6 ms·

"If you default, the federal government helps itself to a chunk of your Social Security check." This, to me, is the buried lede. This is worse than payday lend

"If you default, the federal government helps itself to a chunk of your Social Security check." This, to me, is the buried lede. This is worse than payday lending, and it's being perpetrated by our government upon desperate parents.

xwdv 4y ago
I don’t know, given that social security will likely be totally bankrupt and unable to make payments in the future, this seems like a smart move to default early. Government won’t be able to take a chunk out of $0.
- gamegoblin 4y ago
  Could you explain the mechanism by which social security would go bankrupt, given that it is just an institution of USG? And why does such a mechanism not apply to other large institutions such as the military?
  - alistairSH 4y ago
    It’s an old right wing trope. Fewer babies, fewer people paying into the system, eventual bankruptcy. Completely ignoring that we can just increase the tax.
    - junofan 4y ago
      You’re saying old people could vote themselves more money? Sure, in theory.
    - VictorPath 4y ago
      Also ignoring that social security payments as a percentage of GDP is not hitting some limit it has not over the past eight decades. The US was able to pay out social security in 1942 with a much smaller economy, there is no reason it should be unable to in the future. Some groups have been complaining about social security for eighty years - probably because it is the one benefit the average worker gets back from the federal government.
      - rayiner 4y ago
        Social security expenditures will grow from 4% of gdp to 6% of gdp from 2000-2035. By 2035 Medicare will grow to 8% of GDP. So in a bit over a decade, one out of every six dollars produced in the economy will be going to take care of retired people.
        VictorPath 4y ago
        Social security was a higher percentage of gdp in the early 1980s than it is now. Even if it goes back up it is to a level it was at before. People can come to different estimates about what future gdp growth rates will be and have different estimated. All health care costs in the US are going up. The US government has to pay HMO corporation profits, Americans have to pay higher drug prices unlike other countries. The government can continue paying current Medicare rates, or it can hand more money to health companies if it wants to. As the government is still handing extra money to health companies apparently no one thinks it is a problem as of yet.
    - spiderice 4y ago
      I wouldn't call it a trope if the "solution" is "just increase the tax". That's exactly what many many people want to avoid. Just because you don't see an issue with raising taxes, doesn't mean people aren't justified in wanting to avoid it.
      - alistairSH 4y ago
        There are many knobs we can turn. Increasing taxes on everybody is the "easy" one. We can reduce benefit payments. We can increase retirement age. We can remove the income max (income over $137k isn't taxed). We can import labor. Thee point is, SS only runs out of money if we allow it to do so. There is no law of nature that requires SS to become insolvent any time within our lives. The typical conservative plan is to abolish SS and replace it with private savings. We tried that. It didn't work. Low income earners don't always have the capacity to save at the levels required to avoid destitution in old age or disability.
        tastyfreeze 4y ago
        Why is it the government's responsibility to ensure an individual wont be destitute in old age?
        alistairSH 4y ago
        We are the government/society. It does what we want. We decided in the 1930s that a minimum level disability and retirement income should be available. Watching granny starve in the gutter wasn't a pleasant sight. Not everybody will be able to retiree on their personal savings. Many of those people will get that way through no fault of their own. Some people just have bad luck. They get injured and disabled. They have extenuating family circumstances. They might just be stuck in a dead-end, minimum wage job.
    - rayiner 4y ago
      The dwindling ratio of workers per retiree (from 16 to 1 in 1950 to under 3 to 1 today) is a real thing. The right wing runs with it because it plays into their politics, for the same reason the left runs with climate change. But that doesn’t make it a manufactured problem. Working young people have to take care of non-working old people. That’s true in a Bangladeshi village and that’s true in America. There’s no policy knob you can turn to make that fundamental dynamic go away.
      - shadowgovt 4y ago
        Policy knobs can be used to determine how resources are allocated and, perhaps most importantly, the kind of resources. There's a lot of elder-care that is fundamentally non-scalable and non-automatable. But there's also a lot that is. Policy can both incentivize development of / investment in the latter and paying people competitive wage and benefits to step up and work the former. Meanwhile, with productivity per person higher than it's ever been thanks to general industrial and service automation, there should be more GDP than ever free to invest in such social programs.
