Skip to main content

Yesterday, poopdogcomedy had a great post about Alaska Senator Mark Begich's bill to strengthen Social Security by eliminating the payroll cap on Social Security taxes so that high-income people pay the same rate as the rest of us. This is an excellent idea.

Social Security currently generates a surplus – it contributes nothing to the federal deficit. And the program would probably be fine over the long term if we could just get out of the recession we're in. So the best solution to preserve Social Security would be for the government to stimulate the economy which would create demand for goods and services which would prompt businesses to hire more people and those new employees would then pay more payroll taxes, increasing SS's surplus. But it would also be helpful to eliminate the payroll tax cap. This would raise enough additional revenue to increase Social Security benefits and this is what Begich's bill does.

As the Wonkblog says, Begich's bill would sort out Social Security’s finances while making it more generous:

Social Security is not in danger of becoming insolvent any time soon. According to the program’s actuaries, without any changes, Social Security will be able to pay out full benefits until 2033. And there’s reason to doubt that problems will arise even 21 years from now.

... The Begich bill would lift the current payroll tax cap, which exempts wages in excess of a certain amount ($110,100 this year) from the tax. In turn, it would give high earners, who would pay more, additional benefits upon retirement, just as benefits increase as wages do for workers below the cap.

According to the Congressional Research Service, a change like that would almost entirely wipe out the program’s long-run actuarial imbalance....

[Instead of the chained Consumer Price Index (CPI),] Begich adopts “CPI-E,” or a measure that specifically captures inflation in goods that seniors buy.

Due to deteriorated health and other considerations, goods seniors buy tend to be more expensive than those younger people purchase. Begich’s CPI-E change would mean, effectively, a 4.5 percent benefit increase for the program’s beneficiaries, including not just seniors but their designated survivors and disabled Americans as well....

The Alliance for Retired Americans (ARA) supports Senator Tom Harkin's Rebuild America Act which would, among many other good things, raise and then eventually eliminate the payroll tax cap as well as increase benefits for the poorest recipients.

Robert Reich notes that raising the cap to $180,000 would ensure that the payroll tax once again applied to about 90% of total wage income (as it did in the 1980s and 90s before inequality meant that more of total wage income is going to the richest earners and only 84% to the rest of us).

Pointing out that pensions and 401(k) plans have been devastated in the last few decades, Steven Hill goes further and calls for doubling Social Security benefits (in The Atlantic and in a report for the New America Foundation):

Doubling Social Security's individual payout would cost about $650 billion annually for the approximately 53 million Americans who receive benefits. Here's how to pay for it.

Step 1. Lift Social Security's payroll cap that favors the wealthy.

...

Making all income levels pay the same percentage -- which is how Medicare works -- is popular with Americans according to opinion polls, and would raise about $377 billion toward the $650 billion needed to double the Social Security payout. As a candidate in 2008, Barack Obama stated that he supported raising the cap on the Social Security tax to help fund the program.

Step 2. Cut out the business deduction for employees' retirement plans.

With all Americans receiving Social Security Plus, employer-based pensions would be redundant, so businesses no longer would need the substantial federal deductions they currently receive for providing employees' retirement plans. These deductions total a substantial $126 billion annually....

Step 3. Cut or reduce other deductions that disproportionately benefit top income earners....

Some Good Background Reports

There are many other options that would actually strengthen Social Security and help people instead of cutting benefits. Here are two Congressional reports that provide a lot of good background information:

Social Security Modernization: Options to Address Solvency and Benefit Adequacy, Special Committee on Aging, United States Senate, May 13, 2010.

One option explored in this report is to eliminate the cap and increase benefits to the rich, but not by the full amount. This is the third option under "Broaden the Revenue Base" on the table on pages 8-9.

Social Security: Raising or Eliminating the Taxable Earnings Base, by Janemarie Mulvey, Specialist in Aging and Income Security, Congressional Research Service, September 24, 2010.

...if the base was completely eliminated for both employers and employees so that all earnings were taxed, but those earnings did not count toward benefits, solvency would be restored to Social Security. ... Under this scenario, the payroll tax rate could be immediately lowered from 12.40% to 12.12% and the system would remain solvent for the next 75 years...
OurFiscalSecurity offers a helpful fact sheet on Social Security and the National Committee to Preserve Social Security and Medicare provides this basic primer.

Originally posted to RandomNonviolence on Mon Jan 14, 2013 at 07:18 AM PST.

Also republished by Social Security Defenders.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  For those that favor this approach (6+ / 0-)

    is it fair to assume that you also favor increasing the employer matching portion to the same level?  This is almost never talked about in the discussions regarding raising the cap and I just want to make sure that that is in fact what is supported when people say to raise or eliminate the cap.

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

    by theotherside on Mon Jan 14, 2013 at 07:26:30 AM PST

    •  Would work but would ruin one of the best (6+ / 0-)

      government programs ever devised.  Might as well just drop it all together and tack on the percentages to income tax and call it a giant welfare program because that's what it would become. SSI is hugely popular because in simple terms you get back what you pay in.  A quasi insurance program.  Granted not all get back what they pay and some get back more in some cases but that is the nature of "insurance". Raise the caps most definitely. Lift them completely and you have something entirely different.  It would politically collapse.

      Guns don't kill people...people with GUNS kill people.

      by thestructureguy on Mon Jan 14, 2013 at 07:34:03 AM PST

      [ Parent ]

      •  You are still paying in and getting back (2+ / 0-)
        Recommended by:
        kyril, TheSpectator

        just as before. As before, some get more back than they put in and some get back less – this would just change the amounts somewhat. This has the added benefit of subjecting all wage income to the same rate instead of exempting the money earned by the superrich. That should make it more popular for many people.

        •  RandomN - eliminating, or raising, the cap (6+ / 0-)

          and not allowing benefits to also rise would end SocSec as we know it. SocSec was never intended to be an income redistribution program. It has always been a way to "insure" your own retirement income, not to have higher income earners provide more retirement income to low income workers. I understand that the current benefit formula is highly progressive, but I fear that if we bend that curve more significantly we will see serious attacks on the whole system. Our best defense against proposed changes, like partial privatization, is that they would make fundamental changes in the program. If we are willing to accept fundamental changes, then everything is on the table.

