Social Security question

they should, but they might not

All good questions that we will never hear and answer to.

They need to raise the income cap on S.S. deductions ASAP!

So If I understand correctly, Reagan started it, but GW Bush, Clinton, Bush Jr, and Obama all did it too, just not as bad. But what they issue in exchange are IOUs. Okay so let's call in our IOUs. I think as taxpayers who paid that money in, we should be entitled to call in the IOUs.

How can anyone trust a government that had Donald Trump as President and may have him as President again? The US’s credit rating has been declining and probably will again if the upcoming government shutdown is severe. An insurance company that backs a retirement plan of mine has a higher credit rating than the US government. Accordingly, I have more confidence in the retirement plan paying out what’s due to me than Social Security.

Social Security collections are not put into an interest-bearing bank account. People (understandably) get nervous when they hear that people working currently are paying the social security benefits of someone who retired decades ago, but that is exactly how it works and has always worked. SS taxes just go into the government coffers. ON PAPER, they are accounted as being dedicated to SS benefits, but, as mentioned above, as general government revenue, every congress and every president has found uses for that extra money. Every single retiree or soon-to-be retiree who complains about immigrants coming into the US and "stealing" jobs from hard-working Americans needs to shut up. (Yes MAGAS, I'm talking about you). One out of 6 Americans is over the age of 65 and soon it will be 1 in 4 and then 1 in 2. We need active younger workers to support the people who are receiving SS payments. It is true that if the upper limit on contributions were removed, that would extend SS for several decades at least. That should happen immediately, but look at the fuckers in the House of Representatives. Do we really think they are going to vote for that? They can't even pass a frickin' budget, which is their primary job.

Great questions OP.

[quote]They need to raise the income cap on S.S. deductions ASAP!

They don't need to raise it, they need to eliminate it. Problem solved. Right now, every millionaire and billionaire in the U.S. does not have to pay more than someone capping out 166,000 a year. That's ridiculous. If the average guy pays 12% of his salary, whether he makes 30,000 or 80,000, why do the billionaires only have to pay .0012 of their income? Everyone should pay their fair share NOT based on how much money they contribute but on [bold]equal percentage[/bold] if they want to consider themselves Americans who want to participate in this democracy.

I predict or hope younger people wise up and start pushing for this publicly before it's their time to collect. Think of all the money that would come in if they made that one simple change.

SS is a pyramid scheme writ large. There's nothing wrong with that as long as everyone plays along and the bottom players don't drop out.

R8 is a budding Log cabinet.

It's not a pyramid scheme. For that to be true, the person at the top receiving benefits would be a multi millionaire and everyone below him will be hustling to get more people to join so their own income can increase. That's not how SS works. Everyone gets the same payout based on what was paid in. No one is a millionaire, no one gets more money based on how many people they personally bring into the plan.

I'm certain Our Government will continue to address any problems with Social Security similar to their handling of Illegal Immigration. We can count on it.

R7. I don’t oppose your proposal to tax billionaires more heavily, but it’s a fantasy to say that alone is the solution. The amounts spent on social security are so vast that taxing the rich alone will not solve it. The middle class will also have to pay.

OP. The answers to your questions are very simple.

1. As some have noted above, money is money 2. The government has consistently run deficits before and after Reagan.

Given those two facts, it makes no sense to ask why the social security funds weren’t invested at interest. Think of it on a personal level. If you are one million dollars in debt with 100, 000 dollars in interest due ever year, it makes no sense to say that you’re not going to starve just because you put 1,000 dollars aside each month at interest as a “food fund”. The reality of social security is really no more complicated than that.

Trickle down economics was stupid but we had deficits before Reagan and after him. Trickle down economics has little to do with the projected shortfalls on social security.

Well we should stat with the millionaires and billionaires before hitting up the middle class for a change. There are 756 billionaires in the U.S. Imagine what a boost 10% of their income would be to that fund if they paid the same percentage as the rest of us. Their estimated collective wealth is $4.5 trillion.

That dose not even take into account the 22 million citizens in the U.S who are millionaires. Some at the top with net worth over 100 - 900 million sitting around making more money with it.

R13. The match to explain why the middle class will have to shoulder much of the burden is available in your own post once you realize that you are defining billion in one way in one sentence and in another way in the next sentence. You are initially defining billionaires as people with WEALTH of at least a billion. But when you talk about taxing them you assume those billions are their INCOME each year. Very, very few Americans earn billions each year. Not that many even earn millions each year, much less tens or hundreds of millions each year. And, currently, social security taxes apply only to wage income. I doubt a single American earns a billion in wages. So, raising the ceiling is not all you would have to do. You would also have to modify the social security tax to be in effect a second income tax (and one that probably taxes unrealized capital gains, unlike the current income tax).

The Federal government spends 6.3 trillion each year. If you taxed one hundred percent of the billionaire wealth you cite, you would fund the government for one year. After that, you would have to rely on what those billionaires can earn in the following years, which is going to be nothing like 6.5 trillion each year.

No r14, I never assued they made that per year, my point was look at their total wealth, not their income because most people who make that kind of money do it through interest and other typical ways they use to avoid "INCOME" taxes. Also, there really is no way to know what they are making unless it public, so I based that idea on total net worth assuming they would be paying over time.

I am sure some of these guys make more than a billion a year.

Scrap the cap abd RAISE EVERYONE'S MONTHLY BENEFIT.

R14. Most forms of interest are taxable.

