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social security : what will happen, now that trump won ?

JoeTheEconomist said:
It can't be done mathematically. The cost might reach $30 trillion. But... you can't use 15% because it covers things unrelated to retirement. The OAS side of SS gets 10.3%.
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Math tends to get in the way of a lot of political ideas.
 
cpwill said:
No, my plan is to reduce the growth rates for upper income earners. I'd like to "stiff" them, but that's probably impossible.

Though that's an interesting definition of "stiff". In what other world are your children responsible for you bouncing a check, and stiffing you if they don't pony up?



Yup. Too bad, eh? Sure wish we'd been more responsible, but :shrug: here we are.



That's not a bad jobs program, and, apparently, anyone can do it.




But I like the Boomer plan. We should increase spending without increasing taxing or borrowing. Magic. We're gonna use magic. :D
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Being stiffed is paying into a system, then not getting anything in return.

Yeah, I wish we'd been more responsible too, but we had to have a war and a Great Society at the same time.

If only magic could trump math.
 
JoeTheEconomist said:
This is a piece that I wrote on changing the retirement age : Why the age for Social Security benefits doesn’t need to go up to 70 - MarketWatch

The gist of the piece is that people aren't really living longer. Much of the increase has occurred at a time in our lives when we are contributing to the system rather than collecting from it. Feel free to tell me where it is wrong.
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Good point.
Nevertheless there are more seniors than there were when SS passed.
 
Dittohead not! said:
Being stiffed is paying into a system, then not getting anything in return.
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Oh. You mean like the boomers who are insisting that I and my children make good on their bounced checks are planning on doing to us?

But no one is suggesting they not get anything. I am saying we need to reduce payouts to high income earners order to protect benefits for the poor.


Yeah, I wish we'd been more responsible too, but we had to have a war and a Great Society at the same time.
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[emoji38] defense spending hasn't driven the deficit - if anything, over the past couple of decades, the reduction in defense spending has reduced our spending growth. The driver's are the entitlements.





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JoeTheEconomist said:
I would be careful of using snapshots of today to project SS trajectory. I think our experts have seriously misjudged where it is going. When you hear a statistic like 1/3 of seniors get 90 percent of their income from SS, the data is aggregated by age over 65. The Baby Boomers are statistically weighting that aggregation down in age. Over time the future distribution of age will be very different, and not surprisingly dependence upon SS rises with age. It basically doubles. As the boomers age, the distribution of age in these statistics will normalize.
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Hm. What percentage of that 1/3rd have assets they simply aren't drawing on (or drawing very little) because their OASI checks are most of what they spend?

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Dittohead not! said:
Math tends to get in the way of a lot of political ideas.
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Yup. Such as Trump's insistence that we don't need to Reform entitlements.

Now we find out if Ryan can teach him math.

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Dittohead not! said:
Good point.
Nevertheless there are more seniors than there were when SS passed.
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This is more of a problem than a blessing. AARP is learning that every new customer that they have expects to retire after the Trust Fund is gone. They are quietly looking at forcing SS to the surface, where as in the past they were obstacles to the discussion. At this point about 80 percent of the voting public expects to be alive when the consequences of the 3rd rail politics arrive. People who are 60 have an incentive to push this issue to the top of the priority list.
 
cpwill said:
Hm. What percentage of that 1/3rd have assets they simply aren't drawing on (or drawing very little) because their OASI checks are most of what they spend?

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Every interesting question. The data from Census is bad, and all of the experts know it. SSA publishes a disclosure that says that the definition of income for seniors is not really very reflective of their taxable income because so much of it is excluded, say capital gains. I have written on the problem in the data.

That said, the data collection and methodology issues do not cause the rise in relative importance. It isn't like the survey knows that you are 80, and starts lowering your reported income. The issues with data collection seem independent of age. So yes it is bad data, but the trends based on age are likely reflective of actual trends with age. The Census data shows that dependence upon SS doubles between 65 and 80.
 
cpwill said:
Oh. You mean like the boomers who are insisting that I and my children make good on their bounced checks are planning on doing to us?

But no one is suggesting they not get anything. I am saying we need to reduce payouts to high income earners order to protect benefits for the poor.
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That might work. What else would work, perhaps better, would be to take the cap off of contributions.




cpwill said:
[emoji38] defense spending hasn't driven the deficit - if anything, over the past couple of decades, the reduction in defense spending has reduced our spending growth. The driver's are the entitlements.





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You do remember that SS was put into the general fund and began to be spent on other things when LBJ was trying to wage a war and create the great society at the same time?
 
