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View Diary: Day 4 SSD blogathon: SS is not going broke by 2033, stop saying it Dems (69 comments)

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  •  Krugman often asks the question (8+ / 0-)

    WHY is it important that we legislate today some action to take place in 2020 or 2030? The same legislation passed when it becomes clear it is justified achieves exactly the same result, doesn't it?

    Judge us not by what we promise ourselves we'll start doing in 5 years but by what we start doing today, and today's unemployment report suggests that what we need today is some decent economic stimulus to take advantage of record low interest rates and build infrastructure for the future. Don't you think?

    Too late for the simple life, too early for android love slaves - Savio

    by Clem Yeobright on Thu Mar 28, 2013 at 07:26:09 AM PDT

    [ Parent ]

    •  Several reasons even Krugman knows (1+ / 0-)
      Recommended by:
      Neuroptimalian

      The main reason is the trajectory of the funding imbalance. We have a relatively rapid change happening because of demographics and past decisions about  how to fund this transition,  then a long period of relative stability. Because the imbalance at the point of "trust fund exhaustion" is relatively large how we prepare for it matters.

      1. Who pays the costs of funding the system differs by when you implement it. Raising the payroll tax rate today versus raising it is 2036 has distributional consequences.

      2. The size of the change depends on when you implement it. you can implement an increase in tax rates very gradually, as Bruce as wisely suggested. Or phase in increases in the retirement age 30 or 40 years from now, and people have much more time to adjust their behavior than if over night they have to pay a 3% higher payroll tax, or tax a 20% benefit cut. You could argue that gradual changes are better than abrupt ones.

      3. Decisions about retirement are inherently future oriented. Should a person who is 30 or 40 years old be thinking about how much they can expect from Social Security or not? If I expect SS benefits to be lower, than I expected when I retire, should I not change my behavior today?

      4. You can enact changes today that are implemented in the future to address the confidence issue. The changes to the retirement age in the 1983 amendments I don't see how putting off action until the the date of exhaustion creates any confidence in the system, and lack of confidence has behavioral and political ramifications.

      5. From a political standpoint, leaving the system in imbalance feeds the enemies of the system. Very few people agree Social Security is an inherently flawed program. It's only really vulnerability is the perception it is not permanent. Suppose we enact a payroll tax increase designed so that it was large enough, and phased in in a way to meet the "sustainable solvency" requirement. Then what happens to the conservative argument. They'd just have to shut the F up, for the infinite horizon.

      •  PK is not really a fan of the confidence fairy. (2+ / 0-)
        Recommended by:
        Roger Fox, priceman

        There's no problem in studying the matter carefully and implementing today whatever it is wise or just prudent to implement today, but it is not wise to pretend commitment to future actions - and no current ones - years in advance.

        Too late for the simple life, too early for android love slaves - Savio

        by Clem Yeobright on Thu Mar 28, 2013 at 02:31:58 PM PDT

        [ Parent ]

        •  That's clever, but wrong (0+ / 0-)

          So you are going to pretend that Krugman's correct condemnation of the idea that budget austerity is pro-growth because bond holders confidence is more important than aggregate demand means that he condemns any use of the word confidence in economics? Really?

          So the question are:
          (1) does people's expectation of their security in retirement affect their current and future behavior. You say no. You say Krugman would say no. I say yes it does.
          (2) Does people's expectations of their futre retirement security change their political or policy preferences. Or should be say vulnerability to political persuasion. You say no, I say yes.

          My guess is if we were talking about climate change you would completely reverse your opinion.

      •  SS long has been insolvent since 1985 in the 75 (2+ / 0-)
        Recommended by:
        Clem Yeobright, priceman

        year projection.

        ...... Social Security blogathon March 25th thru March 29th. #HandsOffmySS 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 Thu Mar 28, 2013 at 04:37:05 PM PDT

        [ Parent ]

        •  I don't think insolvent means what you think (0+ / 0-)

          There is a projected deficit over that summarized over a given 75 year period, which includes many years of solvency e.g 1983-2033 and some years of "insolvency" , or more precisely years in which revenues are less than benefit obligations scheduled under current law. The present value of the sum may be negative, but the system may well be solvent for much of that time.

          In other words, since 1985 we have shown that at some point in the future the system will become insolvent. And the reason has always been because of the demographic shifts under way caused by the historical fall in birth rates. Did you have a point?

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