The question is whether they make a billion per year in the kind of income (wage income) that is subject to social security tax. And supposing there are amazingly one or two who do? That doesn’t even get you one milimeter closer towards finding a multi-trilllion dollar budget

Like I said R17, START there. It's still a good chunk of change. They wont miss it. Conversely, if that's not a lot of money just because it wont solve the problem, imagine if that same amount was added to what the middle class was paying. Trust me, that "drop in the bucket" would be felt hard.

R12 You are incorrect. Reagan had Alan Greenspan convince the people that Social Security was in trouble and they needed to raise the SS tax. Reagan was a hardliner who hated social programs yet somehow he was suddenly concerned about Social Security. The passing of this created the trillion dollar surplus he used to prop up the loss of income because of his tax cuts. That money should have never been used for anything other than investment into supporting social security and certainly should not have been traded for IOUs. There should have been at least a formal loan agreement.

R19. It’s interesting you say I’m incorrect but don’t attempt to refute a single argument I made. Usually that is something you do when someone is actually incorrect.

R18. I said I didn’t oppose taxing billionaires more heavily. It would be good to have a more progressive tax system. I’m just saying the idea that that will move the burden significantly away from the rest of us is only a comforting fantasy.

It may not be a pyramid scheme but it's fairly close to the old 'chain letter' scam.

It really isn't, r22.

I am getting schooled!

I agree that very few people earn 1 billion a year. However, many many people earn over $1,000,000/year. Saying that that is 20 times my annual income, more or less, and probably close to 1,000,000 people earn over 1.000,000/year, that's a lot of money (one trillion, in fact). What billionaires own is assets. Billionaires and the richest millionaires probably own close to 50% of the assets of the US, in spite of their being far fewer than 1% of the population of the nation. Assets are not taxed, at least not the same way as income. In terms of income, the same group of people probably earn only 25% of the nation's income. Most of them get their additional compensation in the form of stock options. I don't know the answer, but I know that having 37% being the top marginal rate in the US is bullshit. The country was much less unequal when the top marginal rate was 90%, but hell, I'd settle for 50%. Ain't over gonna happen, because with Citizens United and other foolish Supreme Court decisions, the rich have all the leverage they need to continue to lower their tax burdens while increasing the rest of ours.

In Russia, they properly call people with this level of wealth oligarchs. We have exactly the same, but because they don't raise their own armies, we don't think of them so pejoratively.

Seriously, it’s beyond ridiculous that SS is capped. I’m sorry, there is no excuse for it. Everyone should be taxed at the same rate, the rich even higher. If you don’t think so, you’ve been bamboozled by the “oligarchs” who run this country.

Okay R20 you are incorrect that this existed before Reagan. Social Security was solvent to 2032 when Reagan convinced Greenspan to declare there was an emergency where Social Security was in danger. The change to the tax created trillions. There was no other time in history where that happened. Your take on it is "meh, there were deficits before, and there were deficits after." No. Reagan lied to create trillions of dollars under the promise it was to be used to make Social Security solvent for a very long time. Even the most conservative of economists could see that the Reagan tax cuts were not suitable for the US to run. There were no projected shortfalls on Social Security, Reagan and Greenspan lied to congress to tax the middle class under the guise of "saving" social security when it was only done to hide Reagan's failing economic policy. To use your analogy. I am 100,000 dollars in debt so I start a go fund me saying I have stage 4 cancer and need help paying for my meds. Raise the money and use it to pay off my debts

R20 I made no comment whether social security was solvent before Reagan or not. So, whether it was not has no relevance to whether I’m incorrect or not.

To summarise, to prove someone wrong you need l1) to find something that person actually said (not something you imagined they said or they you wished they said) and 2) prove what the person said was incorrect.

R25. Figures on earnings are publicly available. You don’t need to assume them. 200,000 people earn a million or more each year. Fewer than 500 earn 50 million or more. That’s not really a lot of people in a nation of 350 million.

as people pay into SS as they work, I'm not sure how this would happen? SS has been deducted from my wages for decades.

It happened because, for most of its history, social security recipients received much more in benefits than they paid in contributions plus the return on those contributions. Social security has been structured from the beginning as a pay as you go system. The contributions of current workers pay the benefits of current retirees.

Two things have gone in the wrong direction 1) longer lifespans and 2) declines in the working age population

R29, assuming that we cap SS tax to one million dollars and that all the 200K $million+ earners pay the 12.4% tax then they would add over $20.8 billion per year. That's enough to fully fund 380K+ people at the very highest benefit rate.

^^plus, very few get the $4555 per month SS benefit.

R29. Social Security has 70 million recipients. You’re funding 0.5 percent of the recipients.

This thread is confusing because while the subject is the projected structural shortfall of social security tax revenue to expenditures a decade from now, someone keeps referencing the overall existing national debt. That’s a RWNJ pivot that should be ignored. The issue with social security isn’t that big and can be handled without cutting benefits in one of two ways or a combination of the two:

1) increase the working age population by increasing legal immigration of people in their 20s to the US. The upcoming problem, as a poster above rightly pointed out, is the increasing percentage of the population over SS age.

And/or

2) increase SS revenues from existing citizens in one of the following ways A) increase the % taken from payees while keeping the contribution cap (this is a terrible idea, but clearly the RWNJ’s favorite as it further impoverishes the poor) B) get rid of the contribution cap entirely C) increase the contribution cap substantially without entirely getting rid of it. D) the doughnut option - another poster on another thread mentioned this idea (which I selfishly love) where incomes between the current cap (which rises every year anyway) and say $400,000 are exempted and then SS contributions resume on salaries over $400,000. There’s a lot of swing voters in swing states in the 2-5% income bucket so this is politically safer than options b or c.

