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I hear this argument all of the time here in conservative Idaho, that social security provides more of a benefit than what's been paid in. This is fundamentall

I hear this argument all of the time here in conservative Idaho, that social security provides more of a benefit than what's been paid in. This is fundamentally NOT how social security works. It has always been self-funded, and if not for the manipulations of unscrupulous politicians who borrowed from it to pay for 30 years of wars, it would be doing just fine today Thank You Very Much. Most people my age (35 and younger) believe that they can't rely on social security for their retirement. It takes some meta thinking to go a step above and realize that this line of reasoning is leading to a self-fulfilling prophecy, meaning we are unlikely to fight for a system we think is doomed. All hogwash of course. Productivity is at least an order of magnitude or two higher today than it was in the depths of the Great Depression. Most staples like food, clothing, transportation and even shelter are cheaper now than they were 75 years ago, adjusted for inflation. We have no way to predict how high productivity will be in 2030, when social security will supposedly encounter "problems". This all dwarfs any increase in lifespan, desired affluence, or cost of medical care we are likely to encounter (once real progress and cures begin happening, instead of the phantom progress we are experiencing in tech bubbles). People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. I really worry for the future of our society, when we freely give up all of the gains made in the 20th century like 40 hour work weeks, rights to privacy, shared public land and other resources like the airwaves, immigration for the huddled masses, and most importantly shared sacrifice and that our society is only as strong as the weakest among us, all the things that Americans used to believe in. We think we are somehow better or wiser than the people some respectfully call the Greatest Generation, who survived the depression, then fought in WWII and died for the standard of living we enjoy today. We're better than this, especially here in such a mecca of ideas and enlightenment.

