Social Security isn’t doomed for younger generations

No, it is not one of the great Boomer rip-offs, as I argue in my latest Bloomberg column.  Here is one excerpt:

According to his [Blahous’s] estimates [link here], if no further steps are taken to shore up the finances of Social Security, the system will stop being able to meet its scheduled payment obligations sometime in the 2030s. (Note that benefit hikes are part of the schedule.) That would be bad, but even under this scenario the system is still paying out a roughly constant level of inflation-adjusted benefits over time, at least as those benefits are defined as a percentage of workers’ taxable earnings (about 13%). Of course, to the extent those taxable earnings rise, the benefits will be rising too, even if not at a spectacular pace.

Keep in mind that this is the worst-case scenario offered by a relative pessimist.

Another way to describe the problem is that, over the next 75 years, about 17% of scheduled benefits are currently unfinanced. Blahous estimates that the U.S. could cover that gap if the Social Security payroll tax were raised from 12.4% to 15.1%.

Now, you might have strong views about the wisdom of that kind of tax increase, but you should acknowledge that this is a very different reality than a bankrupt system. With Social Security on full cruise control, and with no forward-looking reforms, today’s younger earners still are slated to receive more than their parents did — just not very much more.

Dean Baker, an economist to the left of Blahous, also has studied Social Security. He estimates that retirees 30 to 40 years from now will receive monthly checks that are about 10% higher in real terms than today’s benefits. And keep in mind those are estimates per year. To the extent life expectancy rises, total benefits received will be higher yet.

Comments

So, should we?
Lower payroll taxes for humans, and place some payroll taxes on robots:
a) So there are better chances for humans to compete for jobs.
b) So to keep those payroll tax revenues that helps fund social security and Medicare
https://perkurowski.blogspot.com/2017/02/here-some-disorderly-lose-cannon.html

I can't help but think that future generations will look back on proposals like a) as just a drop in the bucket that does little to stop the inevitable rise of automation.

And then I can't help but think that the economic historians of those future generations will look back and see such efforts in the same way as Polanyi saw Speenhamland - ultimately amounting to little, but playing in important role in smoothing the enormous socioeconomic upheaval.

All of this begs the question. Workers and their employee contribute enough to SS over their 45 or so years of employment to provide all SS members with a couple million at retirement. This sum would provide monthly payments about ten times what SS pays them. What happened to all the money??? Privatize SS.

"Lower payroll taxes for humans, and place some payroll taxes on robots"

This make NO sense at all. You can't put a payroll tax on robots -- they don't draw salaries. You could impose capital equipment taxes, I suppose -- but on what exactly? What counts as a robot? Perhaps anything that displaces human labor? But then you're talking about every piece of equipment in a modern factory or on a modern farm. Every power tool on every building site. Every appliance in our homes. Every computer. Everything going back to the Jacquard loom.

All these tools are already taxed at multiple points. Of course, if you make the taxes high enough, the tools will still be used - just elsewhere.

The only reason for production is to supply consumption.

The only reason to pay wages is to allocate workers to production with incentive they can consume by spending their wages in zero sum.

Pay workers nothing and consumption is zero, either quantity higher than today at $0 unit cost, or quantity zero at any non-zero price.

Keynes, Adam Smith taught zero sum: production - consumption = 0, as well as production cost, ie labor costs, - wages paid to buy consumption = 0.

Milton Friedman, Laffer, et all taught non-zero sum:

Cost costs, eg total labor costs, and consumption, GDP, will rise.

Ie if in year 1 total wage income is 100 and GDP is 100, in each successive year of cost cutting

Wages = 80, GDP = 120
Wages = 60, GDP = 150
Wages = 300, GDP = 200

To pay for the GDP growth, conservatives have government put more money in consumer pockets, not employers. Listen to Trump, who simply speaks the conservative economic plainly. Tax cut to put more money in you pockets, and the Fed driving interest rates negative so you get paid to borrow and spend.