          I do favor raising the cap to capture 90% of all wages and salaries (about $190K), and allowing the retirement benefit payments to rise proportionally.

          "let's talk about that"

          by VClib on Mon Jan 14, 2013 at 08:15:29 AM PST

          [ Parent ]

          •  didn't the diary explicitly say that benefits (2+ / 0-)
            Recommended by:
            The grouch, cotterperson

            would also rise?

            Obviously not in lockstep, however, or what would be the point?

          •  SS is popular for several reasons: (5+ / 0-)

            1. It provides a solid pension for elders (instead of leaving them in poverty as was often the case before). And with the demise of company pensions, SS is even more important.

            2. It works well and is very efficient. It costs very little to run and there is very little waste, fraud, or abuse.

            3. It seems fair – everyone pays, everyone gets benefits. Everyone is taken care of (at least to some extent).

            Eliminating the cap would make it even fairer in the eyes of many people: everyone would pay the same rate instead of the super-rich paying just a tiny fraction of what the poor pay. And bending the benefit curve some more would probably not offend most people, especially those who are quite comfortable financially.

            The last two years has demonstrated clearly that no matter what we do, the Republicans will viciously and unfairly attack us. So we should promote policies that solve real problems and make good sense, and stop trying to appease the Right or avoid their wrath. If we propose good policies, then people will support us and vote out the Republicans.

            •  Maybe make option for uberrich to opt out and not (1+ / 0-)
              Recommended by:
              nextstep

              Collect any benefits since superrich  probably don't need the benefits.

              "If the past sits in judgment on the present, the future will be lost." Winston Churchill

              by Kvetchnrelease on Mon Jan 14, 2013 at 09:17:59 AM PST

              [ Parent ]

              •  That would definitely hurt the program (0+ / 0-)

                The whole point is that everyone gets old and the future is uncertain. So everyone pays into the Social Security insurance system and everyone benefits from it. Making it optional is a way to privatize it or to turn it into a welfare program.

              •  Kvetch - not only the super rich (2+ / 0-)
                Recommended by:
                MGross, Roger Fox

                but young professionals would love to have the option of dropping out of SocSec and having 6.25% of their salaries, matched by their employers, in a private account. The rate of return for people contributing at the cap rate is much lower than the package of benefits that amount of money could provide if managed privately.

                "let's talk about that"

                by VClib on Mon Jan 14, 2013 at 10:39:40 AM PST

                [ Parent ]

                •  Marginal Benefit payout of SS (2+ / 0-)
                  Recommended by:
                  VClib, Roger Fox

                  for the lowest income bracket is 6 times the payout the marginal payout at the top income bracket for Social Security.

                  The economic impact of Social Security is already far more progressive than the income tax, but social security does this benefit side, not the contribution side.

                  The most important way to protect the environment is not to have more than one child.

                  by nextstep on Mon Jan 14, 2013 at 11:08:18 AM PST

                  [ Parent ]

                •  You've nailed it. Which is exactly why Bowles- (0+ / 0-)

                  Simpson go SO HEAVILY AFTER middle-income folks in their proposed formula.

                  If they get their way, the drastic cut in benefits for lower- and middle-income Americans (in their monthly Social Security benefit) will also erode the support of this cohort of Americans (in addition to wealthy and professional class).

                  According to Jan Schakowsky, all three cuts as proposed by Bowles-Simpson will slash the Social Security benefits up to 35% for some beneficiaries.  Here's the excerpt from her Reuters Op-Ed, The Sham of Simpson-Bowles.

                  Under Simpson-Bowles, long-term solvency for Social Security is achieved mostly by cutting benefits. Seventy-five years out, the ratio of spending cuts to revenue increases is 4 to 1.

                  They propose raising the age of full Social Security benefits to 69 – claiming that everyone is living longer. But a sizable percentage of Americans, mostly lower-income workers, especially women, are actually living shorter lives, and a large chunk of other Americans just can’t work that long – even if they can find a job. Their plan cuts benefits for current and future retirees by reducing the cost-of-living adjustment.

                  For future retirees, all these changes taken together would reduce the average annual benefit for middle-income workers – those with annual earnings of $43,000 to $69,000 – by up to 35 percent.

                  It's hard to figure anything but that this is exactly what this entire exercise is about--shred the social safety net to the point that NO ONE wants to keep the programs.

                  What else could be the motive since Social Security is self-funded?  I'm still amazed that the PtB have rejected the notion of raising the payroll tax by 1/2% to 2%.  Go figure.

                  Mollie

                  “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

                  by musiccitymollie on Mon Jan 14, 2013 at 06:41:46 PM PST

                  [ Parent ]

              •  Like a means test? (0+ / 0-)

                Turning SS administratively and legally into a welfare program.

                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 Mon Jan 14, 2013 at 01:49:39 PM PST

                [ Parent ]

            •  amen to that (1+ / 0-)
              Recommended by:
              RandomNonviolence

              The idea that laws are passed for the good of the country is called leadership, and that is what we need.

            •  Why are we removing the cap? (0+ / 0-)

              when the Trustees tell us SS is good thru 2090, in the low cost scenario.

              If we're going to increase taxes on the rich, the right way is to increase the top income rate and add more brackets, to raise cap gains to maybe 30-33%, to reform the Estate tax.

              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 Mon Jan 14, 2013 at 01:48:27 PM PST

              [ Parent ]

          •  Bullshit (0+ / 0-)

            Plain and simple.

            "Power concedes nothing without a demand; it never has and it never will."—Frederick Douglass

            by costello7 on Mon Jan 14, 2013 at 08:41:59 AM PST

            [ Parent ]

          •  Does it not appear that we are heading in that (0+ / 0-)

            direction already (partial privatization)?

            After all, if all three of Bowles-Simpson's recommendations (Chained CPI, means testing and raising the age, whether it be 2, 4, etc., years) are implemented and we wind up with mandatory private retirement accounts for folks who don't have defined benefit plans (like Tom Harkin's USA Retirement Funds--here's the link), we veering very close to partial privatization.

