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If fixing Social Security were easy, it would already be done

Joe Economist

Council Member
Legally, you are correct. Politically, it will be impossible to change SS.
Today more than 50% of the country expects to retire after the Trust Fund is exhausted. 80% expect to be alive when the Trust Fund is exhausted. How long do you expect politicians to ignore that demographic?

Legally, you are correct. Politically, it will be impossible to change SS. When you get over 60, you will come around. Until then, pay your taxes, your elders need you.
I am near 60, and more importantly I have friends who are 60. What you need to justify is why elders of today are more important than those of tomorrow.
 

Joe Economist

Council Member
So? Collect more taxes or pay from the general fund, same difference. It's a matter of choices. Invade Iran or support your parents and grandparents? When a nation spends 600-700 billion a year on killing machines and the apparatus to kill, one has to wonder what kind of soul that nation has...death or life. Take a pick.
Today Social Security is not allowed to borrow money. And as a voter who has children, I can't see creating any more debt just to pay benefits of a broken system. The military is a general fund issue, one that should be cut. Cutting the military doesn't change the imbalance of Social Security - in fact it makes it more pressing by cutting jobs.
 

Joe Economist

Council Member
Looks like every single thing you mentioned could be fixed. It is all humanly possible. After all, SS was made by man, it can be changed by man. Next.
No. What I mentioned can't be fixed. The difference between our views is that if it breaks after you are dead, it isn't a problem where as I think it is.
 

EatTheRich

President
I can't see creating any more debt just to pay benefits of a broken system
The debt isn't the working class's problem, and it shouldn't be addressed by going after their social wage. The only thing you've said to "prove" the system is broken is that it's underfunded.
 

Joe Economist

Council Member
The debt isn't the working class's problem, and it shouldn't be addressed by going after their social wage. The only thing you've said to "prove" the system is broken is that it's underfunded.
To be clear, I didn't say that the system is underfunded. I said that the Trustees of the system said that it was underfunded - by more than a year of GDP.

If you read the original post, you would have found out that contributions can't fix that problem because they generate more promised benefits in the future. Adding contributors only changes the date on which it fails. You think that is a good idea, and I think it is a stupid idea. It is a point on which we disagree.

The other source of revenue is taxes. You think it is a good idea to subsidize those who didn't save and didn't contribute sufficiently to the system. I think that a better use of new tax dollars is to pay down the debt created by the retirees as younger voters. You think that we can raise taxes infinitely. I don't. It is a point on which we disagee.
 

EatTheRich

President
You think that we can raise taxes infinitely. I don't. It is a point on which we disagee.
I think that we can raise taxes by 13%, the amount needed to cover the entire infinite horizon shortfall. I never said nor do you have any basis for ascribing to me the idea that we can raise taxes infinitely.
 

OldGaffer

Governor
I think that we can raise taxes by 13%, the amount needed to cover the entire infinite horizon shortfall. I never said nor do you have any basis for ascribing to me the idea that we can raise taxes infinitely.
13% is close to infinity, think of the deficit reduction we could do for that money, why waste it on the elderly and the poor, trust bunny drones need that money for new toys.
 

Joe Economist

Council Member
I think that we can raise taxes by 13%, the amount needed to cover the entire infinite horizon shortfall. I never said nor do you have any basis for ascribing to me the idea that we can raise taxes infinitely.
So once we raise taxes to pay for Social Security, how are you going to fix Social Security's Disability program. How are you going to fix medicare? How are you going to fix infrastructure? How are you going to support the debt much less pay it down...
 
Priorities...medicare can be managed to more effectively administer care. Infrastructure is a great reason to issue debt. Paying down the debt is really quite silly, the issue becomes moot once the economy and wages grow...
 

Joe Economist

Council Member
Priorities...medicare can be managed to more effectively administer care. Infrastructure is a great reason to issue debt. Paying down the debt is really quite silly, the issue becomes moot once the economy and wages grow...
We disagree. The fact that you think you can issue debt forever tells me you are detached from reality. Don't be surprised if the younger generation disagrees with you given that they have to pay for it.
 

OldGaffer

Governor
So when do you figure the younger generation will turn on their parents and grandparents and kick them to the curb? Soon? Have there been any incidents to make you think it is going to happen at all?
 