      - eggnet 4y ago
        It’s math. Imagine you are the SSA. There is tax revenue, and there are payouts. Both are controlled by policies enshrined into law by congress. One of the things that can and has been done to control expenses is raising the retirement age.
      - triceratops 4y ago
        > Working young people have to take care of non-working old people > There’s no policy knob you can turn to make that fundamental dynamic go away. Are all the productivity increases in the past century completely meaningless? To take the most facile, direct example possible, if all the fast food jobs are automated, can't we train those people to take care of the elderly? Not medically, but as orderlies and other employees in nursing homes?
        lotsofpulp 4y ago
        > Are all the productivity increases in the past century completely meaningless? Based on the change in prices for long term care and skilled nursing facilities, the productivity increases due to automation/outsourcing have not offset supply and demand in labor for elder/disabled care. It is highly undesirable work, plus medical advances keep people alive longer and longer who need assistance to live. Even during my life, the past 30+ years, these jobs were almost always done by immigrants because they were willing to accept low wages. It is not something an American with options is going to opt for without higher pay.
    - 988747 4y ago
      You are completely ignoring the fact that you can't always "just increase the tax". Tax increases have their negative consequences, at some point they can kill the entire economy.
      - alistairSH 4y ago
        Or, increase retirement age. Or, tax income over $130k. Or, reduce payments. Like I said, the plan only goes bankrupt if we allow it.
    - inkblotuniverse 4y ago
      Ahh yes, just yoke and impoverish tomorrow's youth. Those kids'll be wishing for another covid- clear out some of the leeches.
      - alistairSH 4y ago
        Or, increase retirement age. Or, tax income over $130k. Or, reduce payments. Like I said, the plan only goes bankrupt if we allow it.
        jimbob45 4y ago
        https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets https://www.nerdwallet.com/article/taxes/federal-income-tax-... Income over $130k is heavily taxed at 24%. Retirement age can only be increased so many times before retirement is effectively gone for the lower class - I think I've heard the statistic that the majority of Americans will only ever collect on three social security checks.
        nradov 4y ago
        You heard wrong. Full Social Security retirement age is 67. US life expectancy is 79. Social Security benefits are paid monthly. Do the math.
        alistairSH 4y ago
        You do realize SS tax is a different line item on your taxes, right? Over $137k does not pay into the SS system.
  - gbear605 4y ago
    Social security, unlike all the rest of the US Government welfare programs, draws from a separate trust. It currently has roughly $3 trillion in the trust. When you pay income tax, there’s a portion (usually noted on the paystub) that goes directly to the trust. If they continue current payments, the income of everyone stays the same, and the tax percentage stays the same, then it will run out of funds after a while (currently predicted to be 2035). However, I would bet pretty strongly that one of those constraints won’t hold - probably the amount paid out to each person will be lowered, although the tax percentage could also increase.
    - eek2121 4y ago
      - xapata 4y ago
        One solution is to invite more immigration to balance the falling birth rate. More workers means more tax revenue.
        bdcravens 4y ago
        Or raise taxes. This could take the form of raising the percentage, or increase the yearly cap, so that high earners contribute more.
        whoooooo123 4y ago
        Immigrants get old too.
        xapata 4y ago
        The USA has plenty of land and food. We can invite more immigrants for a long time. https://www.penguinrandomhouse.com/books/636499/one-billion-americans-by-matthew-yglesias/ https://www.penguinrandomhouse.com/books/636499/one-billion-...
        alistairSH 4y ago
  - voodootrucker 4y ago
    Because the military doesn't have any assets to speak of. It's a government program funded each year by taxes. The social security program is separate from the federal budget [0], and that's why you see it as a separate tax on your paycheck (if you're American). Every dollar you pay into it, goes into a trust fund, whose sole asset is US Government bonds. Social security can go bankrupt if the US defaults on it's debt, which although almost unthinkable (see Russia as a recent example of paying bonds despite being under heavy sanctions, and having to pay them in another currency) comes up every few years [1]. [0] https://www.reuters.com/article/us-column-miller-socialsecurity/social-security-and-the-u-s-deficit-separating-fact-from-fiction-idUSKCN1N64GR https://www.reuters.com/article/us-column-miller-socialsecur... [1] https://www.cnbc.com/2021/12/16/biden-signs-debt-ceiling-increase-preventing-first-ever-us-default.html https://www.cnbc.com/2021/12/16/biden-signs-debt-ceiling-inc...
