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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 propor

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.
  - toast0 3y ago
    Really, it's not like insurance, because no insurer would structure their program the way that social security is structured. But it is like insurance in that the program is named Old-Age, Survivors, and Disability Insurance (OASDI) Program. It's also like insurance in that the payout is related to the premium / taxes. If you pay your premiums and experience the covered risks, you (or your survivors) get paid. It's not like savings, because if you don't experience disability, or old age, you don't get paid. Your survivors might still get something though, I don't know much about survivor benefits. Disability insurance is available from private insurers, but with different terms. Old-age insurance is more or less an anuity, again available from private insurers, with different terms. The biggest difference with social security is that smaller incomes (and thus, smaller payments into oasdi) get a larger payment per dollar income if they experience a covered event. Another major difference is that if one has multiple former spouses of marriages that lasted at least 10-years, they're all potentially eligible for spousal benefits and they don't have to share it: no private insurer would sign up for that. Also, the actuarial tables are rarely updated and rather out of date at this point.

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.
- toast0 3y ago
  Really, it's not like insurance, because no insurer would structure their program the way that social security is structured. But it is like insurance in that the program is named Old-Age, Survivors, and Disability Insurance (OASDI) Program. It's also like insurance in that the payout is related to the premium / taxes. If you pay your premiums and experience the covered risks, you (or your survivors) get paid. It's not like savings, because if you don't experience disability, or old age, you don't get paid. Your survivors might still get something though, I don't know much about survivor benefits. Disability insurance is available from private insurers, but with different terms. Old-age insurance is more or less an anuity, again available from private insurers, with different terms. The biggest difference with social security is that smaller incomes (and thus, smaller payments into oasdi) get a larger payment per dollar income if they experience a covered event. Another major difference is that if one has multiple former spouses of marriages that lasted at least 10-years, they're all potentially eligible for spousal benefits and they don't have to share it: no private insurer would sign up for that. Also, the actuarial tables are rarely updated and rather out of date at this point.