6 ms·

I'm afraid this will sound like a taunt, but I don't mean it to be. What is the easy fix, given political will, for social security?

rconti 8y ago
It's difficult to separate political fact from fiction. But nearest I can tell, the "insolvency crisis" of Social Security (where it's said to be trillions of dollars in the red) is generally a fiction; we can wish the President and Congress hadn't raided the trust fund in the 80s, but it seems generally accepted that a few tweaks would immediately fix it. Considering how easily we fund a war here, a tax cut there, Social Security could be made self-sustaining again fairly easily. We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying). We could adjust the retirement age (say, indexed for lifespan changes to provide some midpoint/average number of 'working years'). That's all without even changing the tax rate, which of course is always another option. Ultimately, just by basic logic alone, there's no reason we can't fund X amount of benefits with Y amount of receipts by setting the numbers properly -- UNLESS AND UNTIL we have a massive greying crisis like Japan has. https://www.quora.com/Has-the-U-S-Congress-really-borrowed-trillions-from-Social-Security-to-use-for-government-spending https://www.quora.com/Has-the-U-S-Congress-really-borrowed-t... https://www.snopes.com/fact-check/social-security-fun-facts/ https://www.snopes.com/fact-check/social-security-fun-facts/ https://www.cbsnews.com/news/lets-debunk-this-social-security-myth/ https://www.cbsnews.com/news/lets-debunk-this-social-securit...
- lesserroneous 8y ago
  Your points are really interesting. I wonder how successful it would be to tax higher wage earners more. Many of the truly wealthy receive their money via means that are largely not subject to payroll taxes. Hence, we are only over taxing the upper "working class" who then might have less incentive for their high wages. Many higher wage earners and their employers are finding clever ways to avoid salary increases through the conferral of non-cash benefits. Though these are technically required to be taxed by reporting them to the IRS, I would bet many people aren't reporting the vacation their company sponsored or their gym memberships. Additionally, many contractors form corps and are using creative ways to reduce their payroll burden (among other tax relief.) The current wage cap is around $118k. What kind of cap do you think would be effective? Or are you saying we should remove caps?
- sseveran 8y ago
  The US Treasury puts out a financial report that paints a bit less of a rosy picture. So long as the dollar is the world reserve currency there is not going to be much appetite to make significant changes. Any shortfall in benefits after 2035 could likely just be financed with debt. If the appetite for US debt would ever change we would then see likely see changes in standard of living, but not in nominal benefits paid, as dollars would need to be created probably on the Fed's balance sheet. I could see some other mechanism coming along though that would actually handle the mechanics of creating large amounts of money. Given how far off any of this is likely to be I can't conceive of how spending could actually be cut on an absolute basis, or even just indexed to inflation. Ultimately healthcare is likely to be a larger driver of US debt than social security. https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/17frusg/02142018_FR(Final).pdf https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/17fr...
- dragonwriter 8y ago
  > We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying). Note that Social Security already has “bend points” in the benefit formula, so one or more additional bend points doesn't change the basic design.
nimish 8y ago
Increasing the payroll tax (from 12.8 to 14.4%) and removing the wage ceiling (but not the benefit ceiling) so that high earners who have accounted for most of the wage growth recently contribute a fairer share
- WkndTriathlete 8y ago
  > so that high earners who have accounted for most of the wage growth recently contribute a fairer share I don't disagree with removing the wage ceiling, but if you word it like that you're pretty much guaranteed to fail, because the equal and opposite to that is "Cut the payroll tax so I don't have to fund the bozos that decided to party all through school instead of working their tail off like I did."

rconti 8y ago

It's difficult to separate political fact from fiction. But nearest I can tell, the "insolvency crisis" of Social Security (where it's said to be trillions of dollars in the red) is generally a fiction; we can wish the President and Congress hadn't raided the trust fund in the 80s, but it seems generally accepted that a few tweaks would immediately fix it. Considering how easily we fund a war here, a tax cut there, Social Security could be made self-sustaining again fairly easily. We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying). We could adjust the retirement age (say, indexed for lifespan changes to provide some midpoint/average number of 'working years'). That's all without even changing the tax rate, which of course is always another option. Ultimately, just by basic logic alone, there's no reason we can't fund X amount of benefits with Y amount of receipts by setting the numbers properly -- UNLESS AND UNTIL we have a massive greying crisis like Japan has. https://www.quora.com/Has-the-U-S-Congress-really-borrowed-trillions-from-Social-Security-to-use-for-government-spending https://www.quora.com/Has-the-U-S-Congress-really-borrowed-t... https://www.snopes.com/fact-check/social-security-fun-facts/ https://www.snopes.com/fact-check/social-security-fun-facts/ https://www.cbsnews.com/news/lets-debunk-this-social-security-myth/ https://www.cbsnews.com/news/lets-debunk-this-social-securit...

lesserroneous 8y ago
Your points are really interesting. I wonder how successful it would be to tax higher wage earners more. Many of the truly wealthy receive their money via means that are largely not subject to payroll taxes. Hence, we are only over taxing the upper "working class" who then might have less incentive for their high wages. Many higher wage earners and their employers are finding clever ways to avoid salary increases through the conferral of non-cash benefits. Though these are technically required to be taxed by reporting them to the IRS, I would bet many people aren't reporting the vacation their company sponsored or their gym memberships. Additionally, many contractors form corps and are using creative ways to reduce their payroll burden (among other tax relief.) The current wage cap is around $118k. What kind of cap do you think would be effective? Or are you saying we should remove caps?
sseveran 8y ago
The US Treasury puts out a financial report that paints a bit less of a rosy picture. So long as the dollar is the world reserve currency there is not going to be much appetite to make significant changes. Any shortfall in benefits after 2035 could likely just be financed with debt. If the appetite for US debt would ever change we would then see likely see changes in standard of living, but not in nominal benefits paid, as dollars would need to be created probably on the Fed's balance sheet. I could see some other mechanism coming along though that would actually handle the mechanics of creating large amounts of money. Given how far off any of this is likely to be I can't conceive of how spending could actually be cut on an absolute basis, or even just indexed to inflation. Ultimately healthcare is likely to be a larger driver of US debt than social security. https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/17frusg/02142018_FR(Final).pdf https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/17fr...
dragonwriter 8y ago
> We could remove the cap on taxed income while either NOT removing the cap on benefits to high earners (or give them increasing benefits but not in relationship to how much additional tax they're paying). Note that Social Security already has “bend points” in the benefit formula, so one or more additional bend points doesn't change the basic design.

nimish 8y ago

Increasing the payroll tax (from 12.8 to 14.4%) and removing the wage ceiling (but not the benefit ceiling) so that high earners who have accounted for most of the wage growth recently contribute a fairer share

WkndTriathlete 8y ago
> so that high earners who have accounted for most of the wage growth recently contribute a fairer share I don't disagree with removing the wage ceiling, but if you word it like that you're pretty much guaranteed to fail, because the equal and opposite to that is "Cut the payroll tax so I don't have to fund the bozos that decided to party all through school instead of working their tail off like I did."