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View Diary: Can you work against the social safety net and still call yourself a Democrat? (173 comments)

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  •  that article is silly (3+ / 0-)
    It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.” This belief is the result of a common error: conceptualizing Social Security from the micro (individual) rather than the macro (economy-wide) perspective.  
    okay, technically, so long as people are working the program isn't "bankrupt."  but if it's only able to pay out 75% on its obligations, there is a huge problem.

    the SS trustees have just recently bumped the securities depletion date ahead another two years to 2031.  basically, if nothing is done, that's all gen x can hope for.

    It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today.

    ...And this is where money comes in. Its function is to enable the transfer of output from current workers to current retirees in a world where we are not all neighbors. Money does not, to reiterate, have anything whatsoever to do with whether or not we can support retirees, how many they can be, or how much they can have. That is 100% a result of productivity.

    all well and good, except that the only reason the SS trust fund has those securities is from running a surplus for a number of years.  the days of SS funds running a surplus are GONE.

    boomers = 79 million or so
    gen x = 53 million or so
    millennials = 70-some million
    gen z = less than gen x

    millennials are, so far, not having children at the same rate as their boomer counterparts.  so boomers retire; gen x and millennials already in the workforce replace them.  no new net jobs.

    the rest of the millennials will be in the workforce within 10 years; gen x will start retiring within 20.  still no new net jobs, as the boomers will have finished retiring in 10 years.

    then gen z starts working, only they, so far, don't have the same numbers as gen x.  net loss of workers, and payroll tax revenue, for the millennials' retirement.

    the population drop from boomers to gen x wreaked havoc on SS; the drop between millennials and gen z will be worse.  even the author recognizes this fundamental problem, though he doesn't acknowledge it:  productivity is a function of -- and limited by -- the number of workers.

    population dynamics have us by the short and curlies here.  the only real solution is to open the floodgates on immigration reform.  because raising the minimum wage (which should happen regardless), raising income caps and the like only go so far in the face of a dwindling workforce.

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

    by Cedwyn on Tue Jan 08, 2013 at 08:30:03 AM PST

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    •  wrong. thanks for playing. (12+ / 0-)

      the reason that there is a shortfall projected all those years out is this. income inequality. the way that the formula for fica taxes is set up it needs for a certain amount of income (90%) to be exposed to the tax.

      since enormous income inequality has been occurring, largely because about 93% (if i recall correctly) of the economic gains of productivity growth have gone to the top 1% of income earners over the past decade roughly, the amount of income (due to the cap on fica) that is exposed to the tax has diminished.

      there are a couple of ways to fix this.  the easiest is to raise the cap on fica until 90% of income is exposed to the tax again, or, the harder but fairer method - income redistributive measures that reverse income inequality.

      thanks for playing.

      i'm part of the 99% - america's largest minority

      by joe shikspack on Tue Jan 08, 2013 at 08:42:16 AM PST

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    •  Heh (6+ / 0-)

      "that article is silly".   Well it doesn't surprise me to see that attitude is here but I believe that if things are laid out honestly, you'd be in the minority in terms of the beliefs and sentiment of the majority of the party.   But I emphasize the idea that things have to be laid out honestly.  A lot of the less informed party members have probably been convinced by the spin and propaganda.


      "Justice is a commodity"

      by joanneleon on Tue Jan 08, 2013 at 08:49:03 AM PST

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    •  Given that wages for the vast majority of (6+ / 0-)

      workers have stagnated for decades while productivity rose, he just divorced his own argument from reality.

      The lesson from this is that if we want Social Security to “be there” when we retire, our efforts must be focused on increasing productivity and making sure in particular that these increases get passed on to workers in the form of higher wages.
      http://www.forbes.com/...

      If I'm not mistaken we already have the highest productivity rate of any industrialized nation. Productivity has consistently risen while wages were stagnating or falling.

      It's a huge factor in income inequality.

      Why he thinks that is suddenly going to change given the historic record and Republican actions is beyond me.

      Does it need too? Of course.

      But how much more blood and sweat are American workers supposed to be able to give when so many are already doing work that was once done by two or even three people?

      I'd love to see a minimum wage that was actually a living wage and that is something we're not even close too.

      Anyway, just some thoughts.

