the person who has admitted ignorance of Social Security, but continues to argue over it anyways. :roll:

haymarket · Jul 30, 2014

Slyfox696 said:
So we have nearly 20 years to raise taxes/cut benefits before benefits get automatically cut to a smaller amount?

I guess I'm not really that alarmed.

Which is why we need to pop the cap right now so that 100% of earners pay FICA tax on 100% of their earnings instead of just the lower 93% as it is today while freezing benefit levels plus a modest inflation rise if we can afford it. that would only require a FICA tax raise on 7% of American earners while 93% pay no higher rate than they do right now.

JoeTheEconomist · Jul 30, 2014

Slyfox696 said:
No, they said the Trust Fund won't become depleted until 2033. And the Trust Fund can only be depleted if expenditures exceed income. Thus, it's a simple thing to understand that, barring significant economic changes which can never be predicted, full benefits CAN be paid until 2033. Here, this may help:

I have traded emails with SSA about the certainty of their projections. I suggested that their wording will create some misconceptions. They replied that there is no misconception, basically no one can reach the conclusion that you have stated.

"The Trustees do not claim certainty in the future estimates reported under any set of assumptions. The text on page 11 refers to estimates based on the intermediate assumptions; that is, the future scenario the Trustees expect “most likely” to occur. The beginning of Chapter V (page 77) discusses the various sets of deterministic assumptions in more detail. For ease of reading, the report does not qualify each statement about future estimates with words such as “projected” or “under the intermediate assumptions” where we believe the intent is clear.

The figure on page 185 results from a stochastic modeling exercise designed to illustrate the uncertainty associated with the estimates obtained using the intermediate assumptions. As you state, the chart shows that the Trustees expect trust fund reserves to be positive until 2033 with about a 50% probability. Note that as you might expect, this stochastic result is entirely consistent with the result under the deterministic intermediate assumptions."

Samhain · Jul 31, 2014

Slyfox696 said:
http://fas.org/sgp/crs/misc/RL33514.pdf

That clearly indicates the 2033 date indicates full payment of benefits until the Trust Fund runs dry.

Correct. Over the next 20 years, they will continue to adjust the tax cap and benefits on an annual basis, with projections indicating that the 2.7 trillion in private trust fund bonds will need to be redeemed over that time for public bonds. I'm not 100% sure if the trust fund value(2.7 trillion) includes the interest earned on the face value of the bonds, so its possible that its worth closer to 3 trillion.

Erod · Jul 31, 2014

The music eventually stops on all Ponzi schemes.

JoeTheEconomist · Aug 2, 2014

Samhain said:
Correct. Over the next 20 years, they will continue to adjust the tax cap and benefits on an annual basis, with projections indicating that the 2.7 trillion in private trust fund bonds will need to be redeemed over that time for public bonds. I'm not 100% sure if the trust fund value(2.7 trillion) includes the interest earned on the face value of the bonds, so its possible that its worth closer to 3 trillion.

This is not correct. The projection is an outcome within a single possible economy. They use reasonable assumptions to create the theoretical economy, and say in that economy the Trust Fund would be exhausted in 2033. They equally project that the Trust Fund might be completely exhausted in 2027 in the economy does not cooperate.

These comments come from SSA :

"The Trustees do not claim certainty in the future estimates reported under any set of assumptions. The text on page 11 refers to estimates based on the intermediate assumptions; that is, the future scenario the Trustees expect “most likely” to occur. The beginning of Chapter V (page 77) discusses the various sets of deterministic assumptions in more detail. For ease of reading, the report does not qualify each statement about future estimates with words such as “projected” or “under the intermediate assumptions” where we believe the intent is clear.

The figure on page 185 results from a stochastic modeling exercise designed to illustrate the uncertainty associated with the estimates obtained using the intermediate assumptions. As you state, the chart shows that the Trustees expect trust fund reserves to be positive until 2033 with about a 50% probability. Note that as you might expect, this stochastic result is entirely consistent with the result under the deterministic intermediate assumptions."

Slyfox696 · Aug 5, 2014

JoeTheEconomist said:
I have traded emails with SSA about the certainty of their projections. I suggested that their wording will create some misconceptions. They replied that there is no misconception, basically no one can reach the conclusion that you have stated.

:lamo

The conclusion I have stated is the exact one stated in the reports. As I've already said, no one can predict the future, but the current knowledge (under current law and with the current economic situation) says we can continue to pay full benefits for the next roughly 20 years.

Once more, you are intentionally trying to be misleading, for reasons I still don't understand.

JoeTheEconomist · Aug 7, 2014

Slyfox696 said:
:lamo

The conclusion I have stated is the exact one stated in the reports. As I've already said, no one can predict the future, but the current knowledge (under current law and with the current economic situation) says we can continue to pay full benefits for the next roughly 20 years.

Once more, you are intentionally trying to be misleading, for reasons I still don't understand.

Given what you have said suggests that there is a lot about the subject of Social Security. Again the words aren't mine. They come from the Social Security Administration. Now I will say that I read the wording of the Trustees, and took time to tell them that their words could be misunderstood. What they have said is basically, only if you have the urge to misunderstand.