- alistairSH 4y ago
  Social Security only goes bankrupt if we fail to fund it.
  - deleted 4y ago
    [deleted]
- javagram 4y ago
  Under current laws of social security “defaults” it will still pay out something like 70-80% of authorized benefits. There is no reason to believe it will ever be 0% as the benefits are paid out of taxes that are continually collected from current workers.
  - AngryData 4y ago
    The only reason to believe it will still exist in the future is because people believe it should exist and should pay out from the government pocket even if it technically doesn't have the money. The problem is many millennials and Gen Z have already given up on social security, do not believe in it in the future, and will not vote to keep a dead or dieing SS program alive when they themselves had abandoned it long ago. And once they hit critical mass the SS can actually die without voters to backup it up and along with it all the terrible old precedences of that program will disappear. That will leave a huge hole for retirement funds, but it also means a new program can be implimented into its place, something like a basic income that has become more popular or just another social security model that has different specifics and rules. Current social security is relying heavily on population rising or at the least not falling, but even that is very questionable at this point and could end up being the nails in its coffin.
    - infamouscow 4y ago
      > The problem is many millennials and Gen Z have already given up on social security, do not believe in it in the future, and will not vote to keep a dead or dieing SS program alive when they themselves had abandoned it long ago. Good. Let's be brutally honest and ask who's really to blame for this.
      - pessimizer 4y ago
        All the people who say that Social Security is in danger usually then elaborately explain that it's in danger because they themselves are going to try their best to dismantle and defund it.
- bdcravens 4y ago
  Bankruptcy doesn't always mean complete dissolution. Typically the obligations are altered to ensure continued existence, especially when there is continued revenue coming in.
- trashtester 4y ago
  If they modify the COLA, they can let inflation take care of the social security bomb. I'm guessing they will adjust this next year, due to the elections this year.

xwdv 4y ago

I don’t know, given that social security will likely be totally bankrupt and unable to make payments in the future, this seems like a smart move to default early. Government won’t be able to take a chunk out of $0.

gamegoblin 4y ago
Could you explain the mechanism by which social security would go bankrupt, given that it is just an institution of USG? And why does such a mechanism not apply to other large institutions such as the military?
- alistairSH 4y ago
  It’s an old right wing trope. Fewer babies, fewer people paying into the system, eventual bankruptcy. Completely ignoring that we can just increase the tax.
  - junofan 4y ago
    You’re saying old people could vote themselves more money? Sure, in theory.
  - VictorPath 4y ago
    Also ignoring that social security payments as a percentage of GDP is not hitting some limit it has not over the past eight decades. The US was able to pay out social security in 1942 with a much smaller economy, there is no reason it should be unable to in the future. Some groups have been complaining about social security for eighty years - probably because it is the one benefit the average worker gets back from the federal government.
    - rayiner 4y ago
      Social security expenditures will grow from 4% of gdp to 6% of gdp from 2000-2035. By 2035 Medicare will grow to 8% of GDP. So in a bit over a decade, one out of every six dollars produced in the economy will be going to take care of retired people.
      - VictorPath 4y ago
        Social security was a higher percentage of gdp in the early 1980s than it is now. Even if it goes back up it is to a level it was at before. People can come to different estimates about what future gdp growth rates will be and have different estimated. All health care costs in the US are going up. The US government has to pay HMO corporation profits, Americans have to pay higher drug prices unlike other countries. The government can continue paying current Medicare rates, or it can hand more money to health companies if it wants to. As the government is still handing extra money to health companies apparently no one thinks it is a problem as of yet.
  - spiderice 4y ago
    I wouldn't call it a trope if the "solution" is "just increase the tax". That's exactly what many many people want to avoid. Just because you don't see an issue with raising taxes, doesn't mean people aren't justified in wanting to avoid it.
