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You are stating that Social Security isn’t sustainable, when in fact its sustainability depends in its entirety on demographic trends, workforce behaviors, and

You are stating that Social Security isn’t sustainable, when in fact its sustainability depends in its entirety on demographic trends, workforce behaviors, and market conditions that cannot be accurately predicted. The imminent collapse of Social Security has been just ahead of us for roughly as long as fusion energy and flying cars have been… while I agree it’s unstable, it’s been sustainable thus far and the imminent tipping point keeps being slightly further off than predicted by everyone with an opinion.

smitty1e 2y ago
So, it sounds as though the recommendation is to carry on until the collision with Stein's Law? https://en.m.wikipedia.org/wiki/Herbert_Stein https://en.m.wikipedia.org/wiki/Herbert_Stein
- yawpitch 2y ago
  Stein was an economist, and effectively nothing that an economist states can ever result in anything reliable enough to be called a (capital L) Law. In this case, Stein’s Not-Very-Well-Reasoned-Aphorism conflicts with the Halting Problem, which has formally proven that it’s impossible to know if any given computational process halts once it’s begun. Social Security is, inherently, a computational process. Moreover, it’s a process the source code of which can be changed (and has been changed) during its runtime… we can’t assume it’s unsustainable except given other conditions that are all three of dynamic, stochastic, and unpredictable.
jfengel 2y ago
The date for the collapse of Social Security has always been the same: the early 2030s. We do have a pretty good idea of what the demographic trends are: a baby boom, followed by a baby bust. That was why we moved from Social Security as a pay-as-you-go program to having a Trust Fund. We knew when the Trust Fund would top out, with more money going out than coming in (i.e. right about now), and how long it would take to deplete (i.e. roughly a decade). Life spans have not radically increased. They have slightly decreased, extending the fund a couple of years. But it's actually the least of our problems. That "trust fund" isn't a pile of money. It's just Treasury Bills. The government "borrowed" the money, and is now having to pay it back. That means we're going to have to either cut the budget dramatically, raise taxes, or borrow from somebody who will give us a worse interest rate than... uh, ourselves. So indeed, the ~2034 date for the Social Security failure is something of a red herring. But only because it's actually worse than that.
- tzs 2y ago
  Making the payroll tax apply to wages beyond $176,100/year would greatly extend the life of the trust fund which should allow getting past the death of most of the last baby boom.
  - dragonwriter 2y ago
    Lifting the cap, converting the tax from a payroll to a general income (including capital gains) tax (and therefore also including other income in benefit calculations), and adding several additional bend points rather than capping benefits would stabilize the fund forever, while broadening the kind of income generating activities people could rely on while benefiting from the safety net retirement system. But simply uncapping the tax without other reforms is probably the easiest short-run solution.
    - s1artibartfast 2y ago
      How is that better than just funding it from the general fund as a welfare wealth transfer? from the political perspective, I suppose there is a pretext/misconception that social security is self funded on an individual basis, when payments are already extremely progressive, with higher earners subsidizing the low. The high bend point already diminishes additional benefit for additional contribution nearly to zero. Someone's last 50k of SS taxable income is already returning only 20% of their first 50K of SS taxable income. More specifically, below the first bend point, recipients get 90% of their average taxed income. After the last bend point, they are getting 15% of their marginal taxed income . 15% doesn't leave much room for additional reduction bend points.
      - jfengel 2y ago
        Funding it from the general fund is probably fine. The whole "trust fund" idea was pretty bogus. The pay-as-you-go idea never anticipated a baby boom and baby bust, but a trust fund wasn't a good solution, either. It just obscured the fact that it was a tax increase on the lower and middle classes. Water under the bridge, now. The fact is that social security is an entitlement. If the SS budget does not have enough money to pay it, the government is in violation of the law. The money will come from the general fund, and it will be raised by either taxes or borrowing.

smitty1e 2y ago

So, it sounds as though the recommendation is to carry on until the collision with Stein's Law? https://en.m.wikipedia.org/wiki/Herbert_Stein https://en.m.wikipedia.org/wiki/Herbert_Stein

yawpitch 2y ago
Stein was an economist, and effectively nothing that an economist states can ever result in anything reliable enough to be called a (capital L) Law. In this case, Stein’s Not-Very-Well-Reasoned-Aphorism conflicts with the Halting Problem, which has formally proven that it’s impossible to know if any given computational process halts once it’s begun. Social Security is, inherently, a computational process. Moreover, it’s a process the source code of which can be changed (and has been changed) during its runtime… we can’t assume it’s unsustainable except given other conditions that are all three of dynamic, stochastic, and unpredictable.

jfengel 2y ago

The date for the collapse of Social Security has always been the same: the early 2030s. We do have a pretty good idea of what the demographic trends are: a baby boom, followed by a baby bust. That was why we moved from Social Security as a pay-as-you-go program to having a Trust Fund. We knew when the Trust Fund would top out, with more money going out than coming in (i.e. right about now), and how long it would take to deplete (i.e. roughly a decade). Life spans have not radically increased. They have slightly decreased, extending the fund a couple of years. But it's actually the least of our problems. That "trust fund" isn't a pile of money. It's just Treasury Bills. The government "borrowed" the money, and is now having to pay it back. That means we're going to have to either cut the budget dramatically, raise taxes, or borrow from somebody who will give us a worse interest rate than... uh, ourselves. So indeed, the ~2034 date for the Social Security failure is something of a red herring. But only because it's actually worse than that.

tzs 2y ago
Making the payroll tax apply to wages beyond $176,100/year would greatly extend the life of the trust fund which should allow getting past the death of most of the last baby boom.
- dragonwriter 2y ago
  Lifting the cap, converting the tax from a payroll to a general income (including capital gains) tax (and therefore also including other income in benefit calculations), and adding several additional bend points rather than capping benefits would stabilize the fund forever, while broadening the kind of income generating activities people could rely on while benefiting from the safety net retirement system. But simply uncapping the tax without other reforms is probably the easiest short-run solution.
  - s1artibartfast 2y ago
    How is that better than just funding it from the general fund as a welfare wealth transfer? from the political perspective, I suppose there is a pretext/misconception that social security is self funded on an individual basis, when payments are already extremely progressive, with higher earners subsidizing the low. The high bend point already diminishes additional benefit for additional contribution nearly to zero. Someone's last 50k of SS taxable income is already returning only 20% of their first 50K of SS taxable income. More specifically, below the first bend point, recipients get 90% of their average taxed income. After the last bend point, they are getting 15% of their marginal taxed income . 15% doesn't leave much room for additional reduction bend points.
    - jfengel 2y ago
      Funding it from the general fund is probably fine. The whole "trust fund" idea was pretty bogus. The pay-as-you-go idea never anticipated a baby boom and baby bust, but a trust fund wasn't a good solution, either. It just obscured the fact that it was a tax increase on the lower and middle classes. Water under the bridge, now. The fact is that social security is an entitlement. If the SS budget does not have enough money to pay it, the government is in violation of the law. The money will come from the general fund, and it will be raised by either taxes or borrowing.