Battle over Mandatory (aka “Entitlement”) Spending

[BlooVooDoo]

Is there anything that those who benefit most from social security should have to do to save the program?

The answer always seems to be tax the rich more. From a standpoint of principle, when is it fair to ask those who will benefit the most to sacrifice?

People who have incomes that greatly surpass $176k are the ones who are benefiting the most from the current structure.

 

[ZenMode]

Of course once you get past the age of 65, you’re generally going to have a harder to time finding an employer who wants to hire you (unless you’re applying to be UNC’s head football coach). And when there becomes a time where there a lot more 65+-year-old people trying to find jobs, it gets even harder. And that’s before factoring in how technology/AI will impact the job market. There are a lot of moving pieces to consider.

I don't think 65 is as old as many want to portray it. There are plenty of people who are fully functional well into their 70's. On the subject of head coaches, Pete Carroll is 73.

Sure, there are people who may not be able to work, but we can address those as exceptions, not the norm, right?

 

[hedge]

They should have to eat cat food in their golden years as penance for this sin.

Chicken livers are way cheaper than cat food...

 

[BlooVooDoo]

But regardless of who falls in that group, social security benefits are generally recognized as sufficient even for those who 100% depend on SS for income.

I think you should disclose the qualifying conditions there. I can easily imagine situations, not all that unusual, where this would not be true.

 

[mpaer]

I think you should disclose the qualifying conditions there. I can easily imagine situations, not all that unusual, where this would not be true.

avg is $1,800 a month I think
Not sure how you live on that in anything approaching an urban area-

 

[Icky Mettle]

I don't think 65 is as old as many want to portray it. There are plenty of people who are fully functional well into their 70's. On the subject of head coaches, Pete Carroll is 73.

Sure, there are people who may not be able to work, but we can address those as exceptions, not the norm, right?

I addressed people’s job performance capabilities as they age in a previous post (responding to a post by nyc).

But that’s also not necessarily responsive to the point I was making. While 65 may not be that old (and as someone about to turn 50, I certainly don’t want it to be viewed as old), trying to land a job at 65 or older – regardless of how capable that person is to perform the job they are seeking— is another story.

 

[superrific]

1. Whether the retirement age has or hasn't kept up with life expectancy is of zero relevance. Social Security was started in the middle of the Great Depression, in an economy that was but a generation removed from the Industrial Revolution. Of course that society couldn't afford to support retirees. We are now much richer.

2. As economists like to say, consumption is about choices. Because we are a rich country, we have the ability to finance a lot of consumption. One form of consumption is leisure time. Silly people like Zen think that the economy is solely about the accumulation of material wealth. It is not. A free society can choose non-work if it wants. People in European countries have more vacation time, generally speaking, than Americans -- and their governments allow it (this is why, by the way, cross-country GDP comparisons are faulty without adjustments). In Mexico, the workday is interrupted by a siesta, or at least it was 20 years ago when I did a lot of work with Mexico.

So the US can choose non-work in retirement, if it wants. We absolutely can afford it and it's not even close. Of course, doing so would require us to, you know, make sure the rich pay their taxes. You know, not electing corruptocrats like Trump who are trying to shut down tax collections on the very rich to the maximum extent possible.

There is no reason as a society we should have to raise the retirement age. We just have to make choices. Zen, how do you choose? Properly fund the IRS and collect the hundreds of billions of taxes that aren't paid? Or let the rich get away with tax evasion and make ordinary Americans work longer and harder. That is a choice in front of you. How do you choose?

3. Social Security has never been a take-what-you-pay system. Every generation has taken far more than what it paid. That's fine!! Again, that's what a rich country should do! Or can do, if it wants to. Artificial constraints like "we can't use general revenues to fund SS shortfalls," make no sense and serve only to distract people on the bottom line. I guess it also gives cover to the lie that lower-income Americans don't pay any "federal income tax" because SS is classified as something different, even though it is a federal tax on income and functionally indistinct from any other income taxes.

4. Social Security doesn't really cost anything. Generally, it finances expenses that would be paid by retirees' children if SS didn't exist. So it's more of a bookkeeping issue than most people think. It's simply a question of which bucket of capital to use to finance those expenses. This makes SS different than Medicare, which absolutely does induce the consumption of real resources because it pays for medical care.

I don't want to exaggerate this point. SS probably induces *some* consumption. There are old people, perhaps, who are able to throw a party for their grandkids' graduations who wouldn't be able to but for that income. That's a real economic cost. There are SS recipients who might trade in an old car for a new one a little more quickly than without SS. That's a real economic cost. For the most part, though, SS does not finance lavish consumption. Generally speaking, it simply reduces the financial liabilities of children for their parents, which seems like a good use of money.