(Also the projections may be off because life expectancy is falling rather than rising and I don’t think the projections have fully taken that into account yet)

Rip the cap off like a band aid. Sure you will hear the screaming and yelling by the 1% but they will get over it once they realize their lifestyle will not be impacted in any significant way. It's time. There is no legitimate reason to have an income cap that only benefits the rich if you say we live in a society were everyone is treated equally in terms of it's laws.

R36. The social security trustees keep all assumptions updated, including life expectancy. The decline in life expectancy would have to be pretty significant to get rid of the shortfall.

Isn't it funny how rich people complain about taxes but they are right there at the mail box waiting for their Social Security checks.

While it's legal for them to collect, wasn't SS originally designed as a way to take care of our elderly? Before that many ended up on the street when they could no longer work. Not everyone had family to take them in. But rich people dont have that problem, why are they still allowed to collect?

r28 "Trickle-down economics has little to do with the projected shortfalls on social security." Trickle-down economics has everything to do with it. I didn't imagine you wrote that. 1. There was no projected shortfall, it was projected solvent to 2032 back in the 80s. 2. The trillions collected, if not stolen would have funded social security even if invested in a modestly. What Reagan did is in direct correlation to where we are now.

This is all just scare tactics. Social Security is not going to run out of money, ever. They are not going to reduce the payments in 2034. It's all bullshit.

Elderlez. People don’t need someone of your ignorance to know what to ignore. The national debt has everything to do with OPS simplistic question why there is not a fund of money collecting internet. The comment has no political motivation or implication.

Do they R38? The CBO report is still assuming increases in the projections. And life expectancy has already fallen a year because of COVID.

This country is so fucked up, I don't see how we can count on social security to be around for us. I'm 55. If you break it down and really look at the state of the world and the US, we started circling the drain a while ago. I'm grateful everyday that I never had kids. It's really going to suck for the young kids of today.

R40. You’re going to keep trying, aren’t you? Trickle down economics (lowering tax rates on higher earners) was not applied to social security taxes. That is one tax for which the rate went up for everyone. Nice try.

R35. Removing the cap is not a. “or” solution. Raising the cap delays the shortfall but doesn’t eliminate it.

R43. The most recent trustee’s report acknowledges both the effects of Covid on mortality and the possibility that historical declines in mortality may cease.

R42 even if there were no federal debt, social security wouldn’t “invest.” It’s just not structured that way. The current contributions pay for the current expenditures which avoids volatility and lets the government create projections with a fair degree of accuracy.

Thanks R47! do you have the link? I’d be interested in reading.

R48. I and everyone with any knowledge is aware that social security is a pay as you go system, and I had explicitly posted so. The point that is escaping you is that money is fungible. The surplus social security taxes that have been collected to-date have increased the funds the government has for its operations. Those collections have decreased the borrowing and interest expense of the US government over the last decades. In that sense it has been “invested”., but, because of the overall deficit, there is no stash of money labelled “social security” OP can go look for.

Hey ElderLez, r42 definitely underestimates/dismisses your intelligence. I have no idea what he posted, but you capably figured it out and responded (much more politely than I would have).

R42. She has little idea what she’s talking about but thinks she does. Her ignorance and overconfidence often.leads her into incredible rudeness. I was quite restrained on response.

R51 She has little idea what she’s talking about but thinks she does. Her ignorance and overconfidence often.leads her into incredible rudeness. I was quite restrained on response

everyone calm down and ignore the political theatrics. SS is here to stay. It ain't going nowhere.

I tend to agree. Old people go out to vote. We will have higher taxes and and some trimming of the program, but I wouldn’t count on its disappearance

[quote]Has there ever been a forensic accounting

Has there ever been a forensic accounting of anything in gov't.? Trump stole so much money he probably dipped into SS too.

The scale of immigration required to remedy the shortfall would be enormous and politically unpalatable. The numbers would be so large there would be legitimate concern about how we would process and integrate that number, not just from anti-immigrant zealots.

Since we are talking about 2034 it wouldn’t need to happen all at once and it could be done in concert with cap reform so neither needs to be the sole remedy.

Total Social Security expenditures are about 1.4 million and the expected shortfall is 23% so about 322 billion, which certainly sounds like a lot, but a million immigrants a year over 10 years would make up a third of the shortfall and seems reasonable to me given the fact that we’ve got six million job vacancies at the moment and it’s only going to get worse when the Boomers are completely out of the workforce.

Claiming immigrants can solve the problem is a bit different from saying that they can cover100 billion of it.

You have to take into account that not all immigrants hold wage-paying jobs and that immigrants have lower wages.

If the immigrants immediately earn the median US income of 57,000 on average (a very unlikely assumption), they and their employers will contribute a little over 7,000 a year per immigrant. To generate 107 billion, you would need 15 million immigrants. And that assumes, as I say, they earn on average the median income and every single one of them works (no children, no stay-at-home spouses, or elderly).

Shoring up social security will almost certainly require higher tax rates and benefit reductions. Other measure can help but they won’t come close to resolving the problem on their own.

And the 15 million would be incremental to the immigration already assumed in social security projections. It’s going to take a lot of immigrants.

R59, I don’t buy the benefits reduction. Eliminate the cap first and then see where we stand. The elimination of the cap is imperative.

R59. Reality doesn’t care what you care to buy or not. This is a question that can be answered on the basis of data. If the data don’t accord with your feelings, reality will win in the end.

The current social security deduction cap is $160,000. They can solve the social security solvency easily by increasing that amount to $400,000

R68. You have no basis for that statement. This issue has been analysed extensively. There is no support for your claim

It does increase the solvency by reducing the cap, but the fact remains that almost all people get more back in benefits than they ever pay in. Placing a greater burden on upper wage earners still lets people like Warren Buffett or Elon Musk off the hook. They earn their income from investments and can easily offset it with deductions that are not available to people who earn high salaries and pay the bulk of taxes.