Really? So we don't have enough income generated each year within the USA to afford to pay SS...Since none of us have to worry about it until the mid 2030s, why the hurry? Its a paygo system anyway. Once we get to the point where SS is 100% of the taxable revenue (assuming SS taxes are subsidized by income taxes), then we can figure something out. But you know as an "economist" that any forecast that far out is really just made up nonsense. Ask yourself what an "economist" like you forecasted 20 years ago for today. Any of them right? Hell, ask Greenspan in 1999, 2000, 2001, 2002, 2003 and so on....
 

Joe Economist

Council Member
Since none of us have to worry about it until the mid 2030s, why the hurry? Its a paygo system anyway.
The fact that you think you don't need to worry about it should tell you that you aren't paying attention. The date is 2033, likely to be 2031 as soon as the Trustees release their next report. All projections are based on assumptions. These assumptions are that we have a good economy, and workers are willing to pay 12.4% of wages into a system on the verge of collapse.

Once we get to the point where SS is 100% of the taxable revenue (assuming SS taxes are subsidized by income taxes)
Once Social Security is subsidized by income taxes, it is no longer Social Security. It is just a welfare program. But you face a larger problem. Millions of Americans aren't eligible for SS. Once you fund this system from income taxes, they will want some of the pie as well. This will shift millions of people onto the rolls.

Ask yourself what an "economist" like you forecasted 20 years ago for today. Any of them right?
This is less of a forecast and more actuarial math. The assumptions are forecasts, but they tend to be very optimistic. The shortfall is 20.5 trillion. If it is 18 or 15 trillion, do you think that you are lucky? When you say 'why the hurry', is what you mean look I want to collect as much as I can even if it makes the next round of seniors significantly worse off.

Social Security should be run with conservative standards as though millions of people depend upon it, not like a candy store for current voters.
 

EatTheRich

President
So once we raise taxes to pay for Social Security, how are you going to fix Social Security's Disability program. How are you going to fix medicare? How are you going to fix infrastructure? How are you going to support the debt much less pay it down...
We can raise tax rates further still, and raise tax revenues without raising tax rates via economic growth. If we had a planned economy, in fact, based on state ownership of major enterprises, the surpluses from running certain of these enterprises could be used for social security, medicare, and debt payments if those are advisable.
 

Joe Economist

Council Member
We can raise tax rates further still, and raise tax revenues without raising tax rates via economic growth. If we had a planned economy, in fact, based on state ownership of major enterprises, the surpluses from running certain of these enterprises could be used for social security, medicare, and debt payments if those are advisable.
So we could use the profits from say the US Post Office to fund a 20 trillion dollar shortfall? Or maybe the profits from Freddie and Fannie. Our government ran Freddie and Fannie in one of the most stable industries in history. The government managed to break both the companies and the industry.

Friedman said it best. If the government ran the Sahara there would be a shortage of sand in 5 years.
 

OldGaffer

Governor
So we could use the profits from say the US Post Office to fund a 20 trillion dollar shortfall? Or maybe the profits from Freddie and Fannie. Our government ran Freddie and Fannie in one of the most stable industries in history. The government managed to break both the companies and the industry.

Friedman said it best. If the government ran the Sahara there would be a shortage of sand in 5 years.
It should have been if Republicans ran the Sahara, and hated sand. Friedman has been discredited as an economist, is he your role model?
 

worldlymrb

Revenge
I'd make it into a cradle to grave benefits system funded solely by income tax and state capitalist enterprises.
State/Capitalist Enterprises (Fascism)? Like Fannie/Freddy, FDIC, and Off Track Betting (OTB)?

Problem with that is they never really generate any profit and always end up needing to be bailed out.
 

worldlymrb

Revenge
So we could use the profits from say the US Post Office to fund a 20 trillion dollar shortfall? Or maybe the profits from Freddie and Fannie. Our government ran Freddie and Fannie in one of the most stable industries in history. The government managed to break both the companies and the industry
Well said,

Currently the FRB is creating huge profits from its multi-trillion balance sheet of asset purchases... And as we all know, "profits" from the FRB goes to the UST, which is why the deficit is going down in FY2013.

Any guesses if the UST will enjoy such "profits" when the FRB winds down QE and begins selling those assets (also causing interest rates to rise)?
 
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