            I'm too pushed for time to dig out the link right now, but I was flabbergasted when I read a White Paper describing the privatization of Mexico's (equivalent) Social Security program.  

            Apparently, we're (IF Bowles-Simpson't proposals are carried out, and Americans are mandated to have private retirement accounts) following the same steps that Mexico took in the 1990's, when they went to a defined contribution, instead of a defined benefit plan (and left the "pay as you go" system).

            From what I've read, if and when the formula for Social Security PIA goes to price indexing (as opposed to wage indexing), by approximately year 2100 the benefit will pretty much flatline, and will be about the same benefit or stipend for everyone (since it will no longer be tied to one's earned wages).

            I wonder sometimes if this train wreck can be avoided.  I sure hope so.  But, increasingly, I'm doubtful that it will be.

            OTOH, I won't give up trying to oppose attempts to destroy our social insurance programs.  I just hope that enough folks will wake up and push back on these efforts.

            Mollie

            “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

            by musiccitymollie on Mon Jan 14, 2013 at 05:17:47 PM PST

            [ Parent ]

        •  Two reasons the cap rise works. (1+ / 0-)
          Recommended by:
          maybeeso in michigan

          First, he or she who pays in more will get more than previously, the current max being in the $2300 or so a month range.

          But, second eliminating other pensions does not work because not every family can live on $2300 a month, once the deductibles for serious medical or other needs kick in. Think about seniors in their own homes who pay real estate property tax, as one example - I have known seniors whose current annual real property tax bill is larger than the original purchase price of the house they live in. The program was designed as a form of insurance where everyone who managed to work all of ten years, in some order, had a basic survival rate, not one in which no effort by a person now a senior to do better was to be penalized.

          •  Removing the cap creates a 14k monthly check (0+ / 0-)

            And CBS would have to pay FICA on Les Moonves entire 35 million salary.....

            And we lose the reason we got the EITC in 1975...

            Sure hope the GOP doesnt want the EITC back....

            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 Mon Jan 14, 2013 at 01:54:00 PM PST

            [ Parent ]

      •  that is absolutely what would happen (4+ / 0-)

        under this scenario:

        all earnings were taxed, but those earnings did not count toward benefits
        not. gonna. fly.

        of course, we should be a civilized society and just have a pension program from the general fund.  but the conservatives of FDR's time balked at that and ours will, too.  so until the GOP/country has a collective come to jesus moment, getting anything proposed in this diary out of the GOP House is but a dream.

        immigration is the only real answer to fixing the program, anyway.

        Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

        by Cedwyn on Mon Jan 14, 2013 at 07:57:12 AM PST

        [ Parent ]

        •  As best we can tell, nothing will come out of the (0+ / 0-)

          Republican House since almost nothing has in the past 2 years. But that doesn't mean we shouldn't be pushing for good policies that the public will like and demand. That is the way to change the House – get the public to demand good policies and vote out the Repubs who stand in the way. Social Security is currently generating a surplus, so we have lots of time.

          •  the program is not generating a surplus (1+ / 0-)
            Recommended by:
            winsock

            they are cashing in securities to meet their obligations as we type.

            http://www.ssa.gov/...

            Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.

            Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemptions will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

            Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

            by Cedwyn on Mon Jan 14, 2013 at 08:28:46 AM PST

            [ Parent ]

            •  They aren't counting interest (0+ / 0-)
              ...Social Security’s expenditures exceeded non-interest income in 2010 and 2011...
              Even with extremely low interest rates, I think that the SS trust fund is generating more interest income than this shortfall. Table 8.5 of the FY2013 Budget Historical Tables shows an "Off-Budget Trust Fund Net Interest" of $118.5 billion for FY2010 and $116.0 billion for FY2011 (this table shows outlays, so a negative number means interest earned by the government). Not all of this money is from Social Security (there are other "off-budget trust funds"), but SS comprises the bulk of it.

              I think the Social Security Trustees are being dishonest in focusing on the simple income versus redemptions without including the earned interest. When the interest is included, the program is doing just fine. By focusing attention the way they do, the Trustees seem to be part of the effort to scare ordinary people into thinking that SS is in crisis and should be privatized.

              •  "non-interest income" means payroll taxes (0+ / 0-)

                the program's expenditures exceeded payroll tax revenues.  so they have had to use interest income/securities to make up the shortfall.  

                The Social Security outlook has worsened significantly relative to last year's report. The actuarial deficit in its combined trust funds is now 2.67 percent of taxable payroll, the highest recorded since the last major Social Security financing reforms roughly three decades ago. The single-year deterioration in the 2012 report is the largest recorded since the 1994 report.

                While the projected depletion date (2033) for the combined trust funds is not the earliest recorded since the 1983 reforms, we are nevertheless now closer to the point of projected depletion than we have been since enactment of those reforms. The combined Social Security trust funds' balance continues to grow in nominal terms, but has been declining generally relative to the total cost of paying benefits since 2008, and will be shrinking after 2012 in real (inflation adjusted) terms. Thus by almost any objective measure, the financial health of the Social Security system has entered a concerning decline.

                since the days of SS running a surplus and being able to invest in securities are OVER due to population dynamics, that well will run dry at some point.  the SS trustees currently project a securities depletion date of 2033.  some researchers, who worked with SSA, now say 2031.

                http://www.lifehealthpro.com/...

                Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

                by Cedwyn on Mon Jan 14, 2013 at 10:07:50 AM PST

                [ Parent ]

                •  And the recession (0+ / 0-)

                  A large part of the current problem is that there are still millions of Americans who are not working and those who are are making a lot less than they used to. Hence, they are not paying nearly as much in payroll taxes. Also, a lot of people in their early 60s opted to retire early since they couldn't find work.

                  If the recession ended and we had a robust economy again, payroll taxes would grow and erase some or all of this shortfall. In the meantime, SS is still earning lots of interest despite very low interest rates. So SS is fine for now and there is still plenty of time to make changes. We don't have to rely on the Right-wing Republicans in this dysfunctional Congress.

                  •  Recession is a major driver (0+ / 0-)

                    I dont but the population dynamics stuff, Ced never fesses up to the numbers, In the intermediate scenario the triustees assume civ workforce growth of .2%

                    No one uses a number that low.