Too many people are living too long.

R65, that’s disingenuous. People that earn high salaries are more than capable, of increasing their contribution, a much better solution than cutting benefits. It’s not perfect, but unless this country is willing to tax the hell out of the incredibly rich, I don’t want to see the middle class pay more than is necessary.

R67. The effect of removing the cap has been extensively analysed. Removing it will delay but not prevent insolvency. Permanent solutions will require more than removing the cap.

Delay by how long?

To judge from the posts here, you would assume social security is an obscure program operating in some little-known country.

All of the proposais here have been analysed to death by experts of all political persuasions. The results of those analyses are readily available through a Google search. Yet, people are claiming here that this or that solution is the ultimate fix because it gives them a warm feeling.

According to a economics article I read a year or so ago, increasing the deductible cap up to $500k will allow for SS to continue in it's current set-up for a minimum of 40 more years.

Eliminating the cap entirely will extend solvency by 13 years (from 2033 to 2046). I don’t think any reputable source says 40 years.

A lot can change between now and 2046 especially if we increase legal immigration.

But as noted above, immigration is not that powerful in resolving the problem. Even if, for whatever reason you dispute the accuracy of the calculations supporting that conclusion, can you seriously expect increased immigration to be a viable political option in the near term? That is on the outer shores of fantasy thinking.

What conceivable political indicator is there that the US public has an appetite for massive increases in immigration?

If increased immigration is framed as the cure for the problem with social security and that they (the young immigrants) will be working to pay our bills maybe views on immigration will change. And it really is a structural age based problem so the immigration increase should be focused on kids coming here for college anyway. Give smart kids an easy path to citizenship and the whole country benefits.

I don’t object to that as part of the solution. It just can’t be viewed as a very big part of the solution or as a politically likely one. Raising or eliminating the FICA cap is also a possibility. However, we can’t avoid the need for generalized sacrifice in the form of higher taxes and reduced benefits just because the idea isn’t appealing.

I believe they should increase taxes on passive income, partly to pay for the debt and partly to help support social security and medicare.

[quote]According to a economics article I read a year or so ago, increasing the deductible cap up to $500k

WTF? What is it with you guys and raising the cap? Talk about a band-aid. Let's not upset the 1% too much. Also can I like the other boot. Just get rid of it. You know like how the Supreme Court got rid of Roe v Wade. Poof! Gone! Deal with it.

R78. He’s citing a source that computed it that way. Calm down.

r29, you're correct that I was making that number up out of my ass. So were you:

Somewhere around 414,347 people made a seven figure income in 2022.

R80. How dare you accuse bb me of lying. Why on earth would I lie about something so easily verifiable? Your belief that I am lying stems from 1) your total ignorance of the FICA tax and 2) your inability to read.

Perhaps you are not American and didn’t bother to read anything about the topic tou were posting on? Social Security applies to EARNED Income not UNEARNED income. Even if you have never seen a W-2, you could have read my post. And, even if you are not American you would know pension systems are generally funded by taxes on earned income.

Please read or educate yourself before you accuse me of lying in the future. I have provided the link directly to the most updated government data.

Gen Xers do not have enough saved for retirement. Benefits are not enough to live on without lifestyle cutbacks or additional savings or income. However, if you claim Social Security before 67, you cannot work to supplement your income without a significant penalty.

The funding shortfall may ease because people simply can’t afford to retire. But there are far greater funding challenges, like servicing the $33 trillion debt, Medicare and Medicaid, and the costs of climate change. Americans were bribed with low taxes for all, limited social services, many wars and bailouts. Even though wages stayed stagnant, low cost consumer products made people feel more prosperous than they were.

The bill is coming due. It’s going to a rough road.

R40. Attached is the section of the most recent trustees report addressing demographic assumptions.

You can see why America is doomed. Almost every person here is posting utter nonsense and fantasy. Virtually no one bothers even to consult data before forming his preferred fantasy solution or to correct other posters. We get the government we deserve.

Thanks for attaching R83. That is very helpful.

Thoughts on how increased unionization might impact social security solvency?

[quote]America is doomed.

Gee like no one has said that since the day it became a nation. So insightful.

R86. And you doit know how to read. You arrived as if cue to confirm the stupidity on this thread by being possibly the stupidest so far.

r45 lol gaslighting is not your strong suit. Trickle-down caused the loss of funds for the government. It is the direct cause of Reagan suddenly caring about Social Security and raising the tax on the middle class. He then used the trillions collected not to protect Social Security but to plug the holes in his failed economic polices. Nice try though I can tell you hate being wrong so here You are right I am wrong. Now you can go back to Fox News.

The lowest form of stupidity is to dismiss am opinion by attributing a political motivation to it. First, it has nothing to do with whether the statement is true. Second, people are usually bad at guessing the politics of people who post here. If you checked my posting history you will see I am definitely not a Republican and I have expressed an openness to raising the social security cap.

Reagan’s policies did result in deficits., but we’ve had a lot of deficit-running republican Presidents since Reagan. It’s weird to say something that happened four decades ago is the sole cause of our current condition. Even if you have no specific knowledge of the topic, which you clearly don’t, you can rely on common sense to assess whether your claim is reasonable or not.

I don’t assume you’re Republican, democrat ,Nazi, etc. Just because I find your positions stupid. Please find a less offensive way to humiliate yourself here next time.

I’m not counting on a penny from SS when I retire. I don’t include it in my retirement projections. It’s hard to save 30% of my income but I’m not going to be surprised when I get fuckall later on.

