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View Diary: AFL-CIO policy director: 'No cover' for politicians on Social Security, Medicare, or Medicaid cuts (162 comments)

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  •  Have you quantified it? (1+ / 0-)
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    "I'm in Gen X and I can't think for the life of me why the systems should be rigged in favor of my parents over my kids.    On top of that the denial regarding the need for change in these systems is akin to climate change denialists, and, in fact, it may be worse.  The financial shortcomings of both SS and Medicare are easily calculated based on actuarial tables and basic math. "

    Because I have. And not alone, in collaboration with real honest to God economists.

    Here is a little quiz for you. Assume Intermediate Cost economic and demographic assumptions (SSA OACT standard) that project the OASDI TF going to zero in 2033 and requiring a 25% cut in benefits. Which is pretty much the definition of crisis. And now for the question:

    Would the retiree of 2033 be able to purchase the same real basket of goods after that 25% cut as a similarly situated retiree can purchase today? If not, then how much less?

    Turns out that the answer is that the retiree of 2033 would after cut still be able to purchase a real basket of goods around 15% greater than today's retiree. Because the current benefit formula has the real benefit growing 180% over the 75 year window used by SSA and CBO and that figure looks to be around 140% by the time of Trust Fund Depletion.

    The equation varies a little year by year as projections change but always has the same basic form: 75% of 140% = 120%. That is a cut from a higher baseline does not mean a cut in REAL basket of good terms. I long ago dubbed this 'Rosser's Equation' after my friend and erstwhile collaborator who first pointed it out, that is Prof. Barkley Rosser (Jr.) of JMU.

    Now neither Barkley or I believe that this cut is acceptable. On the other hand it does go to show that Gen-Xers who have swallowed the Peterson Intergenerational Warfare "why sacrifice my kids for my parents" because it is "math" actually never got off their slacker Gen-X ass to calculate it.

    Here is a hint. If Gen-X as a whole generates the same rates of productivity, Real GDP, and Real Wage over the next 20 years that their Silent and Boomer parents and grandparents  did over the 30 years from 1948 to 1978 then Social Security self-funds with no increases in cap formula or anything else. That is if anyone is to blame for current projected shortfalls in the 2030s the culprit is mostly to be found in your own shaving mirror hot shot.

    You have been had. Try alternately Googling 'Butler Germanis Leninist Strategy' and 'Rosser's Equation' to see how the Fix the Debt/Kick the Can folk played your whole generation as suckers too lazy to do their own arithmetic. With fantastic success, as your comment shows.

    SocSec dot.Defender at - founder DK Social Security Defenders Group

    by Bruce Webb on Fri Oct 18, 2013 at 04:12:46 PM PDT

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    •  So help me out here (0+ / 0-)

      It's been awhile since I took math classes.  By Trust Fund depletion benefits are expected to go up 140% in real dollars (inflation adjusted).  Is that what you are saying?  And when the trust fund is depleted, as we know, it is expected that SS can only pay 75 percent of the expected benefits.

      To make it easy let's do some math on these figures.  Let's say you have a person receiving $1,000 in benefits now.  By the time the trust fund depletes it would be up to $1,400 in benefits.  But they receive only 75 percent.  $1,400 multiplied by 75% would seem to be $1,050.  

      So help me understand your 75% of 140%= 120% calculation because it isn't sinking in.

      We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

      by theotherside on Fri Oct 18, 2013 at 06:47:12 PM PDT

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    •  You have obviously thought about this (0+ / 0-)

      alot and you are passionate about it.  You are obviously also quite condescending to Gen-Xers.  But just to let you know some of us have done some math.

      So have you calculated how much a boomer will have paid into the system versus how much a Gen Xer will have?  Despite your 'lazy' accusations of my generation, I have done the calculations.  So if you apply the appropriate FICA tax rate to the median income (inflation adjusted) to a person that starts work in 1967 and one that starts in 1989 and you assume the average real wage growth, what do you come up with?

      Doing the math (and I may be wrong since I think 75 percent of 140 is 105 and not 120 like you came up with) I calculated that the person that starts work in 1989 will pay approximately 18 percent more in "real" dollars than a person that started work in 1967.

      Can you clarify or correct my calculations?

      We cannot solve our problems with the same thinking we used when we created them. Albert Einstein

      by theotherside on Sat Oct 19, 2013 at 02:43:02 PM PDT

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