JoeTheEconomist said:
This is more of a problem than a blessing. AARP is learning that every new customer that they have expects to retire after the Trust Fund is gone. They are quietly looking at forcing SS to the surface, where as in the past they were obstacles to the discussion. At this point about 80 percent of the voting public expects to be alive when the consequences of the 3rd rail politics arrive. People who are 60 have an incentive to push this issue to the top of the priority list.
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People a lot younger than that need to force SS to the surface as well, unless they just plan to allow the government to flush the money they've contributed down the toilet.

SS is not dead. It needs fixing, but it's not dead, not yet.
 
Dittohead not! said:
That might work. What else would work, perhaps better, would be to take the cap off of contributions.
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Oh. The largest tax increase in history on my generation because Boomers decided to live irresponsibly?

Somehow that sounds less than enticing. Nor will it solve the problem.

You do remember that SS was put into the general fund and began to be spent on other things when LBJ was trying to wage a war and create the great society at the same time?
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I was referring to post-Cold War, but the effect is the same. It's the poorly designed social safety net that's unsustainable.



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cpwill said:
I'm sorry - but that's obviously a lie. Bernie Sanders was very clear that wages were flat or falling relative to inflation, so......

:D
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There you go, confusing median with mean again.... It's a common 'conservative' trick. :roll:

Warren Buffett walks into a small town bar. Average wealth for the whole town goes up by 140%!
 
JoeTheEconomist said:
This is a piece that I wrote on changing the retirement age : Why the age for Social Security benefits doesn’t need to go up to 70 - MarketWatch

The gist of the piece is that people aren't really living longer. Much of the increase has occurred at a time in our lives when we are contributing to the system rather than collecting from it. Feel free to tell me where it is wrong.
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That was a nice article. I get tired of hearing the misleading stats about life expectancy when discussing SS. I saved an old graph from St. Louis Fed and it shows life expectancy at birth in 1940 was about 64, but a 65 year old in 1940 was still expected to live for 12-13 more years. And the points about moving the retirement age up were surprising. :peace

retirement-age.png
 
social security : what will happen, now that trump won ?
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for people under 55, both SS and Medicare are at risk under the current regime; Medicare even more so than SS. those over that age are an important part of the Republican electorate, so their benefits will stay the same.
 
Dittohead not! said:
People a lot younger than that need to force SS to the surface as well, unless they just plan to allow the government to flush the money they've contributed down the toilet.

SS is not dead. It needs fixing, but it's not dead, not yet.
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It is in a lot more trouble than people realize. Generally America has no idea what needs to be fixed. We don't have a sound measure of the problem, or an understanding of the forces driving the system to crisis. For every dollar that SS has ever collected, it has created $2 of promises it can't keep. The idea that is a demographic problem is silly.

The issue isn't about people under 40 anymore, and hasn't been in a decade. These people will be able to make adjustments. The problem is the 55-65 year-old who will live long enough to find that all of the time that we have spent ignoring the system has a price.
 
JasperL said:
That was a nice article. I get tired of hearing the misleading stats about life expectancy when discussing SS. I saved an old graph from St. Louis Fed and it shows life expectancy at birth in 1940 was about 64, but a 65 year old in 1940 was still expected to live for 12-13 more years. And the points about moving the retirement age up were surprising. :peace

retirement-age.png
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That is consistent with what I saw from SSA, actuarial study 120. Life expectancy of a retirees is growing steadily, not explosively. The chart does not contain a very important statistic. The probability of a 30 year-old reaching retirement age that has risen sharply since the 1940s. The problem isn't that we are living longer, it is that more of us are living average. These are very different problems. Structurally this is a huge problem for SS because it means that fewer people collect nothing.

This is the problem with SS. We aren't even looking at what is driving the system's problems.
 
Helix said:
for people under 55, both SS and Medicare are at risk under the current regime; Medicare even more so than SS. those over that age are an important part of the Republican electorate, so their benefits will stay the same.
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The average person who turns 68 this year expects to be alive in 2034 - that is the most optimistic expected outlook for the Trust Fund. CBO is the most negative, and if they are right, a person turning 76 this year expects to be alive when the crisis arrives. The 55 number is a legacy from 2005, and no one seriously believes that people under 65 can escape the wrath of economic gravity.
 
Dittohead not! said:
You do remember that SS was put into the general fund and began to be spent on other things when LBJ was trying to wage a war and create the great society at the same time?
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Please tell me that you are joking.

This is a tired meme where the dates do not even match-up. SS in 1968 was a pay as you go operation. It did not generate any cash to spend on other things. Nixon did about as well as anyone until the 1972 reform which created the COLAs based on flawed mathematics.

Seriously I hope that you are joking.
 