temphn 15y ago
People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. But I can choose not to use a credit card, buy a smartphone, or sign up for cable or internet. I can't opt out of Social Security. We have to be clear on whether it's supposed to be a great deal for everyone, or whether it's meant to be a redistributive program. If it's supposed to be a great deal for everyone, ok, well, I have a different opinion. Let me opt out. You can continue to use it. Alternatively, if it's supposed to be a redistributive program, well, then you might see why people complain about it. If it's redistributive, by definition some will pay in more than they get out, and others will pay in less than they get out. All that the rational critics of Social Security, Medicare, and Medicaid want is the ability to opt out, in the same way we can switch from AT&T to Verizon. Right now you can only opt out via the very high friction process of moving and giving up citizenship.
InclinedPlane 15y ago
There is some truth to this, but not enough. Social Security provides a fixed rate of return, and provides benefits throughout old age, regardless of how long one lives. How? Not through investment, through fiat. And ultimately that's the core of the problem, because the only way to achieve that is to have more workers paying in to the system than there are retirees pulling from it. Whether it's dollars or government bonds sitting around in a vault somewhere the problem of making them multiply by fiat will always exist. And that's the problem that Social Security ultimately faces. Within the next decade we will face the "we've been stealing from Social Security" problem, but about 15 years after that we will face the absolute "Social Security can't pay for itself at all" problem.
- sjwalter 15y ago
  This is taken directly from a Metafilter post[1]. In short, it seems the "social security is broke" trope isn't an accurate depiction of reality. The post is lengthier than this snippet, includes plenty of citations, and is worth reading in its entirety. "Someone just told me that living outside the US for 5 years could disqualify me for Social Security benefits - I told them that I never expected to get them anyway. It's been said upthread, but this pervasive attitude shows that the rich and their propagandamiesters are winning. Straight talk on Social Security[2]: 'Here’s what Social Security is not: - going broke; - a Ponzi scheme; - expected to stop paying out benefits in your lifetime; - bankrupting our nation or future generations.'" [1] http://www.metafilter.com/115423/My-FaithBased-Retirement#4319492 http://www.metafilter.com/115423/My-FaithBased-Retirement#43... [2] http://www.rollingstone.com/politics/blogs/national-affairs/straight-talk-on-social-security-20120427 http://www.rollingstone.com/politics/blogs/national-affairs/...
  - InclinedPlane 15y ago
    That's nice, but it doesn't reflect reality. In reality it will require a great deal of budgetary pain just to get the government to pay out the social security trust fund. That represents a debt the US has made to itself but we haven't been very good at paying off even those loans. If we don't make any hard choices such as raising other taxes or cutting overall spending then we'll end up with an even greater increase in our national deficit and an accelerating buildup of our national debt. And that will cause the whole system (the economy, the government, everything) to come crashing down long before the so-called social security trust fund "runs out". Right now a social security payments surplus is subsidizing many other government programs, when that subsidy ends within the next decade it will cause hardship. More so, social security is on a glide slope to begin running an absolute deficit in about 25 years. At that point the trust fund will be emptied and there won't be as much money coming in as going out. That's a pretty serious problem. Medicare is even worse off, by a huge margin. Yes, we can change medicare and social security and perhaps fix these things, but right now the train is on a set of tracks which are aimed directly at the edge of a cliff. We can also potentially balance the whole budget and pay down our debt as well, but that isn't happening either. Look at the EU and their budgetary crises right now. The public doesn't want to pay down their debts, they don't want "austerity measures", they don't want to pay their bills, they want benefits to remain forever high regardless of whether that's financially feasible. And they are willing to vote and riot to have their way. Social Security and Medicare are not sustainable in their current forms. Period. They need fixing. Period. Fixing them will be really motherfucking hard (politically and financially) for our country. Period.
twoodfin 15y ago
I hear this argument all of the time here in conservative Idaho, that social security provides more of a benefit than what's been paid in. For many people (the subset of the working poor who end up living a long time) this is absolutely the case. For many other people (those with a below average lifespan or substantially above average career earnings) Social Security is a terrible deal and has no chance under the current formula of paying them back what they put in. Even if you don't count what their employers had to contribute, which might otherwise have been spent on higher wages. It seems inevitable that the SS payroll tax cap will be lifted without substantial changes to the benefit formula, which will make it an even worse deal for, say, the median earner with a post-graduate degree. That doesn't demonstrate that it's a bad program, just that's it's redistributive and we should be honest about that fact. A smart, productive 35-year old should absolutely not rely on Social Security for her retirement, assuming she doesn't want her lifestyle to drop off a cliff at age 68 or whatever the retirement age is by then.
- legutierr 15y ago
  Social Security is redistributive much in the same way that flood or fire insurance is redistributive: those who never need it have overpaid, and those who do need it have underpaid. The flaw that exists in the current discourse regarding Social Security is that the program is framed as a retirement program. It is not. It is "end of life insurance". In fact, one correct term to use in describing programs such as Social Security is "Social Insurance": http://en.wikipedia.org/wiki/Social_insurance http://en.wikipedia.org/wiki/Social_insurance
  - twoodfin 15y ago
    No, it's not redistributive merely like fire or flood insurance. My $300,000 house will cost the same amount to insure as my similarly-housed neighbor who makes twice as much. And the additional cost to insure a $400,000 house isn't typically greater than the reduction in cost to insure a $200,000 house. That's not how social security works. The benefit curve drops off dramatically in relation to the "pay-in" curve: http://www.ssa.gov/oact/COLA/piaformula.html http://www.ssa.gov/oact/COLA/piaformula.html And again, things will get worse when, seemingly inevitably, the payroll tax cap is lifted without substantially modifying the "bend points". A dollar you contribute to SS on your earnings over $56,000 is worth half the benefits of a dollar contributed under that amount.

temphn 15y ago

People complain more about the self-funding social security payroll tax of 6% than they do about the 3% rents charged by credit card companies. Heck some people spend more on their smartphone, cable and internet plans than they do on social security. But I can choose not to use a credit card, buy a smartphone, or sign up for cable or internet. I can't opt out of Social Security. We have to be clear on whether it's supposed to be a great deal for everyone, or whether it's meant to be a redistributive program. If it's supposed to be a great deal for everyone, ok, well, I have a different opinion. Let me opt out. You can continue to use it. Alternatively, if it's supposed to be a redistributive program, well, then you might see why people complain about it. If it's redistributive, by definition some will pay in more than they get out, and others will pay in less than they get out. All that the rational critics of Social Security, Medicare, and Medicaid want is the ability to opt out, in the same way we can switch from AT&T to Verizon. Right now you can only opt out via the very high friction process of moving and giving up citizenship.

