Reply to What Would You Be Willing to Do to Save SS?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The SS funding mechanism is a total mess. SS is so much more expensive than anybody ever anticipated and I really doubt it would have made it past congress if anybody would have had an inkling about what SS taxes would have turned into.

Hell, people in this thread basically abandon any pretense about SS being anything other than a welfare program. The reality is that every 10-15 years SS needs some massive patch that amazingly (!) always involves more revenue from higher taxes.

Rather than be humbled by its incompetence in predicting future demographic trends and its inability to design a sustainable program, the political left just doubles down and wants even more money for the program.

Since 1970 alone, SS revenue and benefits have spiked from below 3% of yearly GDP to 5%. I'm sure this thing looks even worse if you track back to inception.  Data suggests SS cost 2.2% of GDP in 1960.

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Huh? Nobody here has "abandoned any pretense" about it being a welfare program. In fact several of us have argued that it's *not* welfare and gave clear reasons why not. Either you didn't read those comments or it serves your purpose to make things up.

Yep the program has gotten bigger. It's driven by population growth and [b]population aging.[/b] More workers are paying in, [b]the average age of the population has increased, and the share of the population that's retired is much larger because of the boomers[/b]. None of this is the program's fault--it's providing security to many more retirees. Expenses as a share of GDP will level out in the early 2020s as the youngest boomers retire. [/quote]

No. You don't seem to be very intelligent.  How could population growth explain an increase in cost as a percentage of GDP?  Lack of population growth has been the problem.  Fertility rate has dropped 46 percent since 1960, which eventually translates into fewer workers (even after accounting for immigration) as a percentage of total population.  Fewer workers are now supporting more beneficiaries, and hence, cost as a percentage of GDP has increased. This is an inherent flaw in the program in that if demographic trends end up not coming to fruition in a negative manner, the program will be woefully underfunded. And since politicians will always price social programs based on the most optimistic projections in order to hold costs down (and keep taxes at a minimum), it is almost certain that SS will never be poorly funded. Eventually, the continuously escalating probability of systemic failure due to this inherent flaw will turn into actual failure.

Ida May Fuller, the very first SS beneficiary paid less than $23 into system and received $22k in lifetime benefits. This thing has been unsustainable from the start and hence you have to keep dipping into the pockets of the American people to try to make it work. Rather than admit your inability to get this thing right, this one time we'll actually fix SS with a tax increase, right?  The definition of insanity is....[/quote]

Oh my gosh. Your insults and belligerence combined with your lack of understanding of the most basic concepts don't reflect well on you at all. We've had to educate you about the definition of "progressive taxes," your laughable claim that a president can "renegotiate" government debt in the absence of Congressional assent and premised on financial markets simply agreeing to lend to us on more generous terms (ha ha ha ha ha), and on how the Social Security benefit structure works. You cite Economist articles you're clearly incapable of understanding. Yet you make all your ignorant claims in a tone of persistently aggressive belligerence with ad hominems. You straight up lie about what other posters have written, like on the supposed "welfare" issue. So gross.

[b]Population aging[/b] is a key problem that was stated very clearly in the post you're referring to. I've highlighted it in the post above to help you out. The "dependency ratio" is the standard term and it's the ratio of retirees to workers. The numerator, retirees, is obviously driven by population aging. Low fertility contributes to the denominator, but the reason I didn't mention it is because, frankly, I didn't think you were capable of holding all this in your head. I'm totally serious: after your performance so far, I concluded that you're both ignorant and not very bright, and I wanted to help you out by simplifying. However, I'm not sure how you can deny the issue of population aging (deliberately or because of reading comprehension issues?). Seoerately, population growth explains the growth in absolute dollars spent on the program, which is a different type of measure.

You're also referring to the fact that the first Congresses gave very generous benefits to the earliest beneficiaries. That's a debt that generations today are still paying. But what's your solution, short of throwing all current beneficiaries into the street? Because financing the transition to another system requires continuing to pay benefits to current retirees (unless you cut them off, which nobody but nobody is proposing to do) even as you divert revenues out of the system by letting people opt out or otherwise shutting down new contributions. This transition would cost billions of dollars and obviously requires a sound budget--which we don't have. All the debate in the early 2000s about private accounts was in the context of the budget surpluses at that time, which Bush proposed to use to finance the SS transitions costs to a new system of private accounts. But then he squandered the budget surplus on his wars and tax cuts for the rich, and all talk of Social Security reform ended. This cold, hard, fact, rather than any change in ideology, is why your buddies at Heritage, Cato and AEI no longer talk much about private accounts. You may still hear about it from ranters on Fox, but they either don't understand or are deliberately ignoring the huge financial barriers. The fact that you're still ranting on about it shows how out of touch you are with true conservative thinkers.

To move this discussion onto more current and interesting ground, here's how many think this will play out. SS will pay full benefits until 2034 or so. After 2034, SS can pay 75% of benefits from FICA taxes, which translated means SS will be pay-as-you-go for 75% of benefits. There will be political action that will probably increase pay-as-you-go funding to somewhere between 75-100% of current benefit levels, maybe even more than 100%, but it's impossible for anybody here to predict exactly how things will play out in 2034. The difference will be made up by mandatory savings via auto-Iras (or similar accounts) through your employer, which about half of the states are already looking into, and Congress will probably catch up on in order to avoid a patchwork of state systems (there are some legal issues with federal action, which Congress would have to fix first, but there is already at least one bill in Congress). The key thing here is that the new savings accounts are "add on" rather than "carve out", i.e. they don't allow people to pull out of the current system and divert money away from it. SS remains a base of income that's inflation-adjusted and free from investment risk, within a multi-tiered system that has a component of mandatory personal savings.[/quote]

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