The short scifi story Autofac, especially in the Amazon P K Dick Electric Dreams version make the point that if robots replace workers, it will not be Terminator, but robots forced to become consumrrs.

If there are no consumers, what is the point of robots producing.

If there are no workers, there can be no consumers, unless the price of everything produced is zero.

File in the "Go Figure" folder.

We never hear/read about Free Everything For Millions of illegal Aliens, Medicaid, Welfare, etc. going bankrupt.

...all of that is in your head.

How do you determine what is a robot 'on payroll'?

All a robot is, is an efficiency increasing device.

A cash register eliminates, at a minimum, a partial employee. A backhoe removes the need to employ a good half dozen. Heck, even *air conditioning* increases the efficiency of your existing workforce, meaning you don't need to hire as many people.

Do we want to encourage going back to the days when ditches were dug with shovels - or where we replace the shovels with bare hands?

Shovels? Shovels are "robotic" hands.

"Lower payroll taxes for humans, and place some payroll taxes on robots:"

This is a dumb idea. What defines a robot? Why would a "robot" be subject to such a tax but a cash register or autonomous car would not. Furthermore, any taxes of that nature will just be transferred to consumers as price increases.

And in the real world, when someone says, I can meet my obligations only if I receive a 25% bump in income, most folks would consider that person on the brink of bankruptcy.

But individuals and governments are different!

Government is part of the real world.

John,

Back in my day it was “If I can only get a 10% raise this year ...”.

To which you may respond:

“OK boomer.” :-}

Financial counsellors do ask clients experiencing difficulties if there is any way they can increase their income.

The problem is not inflation adjustment, it is deflation adjustment. Absent something happening, we are destined for about a hundred years of half point deflation as there was no prior inflation, just a price variation that extends from the Nixon Shock to 2130, where it levels out.

The system only rachets up, as all government programs are geared to only ratchet up. The current system has youngsters earning increasingly less money to pay for inflated pension defined from the past.

We have wrong notions about banking and inflation. Officially we have really frigged that system up way badly, the 'This time is different' syndrome is in your post, Tyler. This time is not different, we should be preparing for long deflation or monetary regime change.

Tyler analysis has another problem, it assume the string will push because we are a bell curve of income distribution. That is not true, wages can vary across the USA by location as much as 20%, and stay at that level for much longer than anyone can remain liquid. This not, by any means, a bell curve, it is, for example, a marginal tax on folks in Vermont to pay for low income folks in California. So SS may look like it is surviving for a string pushing economist, but it will kill Vermont unless Obamcare Taxes for All kill Vermont, or demographics kill Vermont. In either way, SS will do the jb, and we have a severe Cnstitutional crisis. Further, the small states are getting clues, and their best option is to quit swallowing rifle barrels and stop the Senate today, before it gets worse. That, in fact, is the Constitutional duty of small state senators, to say, no, now.

California "middle class" is more likely paying for both California and Vermont working class born old folk. California has lots of $100k plus workers as a share than Vermont, which does have high tech, but it's a smaller share of the economy.

"Absent something happening, we are destined for about a hundred years of half point deflation as there was no prior inflation, just a price variation that extends from the Nixon Shock to 2130, where it levels out."

Could you please explain or point to a link describing this in greater detail? I read you as saying that the Bretton Woods devaluation was a one off monetary rebasement, and all inflation since then was just a lagged response of the actual retail prices. Am I reading this right?

"And keep in mind those are estimates per ear..."

Van Gogh hates this policy...

Bullfighters love this policy.

What do friends, Romans, and countrymen think of it?

Depends on the interest rate.

Fine, but of the two big programs that are supported by FICA taxes, isn't Medicare the one with the more worrisome actuarial figures? Whereas social security for decades has been foreseen to be in a little bit of trouble but not catastrophically so.

"isn't Medicare the one with the more worrisome actuarial figures? "

+1, SS's low point is about 75% of payments, but Medicare's low point is only 50% of payments. The Medicare numbers are much bigger.

FICA originally only paid 50% of Part A with the other half coming from general revenue. That's what pays hospitals 80% of costs, where people end up when dying.

