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I agree there are a number of easy solutions in a mathematical sense. But the political battles around any of these paths are going to be intense. Raising the

by cepth 8y ago

I agree there are a number of easy solutions in a mathematical sense. But the political battles around any of these paths are going to be intense. Raising the retirement age has been a non-starter because of the power of groups like AARP. And there's a fairness question of who to apply it to. Do you tell 40 year olds that the age is going up? Is that enough time to adjust your retirement planning? How about for a 50 year old? Increasing the taxable maximum income would also be an interesting fight. At a 12.4% payroll tax, you're effectively raising taxes on someone making $150k by $2600 a year, since the current cap is is $128700. I think if you're living in an expensive city like SF or NYC, or an expensive state, that may be a political nonstarter.

wahern 8y ago
Increasing the payroll tax will definitely hit the working class hard but it's also inline with the otherwise reasonable Republican argument that people should be paying for their own retirement. The Republican preferred alternative is 401(k)s and IRAs, where the working class will simply be screwed and the middle-class burdened with unnecessary risk and uncertainty. See, e.g., Chile, which Republicans naively point out as a model for retirement savings reform but which evidences exactly why their preferred models simply won't work as intended.[1] Given the long-standing conservative climate, Democrats really have no choice but to usher through a bill with moderate Republicans that keeps Social Security solvent with a less-than-progressive taxation and benefits model. But the Democrats won't because the moment they do Republicans will paint them as taxing the working-class and Democrats are too chicken to do the right thing and deal with the unfair consequences. Yeah, the solutions are simple and obvious (because of the math, because of the political landscape) but the path to get there is unfortunately treacherous and not at all certain. :( I just want to fight the narrative of the Social Security "crisis", and point out that it's entirely self-inflicted and largely the product of a very cynical narrative--a self-fulfilling prophecy--promulgated by an extremist conservative faction, which unfortunately has enjoyed outsized influence for the past 25 years, ever since Newt Gingrich's Republican Revolution. [1] Hint: (1) Banks take a huge, often double-digit premium in management fees. (2) The working class simply don't fund their accounts because, much like with Obamacare, it's not politically feasible to enforce the mandate widely. (It's in some ways worse than the Obamacare mandate because people are more likely to appreciate the benefits of healthcare as opposed to retirement savings, though in terms of absolute numbers people really underestimate the cost of healthcare). (3) People are subject to additional, sometimes severe market risk because there's simply no more efficient way to provide a defined benefits plan (what all economists agree is most rationale for retirement) than a nationwide, government guaranteed insurance program. (Who here younger than 50 invests in an annuity? Probably no one, myself included, even though it's what makes most sense. Though I suppose precisely because we have Social Security we can take on more risk with our personal retirement investments.)

by cepth 8y ago

wahern 8y ago

Increasing the payroll tax will definitely hit the working class hard but it's also inline with the otherwise reasonable Republican argument that people should be paying for their own retirement. The Republican preferred alternative is 401(k)s and IRAs, where the working class will simply be screwed and the middle-class burdened with unnecessary risk and uncertainty. See, e.g., Chile, which Republicans naively point out as a model for retirement savings reform but which evidences exactly why their preferred models simply won't work as intended.[1] Given the long-standing conservative climate, Democrats really have no choice but to usher through a bill with moderate Republicans that keeps Social Security solvent with a less-than-progressive taxation and benefits model. But the Democrats won't because the moment they do Republicans will paint them as taxing the working-class and Democrats are too chicken to do the right thing and deal with the unfair consequences. Yeah, the solutions are simple and obvious (because of the math, because of the political landscape) but the path to get there is unfortunately treacherous and not at all certain. :( I just want to fight the narrative of the Social Security "crisis", and point out that it's entirely self-inflicted and largely the product of a very cynical narrative--a self-fulfilling prophecy--promulgated by an extremist conservative faction, which unfortunately has enjoyed outsized influence for the past 25 years, ever since Newt Gingrich's Republican Revolution. [1] Hint: (1) Banks take a huge, often double-digit premium in management fees. (2) The working class simply don't fund their accounts because, much like with Obamacare, it's not politically feasible to enforce the mandate widely. (It's in some ways worse than the Obamacare mandate because people are more likely to appreciate the benefits of healthcare as opposed to retirement savings, though in terms of absolute numbers people really underestimate the cost of healthcare). (3) People are subject to additional, sometimes severe market risk because there's simply no more efficient way to provide a defined benefits plan (what all economists agree is most rationale for retirement) than a nationwide, government guaranteed insurance program. (Who here younger than 50 invests in an annuity? Probably no one, myself included, even though it's what makes most sense. Though I suppose precisely because we have Social Security we can take on more risk with our personal retirement investments.)