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>I think people are reasonably skeptical of this part I think that understates it: some enormous fraction (like 45%) of federal government spending is for reti

>I think people are reasonably skeptical of this part I think that understates it: some enormous fraction (like 45%) of federal government spending is for retirees (Social Security, Medicare and government funded pension) who represent only about 15% of the population. That's the unsquareable circle for UBI.

AnthonyMouse 6y ago
It's actually pretty easy to solve, because it long-term replaces social security. Social security has a dumb design if it's supposed to be a safety net. It pays out in proportion to how much money you made. That's not a safety net. If someone who made $20,000/year when they were working can survive on a given amount of money, someone who made $80,000/year when they were working can survive on the same amount. If they want more they can use the extra money they made to buy an annuity. And that's why social security costs so much -- it pays out more to people who, by and large, need it less. Now, you're not going to pass a repeal of social security. The people currently receiving significantly more from it than they would from a UBI would revolt. So you do this. You give people an election between a UBI for life or social security after retirement. Current 65 year olds are all going to pick social security. Current 18 year olds are going to pick the UBI, because the net present value is higher. That means social security long-term goes away. In the short term, social security has a trust fund. It gets spent down to make up the difference between what existing retirees would get from the UBI and what they'll be getting from social security. In the long term, when all of the younger people who chose the UBI over social security reach retirement age, the high cost of social security goes away because nobody wanted it.
- NovemberWhiskey 6y ago
  >Social security has a dumb design if it's supposed to be a safety net. It pays out in proportion to how much money you made. Well, sort of. There're two bend points where the proportions go down fairly sharply (90%-32%-15%). It's extremely progressive from that point of view: those with lower average lifetime earnings get a much higher proportion of income replaced than do those with higher lifetime earnings. Median annual Social Security benefits for 2020 are about $15K, vs. mean of about $18K., for example. >So you do this. You give people an election between a UBI for life or social security after retirement. Current 65 year olds are all going to pick social security. Current 18 year olds are going to pick the UBI, because the net present value is higher. That means social security long-term goes away. It makes a big difference where you set the level for UBI, and which entitlements programs you claim it replaces. Without knowing the specifics of the proposal, you can't get good numbers. But it sounds like you're saying UBI will replace Social Security. Let's assume UBI pays $12K per year to every adult, which is less generous than a lot of numbers I've heard. This means it would replace about two-thirds of the average Social Security benefit. Based on U.S. life expectancies, that UBI number and average Social Security benefits, I think that puts the break-even point for lifetime UBI to equal lifetime Social Security about 56 or 57. So let's say that everyone 57 or over stays in Social Security. >In the short term, social security has a trust fund. It gets spent down to make up the difference between what existing retirees would get from the UBI and what they'll be getting from social security. Social Security's "trust fund" was about $2.8tn at the end of 2020. That's 2.61 years of payments. The idea that Social Security is, in some sense, pre-funded by payroll taxes is completely false. It is effectively a pay-as-you-go system with a small buffer. Under the assumptions above, you will exhaust the trust fund in less than 8 years, which is a problem as life expectancy at 65 in the U.S. is almost 20 years. So you now either have to stop funding the gap between UBI and Social Security (politically impossible) or raise more taxes. Over to the UBI then. Social Security brings in taxes of just over $1.06tn year year. Let's just call it $1.1tn. By the way, non-benefit costs for Social Security are only about 0.05% of the program cost, so there's very limited opportunity to make gains by streamlining administration as is often claimed for UBI. US population is about 330m. Take out the child population (about 19%; they aren't getting UBI) and the over-65 population (about 16%; they're retired and are getting Social Security). So you now have 215m people who will receive UBI. Your $1.1tn of payroll taxes funds only about $5,100 of the $12,000 that's supposed to be paid in UBI. Payroll taxes would have to increase by 2.35x to cover the cost of the UBI, and that's before you plug the Social Security gap. Making UBI less generous encourages more people to stay in Social Security which means your funding gap gets wider.

AnthonyMouse 6y ago

It's actually pretty easy to solve, because it long-term replaces social security. Social security has a dumb design if it's supposed to be a safety net. It pays out in proportion to how much money you made. That's not a safety net. If someone who made $20,000/year when they were working can survive on a given amount of money, someone who made $80,000/year when they were working can survive on the same amount. If they want more they can use the extra money they made to buy an annuity. And that's why social security costs so much -- it pays out more to people who, by and large, need it less. Now, you're not going to pass a repeal of social security. The people currently receiving significantly more from it than they would from a UBI would revolt. So you do this. You give people an election between a UBI for life or social security after retirement. Current 65 year olds are all going to pick social security. Current 18 year olds are going to pick the UBI, because the net present value is higher. That means social security long-term goes away. In the short term, social security has a trust fund. It gets spent down to make up the difference between what existing retirees would get from the UBI and what they'll be getting from social security. In the long term, when all of the younger people who chose the UBI over social security reach retirement age, the high cost of social security goes away because nobody wanted it.

NovemberWhiskey 6y ago
>Social security has a dumb design if it's supposed to be a safety net. It pays out in proportion to how much money you made. Well, sort of. There're two bend points where the proportions go down fairly sharply (90%-32%-15%). It's extremely progressive from that point of view: those with lower average lifetime earnings get a much higher proportion of income replaced than do those with higher lifetime earnings. Median annual Social Security benefits for 2020 are about $15K, vs. mean of about $18K., for example. >So you do this. You give people an election between a UBI for life or social security after retirement. Current 65 year olds are all going to pick social security. Current 18 year olds are going to pick the UBI, because the net present value is higher. That means social security long-term goes away. It makes a big difference where you set the level for UBI, and which entitlements programs you claim it replaces. Without knowing the specifics of the proposal, you can't get good numbers. But it sounds like you're saying UBI will replace Social Security. Let's assume UBI pays $12K per year to every adult, which is less generous than a lot of numbers I've heard. This means it would replace about two-thirds of the average Social Security benefit. Based on U.S. life expectancies, that UBI number and average Social Security benefits, I think that puts the break-even point for lifetime UBI to equal lifetime Social Security about 56 or 57. So let's say that everyone 57 or over stays in Social Security. >In the short term, social security has a trust fund. It gets spent down to make up the difference between what existing retirees would get from the UBI and what they'll be getting from social security. Social Security's "trust fund" was about $2.8tn at the end of 2020. That's 2.61 years of payments. The idea that Social Security is, in some sense, pre-funded by payroll taxes is completely false. It is effectively a pay-as-you-go system with a small buffer. Under the assumptions above, you will exhaust the trust fund in less than 8 years, which is a problem as life expectancy at 65 in the U.S. is almost 20 years. So you now either have to stop funding the gap between UBI and Social Security (politically impossible) or raise more taxes. Over to the UBI then. Social Security brings in taxes of just over $1.06tn year year. Let's just call it $1.1tn. By the way, non-benefit costs for Social Security are only about 0.05% of the program cost, so there's very limited opportunity to make gains by streamlining administration as is often claimed for UBI. US population is about 330m. Take out the child population (about 19%; they aren't getting UBI) and the over-65 population (about 16%; they're retired and are getting Social Security). So you now have 215m people who will receive UBI. Your $1.1tn of payroll taxes funds only about $5,100 of the $12,000 that's supposed to be paid in UBI. Payroll taxes would have to increase by 2.35x to cover the cost of the UBI, and that's before you plug the Social Security gap. Making UBI less generous encourages more people to stay in Social Security which means your funding gap gets wider.