 

[ZenMode]

1. Whether the retirement age has or hasn't kept up with life expectancy is of zero relevance. Social Security was started in the middle of the Great Depression, in an economy that was but a generation removed from the Industrial Revolution. Of course that society couldn't afford to support retirees. We are now much richer.

2. As economists like to say, consumption is about choices. Because we are a rich country, we have the ability to finance a lot of consumption. One form of consumption is leisure time. Silly people like Zen think that the economy is solely about the accumulation of material wealth. It is not. A free society can choose non-work if it wants. People in European countries have more vacation time, generally speaking, than Americans -- and their governments allow it (this is why, by the way, cross-country GDP comparisons are faulty without adjustments). In Mexico, the workday is interrupted by a siesta, or at least it was 20 years ago when I did a lot of work with Mexico.

So the US can choose non-work in retirement, if it wants. We absolutely can afford it and it's not even close. Of course, doing so would require us to, you know, make sure the rich pay their taxes. You know, not electing corruptocrats like Trump who are trying to shut down tax collections on the very rich to the maximum extent possible.

There is no reason as a society we should have to raise the retirement age. We just have to make choices. Zen, how do you choose? Properly fund the IRS and collect the hundreds of billions of taxes that aren't paid? Or let the rich get away with tax evasion and make ordinary Americans work longer and harder. That is a choice in front of you. How do you choose?

3. Social Security has never been a take-what-you-pay system. Every generation has taken far more than what it paid. That's fine!! Again, that's what a rich country should do! Or can do, if it wants to. Artificial constraints like "we can't use general revenues to fund SS shortfalls," make no sense and serve only to distract people on the bottom line. I guess it also gives cover to the lie that lower-income Americans don't pay any "federal income tax" because SS is classified as something different, even though it is a federal tax on income and functionally indistinct from any other income taxes.

4. Social Security doesn't really cost anything. Generally, it finances expenses that would be paid by retirees' children if SS didn't exist. So it's more of a bookkeeping issue than most people think. It's simply a question of which bucket of capital to use to finance those expenses. This makes SS different than Medicare, which absolutely does induce the consumption of real resources because it pays for medical care.

I don't want to exaggerate this point. SS probably induces *some* consumption. There are old people, perhaps, who are able to throw a party for their grandkids' graduations who wouldn't be able to but for that income. That's a real economic cost. There are SS recipients who might trade in an old car for a new one a little more quickly than without SS. That's a real economic cost. For the most part, though, SS does not finance lavish consumption. Generally speaking, it simply reduces the financial liabilities of children for their parents, which seems like a good use of money.

"There is no reason as a society we should have to raise the retirement age. We just have to make choices. Zen, how do you choose? Properly fund the IRS and collect the hundreds of billions of taxes that aren't paid? Or let the rich get away with tax evasion and make ordinary Americans work longer and harder. That is a choice in front of you. How do you choose?"

If it were that simple of a choice, and it we were guaranteed hundreds of billions, I would choose to fund the IRS to collect SS taxes.

 

[superrific]

"There is no reason as a society we should have to raise the retirement age. We just have to make choices. Zen, how do you choose? Properly fund the IRS and collect the hundreds of billions of taxes that aren't paid? Or let the rich get away with tax evasion and make ordinary Americans work longer and harder. That is a choice in front of you. How do you choose?"

If it were that simple of a choice, and it we were guaranteed hundreds of billions, I would choose to fund the IRS to collect SS taxes.

It is that simple of a choice. Fund the IRS, get money in unpaid taxes, finance social security. Or cut the IRS, and get rid of SS as "unaffordable."

I'm just going to ignore that bait about having the IRS collect SS taxes.

 

[ZenMode]

It is that simple of a choice. Fund the IRS, get money in unpaid taxes, finance social security. Or cut the IRS, and get rid of SS as "unaffordable."

I'm just going to ignore that bait about having the IRS collect SS taxes.

It's not bait. I called it SS taxes due to lack of a better term. SS, from what I've read, can't be funded by just any taxes. It can only be funded specifically by SS "taxes".

 

[superrific]

It's not bait. I called it SS taxes due to lack of a better term. SS, from what I've read, can't be funded by just any taxes. It can only be funded specifically by SS "taxes".

That's just a statute. Congress can change that at any point. Legislation would be necessary to increase the retirement age. Suppose you're a member of the House, and you're presented with two bills:

1. Raise the retirement age for Americans by two more years;
2. Fund the IRS, go after tax evasion by the rich, and allow general revenues to be used for SS.

Which one do you choose? You don't get to evade or ask for other options. You have to vote. You can, if you would like, vote for both or neither.