Part B was originally 50% paid for by premiums with the other half paid out of general revenue. That's what pays 80% of bills to stay out of hospitals.

Medicare was a benefit to doctors and hospitals as much as a benefit to patients, maybe a bigger benefit to hospitals initially than patients, but long term more benefit to doctors. Patients tight on money don't see doctors, which means doctor earn not money in the US medical piece work system. Of course, a magic doctor who prevents illness and accidents earns nothing in the AMA model. Which Medicare is.

Cowen makes a two-part argument in his essay, although the first part is omitted from his summary above. The first part is the risk that social security will end up taking funds from the U.S. Treasury to pay social security benefits. The second part is that the first part can be avoided if payroll taxes are increased. What's wrong with this argument? In the past 30 years, the U.S. Treasury has taken almost $3 trillion from social security, which has partially offset income tax cuts primarily benefiting the wealthy. Cowen isn't the first to suggest we increase payroll taxes in order to "save" social security: Simpson-Bowles suggested the same thing. Of course, with trillion dollar deficits looming, how could the U.S. Treasury ever repay the $3 trillion already borrowed from social security. It can't. It will just borrow another $3 trillion (by selling the IOUs it gave the social security trust fund). I'm not accusing Cowen of suggesting we repeat the same deceit as the plan to "save" social security adopted in the 1980s, but his suggestion, to raise payroll taxes without any conceivable plan to repay the amounts already borrowed from social security, would please those who wish to repeat the exercise. It would be a tax increase on working Americans, a payroll tax increase, to partially offset the income tax cuts already adopted.

The Republican leader in the Senate, Mitch McConnell, has stated more than once that if it were up to him we'd just write off (forgive) the debt owed social security by the U.S. Treasury. He doesn't quite put it this way, but McConnell's approach has the benefit of honesty: it implicitly acknowledges that the plan to "save" social security adopted in the 1980s was a scam.

And the wheel keeps turning. Wasn't one of the solutions to the whole WWI debt crisis Keynes suggested a big bonfire?

You can see how that would have seemed a good idea from Keynes point of view? The UK paid off the last of its WW1 debt in something like 2015.

Yeah, the UK, US, burning the debt owed by Germany, not taxpayers burning the war bonds they bought during war rationing.

Giving workers back their saving over time so they would pay workers to produce, and consume, a bit more is Keynesian stimulus.

Keynes always wanted debt repaid before the assets they built were consumed, the the time to build assets is when labor demand is slack in order to pay workers to work, and consume, which pays workers,...

Conservatives seem to think not paying workers will result in workers consuming more and thus growing GDP.

The only way old folk pay for consumption and thus not crater GDP is by programs like Social Security.

Every argument has two sides: Here is Cowen's friend Megan McArdle essentially taking the McConnell position by arguing that we owe the amounts borrowed from social security to ourselves and ought not have to pay interest on the amounts borrowed from social security and besides social security benefits are too generous anyway: https://www.bloomberg.com/opinion/articles/2015-04-07/the-left-gets-it-wrong-about-social-security McArdle might be described as a self-appointed expert on social security as she has written many essays on the subject, but not everyone agrees with her: https://www.latimes.com/business/hiltzik/la-fi-mh-bloombergs-megan-mcardle-gets-social-security-almost-totally-wrong-20150408-column.html

Or we could just ignore the accounting fiction and acknowledge that Congress has always in practice treated general receipts and SS tax income as a single, commingled fund and will continue to do so.

No, this is not a Boomer ripoff. IIRC, only those who retired prior to 2000 received more in benefits that they paid in taxes. At the normal retirement age of 65, that means dates of birth of 1935 and earlier.

I calculated how much I would have accumulated had my FICA taxes had been invested 80/20 equities/FI and it was slightly over $1M. That money would have generated $40K a year (using the 4% withdrawal guide). That’s more than anyone would receive from SS at NR. And that is only my portion - add an equal amount for the employer tax.

