4 ms·
Private companies have to fund retirement benefits. The US government doesn't -- which is why there's arguments over why the US debt is around 20 trillion (cur
by cperciva 5y ago
Private companies have to fund retirement benefits. The US government doesn't -- which is why there's arguments over why the US debt is around 20 trillion (current bonds outstanding) or over 100 trillion (including unfunded social security benefits).
- rahimnathwani 5y agoAlso, unfunded US govt retirement benefits come in two forms: A) future pension and medicare costs, for people who are alive today, and B) future retirement benefits for current and former govt employees IMO (B) should be prefunded (or at least have an actuarial value on the govt balance sheet) because it's an actual liability. But whether or not (A) should be treated the same way depends on whether the benefits are fixed as of now, or whether they can be reduced/eliminated if they take too large a part of the total budget at the time they're due to be paid.
- cperciva 5y agoAgreed, although (a) the fact that social security is the "third rail of politics" suggests that while it's not a contractual obligation like employee retirement benefits, it's effectively an unavoidable obligation; and (b) even if the future value of benefits to be paid out isn't recorded as a liability, the social security taxes paid should probably be treated as "deferred revenue" since that revenue is at least theoretically being gathered for the purpose of paying the future benefits in question.
- rahimnathwani 5y agoYes, taxes collected by govt effectively go into a single pool. The money is not ringfenced for particular purposes. Both in the UK (where I'm from) and in the US (where I live now), there are separate taxes ('social security' in the US, 'national insurance' in the UK), but the AFAICT this is just a trick to obscure the true rate of payroll/income taxes.