4 ms·

The current system is mathematically unsustainable pretty much by the design of a certain political faction interested in demonstrating the incompetence of gove

The current system is mathematically unsustainable pretty much by the design of a certain political faction interested in demonstrating the incompetence of government. Removing the income cap—currently around $160k—on the social security tax would do a great deal to make social security sustainable (and more equitable).

wolverine876 3y ago
Think how many problems could be solved by removing (democratically) that faction: Social security, climate change, immigration (to a significant extent), education, et al
dh2022 3y ago
If they remove the cap on retirement contributions they should also remove the cap on retirement payouts. I would love to see social security pay former CEOs millions of dollars per year:)
- yterdy 3y ago
  No, they shouldn't. SS is meant to prevent destitution, not enable luxury. Wealthy Americans owe the working and consumption classes whose sacrifices make their riches possible; there is no such obligation to ensure those elite earners get back even what they paid into that particular channel, at the expense of people who are much less well off, when they have other resources to draw from. You might not think that's fair. I do. Even under this hypothetical regime, I know who I'd choose to be: rich and paying a ton in taxes, in a heartbeat.
  - bumby 3y ago
    Devils advocate: by subsidizing the “consumption class” you enable more consumption. I get that’s how our current economy works but there are probably a lot of negative externalities associated with increasing consumption.
    - yterdy 3y ago
      That's fine. Sure, there are downsides that increase as consumption increases, meaning that overconsumption (however that's defined) is undesirable. However, consumption enables cultural expression that otherwise would be economically untenable. Art, design, music, etc. benefit from economic incentives to overproduce beyond subsistence. That people go above and beyond in their productive capacity in order to enable creators to create freely and contribute to the corpus of human expression is something that should be recognized as the sacrifice for the collective soul that it is.
      - bumby 3y ago
        That's a good point, and I'm in favor of those 'cultural expressions'. But I think we're fooling ourselves if we think somebody is buying a gas-guzzling SUV, or the next iPhone, so they will have the ability to write the next great American novel. I'd venture that most consumption is a status game. I think my larger point is we have to zoom out for a systems level analysis. We shouldn't assume that the production is de-coupled from the consumption, and production can come with a host of negative externalities. I'm not convinced that wonton consumption (especially for the sake of itself) is a net positive, given human nature's tendency to be insatiable with regard to consumption.
        yterdy 3y ago
        >I'd venture that most consumption is a status game. I would include the debasement of one's moral soul for social-climbing purposes in the set of aforementioned sacrifices. :) In any case, I did mention the dangers of overconsumption. There is something in between that and subsistence that is a net-positive for society (in this epoch, at least).
- the_gastropod 3y ago
  I don't understand why the mental model for SS is any different than any other service the government provides. People don't expect their tax payments to proportionally determine: their access to roads, law enforcement services, fire protection, access to GPS or weather data, etc. Government's purpose is to facilitate the common good. Some fortunate individuals are able to contribute more, some less fortunate individuals are able to contribute less. I'm relatively lucky in that I do hit the SS income cap every year. And I think it's extremely stupid that my paycheck suddenly grows 6.2% well before the end of the year every year. I can absolutely afford to continue paying my 6.2% tax, just like everyone else, and not need special treatment when withdrawal time comes in retirement.
  - AnthonyMouse 3y ago