                    BLS

                    Council of economic advisers, no one.  Most agree on .5% to .7%, currently growing at about .97%.

                    To reinforce your point, from 2003 to 2007, if you look at the intermediate scenario, the depletion date advanced a  for 4 years in an economy that was growing moderately. SInce 2008 that trend has been reversed.

                    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 Mon Jan 14, 2013 at 02:00:46 PM PST

                    [ Parent ]

                    •  i never fess up to what numbers? (0+ / 0-)

                      what does this even mean:

                      To reinforce your point, from 2003 to 2007, if you look at the intermediate scenario, the depletion date advanced a  for 4 years in an economy that was growing moderately. SInce 2008 that trend has been reversed.
                      or at least, do you have a link so i can suss it for myself?

                      and what about the population dynamics don't you buy?  because here's what's what:

                      boomers = 79-some million
                      gen x = 53-some million
                      millennials = 70-some million
                      gen z = on course to be smaller than gen x

                      millennials are, so far, not having children at the same rate as their boomer counterparts.  so boomers retire; gen x and millennials already in the workforce replace them.  no new net jobs.

                      the rest of the millennials will be in the workforce within 10 years; gen x will start retiring within 20.  still no new net jobs, as the boomers will have finished retiring in 10 years.

                      then gen z starts working, only they, so far, don't have the same numbers as gen x.  net loss of workers, and payroll tax revenue, for the millennials' retirement.

                      the population drop from boomers to gen x wreaked havoc on SS; the drop between millennials and gen z will be worse.  there is only so much you can raise the minimum wage and the payroll tax income cap to make up the shortfall given those numbers.  fewer workers means less payroll tax, whatever the rates.  

                      srsly...immigration is the only real answer.  and that is why i'm stoked that immigration reform is a priority for obama's administration now.  it would expand the economy immediately and would put SS on solid footing, solid enough that SSI/SSDI eligibility could be expanded and paid for via savings from CCPI paying less money to seniors who don't need it.

                      because let's get real, for every senior who NEEDS social security, there is one who is fine without it.

                      Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

                      by Cedwyn on Tue Jan 15, 2013 at 05:47:56 AM PST

                      [ Parent ]

                      •  List of past trustees reports (0+ / 0-)

                        http://www.ssa.gov/...

                        I incorrectly cited 2004-2008, it was 2001 thru 2004:
                        http://www.dailykos.com/...

                        In 2000 the intermediate trust fund depletion date was 2037, by 2004 it was up to 2042.  GDP growth in those years was 2001=1.09%, 2002=1.83%, 2003=2.55%, 2004=3.48%. Not stunning growth, but yet enough to add 5 years to the intermediate assumption.

                        As far as civilian workforce projections, the 2032 date of depletion is based on growth of .2%.

                        BLS uses .6% thru 2050. As I commented recently:

                        http://www.dailykos.com/...

                        AS soon as civ workforce growth is above .5% over the next 20 years, its a non issue to trust fund depletion. And the Trustees themselves cite jobs and wages as the 2 largest drivers of trust fund solvency/depletion, not workforce growth.

                        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 Tue Jan 15, 2013 at 09:02:23 AM PST

                        [ Parent ]

                        •  what do past reports have to do with anything? (0+ / 0-)

                          it's not like they predicted the financial meltdown, hey?  and since those studies you mention, they've done nothing but revise the date forward.

                          anyhoo, "civilian labor force" excludes everyone in the military service, which is still a job.  

                          so, if civ workforce grows at .6%, but military drops, like ending wars and such, what is the overall net effect on total jobs?

                          do you have any thoughts on what i've said about population dynamics?  there can only be as many jobs as you have workers, n'est-ce pas?

                          Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

                          by Cedwyn on Wed Jan 16, 2013 at 07:35:31 AM PST

                          [ Parent ]

                          •  Past reports show in a good economy (0+ / 0-)

                            That trust fund depletion date is pushed into the future...it grows, in a poor economy the trust fund depletion hastens.

                            Population dynamics is what the Trustees spend a lot of time on. But you have to look at the big picture, the aggregate. Any Immigration amnesty plan will only increase the workforce. Which is likely in a year or 2.

                            Current US military workforce is about 2.2 mil. Civilian workforce is about 155 million, cut the military workforce by half= 1.1mil. Not even equal to civ workforce growth in one year of 1.6mil. Why do you insist on looking at small order effects?

                            IF we eliminate half the military jobs right now, total workforce growth is still .4% for the year, and the next year total workforce growth would still be 1.1%. In fact we could cut all military jobs and in the third year total workforce growth would still be 1.1%.

                            And remember the BLS projections thru 2050 never drop to .6%. And all we need is .5% or better thru 2032. Its likely that by 2032 civ workforce growth will have dropped to .75 or .7%.

                            And remember the Boomers, if we all live to 100, will be dead by 2062, then the trust fund assets grow quickly. Since many Boomers will live to 75 or 80, its likely the burden of sending benefit checks to Boomers will decline massively by 2042-2046.

                            The single best thing we can do, is to create jobs and raise the min wage. Next best is to re adjust the cap back to 90%.... about 186k.

                            Workforce growth is a small order effect on the SS trust fund, job creation and wages are major order effects.

                            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 Wed Jan 16, 2013 at 10:22:44 AM PST

                            [ Parent ]

                        •  pee ess (0+ / 0-)

                          check out what that link says about replacement needs.

                          Please don't dominate the rap, Jack, if you got nothin' new to say - Grateful Dead

                          by Cedwyn on Wed Jan 16, 2013 at 07:39:42 AM PST

                          [ Parent ]

                •  Still betting the farm on .2% civ workforce growth (0+ / 0-)

                  for 17 years?

                  Civ workforce = 154 million. Growth is 135k a month, 1.6 million a year, or about 1.1%.

                  You need to get it down to .2% quickly and hold it at .2% for better than 16 years, thru 2032.....

                  It is declining, but hold on the BLS says .7% thru the next decade.