No one should really count on SS R90, but life happens and MOST people are not able to save what the experts tell them they should be doing.

It's easy to say put away 30% of your income when you are 20, invest it, and by the time you retire you will have over 2 million dollars. But they never factor in job insularity, job loss, age discrimination, economic downturns, medical issues, divorce, accidents, theft, environmental disasters, taking care of elderly parents, etc.

.R78. I’m always curious what motivates some of the lower intelligence posts on Datalounge, but I wouldn’t normally ask because I wouldn’t want to hurt anyone’s feelings. However, since you are foul-mannered to other posters I feel comfortable asking.

What motivates you to post? You don’t provide any information, but you continue posting even when presented with facts that demonstrate that what you are posting is wrong. Clearly, you can’t be posting to inform people since you are incorrect and you make posts that present no facts. Does it provide an emotional release that is important to you? You also clearly have reading and comprehension problems. We’re those ever diagnosed ? Have your intellectual limitations and the foulness of your manners prevented you from earning a good living and fueled your resentments?

I could not survive without my SS. I get a pension, and SS. Now, as I understand it most companies don't even offer pensions anymore. They're a relic. But as a public servant working in government for 25 years, I get a pension which comes with modest healthcare benefits to supplement Medicare, and I get SS. I live quite comfortably if I stay within my budget. Regrettably I have very little saved for emergencies. My brothers know that I am one health crisis away from financial ruin. I'm not alone. I suspect a lot of people are in similar situations. I pay a monthly mortgage and my car is 10 yrs. old. I just turned 70. I feel great but I take care of myself. I try to eat right and exercise and take vitamins. Keep my mind active. It's important.

R93. Is your concern they you may need long-term care? Most other medical costs should be covered by Medicare?

R94 yes, but not just that. The coverage for catastrophic illness is very inadequate, very limited. My cousin died of cancer four years ago. They had to take out a second mortgage, because several years of treatment for Cancer ruined them.

R89 again....I will type slowly so you can understand. Social Security was no insolvent when Reagan was president. It was fine. Projected to be solvent well into 2030. Reagan needed money to plug the holes in Reaganomics. He convinced Alan Greenspan to convince Congress and the American people we needed to raise the ss tax because Social Security was going to run out of money. They did and it resulted in trillions of dollars. Now, and this might be hard to understand if they had just used the trillions for what it was intended for, Social Security would be more than Solvant well beyond 2030. Did other presidents use it after Reagan? Yes. Does that change the fact that Reagan did it first? no. Reagan's failed economic policies caused him to rob from Social Security surplusses he created through false information, replacing the money with worthless IOUS. Oh and I never accused you of being a Republican, Democrat or otherwise. I merely suggested you go back to Fox News. I just assumed you get your misinformation from somewhere.

The payroll tax hike of 1983 generated a total of $2.7 trillion in surplus Social Security revenue. This surplus revenue was supposed to be saved and invested in marketable U.S. Treasury bonds that would be held in the trust fund until the baby boomers began to retire in about 2010. But not one dime of that money went to Social Security.

The 1983 legislation was sold to the public, and to the Congress, as a long-term fix for Social Security. The payroll tax hike was designed to generate large Social Security surpluses for 30 years, which would be set aside to cover the increased cost of paying benefits when the boomers retired.

Reagan and the government had big financial problems. Supply-side economics was not working like Reagan had promised. Instead of the lower tax rates generating more revenue as the supply-siders claimed would happen, there was a dramatic drop in revenue. Something had to be done, so Ronald Reagan set for himself a new mission. He would have to figure out a way to get the additional revenue he needed from another source.

The mechanism, which allowed the government to transfer $2.7 trillion from the Social Security fund to the general fund over a 30-year period, was the brainchild of President Ronald Reagan and his advisers, especially Alan Greenspan. Greenspan played a key role in convincing Congress and the public to support a hike in the payroll tax. A few years later, Reagan appointed Greenspan to become Chairman of the Federal Reserve System.

Since Greenspan’s new job was one of the most coveted positions in Washington, many observers have wondered whether or not this appointment represented, at least in part, payback for the role Greenspan had played in making vast sums of new revenue available to the government.

The tax increase was designed to generate large Social Security surpluses for the next 30 years. The public was led to believe that the surplus money would be saved and invested in marketable U.S. Treasury Bonds, which could later be resold to raise cash with which to pay benefits to the boomers. But that didn’t happen.

This would not be such a serious problem if Social Security was still running annual surpluses. But Social Security ran it last annual surplus in 2009, and began running permanent annual deficits in 2010. The cost of paying full Social Security benefits for 2010 exceeded Social Security’s total tax revenue by $49 billion.

So tell me again how Reagan has nothing to do with Social Security shortages and it's current state?

R96.and R97. Do you not understand that money is money? Is that really so difficult for you???

What does it mean to invest 2.7 trillion in securities when you have an amount of debt that exceeds that? It makes absolutely no sense whatsoever. The money wasn’t transferred because money is money. The federal deficit is 2.7 trillion less than it would have been without those FICA collections. The increased FICA collections have reduced government borrowing and interest expense.

Do you look in your wallet and say this is a lunch dollar and this is a parking meter dollar? The mind boggles.

Go back to the child porn that you must be watching since you disagree with me.

I do think a lot of people invest money for retirement while at the same time carrying debt on a mortgage or car loan R98; maybe even most people. And of course poor people do assign specific roles to every dollar. Maybe you have an atypical life experience in relationship to money that makes you think your logic is especially compelling, but I for one find it kind of odd.

Yes, Reagan used the FICA surpluses to conceal his massive fiscal irresponsibility. There was no lockbox to prevent this, nor did he change the accounting.

