5 ms·
>Social Security will not be gone, and it is not unsustainable. Currently configured, it will pay out ~75% of earned benefits once the trust fund is exhausted i
by treis 8y ago
>Social Security will not be gone, and it is not unsustainable. Currently configured, it will pay out ~75% of earned benefits once the trust fund is exhausted in 2034
The trust fund is the government loaning money to itself. Ultimately, it is an accounting fiction. Instead of tax payers having to shore up a SS shortfall they have to pay back T-Bills. Either way, there's about 3 trillion dollars missing that will need to be paid.
- toomuchtodo 8y agoAs long as the US government exists and has taxing authority, the general fund will survive and be able to support paying back special issues securities [1] that were provided to Social Security. You can't invest the same way as Vanguard and Blackrock at nation state scale (ie "let's throw it all in a three fund/target date fund and call it a day"), although the Bank of Japan is going to be a pioneer in acquiring and distributing the gains from public companies in Japan [2] due to their demographic situation (which all first world countries will eventually transition through). I would agree there are lots of liabilities (somewhere between single and triple digital trillions) we should start paying back now versus later though, before the debt service becomes unmanageable and we steal from savers by inflating the debt away, but this is a policy issue. We must stop kicking the can down the road, as a society, as a country, and as a species. [1] https://www.ssa.gov/oact/progdata/fundFAQ.html https://www.ssa.gov/oact/progdata/fundFAQ.html (Frequently Asked Questions about the Social Security Trust Funds) [2] https://news.ycombinator.com/item?id=19686549 https://news.ycombinator.com/item?id=19686549 | https://asia.nikkei.com/Business/Markets/Bank-of-Japan-to-be-top-shareholder-of-Japan-stocks https://asia.nikkei.com/Business/Markets/Bank-of-Japan-to-be... (Bank of Japan to be top shareholder of Japan stocks )
- ThrustVectoring 8y ago>You can't invest the same way as Vanguard and Blackrock at nation state scale You can, it's just that current consumption is fulfilled by current production. Current production gets allocated to some combination of return to labor, return on capital, and taxes. All else equal, the state owning more capital will just squeeze out some combination of return to labor and return on capital. If you look at the cash flows, there's no difference between the government owning 1% more of your employer vs taxing an extra 1% of the company's overall value. The biggest practical consideration is that taxation is a much more visible way of paying for benefits for current retirees, so replacing that with less obvious means is more politically viable.
- ivalm 8y agoTaxes also provide steady cash-flow. For much of equity you need to sell in order to get money back.
- djakjxnanjak 8y agoThe point of the parent comment is that even without the trust fund, each year’s social security taxes will be sufficient to pay 75% of benefits. This makes it clear that claims that the program is bound to disappear completely are overblown.
- treis 8y agoSure, "gone" is clearly hyperbole. But the sentiment is accurate. GenX will pay for the Boomers to get 100% of their SS while they will likely receive less than the full value of their SS.
- toomuchtodo 8y agoTaxes (currently at historic lows) will go up, and GenX will get paid.
- mrguyorama 8y agoOh good, because everyone knows millennials are just swimming in extra taxable cash
- toomuchtodo 8y agoYou'd tax those making >$10 million/year, not those making <$100k/year.