As you recall, SS was instituted by FDR, Medicare by LBJ. If the post-Boomer generations feel like they are being taken advantage of, thank the Democrats. Of course, given the poor education they have received in the government schools, they are probably ignorant of these facts.

The 1983 social security reform was a bipartisan effort. In the House, the vote was 163 Democrats and 80 Republicans in favor (54 Democrats opposed and 48 Republicans opposed, with 51 Democrats and 38 Republicans not voting), while in the Senate the vote was 32 Republicans and 26 Democrats in favor (8 Republicans opposed and 6 Democrats opposed, with 14 from each party not voting). Reagan then signed the measure into law.

I've often commented that Senator Dole, who convinced Republicans in the Senate to approve the measure, outsmarted the Democrats in the House, who didn't seem to appreciate that the measure imposed a large payroll tax increase on working Americans to partially offset the Regan income tax cuts primarily benefiting the wealthy. The irony is that today's conservatives have little appreciation for Dole.

Bur Rich, Social Security is a guaranteed inflation-protected annuity.

Financing a guaranteed benefit like this with a risky portfolio is actuarially dubious, as we have seen in the pension world.

AOC says there are only 12 years left for life on earth, so there aren't going to be future generations to worry about ---
https://pjmedia.com/trending/aoc-no-seriously-we-only-have-12-years-left/

"Blahous estimates that the U.S. could cover that gap if the Social Security payroll tax were raised"

Don't blame the Boomers, take it out on future generations instead!

All a big conceptual confusion. SS and Medicare are defined benefit welfare programs financed by a tax on wages. Change the tax to one on consumption, a VAT and you need to change the tax rate less often to keep revenue collection more of less in line with benefits and the tax would be slightly less regressive.

Unlike Social Security, Medicare provides "in kind" benefits. Much more open-ended.

If our biggest financial issue was Social Security, we'd be on easy street. The system can be stabilized with minor changes.

Medicare is a whole other kettle of fish. The idea that it is tied to employment is silly at this point. The Medicare portion of the payroll tax should be eliminated and replaced with higher income tax rates (we're already kind of doing this in a complicated way.)

"The Medicare portion of the payroll tax should be eliminated and replaced with higher income tax rates"

One of the very first moves would be to eliminate those higher income tax rates on the poor and then SS would be even worse off. SS is already a large income transfer to the poor, your scheme would make it worse.

Social Security includes SSI, which is a welfare program, but the regular Social Security program is not hugely skewed toward low-paid.

Taxes are a level percent of pay, capped at $137,700 in 2020. Benefits are skewed toward lower-paid workers, but lower-paid people don't live as long. And high-paid people have most of their Social Security taxed. So yeah, some progressivity, but nothing crazy.

Medicare taxes apply to uncapped wages (plus, to unearned income above some level), making it essentially income tax-financed today, but in a really messy, complicated way.

Everyone gets the same Medicare, not a function of years worked or taxes paid.

Also, the EITC today works to reduce payroll taxes for lower-paid workers. But the EITC is a good thing IMO.

"when the Social Security trust fund is depleted, and Social Security is financed fully from current government revenues. That could destroy the perception of Social Security as a system where contributions are related to final payments."

You mean, make perception match reality? If one believes that the "trust fund" is real, then we have a simple solution for Social Security: just relabel enough general revenue taxes as FICA tax, earmarked for a "trust fund" to pay future benefits, and lend that trust fund back to the government for current spending. Then, despite the fact that current (FICA plus non-FICA) taxes and spending haven't changed, we can claim to future generations that we have "set aside" this trust fund to pay for our future Social Security benefits. That's exactly what the Boomers did with their Social Security "reform": every single contribution to the so-called trust fund came from adding the same amount to the general (non-Social Security) deficit. Of course, they were only extending FDR's original fiction: that somehow mere labeling of a tax as "FICA" instead of "general revenue" means that such tax was paying for future benefits. Without a constraint on non-Social Security deficits, such re-labeling of taxes is pure budget gaming: we can obtain whatever Social Security "surplus" we want by increasing the non-Social Security deficit.