But I haven’t seen anyone mention the worst part of his “reform,” which was to start making Social Security benefits taxable (that was subsequently increased 20 years later under Clinton). He also eliminated the deduction for credit interest in 1986.

You may find it’s odd , but it’s fundamental and undeniable.

The reason it seems odd to you is that you have the analogy backwards. I provide the analogy in the correct direction in an earlier post. I will modify it slightly here to correspond to the way you have framed it.

Let’s say you have a 10 000 dollar “food fund”.but you take on a 1 000 000 mortgage. Will you avoid starvation or bankruptcy because you have designated 10. 000 in savings for food? No, you will not. Became money is money. It doesn’t matter if you put the 100 000 in a separate pile and write “for feeding me” on the dollar bills. The fact that you have designated a certain amount of savings to feed yourself has no value ouf you have other debt greater than that amount.

By saving 10 000 you have reduced your net indebtedness by 10 000. You have 990 000 net. But you are still bankrupt and starving.

Similarly the 2.7 trillion wasn’t set on fire. It did reduce the amount of net indebtedness by 2.7 trillion compared to what it would otherwise have been. But there is no pile of 2.7 trillion you can go look for. It would be nonsensical to go looking for the 2.7 trillion in cash or securities when the government debt vastly exceeds that amount. The concept is fungibility.

R97. For the 100 000 time, the 2.7 trillion has been used to fund social security. What eludes you is 1) money is money, and 2) some numbers are greater than others.

Let’s suppose you put the 2.7 trillion in a special bank account and you label it “retirement”. Subsequently you run up 33 trillion in debt. When the debt collector comes, you say to yourself, “I’m glad I saved that 2.7 trillion and put it in a special account for my retirement.”

The debt collector will not care that you saved the 2.7 trillion and put it in a special account. You are still insolvent. You are 2.7 trillion less insolvent than you otherwise would be, but you are still insolvent.

We don’t have a pile of cash or securities to rely on for social security not because of trickery but because as a country overspent overall Yes, Reagan contributed to the overspending, but the Federal debt was 2.9 trillion when he left office. It’s 33 trillion now. Even if you adjust the 2.9 trillion for inflation, it’s clear most of the debt was accumulated post-Reagan

What you and the other posters seem to be suggesting is that the future social security obligations should be recognized as a liability in the federal budget accounting. Because the future social security obligations are not recognized as part of the federal debt but the FICA collectors are recognized and therefore reduce the debt, the 2.7 trillion in FICA collections made the budget outlook look rosier than it otherwise would have. That has camouflaged the extent of government overspending. That is true, but that is a result of the budget accounting rules. The future social security obligations have never been recognised in the federal debt before or after Reagan

R100. What would a “ lockbox” even mean. Let’s supposed you locked up 2.7 trillion in interest bearing securities in safe deposit box. What relevance does that have. It means nothing when you have 33 trillion in debt overall. Do you think your creditors won’t rich the 2.7 trillion because you put it in a specially labelled box ?

R100 Why was taxing social security benefits so egregious?

R99 To put it more succinctly, what you say is true, but what you are missing is that, if you have retirement savings along side a mortgage, that can be fine. BUT the retirement savings has to be bigger than the mortgage (if you have no ongoing wage income). It’s the net amount of the savings that matters. The ney number for the US is vastly negative.

So was there a bump in the coffers because of all the people that died from Covid? SS doest have to pay them out right?? Same thing for people that die before being able to collect. Where do those monies go??

People die all the time before collecting benefits. The money isn’t thrown away. It remains on the system.

I took SS in 2014 at age 62 and took a 25% cut.

Now, it’s a 30% cut if you opt out at age 62.

Unless you have no other source of funds for living or you are confident you will die before the average life expectancy is reached, it is always advantageous to retire at the maximum age.

R105 And the only reason to hold a mortgage while also holding the savings to pay it off is that mortgage interest produces a tax advantage. Otherwise, it would make no sense to continue to hold debt and pay interest on it if you are capable of paying it off.

r102 - The money was supposed to be put into Treasury Bonds which would have given the government access to the 2.7 trillion but still come due in the 20-30 years as needed while paying interest. The reason T-bonds are considered the safest investment is because the government can tax its people to recover the cost. Had it been used correctly and how it was SUPPOSED to be used we would be in this mess. Instead what happened was Reagan pulled a fast one and instead left a IOU worth nothing as did Presidents after him.

What would it even mean to have the social security invested in bonds when the overall federal deficit is almost ten times larger? Money is money. If the funds had been invested in bonds , the government would have had to buy an identical amount of bonds, at almost certainly a higher rate of interest, to fund the operating deficits. It makes no sense whatsoever to invest 3.7 trillion in bonds when you are 33 trillion in debt.

Neither the Democrats or Republicans have “stolen “ Social Security.

A reason for not eliminating the cap on Social Security is that you would also have to eliminate the cap on benefits. SS is supposed to be an old age pension fund and not simply another tax. The cap also represents a cap in benefits.

R114. Yes. That is a very valid point that no one has mentioned. The social security program in isolation is already relatively progressive.

r114 SS is not just an old age pension but a life insurance policy as well. It pays out survivor benefits as well as disabled people.

R114, could you provide a link? Your claim that removing the cap on taxes would allow limitless benefits seems completely made up. Not to mention that the law that removed the cap could easily address this imaginary concern.

R117. He’s not saying it would make limitless benefits possible. He’s saying that in its long history, benefits have always been linked to contributions. The more you contribute, the more you collect (although it doesn’t increase dollar for dollar). Having people contribute taxes that don’t increase their benefits would be a significant change in how the system operates.

