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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

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

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...