Even if the SS program was legitimate, instead of simply another tax it would be both wrong and evil. What Social Security is telling you is that you're too stupid to handle your own financial affairs and need a government program to guarantee something or other. A part of this is the encouragement of consumer spending over saving, an attempt to grow the economy. Don't worry about buying that new car, your SS benefits will keep you afloat when you can no longer manipulate a mouse.

No silly. I'm not too stupid to handle my own financial affairs. If Social Security didn't exist, I'd save more for retirement. But I'm an ant.

The problem is grasshoppers- those who would not save for their own retirement in the absence of Social Security. You might be ok stepping over these people on the street, but as a society we are not. Rather than provide retirement welfare for the impecunious, we make the grasshoppers provide for their own retirement. It's a good plan.

But the system as it functions doesn't make people provide for their own retirement--it's not pre-funded. If it were, that might be okay, as at least it would be stable. But Ida Mae Fuller didn't save those $21,000 she was handed by the system as Social Security's first recipient. She, and her employer, contributed a whopping $44 of it!

Early recipients received a windfall. If you were born between 1875 the windfall has great, but it tapered down so that cohorts born after 1960 have paid full fare.

Almost all societies in history enjoy a "demographic pyramid" allowing such programs to run on a Ponzi basis indefinitely. The baby boom/bust phenomenon has changed that, and that's why we changed the program in 1983. The system today is pretty intergenerationally fair.

"Ida May Fuller was the first beneficiary of recurring monthly Social Security payments ... During her lifetime she collected a total of $22,888.92 in Social Security benefits and paid in $24.75."

https://www.ssa.gov/history/idapayroll.html

I already acknowledged that the Ida Mae Fuller's of this world (born 1874) received a windfall from Social Security. If only I was lucky enough to be 55 years old at the onset of The Great Depression, I too could have lucked out like this.

Most people are too incompetent to manage their own financial affairs.

Please provide a citation.

Most people aren't forward thinking enough, incompetent might not be the right word. As a rule of thumb Americans have never been good at saving money or thinking into the very distant future. Every country should have a forced savings program for retirees. SS is a kind of UBI for the elderly and thats probably a good thing to guarantee everyone a core retirement income.

As it stands SS is not really a forced savings program but a giant transfer program contingent on more people paying in than out. People in the thread are right to criticize it on those grounds. But supporters are right to argue that we do need some basic income for the elderly. There is definitely a compromise somewhere in here.

The basic income for the elderly is their children. Just as parents are responsible for their minor offspring, these same children are responsible for their geriatric parents, or so it has been since humans descended from the trees. The idea that the state should assume the right to tax the population to provide for the elderly is beyond evil in that it's a conscious effort to replace family loyalty with allegiance to the state.

"And keep in mind those are estimates per ear. "

Does it mean Van Gogh would get less from Social Scdurity?

Typical able-ist crap from Cowen.

And I love that he thinks everything is fine because he found one guy who says everything will be fine.... if we just hike taxes 25% and nothing gets worse.

It's not like people are having fewer kids or living longer or anything. Oh, wait -- as he points out, living longer is a GOOD thing, because people get more benefits! From someplace!

Whenever we raise payroll taxes to save Social Security sometime in the future, we give Congress a pass on covering current expenses for the FDA, war, college loans, the export-import bank, highways, sugar subsidies, sewers, and on and on and on Your good guy representative can announce he's saved Social Security and funded your local university's research program.
If I had magic powers, I would make the entire payroll tax explicitly come out of an employee's check. Every year, the head of Social Security would come before Congress and say we need this much money for each of the next three years to pay benefits. Then Congress would set the rate to avoid building surpluses or deficits.
This would make it obvious that the working generation is paying for the retired generations.

The effect of relying on payroll taxes to pay for government programs (war, farm subsidies, etc.) other than social security is to shift the tax burden down by substituting the regressive payroll tax for the progressive income tax.