R117 That is EXACTLY what I was saying. You are also correct that low earners collect more proportionately, but the cap on contributing has always gone hand in hand with the cap on collecting benefits (pension as well as benefits for survivors). It’s not that I don’t think the cap can be raised on both ends, it acutely is.

I have heard that fully 1/3 of the national debt is actually multiple federal departments that owe money to other federal departments, so that more or less cancels itself out.

R120. The national debt is a net number.

SS tax is actually somewhat regressive, because it is collected on every single person who earns a paycheck, whereas income tax is not collected below a certain level or is refunded back at the end of every fiscal year. The highest earners don't appreciate that they pay the most in taxes as dollar figures, but they have by far the most money and assets. As I like to break down for people, someone earning 1 million dollars a year will pay (without deductions), approximately $370,000 a year in taxes - which seems huge. But that person will be left with $630,000 year to pay for whatever doodads he likes. That "leftover" income is 10 times the average income in the US, and could buy 15 brand new expensive automobiles, could pay off the remaining mortgage on a pretty sizeable mortgage, could put a big down payment on a small jet, or a large boat - all things well outside the means of most Americans.

In reality, income is just a small portion of what most of the wealthiest Americans own - which includes lots of real estate, stocks, gold, shares of companies, and on and on. If they pay a bit more for social security and don't collect a lot more as a proportion of their income, my heart is not going to bleed for them.

There’s already no requirement to increase the payout cap based on increased contributions. If I stopped working now (and therefore contributing) I’d get the same benefits when I start taking social security as I would if I continued to work until I started taking it; assuming the same age when starting to to receive benefits. That’s because I’ve already reached the cap on benefits based upon my lifetime contributions. Since contributing “excess “lifetime contributions doesn’t raise benefits, there’s no reason “excess” yearly contributions would.

Also R101, your example about food and the mortgage doesn’t really help your case. The value of money really does vary based upon what you spend it on as impacted time. Starvation, for instance is very time specific. So to go back to your example the person with ten thousand for food and a hundred thousand in mortgage debt and the person with ninety thousand in mortgage debt and no money to buy food do have the same net worth as your rightly point out, but the practical implications of that net worth are dramatically different as people who live in the real world know.

Ummmm…you do realize you considered only the contributions and not also the benefits when claiming social security is regressive? You do kind of need to remember that. The progressivity of social security is widely, widely analyzed by people who understand the system. You don’t need to analyze it yourself based on your grievous ignorance.

Way too many high school classmates dying before reaching the age of 62 prompted me to file for SS on my 62nd birthday.

You really, really need to give up. Someone who has 50 000 in securities and 100 000 in debt had the same met worth as someone who had 50 000 in deb and no securities. The first person just probably has higher interest expense.

Yes investments and debt obligations have varying maturities but that is irrelevant. The government has an enormous number of securities and debt obligations constantly falling due. It’s not as if the social security obligations fall due in 2034 and the federal debt is due in 2055. That’s insane.

Every single human being alive lives in the real world. What true hell s that supposed to mean? Perhaps it’s shorthand for never having had to manage my own finances ? If so, it’s equally stupid and offensive. Feel free to criticise me for what I type (however unsuccessfully). Don’t criticize me based on fantasies in your head

Feel free. To criticise what I say ( however pathetically ) but don’t criticise me for sillly things you fantasise about e.

R123. That’s really not analogous. Your contributions are still included in the calculation of what your benefits should be. It’s true that there are cases that, after taking into account your additional contribution, your benefits don’t increase, but they are considered in evaluating your benefit. Removing the cap is a novel situation in which there are contributions that are not considered in evaluating your entitlement.

Lower earners acutally collect less because they pay less into it. If you look at projected SS numbers for earners, a person making 50K retiring in 7 years would get 1500 a month. Same person making 160K would get 3170 a month.

R129. It’s hard to live in America without realizing that. It is still progressive. Low earners recoup a higher percentage of their contributions than high earners.

Social Security retirement benefit (not necessarily disability or survivor benefits) are based on your highest 35 years of working. There will be the occasional rare individual that has paid in the maximum for greater than 35 years and continues to work without drawing Social Security yet. Those rare individuals would find themselves in Elderlez’s situation. It’s pretty rare, but can happen. When you look at your projected Social Security online (SS website), it is giving an estimate based on you continuing to work until given age. That figure can and will drop if you stop working at say 60 and don’t start benefits until 67. That is, unless you’ve already contributed the maximum for a minimum of 35 years. It’s really not accurate to call SS regressive. People that are lower wage earners are collecting more ”bang for their buck” even though their check is smaller. Proportionate to their lifetime contributions, they are getting more return. If the cap is simply removed on the contribution end, Social Security becomes something it never was intended to be. That gives the Republicans additional ammunition in trying to replace it with something that totally fucks the poor and middle class.

Isn’t the best solution to increase the contribution percentage? I mean, your employer matches half.

R132 That is one of the suggestions being made and probably the best one. If workers and employers each paid 8.0% (up from today's 6.2%), it would provide solvency through 2090.

R132. Yes, raising the contribution percentage will be the primary solution but people love to indulge in fantasies where someone else pays the whole bill.

It’s true that the employer remits half of the tax. However, it’s not clear who ultimately bears the employer portion ( the employer or the employer). For example, if your employer slows wage increases because of the higher tax, some or all of the employer portion has been shifted to the employee. The 50/50 split of the burden even as it exists now is theoretical since it is impossible to know whether wages would be higher if the FICA tax didn’t exist.

