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  •  In 2008 I wrote a 45 post series (4+ / 0-)

    On Social Security for econoblog Angry Bear and supplemented it with many dozen pieces since. I indexed all of that at my blog The Bruce Webb under the diary title "The Angry Bear Social Security Series". So a little Googling or alternately a site search at AB would turn up a lot. I also have DKos diaries going back to 2005 on this topic, so you could check there.

    But a short version. The Trustees define 'solvency' as having a year end reserve for any given period (one year, ten year, 75 year, infinite future) amounting to 100% if the next year cost. Because of the combination of base inflation and population growth the nominal amount of this needed reserve increases every year. Meaning that a perfectly but minimally solvent Trust Fund at exactly 100% of next year cost has to retain ALL of that principal and indeed add to it to meet the need for a new nominal dollar balance to match the new increased nominal cost. What this means is that you under conditions of solvency ever have net redemptions orr principal, it all HAS to be rolled over.

    Current reserves are actually about 350% of cost but arithmetically restoring solvency long term via cap increases or any other revenue increase or benefit cut simply sends that percentage down to 100% without necessarily ever reducing the nominal balance. That is the current $2.6 trillion never gets redeemed.

    Additionally there is a metric of the gap between future revenue and future cost in current dollars called 'unfunded liability'. In the 2012 Report it added up to $8.5 trillion. But any change in the revenue baseline or the cost one that brings the two into alignment automatically eliminates the 'unfunded liability'. That is to the degree that the Bad Guys like to highlight that number, a cap increase simply makes it vanish. Boom $8.5 trillion in unfunded liability gone plus $2.6 trillion in TF assets that due to reserve requirements never has to be repaid.

    Tax freedom for billionaires. At the expense of millionaires.

    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 Thu Mar 28, 2013 at 06:00:10 PM PDT

    [ Parent ]

    •  I didnt know that, do I have this straight? (0+ / 0-)

      We remove the cap, and about 1% of GDP goes into the SSTF.

      About 150 billion. And 39.6% income tax rate is not applied to that 150 billion, so the gov looses about 59.4 billion in tax revenues in the first year?

      ...... 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 06:22:01 PM PDT

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      •  FICA is not deductible for income tax (1+ / 0-)
        Recommended by:
        Roger Fox

        You could argue that the Standard Deduction represents it in part for low to moderate income folk, but that would not apply to FICA collected over the cap. All that income would still be taxable at applicable marginal rates.

        So it would be 39.6 plus 12.4. Unless the legislation stated otherwise. I am pretty sure the Medicare Part A surcharge is treated that way (i.e. not deductible).

        That said I am not a tax guy.

        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 Thu Mar 28, 2013 at 06:50:55 PM PDT

        [ Parent ]

        •  Right thanks, U got email- good news 4 Friday (0+ / 0-)

          ...... 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 07:01:30 PM PDT

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          •  Someone offered me a job? (0+ / 0-)

            Because I really could use just one of those 20 million needed ones. Trust me I would be happy to be paying FICA again. (Much as I want the blogathon to be a success, rent is a priorty).

            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 Thu Mar 28, 2013 at 07:10:48 PM PDT

            [ Parent ]

        •  It is partially deductible by self-employed (1+ / 0-)
          Recommended by:
          Bruce Webb

          since they are paying the employer portion in addition to the employee portion.

          My Karma just ran over your Dogma

          by FoundingFatherDAR on Thu Mar 28, 2013 at 07:43:27 PM PDT

          [ Parent ]

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