      "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

      by Onomastic on Tue Jan 08, 2013 at 08:52:58 AM PST

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      •  that income inequality is a byproduct (4+ / 0-)

        of the capture of the government by the 1%.  it is indeed the key to understanding the shortfall in revenue for social security.

        if you understand the concepts in the article, the author points out the tension between "current workers having a higher standard of living" and the number of retirees the system can support at what quality of life.  the author does not expressly lay out who it is that gets the higher standard of living.  he sets out a simple example to illustrate the process, an intelligent reader could supply further variables.

        i'm part of the 99% - america's largest minority

        by joe shikspack on Tue Jan 08, 2013 at 09:07:32 AM PST

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        •  Yes. (2+ / 0-)
          Recommended by:
          joe shikspack, Cedwyn

          For example his focus on productivity as the base line for Social Security's continuance.

          But, as he notes, that premise is affected by -

          First, we would need to agree on how many people get to retire, what the criteria are, and what their share will be. As that’s more politics than economics, however, I won’t say too much about it other than to say that there is no reason to assume that the retirees should get exactly the same cut as the workers. We could decide they get more, less, or the same. The possibilities are determined by productivity, while the specifics are a function of our sense of justice and our national philosophy (and, if we are realistic about it, the distribution of power).
          http://www.forbes.com/...

          Productivity is all well and good, but as far too many workers know, that does not mean that productivity is rewarded, except for the fortunate few, or that it is the only factor in play.

          Obviously, if wages had not been kept stagnant over the last four decades, in spite of steadily increasing productivity, then more would have been paid into Social Security.

          But since they were, I don't see how his argument for productivity as the savior of Social Security makes realistic sense. Productivity does not occur in a vacuum obviously.

          The distribution of power would seem far more relevant to me. Without a change in that, we're not going to see wages that reflect increased productivity, a living wage, job creation, or much else that addresses the issue.

          I find the focus on productivity somewhat irksome as it again focuses on the worker but not the environment that the workers has no choice but to operate within.

          I'm old enough to remember the "we just need more productive workers" drum being beaten loud and long.

          It put all the responsibility on the workers and no where else, a shell game of a kind. Workers worked harder and harder, while getting less and less.

          I'm not saying that is what the writer is doing, but it does smack of that old game. I would have liked to have seen more stress placed on wage stagnation, its affects and the need for living wages.

          But then perhaps I missed something. Wouldn't be the first or last time.

          "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

          by Onomastic on Tue Jan 08, 2013 at 10:29:21 AM PST

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          •  i think that the author is defending the mechanism (3+ / 0-)
            Recommended by:
            Onomastic, tardis10, aliasalias

            there are always these dramatic, hyperbolic calls to "fix" social security which is always just a few days decades away from utter destruction.

            pointing out that there really is nothing wrong with the mechanism allows the reader to understand that a) politicians and pete peterson are lying through their teeth,  and, b) that the fix that is needed is an rebalancing of power/equality.

            he comes close to spelling that out in the paragraph you quote above, but i guess there are probably some things that you can't say in forbes magazine. B)

            i'm part of the 99% - america's largest minority

            by joe shikspack on Tue Jan 08, 2013 at 10:44:21 AM PST

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            •  Possibly, though Forbes has had a few (2+ / 0-)
              Recommended by:
              joe shikspack, tardis10

              articles over the last months that left me wondering what had happened to them. :/

              Thanks for the conversation

              "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

              by Onomastic on Tue Jan 08, 2013 at 10:51:00 AM PST

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            •  Was reading the latest CBO analysis of the (2+ / 0-)
              Recommended by:
              joe shikspack, Cedwyn

              Social Security Trustee report and a couple things came to mind.

              Obviously, Social Security is not going to disappear. However, as Cedwyn noted, it will start to run short on funds in 2037. The issue is how to prevent that from occurring.  

              On August 5, the Social Security Board of Trustees issued the 70th annual report on the program’s financial and actuarial status. [1] The trustees’ report shows some mild deterioration in the program’s short-term outlook — a finding that was widely expected — and a mild improvement in its long-run finances, thanks largely to the recent enactment of health reform.

