jungle

The programs have been altered many times over their history, there is no doubt they will have to be altered again in much larger ways and the time horizon is much closer than most people understand.

Think about this for just a minute:

"By 2030, about the midpoint of the baby boomer retirement years, the programs will require nearly half of all income tax dollars."

Add in other proposed spending and it is very easy to understand that all of our backs are going to be pressed against an unyielding economic hard place in the near future.
A complete lack of any figures to the contrary speaks volumes about the truth in this matter. It really doesn't matter how we feel about it, it all comes down to what we can afford.
The limits have already been exceeded by a very wide margin.

DYNASTY HVY

I was under the impression from what Fred told me ,that the idea was for this program to SUPPLEMENT retirement income and not be the primary source.
Maybe Fred was wrong


Ally

ppilot

Well, two points. One, I don't agree with the figures that produced that analysis. As I said before, they're not taking increased immigration and projected growth fully into account. Two, you're including Medicare and Medicaid programs in the analysis that comes up with the 'half of all income tax dollars by 2030' which is a whole different and IMHO separate discussion.

Medicare reform, in my opinion, is a MUCH more important issue that SS reform. Note I'm not saying that it should be abolished or anything, because I don't think it should be, and even if I did, I'm a pragmatist and I know there's no chance of that happening. But I recognize that dramatic changes and reforms are necessary.

And I agree that SS is supposed to be supplemental, not provide retirement. As I said, a 'small safety net'.

ryan1234

Insovency is not the only problem with Social Security. Social Security is dragging down real economic growth. The amount of SS 'withholding' gives a false image of the labor supply and its relation to market compensation. It isn't necessarily that it is or will be insolvent, rather that there is not real return on the investment at all. The SS tax rate imposed on top of income taxes, state and federal, in relation to net income is huge, the incremental benefits are small. In most cases, since SS benefits are based on the 35 years of highest earnings, workers under 25 have an even larger distortion because there is no benefit to the payroll tax. There is a substantial loss to real investment income. As much as social security was intentioned to be a "safety net" it has crowded out private spending and investment. Its nature from that of a supplemental retirement income has become a serious economic liability in more ways than meets the eye.

There is no scaremongering about it. Social Security is an outdated ship, torn by icebergs of government/entitlement programs, headed for the rocks of insolvency - good intentioned or not.

Winged Wheeler

There has been some disagreement here as to whether there is a SS "problem". This is a summary paragraph from this year's report from the trustees of the social security trust fund. WW

Trustees Report Summary

Social Security
The annual cost of Social Security benefits represented 4.4 percent of GDP in 2008 and is projected to increase to 6.2 percent of GDP in 2034, and then decline to about 5.8 percent of GDP by 2050 and remain at about that level. The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 2.00 percent of taxable payroll, up from 1.70 percent projected in last year's report. This increase is due primarily to the recession, slightly lower estimates for real GDP after the economy recovers in 2015, and faster reductions in mortality rates.

Although the combined OASDI program passes our short-range test of financial adequacy, the Disability Insurance Trust Fund does not; DI program costs have exceeded tax revenue since 2005, and trust fund exhaustion is projected for 2020.

In addition, OASDI continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2016, and will be sufficient to finance 76 percent of scheduled annual benefits in 2037, after the combined OASDI Trust Fund is projected to be exhausted.

Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two.

Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes because increasing longevity will result in people receiving benefits for ever longer periods of retirement.

Winged Wheeler

The Social Security Trustees Report | Cato @ Liberty


The Social Security system’s trustees have released their annual report on the system’s finances and announced that — surprise — the program’s looming financial crisis hasn’t gone away.

Social Security will begin running a deficit by 2016, meaning that just seven years from now the program will begin spending more money on benefits than it takes in through taxes. That’s a year sooner than last year’s report.

Of course, in theory, the Social Security Trust Fund will pay benefits until 2037. But even that figure is misleading, because the Trust Fund contains no actual assets. Instead, it contains government bonds that are simply IOUs, a measure of how much money the government owes the system.

Even if Congress can find a way to redeem the bonds, the Trust Fund surplus will be completely exhausted by 2037. At that point, Social Security will have to rely solely on revenue from the payroll tax — and that revenue will not be sufficient to pay all promised benefits. Overall, the system’s unfunded liabilities — the amount it has promised beyond what it can actually pay — now total $17.5 trillion. Yes, that’s trillion with a ‘T.’ That’s $1.7 trillion worse than last year.

Critics of personal accounts for Social Security have pointed to the decline in the stock market over the last few years as an argument against allowing younger workers to privately invest a portion of their Social Security taxes.

Yet studies [more here and here] have shown that long-term investment remains remarkably safe. If workers retiring today had been allowed to start privately investing their taxes 40 years ago, they would obviously have less money than those who retired a couple of years ago.But they would still have more than Social Security promises. And, as the Trustee’s Report shows, a poor economy hurts Social Security’s ability to pay benefits just as it hurts the stock market.

In the end, there are only three possible solutions to Social Security’s problems: raise taxes (and the Social Security payroll tax would have to be nearly doubled to keep the program afloat), cut benefits, or allow younger workers to invest privately.

We can have an honest debate about which of those options is the best choice. But, as the Trustee’s Report makes clear, Congress and the administration cannot continue to duck the issue.

Winged Wheeler

The link is to a 15 page pdf--too long to post here in its entirety. However, it is clearly written and is, I think, a well-made argument. Here is the link:

http://www.cato.org/pubs/handbook/hb108/hb108-25.pdf

And here is the policy proposal:

Congress should allow young workers to redirect their payroll
taxes to individually owned, privately invested retirement
accounts.

WW

jungle

Fine, but it is important to look at the entire "entitlement" package and come up with workable solutions. You say you don't agree with the analysis presented, yet you fail to come up with any analysis at all from any credible source. Argument from "feeling" just isn't going to get it here. The fact is that numerous studies from numerous sources are all saying the same thing.
The news is not good, and the system is in very poor shape.

Throw in a couple of monkey wrenches in the form of continued high unemployment and double digit inflation and the time horizon could be cut in half.

ppilot

Look. I'm not arguing from "feeling". I've looked at both sides of the argument and come to a conclusion. You don't agree with me, and that's fine, but I don't appreciate you deciding that because I disagree with you that I haven't thought it through. The fact that I've not given any deep 'analysis' is that it's really not a deep problem, and it's really not hard to fix, except politically. Be honest. You easily see how it can be fixed, you just don't want it to be.

And there are numerous studies from numerous sources that have given some very simple ways to keep SS solvent, and I've listed several of them. The fact of the matter, as I've said repeatedly, is that Social Security is not supposed to be an investment program. It never has been, and it's not now.

jungle

It is always interesting to see an argument from "feeling" without any supporting factual information. Be honest, you can't counter the hard numbers or facts, but you expect us to accept that you have really "thought it through".

It matters not a whit to me, but many of us have become tired of people urinating on our backs and telling us it is raining. In the end you will have to face the people forced to pay and the people that won't get what they have been promised. When the empty bag is held up for all to see the backlash might be ugly.

The fact is that many of the FDR programs were killed by the Supreme court, the future of these present day programs is still in doubt from both legal and economic challenges.