    - alistairSH 4y ago
      There are many knobs we can turn. Increasing taxes on everybody is the "easy" one. We can reduce benefit payments. We can increase retirement age. We can remove the income max (income over $137k isn't taxed). We can import labor. Thee point is, SS only runs out of money if we allow it to do so. There is no law of nature that requires SS to become insolvent any time within our lives. The typical conservative plan is to abolish SS and replace it with private savings. We tried that. It didn't work. Low income earners don't always have the capacity to save at the levels required to avoid destitution in old age or disability.
      - tastyfreeze 4y ago
        Why is it the government's responsibility to ensure an individual wont be destitute in old age?
        alistairSH 4y ago
        We are the government/society. It does what we want. We decided in the 1930s that a minimum level disability and retirement income should be available. Watching granny starve in the gutter wasn't a pleasant sight. Not everybody will be able to retiree on their personal savings. Many of those people will get that way through no fault of their own. Some people just have bad luck. They get injured and disabled. They have extenuating family circumstances. They might just be stuck in a dead-end, minimum wage job.
  - rayiner 4y ago
    The dwindling ratio of workers per retiree (from 16 to 1 in 1950 to under 3 to 1 today) is a real thing. The right wing runs with it because it plays into their politics, for the same reason the left runs with climate change. But that doesn’t make it a manufactured problem. Working young people have to take care of non-working old people. That’s true in a Bangladeshi village and that’s true in America. There’s no policy knob you can turn to make that fundamental dynamic go away.
    - shadowgovt 4y ago
      Policy knobs can be used to determine how resources are allocated and, perhaps most importantly, the kind of resources. There's a lot of elder-care that is fundamentally non-scalable and non-automatable. But there's also a lot that is. Policy can both incentivize development of / investment in the latter and paying people competitive wage and benefits to step up and work the former. Meanwhile, with productivity per person higher than it's ever been thanks to general industrial and service automation, there should be more GDP than ever free to invest in such social programs.
    - eggnet 4y ago
      It’s math. Imagine you are the SSA. There is tax revenue, and there are payouts. Both are controlled by policies enshrined into law by congress. One of the things that can and has been done to control expenses is raising the retirement age.
    - triceratops 4y ago
      > Working young people have to take care of non-working old people > There’s no policy knob you can turn to make that fundamental dynamic go away. Are all the productivity increases in the past century completely meaningless? To take the most facile, direct example possible, if all the fast food jobs are automated, can't we train those people to take care of the elderly? Not medically, but as orderlies and other employees in nursing homes?
      - lotsofpulp 4y ago
        > Are all the productivity increases in the past century completely meaningless? Based on the change in prices for long term care and skilled nursing facilities, the productivity increases due to automation/outsourcing have not offset supply and demand in labor for elder/disabled care. It is highly undesirable work, plus medical advances keep people alive longer and longer who need assistance to live. Even during my life, the past 30+ years, these jobs were almost always done by immigrants because they were willing to accept low wages. It is not something an American with options is going to opt for without higher pay.
  - 988747 4y ago
    You are completely ignoring the fact that you can't always "just increase the tax". Tax increases have their negative consequences, at some point they can kill the entire economy.
    - alistairSH 4y ago
      Or, increase retirement age. Or, tax income over $130k. Or, reduce payments. Like I said, the plan only goes bankrupt if we allow it.
  - inkblotuniverse 4y ago
    Ahh yes, just yoke and impoverish tomorrow's youth. Those kids'll be wishing for another covid- clear out some of the leeches.
    - alistairSH 4y ago
      Or, increase retirement age. Or, tax income over $130k. Or, reduce payments. Like I said, the plan only goes bankrupt if we allow it.
      - jimbob45 4y ago
        https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets https://www.nerdwallet.com/article/taxes/federal-income-tax-... Income over $130k is heavily taxed at 24%. Retirement age can only be increased so many times before retirement is effectively gone for the lower class - I think I've heard the statistic that the majority of Americans will only ever collect on three social security checks.
        nradov 4y ago
        You heard wrong. Full Social Security retirement age is 67. US life expectancy is 79. Social Security benefits are paid monthly. Do the math.
        alistairSH 4y ago
        You do realize SS tax is a different line item on your taxes, right? Over $137k does not pay into the SS system.
