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View Diary: The Thing About Social Security (178 comments)

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  •  The 2033 date (23+ / 0-)

    Assume 2% growth between now and then.   There are other estimates that show 2050 or even 2090, depending on your assumptions.

    Get ourselves out of this anemic economy and the trust fund is fine.

    Even more...get some jobs for the current generation of young people (who are more numerous than event the boomers) and the money will come flooding in.

    The two things are related.

    If we're going to have this discussion, we should be having it in 2022...after a decade of average 2% growth shows we might actually have a problem in 2033.

    Now, in a time when we should be looking for stimulative measures, not austerity, is not the time to be cutting a program  that is going to be fine for over 20 years, even if nothing changes for the better.

    •  the boomingest economy extant (1+ / 0-)
      Recommended by:
      SoCalSal

      can't do it all by itself if millennials aren't replacing their numbers.

      as for the austerity question, it they legislate extra stipends for the poorest elderly and those over 80, where is the austerity?

      http://money.cnn.com/...

      For Social Security beneficiaries, the effect would barely be felt in a one-year period. In most years, chained CPI differs from the other inflation measure very little -- only by about 0.3 percentage points, according to the Social Security Administration's chief actuary.

      This year, for example, that would shave about $4 a month off the cost of living increase for the average Social Security recipient. Currently slated for a $21-dollar-a-month increase, the average Social Security recipient would instead receive a boost of only $17 a month.

      for seniors under 80, only 25% or so rely solely on SS.  for those over 80, it's higher, but still not a majority.  so again, if the poorest elderly and those over 80 get an extra stipend, it's just not so horrible.  lots of seniors would be just fine without their SS benefits.  it's also true that less than 1% of americans lives beyond 90.  women live longer and the median age at death for them is still 80.

      Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

      by Cedwyn on Sun Dec 23, 2012 at 10:08:38 AM PST

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      •  If they really protect the poorest (9+ / 0-)

        Then it isn't really a budget measure anymore.  It's just a political fig leaf so Rs can claim they're doing something about the evil "entitlements"

        If you're going to means test the COLA though, that opens the idea of means testing the whole thing.  Most of the reason SS and Medicare are a ton more popular than Medicaid is that they're NOT means tested, so they can't be spun as "giving your hard earned dollars to unworthy people" as easily.

        Really the solution to SS is on the revenue side.  Tie the income cap to the COLA and the prior year's growth rate so there is always enough money.    The formula for this is simple enough that you only need algebra to come up with an answer, assuming your measures of growth and inflation are close to accurate.

        One reason they can keep spinning SS as being "in crisis" is that any time we have an economic downturn, the revenue cap doesn't rise to account for reduced growth (and incomes below the cap) in the overall economy.   We instead rely on the idea that the surplus years pay for the bad years....which is probably ok from a policy standpoint but has proven risky politically.

        •  sure it is (0+ / 0-)
          If they really protect the poorest then it isn't really a budget measure anymore.  
          the program would still end up saving overall, simply because of the math of who lives to what ages and stuff.  
          If you're going to means test the COLA though, that opens the idea of means testing the whole thing.  Most of the reason SS and Medicare are a ton more popular than Medicaid is that they're NOT means tested, so they can't be spun as "giving your hard earned dollars to unworthy people" as easily.
          that is already true with SSDI, though.  FICA covers that as well, even though not everybody claims disability.
          Tie the income cap to the COLA and the prior year's growth rate so there is always enough money.
          what are the particulars of that?

          thanks!

          Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

          by Cedwyn on Sun Dec 23, 2012 at 11:17:20 AM PST

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          •  The payroll cap (3+ / 0-)
            Recommended by:
            SethRightmer, Roger Fox, Cedwyn

            is based around the idea that there is a cap on benefits (a maximum income that social security will insure) so there should also be a cap on the income which is tapped to pay for social security.

            The problem is that Social Security's payouts rise with cost of living, but its revenues rise only as salaries below the cap rise (either with more folks employed or higher average salaries).

            These two things are not the same.   The amount of revenue collected below cap during 4% unemployment is less than that during 8% unemployment, and if salaries are stagnant but cost of living increases, you also risk a gap increasing.

            The way to fix this is to do two calculations every year.

            1.  Cost of living adjustment based on change in a cost of goods (however you measure it....hopefully with some basis in reality)

            2.  Payroll cap adjustment, based on the revenue required to pay for the COLA, and also based on the trailing year's actual revenues.   Pick a large enough cap that with last year's actual salaries and employment levels, all the future year's payouts are covered.

            It isn't perfect, as the following year won't be the same as the prior  year, but to some extend fluctuations from year to year will damp that effect (a bad year followed by good adds a surplus, a good followed by a bad, a deficit, but in long term trend, no matter what happens from year to year, it should be pretty stable).

            Measure #2 just needs to be tuned a little high to average a slight surplus, to deal with the damage a string of unusual years can cause, and you're done.

            Alternately you increase fica % yearly, keeping the same cap but that's much more regressive.  The advantage of tying COLA to payroll cap is any "extra" needed in a bad year is paid for by those who can most easily afford it.

            •  that makes enough sense (0+ / 0-)

              i think raising the cap makes sense if we revise the benefits formula, like people only get x % above a certain dollar level back or something.

              Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

              by Cedwyn on Mon Dec 24, 2012 at 06:44:54 AM PST

              [ Parent ]

      •  As long as one billion peopl e live below our (0+ / 0-)

        Southern Border, and realize the only way they will ever have a decent wage is to slip over the border, we don't need  to worry about there not being any replacements.

        In fact, sociologists have studied the effect of a couple emigrating into the USA. While they would choose to have only three kids while living in Mexico City, they will have four kids if they move to California.

        And yes, I know,sociologists have told us that within one generation, the birth rate then tapers off to the norm, which in this case is probably a negative number.

        But since each new aver of immigrants adjusts that generational time line, the USA doesn't have to worry about any type of decline in Birth Rate.

        California has grown from 22 million people to 37 million people in less than thirty years, simply because of the number of newly arriving immigrants and also the birth rate among newly arriving immigrants.

        Offer your heart some Joy every day of your life, and spread it along to others.

        by Truedelphi on Sun Dec 23, 2012 at 02:05:28 PM PST

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        •  i agree that opening the immigration floodgates (0+ / 0-)

          would be the win-win-winnest solution all around.  but that declining birth rate that started circa 2007 includes immigrant families.

          Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

          by Cedwyn on Sun Dec 23, 2012 at 03:56:03 PM PST

          [ Parent ]

      •  Baby boomers will die off at a faster rate than (1+ / 0-)
        Recommended by:
        Roger Fox

        their parents, because elderly people are more sensitive to the health effects of hot weather.  Climate change will kill off the Boomers and rescue SS.  

        Renewable energy brings national global security.     

        by Calamity Jean on Sun Dec 23, 2012 at 02:13:10 PM PST

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      •  Large order effects are job creation & wage growth (0+ / 0-)

        AS far as workforce growth .2% is rather extreme, everyone else seems to be using .5% to .7%.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sun Dec 23, 2012 at 07:22:59 PM PST

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    •  Do you really expect the average growth rate to (1+ / 0-)
      Recommended by:
      Cedwyn

      be much higher than 2%? We have a mature economy here.

      •  3.5% is the top end according to the (2+ / 0-)
        Recommended by:
        FG, Cedwyn

        conventional wisdom. At least from what I've heard.

        And yes the days of 6-7-8-9% GDP growth are gone.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sun Dec 23, 2012 at 07:27:21 PM PST

        [ Parent ]

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