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CBO: (2010) Social Security Policy Options

Many, many commenters claim that Social Security can just be fixed by changing this or that with most progressives lining up via some version of 'Just Lift the Cap'. Well depending on what you mean by 'lift' and what level of benefits go with it you can make that work. And as an aid CBO scored 30 different policy options, including a variety of cap increase proposals, against an actuarial gap they scored at 0.6% of GDP. So that is the magic score, put together any combination of plus (revenue increases or benefit cuts) and minuses (benefit boosts for lower income recipients) that add up to 0.6 and 'Bob's Your Uncle'. Some notes below the fold, but the meat is right here. Bon appetit!

The full CBO document (linked) explores each of these 30 options at length, for an in depth education feel free to click through.

Some friends and I independently produced what we call the Northwest Plan for a Real Social Security Fix, which has gained some interest in DC policy circles and which you can Google for. We produced it before this Report was published but it turns out to be a blend between Options 2 and 3 and based on phased in FICA increases. We knew our numbers were solid but it was gratifying to get confirmation of the basic concept.

A small caveat. Some of these Options would interact, but mostly not enough to matter for the score. So if you want to mix a revenue enhancer that scores 0.9 and a low income subsidy that scores -0.3 you would have a plausible combo to solve the actuarial gap between scheduled and payable represented here.

A larger caveat. This is a 2010 Report and projections have changed some. Moreover CBO has a slightly different score than SSA which at this same time would have put the gap at 0.7 rather than 0.6. Still this is a useful corrective against certain Golden Bullet solutions, there are no fixes that allow a cap increase to offset a massive improvement in benefits for the working poor AND buy every kid a pony. On the other hand it just is not true that the only answer is to kick the olds and condemn them to die starving and freezing in the dark because 'unsustainable'. We just need to pick from the options and variations thereof.

And a final note. CBO did not score any attempt to extend FICA to 'unearned', i.e. capital income. Feel free to comment on that.

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Comment Preferences

  •  Tip Jar (18+ / 0-)

    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 Sat Jan 05, 2013 at 08:25:37 PM PST

  •  thanks for the info (4+ / 0-)
    Recommended by:
    fixxit, Brahman Colorado, elwior, whaddaya

    Always good to get past the noise and into the hard data.  

  •  Hi again. (2+ / 0-)
    Recommended by:
    whaddaya, NM Ward Chair

    This is great stuff.

    Progressives, particularly on this site, are against  reductions in benefits, ie. Chained CPI. Plus it only raises .2% towards the gap.

    options 2 and 3 are a hard sell to working families. Option 4 is doable in this tax the rich environment as is Option 6. (My preference.) Medicare has no cap, so why should Oasdi?

    After all is said and done, a lot more is said than done.

    by Brahman Colorado on Sat Jan 05, 2013 at 09:45:20 PM PST

    •  Option 2 80 cents per week (4+ / 0-)
      Recommended by:
      SoCalSal, tardis10, masslib, whaddaya

      And is almost identical to my/our own NW Plan. So I am hurt, no wounded to the quick.

      2% over 20 years split 50/50 with employers means a reduction in take home pay of 0.05% each year out of a Real Wage very conservatively projected at 1% per year. For a worker making $40 k $20 in the first year. Or 40 cents per week, 80 cents if self-employed and all you would get is avoiding a 25% cut in benefits 24 years out.

      Compared to working two extra years or taking a guaranteed cut in benefits via Chained CPI coming up with couch change is a hard sale?

      Dean Baker puts the hit on takehome at an average of 6% of the increase in Real Wage over the worker's lifetime. CBO option 2 takes a bigger hit because even with a 20 year phase in it is still front loaded.

      Numbers are bitches, but if you can forgive the linguistic misogyny for just a second, when it comes to Social Security solvency they are OUR bitches. The only reason straight out FICA fixes aren't part of the discussion is because Bush took them off the table when he set up his 2001 CSSS. To which I would inquire 'George Who?'

      Reduce option 2 to cents per week per year per average worker and that 'hard sale' dissolves into hilarity. Is that all it takes? Well grab a four function calculator and start punching keys. Yep, we aren't crazy.

      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 Sat Jan 05, 2013 at 10:34:29 PM PST

      [ Parent ]

  •  "Fixing" Social Security must remain unrelated to (6+ / 0-)

    any attempts at reducing the Federal budget deficit, ass these are separate matters.
       I see no problem though with dealing with future solvency issues sometime during the second Obama Administration.
       However, benefits must not be curtailed, particularly for those who depend on these to survive or to maintain a decent standard of living.
       If anything, benefits for low-income folks should be enhanced so that Senior Citizens do not fall into desperate financial straights.

    "We the People of the United States...." -U.S. Constitution

    by elwior on Sat Jan 05, 2013 at 10:00:01 PM PST

  •  Option 6 would be my preferred option. (2+ / 0-)
    Recommended by:
    whaddaya, NM Ward Chair

    That would give some wiggle room for raising the minimum benefit.

    Plus, since many on the right and in the upper income bracket seem to like a flat tax- even calling it a "fair" tax, this is one place I would like to see them get their way.

    As to not raising the benefit for them, well, life is unfair sometimes. Ask the person born in poverty who has worked all his life at a back breaking job or the person whose child died of an illness or the person whose house was blown away in a tornado or most anyone outside the gated walls of the super wealthy if life is fair.

    But I'd be happy with Option 4 and it might be a little more palatable to moderates.

    You can't scare me, I'm sticking to the Union - Woody Guthrie

    by sewaneepat on Sun Jan 06, 2013 at 06:26:05 AM PST

    •  Option 6 and 25 nice neatly wrapped package (1+ / 0-)
      Recommended by:
      NM Ward Chair

      0.6 on the button. And no interactions between them.

      Not my choice only because of purely political calculations. Plus realizing that the progressive agenda isn't limited to Social Security, and there might be some crowding out effects on policy deriving from 6.

      But from within the confines of the SS debate itself  a neat and tight and economically just combo.

      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 Sun Jan 06, 2013 at 11:59:49 AM PST

      [ Parent ]

  •  Just noticed (1+ / 0-)
    Recommended by:
    whaddaya

      I was looking at legislation that has been introduced  on Jan 3-4.   HR155 should be watched - there are no details on-line yet, but there is legislation meant to really screw folks - aka "lump-sum" payments.
        It may be one of the many pieces of legislation to go nowhere, but it was written by a "D" - and the GOP may use it to say - see, here is what the D's want.    

         Sorry to go slightly off topic.
       

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