    Social security was sold as an insurance program and would have to be completely redesigned to operate like other programs -- you'd essentially want it to be a UBI for everyone over a particular age funded out of general revenues, and might be better off to make it a real UBI for just everyone. But it's "the third rail" because there is so much money on the table. It's a program that makes transfer payments, which is zero sum, so any change will be fought hard by whoever ends up worse off than they are under the status quo.
    - wolverine876 3y ago
      How is it like insurance? At least from one perspective, insurance is hedging risks - you put in a little and if something happens, you get a lot back. Social Security is compulsory savings, and you get out pretty much what you put in. (Maybe I'm focusing too much on one word.) > it's "the third rail" because there is so much money on the table. Also, I think because people feel an existential threat - some people rely on that money to survive. And because, after seeing that deduction every two weeks for their entire lives, they want their payout.
      - AnthonyMouse 3y ago
        > How is it like insurance? It pays until you die instead of paying until you run out of savings. The risk it's insuring against is that you live longer than the average person and outlive your savings. The private insurance companies that offer this type of insurance call it an annuity. > Also, I think because people feel an existential threat - some people rely on that money to survive. Nah, the more sensible of the reform proposals are the ones that convert it into a fixed payment for everyone. Those proposals are still every hard to pass because some people would get more than they do now and some would get less, and the people who would get less are the more affluent people with no existential risk, but they would still fight it. > And because, after seeing that deduction every two weeks for their entire lives, they want their payout. The program started by making payouts to people who never paid in. Their money is already gone, given to their own parents.
AnthonyMouse 3y ago
> The current system is mathematically unsustainable pretty much by the design of a certain political faction interested in demonstrating the incompetence of government. The current system is mathematically unsustainable as a result of politics. If you're going to untie benefits from payments then the first sensible thing to do is to make the same payments to everyone instead of giving more to people who made more money, but this would result in large numbers of affluent retirees voting against you. If you're going to untie benefits from payments then the second sensible thing to do is to eliminate social security tax whatsoever and fund the program from general revenues, which would remove the need for the farce of a "social security trust fund" (the government owes itself money: it's a debit and a credit in equal amounts and nets to zero). But then people would condemn you for "bankrupting social security" or "stealing the trust fund" or similar nonsense, funded by the people the tax burden would be shifted onto. Removing the cap while leaving the program as it is not only is worse than either of these things, it doesn't even solve the problem, because the program as-designed would then be making higher payments to all of those people when they retire which would consume more than all of the money they paid in because people who made more money tend to live longer.
- bumby 3y ago
  >the government owes itself money: it's a debit and a credit in equal amounts and nets to zero Can you elaborate? It seems like the govt has a liability and the pensioners have an asset.
  - vineyardmike 3y ago
    The government has a fund that is used to pay for SS. The fund is an asset they’ve committed to using to pay the liability of their pensioner promises. That fund is an asset full of assets. Those assets are government debt. Owning your debt basically nets to 0.
    - bumby 3y ago
      I agree for a snapshot in time. I think the distinction is that if the liability includes future payments to current citizens posting into the system, the liability may outpace the asset.