                   -- Slower population growth and a decreasing overall labor force participation rate are expected to lead to slower civilian labor force growth from 2010 to 2020: 0.7 percent annually, compared with 0.8percent for 2000-10, and 1.3 percent for 1990-2000. The projected 0.7 percent growth rate will lead to a civilian labor force increase of10.5 million by 2020.
                  http://www.bls.gov/...
                  .6% thru 2050

                  http://www.bls.gov/...

                  So make your case for .2%

                  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 Mon Jan 14, 2013 at 02:13:58 PM PST

                  [ Parent ]

      •  SSI is not the same (2+ / 0-)
        Recommended by:
        thestructureguy, Roger Fox

        as Social Security. We have to be careful about this.

        SSI is need based and you don't pay into it.

        http://www.ssa.gov/...

        I must be dreaming...

        by murphy on Mon Jan 14, 2013 at 08:05:58 AM PST

        [ Parent ]

    •  Both are raised in most of the proposals (2+ / 0-)
      Recommended by:
      kyril, greenbell

      I've seen, and that is what I support. A not-very-progressive report by the Center for American Progress (CAP) would only raise the payroll cap for the part of the tax paid by employers. In this propasal, there is no additional cost to employees so there is also no additional benefit to employees. But this report also calls for investing some SS trust funds in the stock market and it supports chained CPI, so I don't trust the authors of this report.

    •  Excellent point, (0+ / 0-)

      I assume that top end employers like CBS who pay Les Moonves (CBS CEO) 30 something million a year.....

      .......would swallow hard and grab a calculator to figure their employers contribution between 113k and 35 million.

      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 Mon Jan 14, 2013 at 01:43:51 PM PST

      [ Parent ]

  •  i would go along with this (5+ / 0-)


    as long as those paying the increase also get an increased benefit level.  The current 'ceiling' for benefits is $2580, and even though I have 13 years of employment to go, I have already hit the 'maximum earning' threshold which is less than a third of what I earn.  That isn't great for me and for other high earners.  So I have no problem with removing the cap, as long as the payment cap is appropriately moved as well.

    "Kossacks are held to a higher standard. Like Hebrew National hot dogs." - blueaardvark

    by louisev on Mon Jan 14, 2013 at 07:30:23 AM PST

  •  Can't we just raise the medical payroll tax too? (0+ / 0-)

    I think it's less than two percent. Why not raise it to 4%? If you make less than $50K, this would be only $1000, and would no doubt be easily consumed when eligible to receive Medicare or Medicaid.

    "If the past sits in judgment on the present, the future will be lost." Winston Churchill

    by Kvetchnrelease on Mon Jan 14, 2013 at 07:34:58 AM PST

  •  "End Social Security as we know it" (7+ / 0-)

    That is what the Democrats would be doing if they just taxes all earnings and did not count those additional earnings toward benefits as Mulvey suggests.  Social Security was designed by FDR as a wage insurance program, where your payout -- what you got in retirement benefits -- was proportional to the amount of wages you insure.  Someone who insures $50,000 in wages and has zero additionl assets gets exactly the same benefits as someone who insured $50,000 in wages but has a $1 million inheritance.  The amount of wages you can insure is capped, and the amount of benefits you get is similarly capped.  FDR specifically designed it that way so it would be perceived as a "you get what you pay for" system, and so that it could not be called welfare for the elderly -- what FDR called "the dole."

    Severing the tie between the amount of wages you insure and the amount of benefits you get (as suggested by  Mulvey) would literally "end social security as we know it."  I do not think the Democrats want to be the ones to do that.  It would also mean that seniors could no longer make claim to SS benefits on the basis that "I paid for it."  (Instead, they would be subsidized by the rich.)  Yes, the benefits are somewhat progressive, but it's important for the credibility of the system that the tie be maintained, as FDR recognized  -- it's the perception that what you get is tied to what you pay in, rather than to "need," that is important.  And if you allow people to insure ALL income, of any amount, from any source, you will be paying some very very rich people hundreds of thousands of dollars a year in Social Security benefits, which is not really politically tenable.  

    I think the far better approach is the one suggested by Reich (the diary mentioned it as well), which is to bring insured wages back up to 90%.  

    You do NOT want the Social Security system to become a "welfare" system. As FDR recognized, that makes it far, far easier to kill -- remember Reagan's "welfare queens" and Clinton's "end welfare as we know it"?

    •  Most of the proposals would also increase the max (0+ / 0-)

      benefit to maintain that tie between income and benefit. People would still be paying in and getting back, some paying more than they get back, some less depending on life circumstances, longevity, etc. Most of the proposals would make the payouts more generous for the poor and less for the rich, but it would still be insurance.

      I understand the fear of the program being called welfare/dole, etc., but I think eliminating the cap is very popular and could withstand this criticism. That said, I'd also be open to just raising the level as Reich suggests. I'd be especially supportive if it were coupled with a higher inheritance tax rate to reduce the massive "welfare" passed on to undeserving children of the super-rich.

      •  There is no max benefit (0+ / 0-)

        benefits are calculated thru AIME, they are based on input and input is capped.

        Guilty of nit picking , yes I am.

        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 Mon Jan 14, 2013 at 02:23:10 PM PST

        [ Parent ]

    •  Said it much better than me. n/t (0+ / 0-)

      Guns don't kill people...people with GUNS kill people.

      by thestructureguy on Mon Jan 14, 2013 at 08:05:47 AM PST

      [ Parent ]

    •  That's a load of crap (1+ / 0-)
      Recommended by:
      RandomNonviolence

      The formula has been changed several times already to no great effect on the popularity or efficacy of the program.  Taxing all income at the same rate (and I would include unearned income as well) actually makes the program fairer.  Why should my FICA rate be hundreds of times, thousands of times, MILLIONS of times greater than the rate of the very rich or of those whose income is entirely in capital gains?  Maintaining the cap on payouts does not change the fundamental nature of the program.  It's a form of stealth means testing, but not altogether different from what is already in practice today.  We're just tinkering with amounts.  Everybody still pays in.  Everybody still takes out.  THAT is the fundamental nature of the program and THAT does not change.