- gbear605 4y ago
  Social security, unlike all the rest of the US Government welfare programs, draws from a separate trust. It currently has roughly $3 trillion in the trust. When you pay income tax, there’s a portion (usually noted on the paystub) that goes directly to the trust. If they continue current payments, the income of everyone stays the same, and the tax percentage stays the same, then it will run out of funds after a while (currently predicted to be 2035). However, I would bet pretty strongly that one of those constraints won’t hold - probably the amount paid out to each person will be lowered, although the tax percentage could also increase.
  - eek2121 4y ago
    - xapata 4y ago
      One solution is to invite more immigration to balance the falling birth rate. More workers means more tax revenue.
      - bdcravens 4y ago
        Or raise taxes. This could take the form of raising the percentage, or increase the yearly cap, so that high earners contribute more.
      - whoooooo123 4y ago
        Immigrants get old too.
        xapata 4y ago
        The USA has plenty of land and food. We can invite more immigrants for a long time. https://www.penguinrandomhouse.com/books/636499/one-billion-americans-by-matthew-yglesias/ https://www.penguinrandomhouse.com/books/636499/one-billion-...
        alistairSH 4y ago
- voodootrucker 4y ago
  Because the military doesn't have any assets to speak of. It's a government program funded each year by taxes. The social security program is separate from the federal budget [0], and that's why you see it as a separate tax on your paycheck (if you're American). Every dollar you pay into it, goes into a trust fund, whose sole asset is US Government bonds. Social security can go bankrupt if the US defaults on it's debt, which although almost unthinkable (see Russia as a recent example of paying bonds despite being under heavy sanctions, and having to pay them in another currency) comes up every few years [1]. [0] https://www.reuters.com/article/us-column-miller-socialsecurity/social-security-and-the-u-s-deficit-separating-fact-from-fiction-idUSKCN1N64GR https://www.reuters.com/article/us-column-miller-socialsecur... [1] https://www.cnbc.com/2021/12/16/biden-signs-debt-ceiling-increase-preventing-first-ever-us-default.html https://www.cnbc.com/2021/12/16/biden-signs-debt-ceiling-inc...
alistairSH 4y ago
Social Security only goes bankrupt if we fail to fund it.
- deleted 4y ago
  [deleted]
javagram 4y ago
Under current laws of social security “defaults” it will still pay out something like 70-80% of authorized benefits. There is no reason to believe it will ever be 0% as the benefits are paid out of taxes that are continually collected from current workers.
- AngryData 4y ago
  The only reason to believe it will still exist in the future is because people believe it should exist and should pay out from the government pocket even if it technically doesn't have the money. The problem is many millennials and Gen Z have already given up on social security, do not believe in it in the future, and will not vote to keep a dead or dieing SS program alive when they themselves had abandoned it long ago. And once they hit critical mass the SS can actually die without voters to backup it up and along with it all the terrible old precedences of that program will disappear. That will leave a huge hole for retirement funds, but it also means a new program can be implimented into its place, something like a basic income that has become more popular or just another social security model that has different specifics and rules. Current social security is relying heavily on population rising or at the least not falling, but even that is very questionable at this point and could end up being the nails in its coffin.
  - infamouscow 4y ago
    > The problem is many millennials and Gen Z have already given up on social security, do not believe in it in the future, and will not vote to keep a dead or dieing SS program alive when they themselves had abandoned it long ago. Good. Let's be brutally honest and ask who's really to blame for this.
    - pessimizer 4y ago
      All the people who say that Social Security is in danger usually then elaborately explain that it's in danger because they themselves are going to try their best to dismantle and defund it.
bdcravens 4y ago
Bankruptcy doesn't always mean complete dissolution. Typically the obligations are altered to ensure continued existence, especially when there is continued revenue coming in.
trashtester 4y ago
If they modify the COLA, they can let inflation take care of the social security bomb. I'm guessing they will adjust this next year, due to the elections this year.