wolverine876 3y ago

Think how many problems could be solved by removing (democratically) that faction: Social security, climate change, immigration (to a significant extent), education, et al

dh2022 3y ago

If they remove the cap on retirement contributions they should also remove the cap on retirement payouts. I would love to see social security pay former CEOs millions of dollars per year:)

yterdy 3y ago
No, they shouldn't. SS is meant to prevent destitution, not enable luxury. Wealthy Americans owe the working and consumption classes whose sacrifices make their riches possible; there is no such obligation to ensure those elite earners get back even what they paid into that particular channel, at the expense of people who are much less well off, when they have other resources to draw from. You might not think that's fair. I do. Even under this hypothetical regime, I know who I'd choose to be: rich and paying a ton in taxes, in a heartbeat.
- bumby 3y ago
  Devils advocate: by subsidizing the “consumption class” you enable more consumption. I get that’s how our current economy works but there are probably a lot of negative externalities associated with increasing consumption.
  - yterdy 3y ago
    That's fine. Sure, there are downsides that increase as consumption increases, meaning that overconsumption (however that's defined) is undesirable. However, consumption enables cultural expression that otherwise would be economically untenable. Art, design, music, etc. benefit from economic incentives to overproduce beyond subsistence. That people go above and beyond in their productive capacity in order to enable creators to create freely and contribute to the corpus of human expression is something that should be recognized as the sacrifice for the collective soul that it is.
    - bumby 3y ago
      That's a good point, and I'm in favor of those 'cultural expressions'. But I think we're fooling ourselves if we think somebody is buying a gas-guzzling SUV, or the next iPhone, so they will have the ability to write the next great American novel. I'd venture that most consumption is a status game. I think my larger point is we have to zoom out for a systems level analysis. We shouldn't assume that the production is de-coupled from the consumption, and production can come with a host of negative externalities. I'm not convinced that wonton consumption (especially for the sake of itself) is a net positive, given human nature's tendency to be insatiable with regard to consumption.
      - yterdy 3y ago
        >I'd venture that most consumption is a status game. I would include the debasement of one's moral soul for social-climbing purposes in the set of aforementioned sacrifices. :) In any case, I did mention the dangers of overconsumption. There is something in between that and subsistence that is a net-positive for society (in this epoch, at least).
the_gastropod 3y ago
I don't understand why the mental model for SS is any different than any other service the government provides. People don't expect their tax payments to proportionally determine: their access to roads, law enforcement services, fire protection, access to GPS or weather data, etc. Government's purpose is to facilitate the common good. Some fortunate individuals are able to contribute more, some less fortunate individuals are able to contribute less. I'm relatively lucky in that I do hit the SS income cap every year. And I think it's extremely stupid that my paycheck suddenly grows 6.2% well before the end of the year every year. I can absolutely afford to continue paying my 6.2% tax, just like everyone else, and not need special treatment when withdrawal time comes in retirement.
- AnthonyMouse 3y ago
  Social security was sold as an insurance program and would have to be completely redesigned to operate like other programs -- you'd essentially want it to be a UBI for everyone over a particular age funded out of general revenues, and might be better off to make it a real UBI for just everyone. But it's "the third rail" because there is so much money on the table. It's a program that makes transfer payments, which is zero sum, so any change will be fought hard by whoever ends up worse off than they are under the status quo.
  - wolverine876 3y ago
    How is it like insurance? At least from one perspective, insurance is hedging risks - you put in a little and if something happens, you get a lot back. Social Security is compulsory savings, and you get out pretty much what you put in. (Maybe I'm focusing too much on one word.) > it's "the third rail" because there is so much money on the table. Also, I think because people feel an existential threat - some people rely on that money to survive. And because, after seeing that deduction every two weeks for their entire lives, they want their payout.
    - AnthonyMouse 3y ago
      > How is it like insurance? It pays until you die instead of paying until you run out of savings. The risk it's insuring against is that you live longer than the average person and outlive your savings. The private insurance companies that offer this type of insurance call it an annuity. > Also, I think because people feel an existential threat - some people rely on that money to survive. Nah, the more sensible of the reform proposals are the ones that convert it into a fixed payment for everyone. Those proposals are still every hard to pass because some people would get more than they do now and some would get less, and the people who would get less are the more affluent people with no existential risk, but they would still fight it. > And because, after seeing that deduction every two weeks for their entire lives, they want their payout. The program started by making payouts to people who never paid in. Their money is already gone, given to their own parents.

AnthonyMouse 3y ago

> The current system is mathematically unsustainable pretty much by the design of a certain political faction interested in demonstrating the incompetence of government. The current system is mathematically unsustainable as a result of politics. If you're going to untie benefits from payments then the first sensible thing to do is to make the same payments to everyone instead of giving more to people who made more money, but this would result in large numbers of affluent retirees voting against you. If you're going to untie benefits from payments then the second sensible thing to do is to eliminate social security tax whatsoever and fund the program from general revenues, which would remove the need for the farce of a "social security trust fund" (the government owes itself money: it's a debit and a credit in equal amounts and nets to zero). But then people would condemn you for "bankrupting social security" or "stealing the trust fund" or similar nonsense, funded by the people the tax burden would be shifted onto. Removing the cap while leaving the program as it is not only is worse than either of these things, it doesn't even solve the problem, because the program as-designed would then be making higher payments to all of those people when they retire which would consume more than all of the money they paid in because people who made more money tend to live longer.

bumby 3y ago
>the government owes itself money: it's a debit and a credit in equal amounts and nets to zero Can you elaborate? It seems like the govt has a liability and the pensioners have an asset.
- vineyardmike 3y ago
  The government has a fund that is used to pay for SS. The fund is an asset they’ve committed to using to pay the liability of their pensioner promises. That fund is an asset full of assets. Those assets are government debt. Owning your debt basically nets to 0.
  - bumby 3y ago
    I agree for a snapshot in time. I think the distinction is that if the liability includes future payments to current citizens posting into the system, the liability may outpace the asset.