Once the trust fund is exhausted (as it will be in 15 years), we will at that point have used every cent of payroll taxes collected to pay SS benefits.

Gradually increase full retirement age, like we did in 1983. People continue to live longer.

I wish every problem were this easy to solve.

"Gradually increase full retirement age,"

+1. bump up the age by another 3 years fairly rapidly

11:14 am > I wish every problem were this easy to solve.

11:18 am > Old people vote.

Either you had a sudden epiphany, or your mind is not little and beset by hobgoblins.

The solution does not depend on knee-capping seniors outside polling stations.

1983 retirement age increases were phased-in over a couple decades, so as not to disrupt current or near-term recipients. Because even back in 1983, old people voted.

If I had magic powers I would abolish the payroll deduction, and make tax day and voting day the same: submit your check with your ballot.

It still wouldn't fix the ant vs grasshopper issue. The Grasshoppers don't pay as much in the way of taxes so they are always inclined to bump up benefits if they aren't paying for them.

Tangent: It's tempting to map "ant v. grasshopper" onto "rich v. poor" but that's not really accurate in my experience. Plenty of high-income grasshoppers out there, while Dad was a modest-income ant.

Isn't money fungible? Government taxes, government spends, government sells bonds to make up the deficit. Does it actually mean anything to say that the social security tax pays for the social security program? If we changed the name to the bomb Niger tax, would it not smell as sweet? I'm being glib, but I mean it as a serious question.

I made the mistake of clicking through. And yes, it's as bad as you think.

Not only does he propagate the "trust fund" lie, he also says don't worry about it running out (or not actually existing) because.... and I swear I'm not making this up...

>Drone delivery and self-driving vehicles might make life much easier

He actually said this.

Did he mention that beans are nutritious and delicious?

Did he mention Bitcoin?

Ok, boomer.

But seriously, it seems a bit unfair to expect worse benefits, higher taxes, or both. If this is a method to pay older generations in support of retirement and free up more young labor, then it is another tax that propagates inequality and should be made more progressive in its collection and distribution.

Curios, which private entity where outflows exceeded inflows with no reasonable reversal in sight would not be described as bankrupt?

I mean I understand two choices are being placed on the table:
Option A - all those who are "owed" by social security take it on the chin and get a 17% haircut.
Option B - all those who are "owed" by social security pay more up front to receive the same payout, also taking a haircut on their already negative profit rate.

How is this different than chapter 11? When Chrysler went through chapter 11, those owed debts received a haircut and things kept going.

I mean at what point do we call something bankrupt? If the haircut had to be 30%? Or 50%? Or 80%?

Bankruptcy rarely means liquidation and even more rarely means that most creditors receive next to nothing.

I would be hard pressed to name a major chapter 11 filing that would not have instantly resolved by a magical 21.7% increase in gross revenue with no offsetting increases in gross costs.

The real answer is that social security is indeed bankrupt, but it is much more a chapter 11 version than a chapter 7. As a chapter 11 style affair, this is not particularly terrible, but will involve a lot of pain for those owed such debts. We can either pay more for the same or pay the same for less … not the end of the world, but bankrupt by any typical measure.

"The U.S. is vastly underperforming relative to its potential."

Payroll taxes are the problem. Where is the Tyler who showed a brief interest in tax incidence? Even with some of the incidence born by workers in the form of lower wages, payroll taxes make US workers relatively less attractive to global employers and skew the cost effectiveness of machines. Replacing payroll taxes with a VAT would reduce or eliminate significant distortions that are keeping the US from performing better.

Ok boomer,

Tyler is a true economist... Shill to the core.
I don't mind so much, it's what I'd say if I were his age.

As to SS it's bankrupt by the expenses > revenue metric. The demographics + actuarial tables also indicate not so much that it won't recover as they say it can't recover. 40 workers per unemployed person =/= 3 workers per unemployed person.

So ya let's end the program, Tomorrow, in it's entirety. Just stop sending checks. Cause here's the thing about unemployed old people; they don't riot. Young folk riot old people not so much.