              Several key points emerge from the new report:

                  The trustees continue to estimate that the trust funds will be exhausted in 2037— the same date that they forecast in last year’s report.
                  Even after 2037, Social Security could pay more than three-fourths of scheduled benefits using its annual tax income. Those who fear that Social Security won’t be around when today’s young workers retire misunderstand the trustees’ projections.
                  The program’s shortfall is relatively modest, amounting to 0.7 percent of Gross Domestic Product (GDP) over the next 75 years (and 1.4 percent of GDP in 2084). A mix of tax increases and benefit modifications — carefully crafted to shield recipients of limited means, potentially make benefits more adequate for the neediest beneficiaries, and give ample notice to all participants — could put the program on a sound footing indefinitely.
                  The 75-year Social Security shortfall is about the same size as the cost, over that period, of extending the 2001 and 2003 tax cuts for the richest 2 percent of Americans (those with incomes above $250,000 a year). Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat.
                  Preserving and building upon the cost-control measures enacted in the health reform law will be important not only to Medicare, but — to a lesser degree — to Social Security as well.

              http://www.cbpp.org/...

              I think you and Cedwyn were both bringing up aspects of the issue that need to be discussed. She was correct in saying that funding for SS was going to drop if nothing changes.

              The article in Forbes laid out one possible option that could prevent a decrease in funding for Social Security.

              There are others or course, raising taxes, eliminated tax breaks for off shoring jobs, big oil, etc, all of which we have to get through a Republican House.

              That is why I think we need to be pushing back hard for stimulus spending, aka, grow the damn economy, etc, NOW, before we get to the sequester, and debt ceiling nonsense.

              Everything, job creation or lack there of, livable wages, eliminated tax breaks, etc, will affect the future of Social Security, along with everything else.

              Was just reading a commentary at the Office on Budget and Policy Priorities on the so called Fiscal Cliff deal, etc, and it is alarming.

              Granted it is one view point, but even so.

               

              Commentary: Next Round on the Deficit
              Big Dangers Ahead for the Economy, the Budget, and Low-Income People

              By Robert Greenstein

              January 7, 2013

              In recent days, policymakers, pundits, and the media have debated whether the “fiscal cliff” budget deal was a victory or defeat for the President or congressional Republicans, progressives or conservatives, rich or poor, the economy or the deficit — you name it.  Most of the commentary is unpersuasive, however, for one basic reason:  the fiscal cliff deal is only one stage in a broader budget battle, and you can’t render a legitimate judgment on that effort until the next stage — which includes the scheduled across-the-board spending cuts known as “sequestration” and, especially, the need to raise the debt limit — is completed.

              What’s important at this point is not assessing winners or losers but, instead, understanding what lies ahead.  That’s because what lies ahead is truly frightening.  Indeed, it could (though it doesn’t have to) produce outcomes that are far more damaging to the economy, sound fiscal policy, and low-income and vulnerable Americans than anything that policymakers and experts feared from the fiscal cliff.

              So, let’s look ahead to the next 60 days and their potentially monumental ramifications for our country, our economy, and our people.

              https://www.cbpp.org/...

              This of course ties in with our conversation on the future of Social Security, so I thought you'd find it interesting.

              "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

              by Onomastic on Tue Jan 08, 2013 at 12:12:31 PM PST

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              •  sure it's interesting... (3+ / 0-)
                Recommended by:
                aliasalias, triv33, Onomastic

                but projections that far out are based upon assumptions that will invariably be incorrect.  the trustees assumptions are based upon a no growth scenario.  there are a lot of variables out there, growth, inflation, unemployment, wage growth or compression among them.  it's a fair bet that the projections are horribly wrong, because the chances of nothing changing over the next few decades is slim to none.

                i think that the best, easiest fix, is to make a legal arrangement that no matter how unequal income becomes, 90% of income is subject to the fica taxes which will virtually  guarantee that the system can pay out as it goes barring a complete economic collapse or an economic contraction just short of said collapse. (which of course i wouldn't entirely rule out, but in that case there will have to be enormous adjustments made to everything and all bets are off.)

                i'm part of the 99% - america's largest minority

                by joe shikspack on Tue Jan 08, 2013 at 12:23:36 PM PST

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                •  Yes, the CBO projections are based upon current (2+ / 0-)
                  Recommended by:
                  joe shikspack, Cedwyn

                  conditions and subject to change as conditions change.

                  But I don't see how that means that their projections shouldn't be a factor in discussions about Social Security.

                  If that's the rule than we wouldn't have anything to discuss on the site, given that things are changing all the time.

                  I'd like a good conversation about what can be done to change course to prevent what the Trustee Report outlines.

                  It would be nice to take proactive action for once instead of knee jerk reaction.