      You would only endanger the program if the masses could be convinced that its become a welfare program.  And you're not going to convince them of any such thing simply by having the rich pay in at the same rate that they do.  You might with direct means testing, which many Dems favor, but not by removing the cap on earnings while retaining a cap on payouts.

      I can pay in, over a lifetime, $300,000 or more in auto insurance.  That doesn't change the amount I get back if I have an accident.  That is established (capped, if you will) by the policy.  In other words, my pay-in is not capped, my pay-out IS capped.  That doesn't make it any less an insurance plan.  It's a defined benefit program.

      "Power concedes nothing without a demand; it never has and it never will."—Frederick Douglass

      by costello7 on Mon Jan 14, 2013 at 09:00:16 AM PST

      [ Parent ]

      •  The rich dont need Soc. Sec? Just let them opt out (1+ / 0-)
        Recommended by:
        MGross

        "If the past sits in judgment on the present, the future will be lost." Winston Churchill

        by Kvetchnrelease on Mon Jan 14, 2013 at 09:21:54 AM PST

        [ Parent ]

      •  I disagree. (2+ / 0-)
        Recommended by:
        nextstep, VClib

        You have to maintain the perception that the amount of your monthly benefit is tied to what you pay in.  That's what is fundamental to the structure of the program as FDR designed it.  If you sever that link, the opponents of the program WILL say you are changing it to welfare, and their credibility on that will be FDR who designed the program.  If you sever that link, you will -- correctly, according to quote after quote from FDR -- be "changing Social Security as we know it."  I don't think that will be a popular position with middle class Americans, who like Social Security precisely because they perceive it as "I only want what I paid for."  If you sever that link, middle class Americans instead become recipients of "the dole," according to FDR.

        Social Security is wage insurance.  It's insurance in case you outlive your ability to work for a living and earn the wages you earned at your peak earnings years, whatever they are.  Sure, some people don't collect all they put in, because they die at 65.  Some people collect far more than they put in, because they live to 102.  That doesn't change the nature of the insurance.  Their insurance premiums (the taxes) are based on the value of what they insure (their wages) and what they collect (their monthly benefit) is based on the value of what they insure (their wages).  

        I became very familiar with insurance after the Army Corps of Engineers Disaster (what the rest of the country calls Hurricane Katrina).  Here's the analogy. Flood insurance was capped at $250,000.  Your premiums were based on the amount you insured (the value up to $250,000 that you insured) and the payout is based on the amount you insured.  You couldn't insure more than the value of your home, of course.  If you insured $50,000, and your home was worth $50,000, you paid the same premium and you received the same as your next door neighbor who insured $50,000 and his home was worth $100,000.  On the other hand, you could have a home worth $250,000 and pay flood insurance premiums on that amount, while your next door neighbor had a home worth $1 million.  Your neighbor could only insure $250,000 under the federal flood insurance program, so his premiums were the same as yours and, when your neighborhood was flooded, his payout was exactly the same as yours -- $250,000 -- because that is what he insured.  Insurance doesn't say, I know you are insuring the exact same amount -- $250,000 -- but since you are twice as rich as your next door neighbor, your premiums for insuring that $250,000 are going to be twice as much as your next door neighbor.  That's not insurance.  That's "the dole," as FDR put it.  

        Of course, some people paid in all their lives and didn't flood, so they didn't collect a cent.  Others paid premiums on a $250,000 value starting June 1,2005 (the beginning of hurricane season) and collected $250,000 as of August 29, 2005. That's the nature of insurance.  It doesn't change the fact that your premiums and your payout are based on the value of what you insure.  The higher the value insured, the higher your premiums AND the higher your payout.  

        Investment income is not "insured against" because you don't lose that income when you retire from working.  So there's no need to "insure against" losing that income if you live to be 65.  

        There's a place for the rich to subsidize the needs of low income Americans -- and that's through the income tax system.  It would be beyond foolish to destroy the broad-based popular support of the most successful program this country has by turning it into what FDR called "the dole."  

        •  FDR was addressing Right-wing attacks of the time (0+ / 0-)

          FDR also did not include farmworkers or domestics (black people) in the SS program in order to secure support from southern Dixiecrats. But that doesn't mean that the program shouldn't be expanded to include them.

          Social Security is somewhat like insurance, and it is somewhat like a company pension program, but it does not have to be exactly like either one. SS recognizes that everyone grows old and no one knows what their prospects will be when they grow old (e.g., rich, poor, healthy, unhealthy alive, dead). So it is a system to provide for everyone and to tax everyone.

        •  coffeetalk, may I ask a question, since I've (0+ / 0-)

          noticed that you often discuss an issue that I'm interested in knowing more about.

          As I mentioned to another commenter, if the PtB change the PIA formula, and base it on price indexing (as opposed to wage indexing), this achieves cutting the link between one's earnings or wages, and one's monthly benefit.  (That's what I've read, anyway.)

          And I fear that we're heading in that direction.  So, what will we do if this reform becomes part of the framework?

          IOW, how does one fight this policy change (if it is enacted)?  I've racked my brain, and can't figure out where we'd go from there.

          Thanks.

          Mollie

          “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

          by musiccitymollie on Mon Jan 14, 2013 at 05:26:15 PM PST

          [ Parent ]

      •  costello - investment income doesn't end when (2+ / 0-)
        Recommended by:
        Roger Fox, nextstep

        we retire so there is no reason to insure it. That is why investment income  has never been part of SocSec. As FDR stated nothing is asked of capital and noting is owed.

        There is particularly no reason to insure it if there is only a payment and no benefit is received.

        "let's talk about that"

        by VClib on Mon Jan 14, 2013 at 12:52:20 PM PST

        [ Parent ]

      •  There is no cap on benefits (0+ / 0-)

        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 Mon Jan 14, 2013 at 02:24:43 PM PST

        [ Parent ]

      •  What formula, please be specific (0+ / 0-)

        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 Mon Jan 14, 2013 at 02:43:30 PM PST

        [ Parent ]

        •  I'm having a hard time following this thread. (0+ / 0-)

          But might I suggest that you raise the cap, but lower the percentage of replacement rate on all income above $500,000 annual income.

          Bowles-Simpson recommends changing the bend point from 15% to 5% for incomes ranging between 64,000 and 107,000 (the cap taxable income in 2010).