R134 There is some truth to what you say, but the same thing could be said for any employee benefit. I’m sure employers take vacation time, sick time, employer cost towards healthcare and any other perk or benefit into account. Most employees however, primarily look at their actual pay when negotiating a new job offer. At least in the current economic situation (labor shortage), I don’t think an employer having to pay an additional 1.8% towards Social Security is going to drive down wages. It’s not a huge increase anyway and only applies to wages up to the current SS cap.

Of course vacation and fringe benefits affect the amount of wages paid. There no reason to think a FICA tax of nearly 15 percent in total wouldn’t have dome effect on wages. It’s very hard to estimate how the effects are distributed between employers and employees. It’s impossible to know a priori. It’s important to remember that for many taxes, there is no particular reason to think that the person who remits it is the one who ultimately beats it.

r130 possibly but typically higher earners live longer due to better health care. Lower earners tend to have to work well into their retirement to make ends meet, have less saved in a 401k or pension etc.

It is progressive and it could be more progressive. Both things are true.

R137. Social Security is one of the largest social programs in one of the most prominent countries in the world. Every aspect of it has been analysed in enormous detail by experts of all political persuasions. The progressive nature of the system, like most of the observations posted in this thread, doesn’t need to be decided based on conjecture or speculation. The progressive nature of the system ( taking into account all considerations such as life expectancy and retirement age) is well attested and available on the internet.

r139 not really the largest unless you mean in population size. I think there are about 10-12 other countries ahead of us in providing these types of benefits.

R140. READ CAREFULLY. I said one of the largest programs IIN one of the most PROMiNENT counties. Geez

R140. In addition to your illiteracy, what evidence do you have that ten to twelve countries have social programs than social security?

I think some of you might find the information in the attached link interesting and informative. It's from the Center on Budget and Policy Priorities (CBPP) which is a strongly left leaning think tank. It addresses many of the things we've been discussing in this tread with objective facts. It also addresses were US Social Security falls with regard to similar programs in other industrialized countries (top of lower third; just below New Zealand, Germany and Israel and just above Canada, Japan and Australia). It also gives specifics on why it isn't means-tested and why this is actually an advantage for multiple reasons. It also addresses the fact that it is progressive in nature and specifically gives examples (no way poorer people dying at a younger age challenges this, but could subtly impact the numbers). It's clearly a "better deal" for lower wage earners, but receives nearly universal support because literally everyone benefits.

r141 r142 have a look

R144 is looking at private pensions and state pensions (eg. Social Security) combined. R143 is looking at state pensions/Social Security only (just the government sponsored/administered plans). Unfortunately there are fewer and fewer private pensions being offered in US businesses. Many offer tax deferred options such as 401K/403B, but most employers no longer match funds and only low matching if they do. You have to have the discipline to save the money yourself and some people simply don't have anything leftover to save. I'm fortunate to have a 403B that used to do some matching in the old days and a decent pension with another employer. I'll also get Social Security. With everything, I am nearly replacing my working take home pay. I am not, nor ever will be, wealthy, but I'm not impoverished either. Not really "lucky", I just worked a lot in my younger years. I frequently would work a full-time job and 2 per diem jobs totalling at least 60+ hours per week. Did that for years except during vacation. Working the extra jobs enabled me to contribute to the 403B although I should have done better. Like so many young people, I just didn't consider it a priority at the time.

If I was in charge, I would raise both the employer and employee contributions to Social Security to greater than an additional 1.8% so that it could be solvent AND increase the retirement benefit. That way people couldn't opt out like they do with 401K/403B schemes and since most employers have stopped offering private pensions, they can compensate by adding more contribution to Social Security. Most lower and middle income people (even some higher income people) just are not going to prioritize savings for retirement. The reason doesn't matter. We can't have elderly people starving and homeless and just say "it's their own fault". I've never considered myself a socialist, but parts of socialism do need to be (and are) incorporated into the system. I feel the same way about healthcare. Medicare (single payer) for all. Supplements could be offered as a fringe benefit/group rate through work, but everyone would have basic healthcare no matter their financial/work status. I guess we need to stabilize and improve Social Security first, then tackle healthcare.

R244. Your illiteracy really is unimaginable. You honestly think the retirement systems in Denmark and Israel are bigger than the social security system? Honestly? The fact that a very small country has a more generous system than the US, does not mean that it has a bigger overall program than them the US, which has more than 300 million residents The mind boggles at the lapses of literacy, math, and logic

R146. Are you suggesting you can opt of social security by contributing to a 401K?

In I was wrong/thank you for teaching me something R131 news, it does appear that the projection of being at the cap for benefits is dependent on continued working at a salary over the contribution cap for more years than I’d like. I’d only have three non-counted contribution years.

r147 I am sure when r244 posts they will be very cross with your intelligent attack! Not only are you super smart you can see the future! I yield to your brain power sir..or mam.

R150. Not super smart. R147 is just grossly incompetent.

r151 I bet you are fun at parties

R151. No, if you enjoy correcting people but are actually a colossal idiot, I’m not very fun at parties. You should avoid me at all costs.

r153 well at least you are self-aware.

R154. Yes, I’m very aware of how I feel about people like that.

R148 That is not what I was suggesting at all. Maybe it wasn't clear in the post. It was to me, but I wrote it. I'm saying that it would be preferable to raise Social Security (both employer and employee contributions) than to opt for 401K/403B contributions as the latter people are able to opt out of. Either because they "can't afford it" (which may or may not really be true) or they have other priorities at the time. Social Security is compulsory so a higher retirement benefit could be guaranteed. It would avoid bad decision making in the younger adult years from affecting financial survival in old age. I was suggesting people often opt out of programs like 401K, not Social Security. That was the point.