Phantasmal (09-29-2022)
Phantasmal (09-29-2022)
No disrespect but I believe you are confusing definitions here. The government calls them entitlements because those who qualify are entitled to them. That's the government's definition.
Ultimately it will probably take a combination of increased taxes and benefit cuts to keep SS solvent. The trust fund runs out in 2034 and if we don't do anything benefits will be cut by like 25% at that time (not enough workers to support the number of retirees). But just jacking up taxes will have repercussions throughout the economy. It's not just free money.
Earl (09-30-2022)
I'll throw this out as well. The way you thought the definition of entitlement was/meant actually would be correct if we remove the SS cap and those who pay more in taxes don't receive the corresponding increase in their benefits. And I've read progressives who expressed concern about that because then it would be more an entitlement program in the sense that you were thinking and those types of programs would be easier to cut in the future.
The future shortfall you have been hearing about referred to the period when all the baby boomers retired (2010-2030). The $2.5 trillion surplus will provide enough to cover the shortfall until about 2037. Then, the surplus will be spent and revenue will not be enough to cover benefits.
See the analysis by the Board of Trustees: Summary: Actuarial Status of the Social Security Trust Funds (ssa.gov)
Earl (09-30-2022)
"Conservatism is the blind and fear-filled worship of dead radicals." -- Mark Twain
Republicans never seem to come up with their own policy ideas, they always just want to tinker with Democratic liberal policies.
Are there any other Major political parties in the world who don't even actually have their own original and independent policy agenda?
Earl (10-01-2022)
Nomad (09-30-2022)
All because the Republicans not only cut the fat in taxes, but have been whacking away at the meat and bone for over 25 years resulting in a collapse of the system.
When people are starving and have nothing else to lose, they'll start venting their rage on Republicans. Scott may end up hiding with Zimmerman. LOL
"Hatred is a failure of imagination" - Graham Greene, "The Power and the Glory"
You're pretty knowledgable on this subject so let me ask you this. As I understand S.S. it's a pay as you go system but we basically get the same amount out that we put in. But if you take away the cap that all changes as those paying the higher taxes won't be receiving a higher amount in retirement. So it goes from everyone paying for themselves to a subsidy program. (You saw Owl's reaction when I called it an entitlement program - which it is - but she thought I was calling it a subsidy program. Well that's what it would turn into.) Am I wrong on that?
And removing the cap would be a massive tax increase. Is it possible to do? Yes. But money isn't unlimited. People also want us to spend on climate change, infrastructure, education and teachers pay, fighting hunger and a whole host of other issues. There's an opportunity cost involved and I don't know that everyone will agree that S.S. should get the largest chunk of that money. So there's a good chance we see benefit cuts, likely in moving back the age one can receive full benefits but in other ways as well. Am I wrong on any of this?
ThatOwlWoman (10-01-2022)
It was pay-as-you-go until a decline in the birth rate and many additional benefits added over the years created a future problem. So, in the 1980s, SS taxes were increased to build a surplus to handle the shortfall (one of the few times government has done something in advance of a problem) caused by the retirement of the baby boomers 2010-2030.
The SS law requires any surplus to be put in special treasury securities. So, that money is now in about $2.5 trillion of securities which are currently being used or will be used soon (not sure). The securities must be redeemed to pay the shortfall between revenue and benefits.
The older generations got much more back than they paid in while younger generations will be breaking about even (I have a chart if interested). That means it was much more of a subsidy program than it is becoming. Medicare is even a larger subsidy program in that we usually pay in much less than is spent on our benefits.
It depends on what other factors change if they remove the cap. If they remove the cap but don't increase benefits then it becomes more of a welfare program and loses a lot of the political popularity of the SS program. If they do raise benefits then you haven't really gained anything. I have not seen anything showing removing the cap would cover the shortfall even though some of our posters claim it would.
That money is not competing for other spending since infrastructure, climate change, etc. come from the general fund (or state funds on issues such as teacher's pay). SS spending only comes from the SS trust fund paid by the 6.2% payroll tax from workers matched by employers.
There are many benefits that were not part of the original SS program added over the years that could be cut without hurting needy people. Early retirement at 62 could be eliminated (about 70% of recipients retire early). Workers who reach full retirement age (66) can now collect full benefits with no penalty which means those probably making their highest career salary are collecting full SS.
Another suggestion is reducing benefits on a sliding scale based on the person's income.
SS is not in trouble because "Congress spent the money on...." as we often hear.
Social Security has a rate of return of about 2 percent above inflation, while Treasury bonds have a rate of return of nearly 4 percent above inflation. So won't allowing current workers to invest their payroll taxes in Treasury bonds raise their rate of return?
S.S. has always been a boondoggle.
Last edited by Earl; 10-01-2022 at 12:15 PM.
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