          I'm not in favor of that drastic of a cut.  But why not change the top bend point to 7.5% for all income over $500,000 (or maybe a bit lower).

          Certainly, if the Bowles-Simpson proposal is enacted into law, there will be literally millions and millions of seniors homeless, living under bridges, etc.

          If there must be a savings by means testing, it will clearly have to come from wealthy beneficiaries, for whom Social Security is most likely NOT their only, or primary income.

          Mollie

          “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

          by musiccitymollie on Mon Jan 14, 2013 at 07:31:36 PM PST

          [ Parent ]

          •  Why are we changing anything about SS? (1+ / 0-)
            Recommended by:
            musiccitymollie

            ...create jobs and raise the min wage means a lot more FICA. SS was never meant to survive a 25 year recession, and its unrealistic to suggest this will happen.

            All the assumptions that go into the SS trust fund being depleted by 2032 are worst case scenarios. All we need is job creation, wage increases growing the economy to 2.8% or better, then SS is good thru 2090, according to the low cost Trustees scenario.

            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 Tue Jan 15, 2013 at 08:26:17 AM PST

            [ Parent ]

            •  Hey, I'm on your side, but I'm afraid 'what I want (1+ / 0-)
              Recommended by:
              Roger Fox

              or think' doesn't matter to the PtB.

              Just heard Annie Lowrey of the NYT Economix column [XM Radio, Diane Rehm Show] say that she expects 'a package of cuts to Social Security' to pass, but separate from the Debt Ceiling CR, or whatever.  She says Wall Street isn't worried, they expect this, too.
              Anyway, since it looks like our social safety net programs will take a big hit, I'm always just trying to figure out a cut that won't throw tens of millions of seniors into poverty over the next decade or so.

              The implementation of Bowles-Simpson's proposal would absolutely be tantamount to Shock Doctrine coming to the US.

              Thanks for all you do to defend the program.

              Mollie

              “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

              by musiccitymollie on Tue Jan 15, 2013 at 09:40:39 AM PST

              [ Parent ]

              •  Have you joined SS defenders @DK? (1+ / 0-)
                Recommended by:
                musiccitymollie

                I can send you an invite.....

                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 Tue Jan 15, 2013 at 11:36:24 AM PST

                [ Parent ]

                •  I did. At the time I didn't realize that you're (1+ / 0-)
                  Recommended by:
                  Roger Fox

                  supposed to be "invited," so I sent a message to the Group (Bruce Webb), and asked if I could join.  

                  Luckily, he was gracious enough to allow me to do so, LOL!

                  Anyway, my diaries will be few and far between due to time constraints.  But I do try to jump in and defend the program by commenting, when I can.

                  I have a couple of interesting C-span video 'clips' (on Social Security) which I hope to post soon, with a brief introduction/explanation.

                  Thanks much for the offer.

                  Mollie

                  “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

                  by musiccitymollie on Tue Jan 15, 2013 at 01:06:41 PM PST

                  [ Parent ]

      •  R U saying coffeetalk is offering a load of crap (0+ / 0-)

        Coffee and I dont always agree, but coffee has an excellent reputation for being accurate with facts.

        Maybe handwaving becomes you.

        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 Mon Jan 14, 2013 at 02:47:08 PM PST

        [ Parent ]

        •  Here's what I'm saying (0+ / 0-)

          albeit a week late.

          I'm saying this argument--that we can't lift the cap on income taxed without a commensurate increase in benefits because "it would change the fundamental nature of the program" and lead to it's end--is a myopic one.  It's all tree and no forrest.  I'm saying that those who are clinging so tightly to that specific tree have missed the fact that there's a guy with a blowtorch burning down all the other trees.  And the argument shows very little understanding of human and mass psycology.

          If we, as citizens or liberals or activists or whatever, stand behind this idea of "the fundamental nature" of Social Security--and with the program under attack from both sides of the aisle for what (I hope) most of us understand is a fraudulent premise (that Social Security is going broke and driving the debt)--then we are inviting draconian cuts to benefits (or, since some would argue the point, cuts, certainly, draconian or not).  It would be a far better stance, for those who really want to preserve the program, to fight for an increase in revenue for the program rather than a decrease in benefits.  It would be lovely if we could win on the argument that the program is solvent and no real changes are required.  Problem is the beltway (and some Kossacks) have accepted as "common knowledge" that the program is in trouble and "something" must be done.  In other words, that ship has sailed.

          Now, on the psycology of the situation.  First off, you have to understand that the vast majority of Americans do not, today, think of Social Security as an insurance plan.  They think of it simply as "something you pay into all your life and, when you retire, it comes back to you".  In a way, the right effed up when, in an effort to demonize Social Security as a welfare program, they kept calling it an "entitlement" instead of an insurance program.  Because, now, no one thinks of it as an insurance program.  The word they know is "entitlement" and their feeling about it is "Damn straight, I'm entitled to it; I paid for it".

          What is being argued is that changing "the fundamental nature" of the program will leave Social Security open to the charge (a charge the right has long been making anyway) that it's just another welfare program.  As I've tried to argue (in assorted diaries' comments threads), that would, indeed, happen if you went to straight up means testing.  But NOT by lifting the cap on income taxed while retaining the cap on benefits.  It's still kinda sorta "means testing", but stealth.  Doing THAT works for the very same reason instituting chained CPI is politically feasible while a straight up benefit cut is not; exactly BECAUSE it's stealth.

          I have no doubt that many Rethugs and conservatives would argue relentlessly that doing what I suggest makes Social Security a welfare program.  But that argument will not penetrate.  Because the aspect that your average individual is (psycologically) going to latch onto is "I'm paying FICA on every dollar of my income and, now, so are they".  Anyone who isn't making over a million a year would view such a change as "fair".  No one (outside of the TeaPubs and the 1%) is going to suddenly start saying, "Hey, wait a minute; that's not fair to the rich guy.  He's not getting back his full measure of benefits."  No one (except, again...) is going to think that at all.  That's just human nature.  They are going to think about the fact that their Social Security is, well, secure.  That is all.