InclinedPlane 15y ago

There is some truth to this, but not enough. Social Security provides a fixed rate of return, and provides benefits throughout old age, regardless of how long one lives. How? Not through investment, through fiat. And ultimately that's the core of the problem, because the only way to achieve that is to have more workers paying in to the system than there are retirees pulling from it. Whether it's dollars or government bonds sitting around in a vault somewhere the problem of making them multiply by fiat will always exist. And that's the problem that Social Security ultimately faces. Within the next decade we will face the "we've been stealing from Social Security" problem, but about 15 years after that we will face the absolute "Social Security can't pay for itself at all" problem.

sjwalter 15y ago
This is taken directly from a Metafilter post[1]. In short, it seems the "social security is broke" trope isn't an accurate depiction of reality. The post is lengthier than this snippet, includes plenty of citations, and is worth reading in its entirety. "Someone just told me that living outside the US for 5 years could disqualify me for Social Security benefits - I told them that I never expected to get them anyway. It's been said upthread, but this pervasive attitude shows that the rich and their propagandamiesters are winning. Straight talk on Social Security[2]: 'Here’s what Social Security is not: - going broke; - a Ponzi scheme; - expected to stop paying out benefits in your lifetime; - bankrupting our nation or future generations.'" [1] http://www.metafilter.com/115423/My-FaithBased-Retirement#4319492 http://www.metafilter.com/115423/My-FaithBased-Retirement#43... [2] http://www.rollingstone.com/politics/blogs/national-affairs/straight-talk-on-social-security-20120427 http://www.rollingstone.com/politics/blogs/national-affairs/...
- InclinedPlane 15y ago
  That's nice, but it doesn't reflect reality. In reality it will require a great deal of budgetary pain just to get the government to pay out the social security trust fund. That represents a debt the US has made to itself but we haven't been very good at paying off even those loans. If we don't make any hard choices such as raising other taxes or cutting overall spending then we'll end up with an even greater increase in our national deficit and an accelerating buildup of our national debt. And that will cause the whole system (the economy, the government, everything) to come crashing down long before the so-called social security trust fund "runs out". Right now a social security payments surplus is subsidizing many other government programs, when that subsidy ends within the next decade it will cause hardship. More so, social security is on a glide slope to begin running an absolute deficit in about 25 years. At that point the trust fund will be emptied and there won't be as much money coming in as going out. That's a pretty serious problem. Medicare is even worse off, by a huge margin. Yes, we can change medicare and social security and perhaps fix these things, but right now the train is on a set of tracks which are aimed directly at the edge of a cliff. We can also potentially balance the whole budget and pay down our debt as well, but that isn't happening either. Look at the EU and their budgetary crises right now. The public doesn't want to pay down their debts, they don't want "austerity measures", they don't want to pay their bills, they want benefits to remain forever high regardless of whether that's financially feasible. And they are willing to vote and riot to have their way. Social Security and Medicare are not sustainable in their current forms. Period. They need fixing. Period. Fixing them will be really motherfucking hard (politically and financially) for our country. Period.

twoodfin 15y ago

I hear this argument all of the time here in conservative Idaho, that social security provides more of a benefit than what's been paid in. For many people (the subset of the working poor who end up living a long time) this is absolutely the case. For many other people (those with a below average lifespan or substantially above average career earnings) Social Security is a terrible deal and has no chance under the current formula of paying them back what they put in. Even if you don't count what their employers had to contribute, which might otherwise have been spent on higher wages. It seems inevitable that the SS payroll tax cap will be lifted without substantial changes to the benefit formula, which will make it an even worse deal for, say, the median earner with a post-graduate degree. That doesn't demonstrate that it's a bad program, just that's it's redistributive and we should be honest about that fact. A smart, productive 35-year old should absolutely not rely on Social Security for her retirement, assuming she doesn't want her lifestyle to drop off a cliff at age 68 or whatever the retirement age is by then.

legutierr 15y ago
Social Security is redistributive much in the same way that flood or fire insurance is redistributive: those who never need it have overpaid, and those who do need it have underpaid. The flaw that exists in the current discourse regarding Social Security is that the program is framed as a retirement program. It is not. It is "end of life insurance". In fact, one correct term to use in describing programs such as Social Security is "Social Insurance": http://en.wikipedia.org/wiki/Social_insurance http://en.wikipedia.org/wiki/Social_insurance
- twoodfin 15y ago
  No, it's not redistributive merely like fire or flood insurance. My $300,000 house will cost the same amount to insure as my similarly-housed neighbor who makes twice as much. And the additional cost to insure a $400,000 house isn't typically greater than the reduction in cost to insure a $200,000 house. That's not how social security works. The benefit curve drops off dramatically in relation to the "pay-in" curve: http://www.ssa.gov/oact/COLA/piaformula.html http://www.ssa.gov/oact/COLA/piaformula.html And again, things will get worse when, seemingly inevitably, the payroll tax cap is lifted without substantially modifying the "bend points". A dollar you contribute to SS on your earnings over $56,000 is worth half the benefits of a dollar contributed under that amount.