 

[ZenMode]

That's just a statute. Congress can change that at any point. Legislation would be necessary to increase the retirement age. Suppose you're a member of the House, and you're presented with two bills:

1. Raise the retirement age for Americans by two more years;
2. Fund the IRS, go after tax evasion by the rich, and allow general revenues to be used for SS.

Which one do you choose? You don't get to evade or ask for other options. You have to vote. You can, if you would like, vote for both or neither.

I'd almost rather keep SS payments from only SS income, rather than open it up to any tax revenue, given that Congress is already blatantly irresponsible with spending.

 

[BlueSmoke]

It's how do we fund the program going forward so that it's viable for the young people that are currently funding it.

How do we fund it? Maybe the question is how did the payroll tax base that was originally meant to fund it got eroded? So much of the income or contributions to these tax accounts are not payroll taxed. Congress, every year gives retirement account goodies away. And who benefits from that? Don't know many low or middle income people who can contribute up to 69,000 a year to these accounts? But you can bet if you are in the top 5 percent you do.

 

[superrific]

I'd almost rather keep SS payments from only SS income, rather than open it up to any tax revenue, given that Congress is already blatantly irresponsible with spending.

All right. So you're going with "I'd rather see ordinary American seniors work more years than make the very wealthy pay taxes."

Cool, cool, cool. BTW, the blatant irresponsibility from Congress is not on the spending side. It's on the "let's give tax breaks and other perks to billionaires so that the government is starved of revenue." That has literally been the GOP's position for decades, dating back to Grover Norquist and his lunatic anti-tax advocacy.

 

[ZenMode]

All right. So you're going with "I'd rather see ordinary American seniors work more years than make the very wealthy pay taxes."

Cool, cool, cool. BTW, the blatant irresponsibility from Congress is not on the spending side. It's on the "let's give tax breaks and other perks to billionaires so that the government is starved of revenue." That has literally been the GOP's position for decades, dating back to Grover Norquist and his lunatic anti-tax advocacy.

I'd rather make sure everyone pays the taxes they owe AND keep funding for SS limited to income from SS taxes. Opening it up to borrowing/spending seems like a recipe for disaster. It basically removes all spending guardrails, which is the last thing we need.

 

[superrific]

I'd rather make sure everyone pays the taxes they owe AND keep funding for SS limited to income from SS taxes. Opening it up to borrowing/spending seems like a recipe for disaster. It basically removes all spending guardrails, which is the last thing we need.

OK. You want to make Americans work longer and harder just to get to retirement because of your abstract concern that maybe Congress will be able to spend more money. As if Congress doesn't have enough things to spend money on. The idea that you can prevent spending by limiting spending on one line item while leaving open literally infinite other line items seems . . . did you think this through? Really?

 

[ZenMode]

OK. You want to make Americans work longer and harder just to get to retirement because of your abstract concern that maybe Congress will be able to spend more money.

Increasing retirement age is one, or part of one, solution that I'm fine with, yes.

As if Congress doesn't have enough things to spend money on.

They're doing a terrible job on current responsibilities, so.....

The idea that you can prevent spending by limiting spending on one line item while leaving open literally infinite other line items seems . . . did you think this through? Really?

SS funding comes from one bucket of money that, as of now, we cannot borrow and spend to fulfill. Given Congress' history of money management, yes, it seems like a horrible idea to give them another opportunity to borrow and spend.

 

[mynameisbond]

Increasing retirement age is one, or part of one, solution that I'm fine with, yes.

They're doing a terrible job on current responsibilities, so.....

SS funding comes from one bucket of money that, as of now, we cannot borrow and spend to fulfill. Given Congress' history of money management, yes, it seems like a horrible idea to give them another opportunity to borrow and spend.

IMO, social security is a trust fund. Like my IOLTA account. It should be distributed to beneficiaries only and the trustee (federal govt.) doesn't get to use it for anything else. Privatizing it or giving the trustee access for any other purposes is a breach of fiduciary duty.

 

[superrific]

IMO, social security is a trust fund. Like my IOLTA account. It should be distributed to beneficiaries only and the trustee (federal govt.) doesn't get to use it for anything else. Privatizing it or giving the trustee access for any other purposes is a breach of fiduciary duty.

The federal government has been borrowing against SS since Reagan.

As well it should. Otherwise, where does the cash go? When a trust has cash and wants to take basically no risk, it parks the cash in treasury bonds. So does the US.

 

[Huh?]

Social security was always designed to be a pay-as-you-go fund rather than a pension-like trust fund.

Even when we accelerated contributions in the late 80's to fund the demographic bubble, it wasn't invested. Where would you invest such a large sum of money with adversely affecting markets? Unless you invest it in a sovereign wealth fund - which are notoriously corrupt and poor market performers - it cant be done.