          Now, if we, instead, cling to "the fundamental nature" of the program as sacrosanct, there will be (in all probability) benefit cuts.  And that (psycologically) is going to make people feel "insecure".  And THAT is going to turn people against the program.  And, suddenly, people are going to embrace privitization.  Psycologically, if the benefits aren't cutting it, otherwise intrelligent people are going to conclude that they COULD do it better themselves.

          I used this analogy in another thread and I'll reprise it here.  Once upon a time, I ran a small publication.  The bedrock principle of the publication, from day one, was that the "people" (meaning the employees) were more important than the publication itself.  Very hippy socialist of me, I know.  Anyway, there came a time when it became clear that the principle had become so overwhelming, so all-important, that the principle was now, in practice, more important than the people.  And, when we realized that, we had to re-evaluate and adjust.  The whole idea, from the outset, was that the employees and their needs and concerns should be the top priority.  Basically, we had to jetison the principle as stated in order to preserve the concept of it.

          In the instant case, it appears to me that the core goal of the program is reducing poverty (which it has done remarkably well).  The "insurance" aspect is merely the mechanism utilized to achieve the goal.  I believe the nature of the mechanism, for some, has surpassed in importance the actual goal.  In my view, in our current political climate, preserving the mechanism wholly intact dooms the program.  To preserve the goal and the program itself, the mechanism requires adjustment.

          "Power concedes nothing without a demand; it never has and it never will."—Frederick Douglass

          by costello7 on Sun Jan 20, 2013 at 12:21:56 AM PST

          [ Parent ]

    •  Sanity at last, thank you. Wage insurance program (0+ / 0-)

      If we take nothing from capital we owe nothing to capital

      FDR paraphrase.

      IIRC 90%tile is at about 186,000. 90% would increase revenues while increasing benefits to seniors.  And afterall, after the 1983 Reagan SS deal the cap was at 90%.

      And we avoid all the pitfalls associated with elimination of the cap.

      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 Mon Jan 14, 2013 at 02:20:56 PM PST

      [ Parent ]

  •  don't get this (0+ / 0-)
    Begich’s CPI-E change would mean, effectively, a 4.5 percent benefit increase for the program’s beneficiaries, including not just seniors but their designated survivors and disabled Americans as well....
    According to the Center on Budget and Policy Priorities, over the last 10 years the average COLA calculation under current CPI is 2.5% and under CPI-E would also have been 2.5%.  The January 2012 COLA under current CPI was 3.6%, under CPI-E it would have been 2.9%.

    Also, survivors and disabled Americans are spending more in line with the general population than the elderly.

    •  Where did you get the data you cite? (0+ / 0-)

      I'm looking at a February 2012 CBPP article that says:

      Over the last 20 years, using the CPI-E would have led to higher COLAs than using the official CPI in 14 years, lower COLAs in four years (including the January 2012 COLA), and a zero COLA in 2010 and 2011 just as the official CPI did; it would have made little cumulative difference (see Table 2). [Table 2 shows CPI-E grew 2.7% annually rather than 2.6% for CPI-W (the current CPI index) over the last 20 years. By my calculations that results in a 3.3% difference in the 20th year (1.027^20-1.026^20) This is not a gigantic difference, but still significant.]

      Chiefly because medical care has a higher weight in the CPI-E and rises faster than other prices, the Social Security actuaries assume that the CPI-E will grow faster than the standard CPI by an average of 0.2 percentage points a year.

      Do you have another reference?

      I'm not sure where the Wonkblog gets its data. It may be old – pre-recession or before the reforms of Obamacare began to reduce the growth rate of medical care. Still, the overall idea of switching to the CPI-E is to ensure that SS checks continue to reflect actual costs by elders.

      And note that CBPP has been a strong advocate for the chained CPI and a harsh critic of CPI-E. They may be biased.

    •  The cola for 2013 is 1.7 %. (0+ / 0-)

      Is that higher than inflation? I didn't think so.

    •  USe the NAtional Wage Index (0+ / 0-)

      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 Mon Jan 14, 2013 at 02:39:54 PM PST

      [ Parent ]

  •  Social Security is extremely progressive now (2+ / 0-)
    Recommended by:
    maybeeso in michigan, Roger Fox

    The progressiveness of Social Security is built largely into the benefit side with additional progressiveness through the earned income tax credit on the contribution side.  While people here are aware of the contribution side the benefit side is not well understood.

    The Social Security retirement benefit calculation can be seen at http://www.ssa.gov/...

    The benefit payout on the first $791/mo of taxed income (all adjusted for inflation over the years) is 90%.  However for taxed earner income over $4,768/mo the benefit payout is 15%.  So the lowest income bracket gets benefits at 6 times the rate of the highest bracket. But there is more.

    There is no income tax on Social Security for lower income beneficiaries, then for one bracket of income 50% of benefits are subject to tax, then for higher incomes 85% of the benefit is taxed.  See http://www.ssa.gov/...

    So lower income SocialSecurity brackets have after tax Social Security benefit of 90% of income.  This is in contrast to highest income tax beneficiaries who get a marginal after tax benefit of 10%.

    So on an after tax basis, not even including the benefits from the earned income tax credit, lower income benefits pay out at 9 times the marginal high income rate.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Mon Jan 14, 2013 at 01:28:02 PM PST

    •  There you go again (0+ / 0-)

      with the facts and logic and stuff.

      +1000

      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 Mon Jan 14, 2013 at 02:28:54 PM PST

      [ Parent ]

    •  It is that way now, but not if the formula (0+ / 0-)

      proposed by Bowles-Simpson is adopted.

      That (I believe) is why some folks are wanting to raise the wage or earnings cap, and adjust the replacement rate for wealthy folks.

      To avoid the draconian cuts proposed in The Moment Of Truth.

      Here's the link to The Moment Of Truth.

      Mollie

      “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

      by musiccitymollie on Mon Jan 14, 2013 at 07:36:24 PM PST

      [ Parent ]

  •  Thanks for the shout out! (0+ / 0-)

    Funny Stuff at http://www.funnyordie.com/oresmas

    by poopdogcomedy on Mon Jan 14, 2013 at 06:07:17 PM PST

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site