JoeTheEconomist said:
The average person who turns 68 this year expects to be alive in 2034 - that is the most optimistic expected outlook for the Trust Fund. CBO is the most negative, and if they are right, a person turning 76 this year expects to be alive when the crisis arrives. The 55 number is a legacy from 2005, and no one seriously believes that people under 65 can escape the wrath of economic gravity.
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nah, they'll keep well away from throwing their demographic to the wolves. any massive changes to those programs will have to be done incrementally in order to quell a backlash, and honestly, i think that there will probably be a backlash anyway. if they suddenly pull the rug out from under current or almost retirees? ****, even gerrymandering won't save them from that.
 
cpwill said:
Oh. The largest tax increase in history on my generation because Boomers decided to live irresponsibly?

Somehow that sounds less than enticing. Nor will it solve the problem.



I was referring to post-Cold War, but the effect is the same. It's the poorly designed social safety net that's unsustainable.



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The poorly designed safety net is only part of the problem.
Trillion dollar war/nation building projects don't help, either.

The SS money should never have gone into the general fund, but that ship has sailed.
 
JoeTheEconomist said:
It is in a lot more trouble than people realize. Generally America has no idea what needs to be fixed. We don't have a sound measure of the problem, or an understanding of the forces driving the system to crisis. For every dollar that SS has ever collected, it has created $2 of promises it can't keep. The idea that is a demographic problem is silly.

The issue isn't about people under 40 anymore, and hasn't been in a decade. These people will be able to make adjustments. The problem is the 55-65 year-old who will live long enough to find that all of the time that we have spent ignoring the system has a price.
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I asked google: what percent of the federal budget goes to medicare?

The answer added SS as well:

In 2010 it is projected to account for 12.5% ($452 billion) of the total expenditures. For the decade 2010–2019 medicare is projected to cost 6.4 trillion dollars or 14.8% of the federal budget for the period.
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Add those together, and they're 29.3%.

So, what percent of revenue comes from payroll taxes that pay for that 29.3%?

3.1.1-figure1.png


source

Social Security/Medicare should be solvent. If we quit collecting payroll taxes, and stopped Medicare/SS altogether, the federal budget would be even further out of whack.
 
JoeTheEconomist said:
Please tell me that you are joking.

This is a tired meme where the dates do not even match-up. SS in 1968 was a pay as you go operation. It did not generate any cash to spend on other things. Nixon did about as well as anyone until the 1972 reform which created the COLAs based on flawed mathematics.

Seriously I hope that you are joking.
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OK, it seems I had that mostly wrong. According to Snopes:

The Social Security Trust Fund was established in 1939 to receive monies collected for Social Security through payroll taxes. The monies in this fund are managed by the Department of the Treasury; they are not, nor have they ever been, put into the "general operating fund."

However, whether the Social Security Trust Fund can truly be said to be "independent" is problematic. The Social Security Act specifies that the monies in the fund may only "be invested in securities backed by the full faith and credit of the Federal government," such as treasury bills, treasury notes, and treasury bonds, as well as special issue bonds. So, essentially, the government can "invest" Social Security funds by lending them to itself, then spending that money on programs not related to Social Security (e.g., defense, foreign aid, education). The government "pays back" this money when the Social Security program redeems the bonds, but critics of the program contend Social Security will eventually fall into deficit by 2018, and the Treasury won't have the necessary cash on hand to redeem the bonds and pay back the fund. As the Social Security and Medicare Trustees themselves noted in their 2005 Annual Report:
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So, the money is not technically a part of the general fund, but the government can spend it as if it were by simply loaning the money to itself and issuing T bills. Now, it may not be able to pay those loans back.
 
Dittohead not! said:
The poorly designed safety net is only part of the problem.
Trillion dollar war/nation building projects don't help, either.

The SS money should never have gone into the general fund, but that ship has sailed.
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DOD spending has shrunk - it's impact on the growth of our deficit has been negative.

That being said, you are correct: the ship has sailed. No good complaining about how "but we put money in!" when, in fact, you then immediately took that money back out and spent it.



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Dittohead not! said:
I asked google: what percent of the federal budget goes to medicare?

The answer added SS as well:



Add those together, and they're 29.3%.

So, what percent of revenue comes from payroll taxes that pay for that 29.3%?

3.1.1-figure1.png


source

Social Security/Medicare should be solvent. If we quit collecting payroll taxes, and stopped Medicare/SS altogether, the federal budget would be even further out of whack.
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No... based on these numbers, the entitlements would be running a surplus if revenues equaled expenditures. Sadly, we are currently doomed to run a deficit long as the eye can see.


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Helix said:
nah, they'll keep well away from throwing their demographic to the wolves. any massive changes to those programs will have to be done incrementally in order to quell a backlash, and honestly, i think that there will probably be a backlash anyway. if they suddenly pull the rug out from under current or almost retirees? ****, even gerrymandering won't save them from that.
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The backlash is going to come when seniors realize that the world has moved on this option. This was the commentary of 2005 which is about 15 trillion dollars ago. Incremental change will buy you almost nothing unless you are willing to hit existing retirees.
 
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