The funny thing about "non-discretionary" spending is; it sure can become discretionary real quick. How do you like them apples all-y'all unemployed folks?

Young people don't riot today, they cosplay.

Old people vote.

If the US nationalises its medical system it might find the bill for Social Security falling quite rapidly.

Brilliant, hun.

Normally I'm somewhat with Tyler on these issues. I think the catastrophe of US debt is often overstated, and yeah, these programs are not going to fail tomorrow, or likely even 20 years from now.

However, I think Tyler goes too far in this article. Will the US do what it needs to do in order to keep Social Security afloat? Sure, all else being equal. But when an institution has a 6:1 debt to income ratio, and there's no sign in sight of that number going down, I highly doubt that all else will be equal.

Disappointing article. SS is underwater already and has been for a decade. The trust fund is full of treasury securities. In other words, debt instruments that the US government must make good on. Not counting "interest income" (which was paid by the federal government--taxpayers--to the SS trust fund), SS collected $920B but paid out $1000B, a shortfall of $80B. That was 2018. So we already finance SS to the tune of $80B each year (almost 10% of SS outlays and growing). That money comes from taxpayers. When all the IOUs from Treasury to the SS trust fund are gone in 2030 or whenever, that just means even more of SS benefits will be paid directly from federal income taxes. It's not like a cliff when the trust fund is depleted. It is a long downhill walk that we have already begun. The author seems to suggest this isn't a big deal because we only have to bump up payroll taxes a few more percent--but then later laments how the US economy is underperforming. Won't bumping payroll taxes make the US economy underperform even more? Making the problem worse? Didn't the author of this article write a book a while back that argued we should value economic growth above almost everything else? I believed that argument. This article seems to have been written by someone who didn't read that book...

As in other current federal budget fiascos, whatever funds are needed to pay Grandpa and Grandma's cable TV bill and Depends supply will be enpixelated. No contribution is necessary.

"but even under this scenario the system is still paying out a roughly constant level of inflation"

So you're saying Social Security, under the worst case scenario, is no better than leaving your money in a savings account? And people think that this is worth killing people to enforce?

The more voters getting money from social security the stronger the program.

I wonder if the academic Economics community finds it reasonable for someone to separate SS from Medicare when doing an analysis of the "system"? I personally find it dishonest, facetious, or moronic - take your pick TC. I find it interesting that TC, arguably a "Boomer" chooses to blame people who were not able to vote during LBJ's tenure as POTUS as the culprits here. Sad, dishonest (pattern here, isn't there?) and indicative of a certain elitist pandering.

Some obvious solutions to help keep SS going.

1) Raise the age for early and full eligibility.
2) Eliminate the cap so that incomes above $118,500 are taxed. I'm surprised no here has yet mentioned this.
3) Don't pay it to people who don't need it. Actually treat it like an insurance policy.

I'm kind of surprised that Larry Kotlikoff hasn't come up in the discussion at all.

Raise retirement ages for future retirees. When SS was begun, primarily males were in the payroll workforce. They were expected to retire at 65 & live about 18 months longer. We began to do this, but still haven't caught up with modern lives. No tax increase is needed if this is done properly.

I agree with you and Dean Baker, Tyler. I am unfortunately not surprised that most commenters here seem to be too stupid to understand what you wrote: that even in the worst case scenario, young people will get more in real terms in the future than do current recipients. This is not a case of either "reduced benefits" or "bankruptcy." These fools just keep repeating drivel they have had falsely fed to them for years.

BTW, while the numbers have changed some since then, the basic story has not changed since I analyzed it in 2005 using what others would call the "Rosser equation." There is actually a Wikipedia entry on this, the only mathematical idea named for a Rosser that is named for me rather than for my much more capable and famous late father.

While the numbers were

It is fundamentally dishonest to disconnect Social Security from Medicare. Your desire to always be clever has hurt your judgement I recommend being real more and clever less. We all know you're smart. Engaging in this type of sophistry just damages your reputation.

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