                  Hope you  write a diary on the legal argument for increasing FICA to 90% of income.

                  "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

                  by Onomastic on Tue Jan 08, 2013 at 01:49:39 PM PST

                  [ Parent ]

                  •  i'm not saying that we should ignore them... (4+ / 0-)
                    Recommended by:
                    Onomastic, aliasalias, triv33, allenjo

                    but there is a certain perspective that one should view them with.  when people say with certainty that the trust fund is going to run out on a tuesday at 8:13am in October 2031, there is a problem.  (either that or they are better than nostradamus)

                    i tire of people making those pronouncements in high dudgeon and expecting me to take them seriously.

                    yes, certainly there will need to be some adjustments made in the future, but, there is no need to worry about them today and certainly not in the context of the federal deficit or the entirely made up fiscal "crisis" that the politicians are on about.

                    i'm part of the 99% - america's largest minority

                    by joe shikspack on Tue Jan 08, 2013 at 02:13:39 PM PST

                    [ Parent ]

                    •  yes, things do change (1+ / 0-)
                      Recommended by:
                      Onomastic

                      and the SS trustees do revise their projections from time to time.  

                      the last two updates/revisions have pushed the securities depletion date ahead by a total of 6 years or so.

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

                      by Cedwyn on Wed Jan 09, 2013 at 05:18:24 AM PST

                      [ Parent ]

                    •  Oh, I don't think Social Security should be part (1+ / 0-)
                      Recommended by:
                      joe shikspack

                      of this self created "crises" either.

                      But it is.

                      So how do we push back against MSM and Republican BS?

                      They're the ones spinning this crap for all they're worth.

                      I'd think that repeatedly pointing out how wage stagnation/income inequality/tax breaks for big oil, off shore tax havens, etc, have created all of this - the deficit, Social Security short fall, the economy crashing, - would resonate hugely with most Americans.

                      It's all part of the whole. At least that's the way I see it.

                      "Compassion is not weakness, and concern for the unfortunate is not socialism." Hubert H. Humphrey

                      by Onomastic on Wed Jan 09, 2013 at 06:29:42 AM PST

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    •  Just FYI (5+ / 0-)

      The date of supposed "securities depletition" was "bumped up" because Obama helped to deplete program resources via a "payroll tax holiday".  I and a lot of progressives opposed the PTH for just this reason.  But it's certainly fair to argue that it was a necessary move for a struggling economy giving the available options.  It is not, however, fair to create a crisis and then scream "hey, look, a crisis" in order to dismantle a portion of the social contract that you've always intended to dismantle in the first place.

      That said, the unadjusted date of 2033 was never regarded as real by the SS trustees, but is based upon the assumption of absolutely no economic growth between now and then.  If there is no economic growth between now and 2033, we've got bigger problems than Social Security funding.  The trustees themselves rejected the 2033 date as improbable (I think their declarations were even more definitive than that).  Other estimations from the trustees were, roughly, 2050 and 2090, based on a different set of assumptions.  So lets stop kicking around those 2033 or 2031 years as though they're gospel.  They were rejected by the very people putting them forward.  I expect that sort of thing from Rethugs, not from Democrats.

      "Power concedes nothing without a demand; it never has and it never will."—Frederick Douglass

      by costello7 on Tue Jan 08, 2013 at 08:58:43 AM PST

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      •  just FYI that is wrong (1+ / 0-)
        Recommended by:
        Cedwyn

        The payroll tax holiday had zero to do with the change in Trust Fund depletion date.

        The PTH was a shitty idea and yes a lot of Social Security policy experts opposed it because of its POTENTIAL threat to solvency. But as it happens transfers from the GF held the SS TF harmless. This time.

        But if you look at Monthly Trust Fund Reports and/or the 2012 Annual Report the transfers are clear as day.

        And your "absolutely no growth" assertion is crap as well. Many people who have looked at the numbers would agree that the Trustees Reports lowballed growth estimates not just in the last Report but consistently back to  at least 1997. That is you are absolutely on the right track.

        Just overstating things. If you examine the actual data tables. Kind of a Maxwell Smart "missed it by THIS much" moment. Low growth in Real Wage is not No Growth. Either looking back or per the Trustees looking forward.

        socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

        by Bruce Webb on Tue Jan 08, 2013 at 05:10:17 PM PST

        [ Parent ]

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