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View Diary: Since when did Entitlements become a Bad Thing? (215 comments)

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  •  that's not quite accurate (3+ / 0-)
    Recommended by:
    chuckvw, wave of change, jamess

    because SS has "bends" in the benefit. It's slightly progressive.

    Since it's slightly progressive, raising the cap still improves the funding even if the richer get a small extra SS benefit out of it.

    The rest was a mixture of misinformation and misdirection.

    Yes, the "rich" portion of the Bush tax cuts is not enough to solve any deficit problem. It's only 25% of the total tax cuts. The big deficit buster, $3 trillion, is the rest of the tax cuts (most of which goes to the over $100k crowd, so "middle class tax cuts" isn't really accorate.)

    And the trust fund doesn't actually need to be paid down, because we can keep it at its peak (in 2028ish) and just use the interest from the treasury investments (about $100B to $200B per year, so it's a lot of money.)

    Your last paragraph is total nonsense.

    The General Fund has a deficit today of over $1 trillion. That has nothing, zero, to do with Social Security.

    •  I disagree. (2+ / 0-)
      Recommended by:
      Clem Yeobright, Justanothernyer

      It is true that, right now, the deficit has nothing to do with SS.  The deficit is an annual number.  I'm talking more in terms of long-term debt and long-term liabilities, NOT the annual deficit.  Part of the long-term debt/liability of the General Fund is its long-term liability to the SS trust fund, at that point in time when current SS payments are not sufficient to pay out current benefits, which happens pretty soon (the estimates vary depending on what assumptions you make). It is a long-term liability of the General Fund, the way long-term liabilities to retirees are part of the considerations of state and local governments, and of any private entity that has an obligation to pay retirement benefits.  It is not yet part of the annual deficit.  It is now part of the long-term liabilities.  When the current SS taxes are no longer sufficient to pay the current benefits, THEN the repayments from the General Fund to the SS trust fund will become part of the annual deficit.

      Yes, SS is slightly progressive.  So, increasing the cap WITH a corresponsing in benefits preserves the structure.  (It also raises less money, and you have the political problem, potentially, of paying out $100,000 a year to people who already have a lot of money, because they paid SS taxes on very high levels of income.)  But most progressives don't argue for lifting the cap WITH a corresponding (progressive) increase in benefits.  They argue for lifting the cap with NO corresponding increase in benefits.  That position is inconsistent with the argument, made by some, that retirees are entitled to benefits because "they paid for them."  Yes, the rich subsidize others a bit now, because of the progressive nature of the wage insurance payout.  Lifting the cap WITHOUT a corresponding increase in benefits severs that  "you get what you paid for" connection significantly.

      •  you're confusing debt and deficit (7+ / 0-)

        and annual budgets, and, frankly, using Cato/Libertarian-style misinformation to confuse the debate.

        Two ways to look at this honestly: as total debt or annual deficit. You cannot mix the two like you are doing.

        As debt, SS has something like $3-4 trillion in treasuries. (too lazy to look up the exact number.) That debt can be sold on the open market over 20 years. Since SS "only" owns 25% of the total US debt, that's a perfectly reasonable scenario, not an "OMG End of the World."

        As deficit, SS selling its bonds would add $120-150B-ish each year, at peak if nothing is done. (And that's a very unlikely scenario.) Reversing the Bush tax cuts is over $300 billion a year. Total military spending is $700 billion a year. It's completely doable.

        Most likely actual scenario: SS trust fund is kept at its peak, not paid down, and uses the interest as part of its income stream. (With slight increase in payroll tax - combination of rate increase and cap increase.) So neither scenario happens.

      •  Lifting the cap doesn't (2+ / 0-)
        Recommended by:
        chuckvw, jamess

        change the fact that no one gets Social Security unless they paid in....people don't get back what they paid in, they get Social Security because they paid in. The fact that FDR had to make it look like an annuity back in the 1930s when it was a radical concept does not mean that we should be forever bound to that same bit of hoodoo forever after, now that the program is established as an institution that Americans rely upon. Most people don't even know the cap exists....I believe less than 10% of American workers earn over $100K a year....and those who do are the ones most likely to have pensions and tax-deferred retirement savings.

        "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

        by Alice in Florida on Sun Jan 23, 2011 at 12:38:04 PM PST

        [ Parent ]

        •  Re (0+ / 0-)

          Most people don't even know the cap exists....I believe less than 10% of American workers earn over $100K a year....and those who do are the ones most likely to have pensions and tax-deferred retirement savings.

          Those people also pay the vast majority of all income tax. The top 10% of earners paid 70% of all income tax in 2010.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Sun Jan 23, 2011 at 03:17:35 PM PST

          [ Parent ]

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