Social Security, the CPI, and Gasoline Prices

Originally posted by normbenign
SS is already somewhat means tested. Someone who has worked and entire career paying maximum FICA taxes, and someone who has worked and paid the bare minimum don't receive proportional benefits. Not even close. Further means testing would make it more of a welfare system than it already is.

Social Security's explicit purpose was to reduce elderly poverty (something it did amazingly well even at the low levels of benefits it provides) so it was always a welfare program.

Social Security has never missed a payment. It never will; it is too politically popular. Money that was borrowed from it will be repaid and FICA taxes will be raised if need be as they were by Reagan and the Democrats in the 1980s. SS is not going bankrupt and it is irresponsible scare tactics to claim it is.

Originally posted by RJHinds
I don't like that either because it is not fair. Even those receiving the most from their Social Security should receive some COLA in my opinion. I just believe those at the bottom should get the higher percentage in order to keep them above the poverty level in their retirement years. Or as I said before, everyone get the same lump sum amount and do away with the percentage system for COLAs.

"Even those receiving the most from their Social Security should receive some COLA in my opinion."

The progressive COLA idea doesn't exclude those who are getting the most from their SS , it excludes the wealthiest, who may or may not be those getting the most from their SS, depending on how they got their wealth. I know you may not like that either, but I still wanted to clarify it.

Originally posted by JS357
"Even those receiving the most from their Social Security should receive some COLA in my opinion."

The progressive COLA idea doesn't exclude those who are getting the most from their SS , it excludes the wealthiest, who may or may not be those getting the most from their SS, depending on how they got their wealth. I know you may not like that either, but I still wanted to clarify it.

I have not read anything on the progessive COLA, so all I know is that you said "the wealthy top third get no COLA."

Originally posted by JS357
"Even those receiving the most from their Social Security should receive some COLA in my opinion."

The progressive COLA idea doesn't exclude those who are getting the most from their SS , it excludes the wealthiest, who may or may not be those getting the most from their SS, depending on how they got their wealth. I know you may not like that either, but I still wanted to clarify it.

You're not going to get rich based on Social Security Retirement Benefits:

The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2015, your maximum benefit would be $2,663. However, if you retire at age 62 in 2015, your maximum benefit would be $2,025. If you retire at age 70 in 2015, your maximum benefit would be $3,501.

https://faq.ssa.gov/link/portal/34011/34019/Article/3735/What-is-the-maximum-Social-Security-retirement-benefit-payable

The average monthly benefit is far less:

The average monthly Social Security retirement benefit for January 2015 is $1,328.

https://faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker

Originally posted by no1marauder
Social Security's explicit purpose was to reduce elderly poverty (something it did amazingly well even at the low levels of benefits it provides) so it was always a welfare program.

Social Security has never missed a payment. It never will; it is too politically popular. Money that was borrowed from it will be repaid and FICA taxes will be raised if n ...[text shortened]... ats in the 1980s. SS is not going bankrupt and it is irresponsible scare tactics to claim it is.

Have you any real actuarial projections on SS for the next 5 decades or longer? At just current benefits, it is projected to consume all government revenues by that time.

You don't hold the view that the majority of my generation does. They think they paid into it, and it's theirs. Tell them it is welfare. I accept that view, but would gladly return to work if or when it goes bust.

Originally posted by normbenign
Have you any real actuarial projections on SS for the next 5 decades or longer? At just current benefits, it is projected to consume all government revenues by that time.

You don't hold the view that the majority of my generation does. They think they paid into it, and it's theirs. Tell them it is welfare. I accept that view, but would gladly return to work if or when it goes bust.

It is not considered welfare. It is considered insurance that you have paid the government as your insurer just like Medicare Insurance is like a medical insurance that you pay for to the government to get benefits that cover a major portion of your medical expenses after your reach the age of 65. However, Medicaid is basically welfare.

Originally posted by RJHinds
I have not read anything on the progessive COLA, so all I know is that you said "the wealthy top third get no COLA."

Well if you aren't going to bother with reading the link I found and posted for you, I suppose your mind is made up. To repeat,

http://www.nationalaffairs.com/publications/detail/means-testing-and-its-limits

I swear to give up on people who I work to provide information with and then say they have read nothing on it.

Originally posted by RJHinds
It is not considered welfare. It is considered insurance that you have paid the government as your insurer just like Medicare Insurance is like a medical insurance that you pay for to the government to get benefits that cover a major portion of your medical expenses after your reach the age of 65. However, Medicaid is basically welfare.

As I said before, most recipients view it as and entitlement, or as you say insurance. We already know that it wasn't properly conceived, and planned as it has already had to be "saved" several times before.

Any private insurance company who calculated so badly, would have been bankrupt, and the officers probably jailed for fraud. Still SS is actually projected to go broke, and we act as if nothing is wrong. Now the majority of the revenue is from higher income people, who are likely to be excluded if SS is means tested.

Of course, all that is academic, if our national debt sinks us.

Originally posted by RJHinds
I have not read anything on the progessive COLA, so all I know is that you said "the wealthy top third get no COLA."

(delete my reply - already answered)

Originally posted by JS357
Well if you aren't going to bother with reading the link I found and posted for you, I suppose your mind is made up. To repeat,

http://www.nationalaffairs.com/publications/detail/means-testing-and-its-limits

I swear to give up on people who I work to provide information with and then say they have read nothing on it.

It is an interesting, and balanced article. It recognizes the partisan problems with almost any proposed solution. Frankly, I tend to think that it all is too little, too late. The logjam, the longer it goes on, the more difficult any solution becomes, and the possible solutions are running out.

Originally posted by normbenign
Have you any real actuarial projections on SS for the next 5 decades or longer? At just current benefits, it is projected to consume all government revenues by that time.

You don't hold the view that the majority of my generation does. They think they paid into it, and it's theirs. Tell them it is welfare. I accept that view, but would gladly return to work if or when it goes bust.

You are grossly misinformed:

As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.

https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html

EDIT: That was the 2010 Trustee Report but the 2015 one didn't change things much:

After 2019, Treasury will redeem trust fund asset reserves to the extent that program cost exceeds tax revenue and interest earnings until depletion of total trust fund reserves in 2034, one year later than projected in last year’s Trustees Report. Thereafter, tax income is projected to be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2089.

https://www.socialsecurity.gov/OACT/TRSUM/index.html

Originally posted by normbenign
As I said before, most recipients view it as and entitlement, or as you say insurance. We already know that it wasn't properly conceived, and planned as it has already had to be "saved" several times before.

Any private insurance company who calculated so badly, would have been bankrupt, and the officers probably jailed for fraud. Still SS is actuall ...[text shortened]... cluded if SS is means tested.

Of course, all that is academic, if our national debt sinks us.

It was brilliantly conceived and virtually solved the problem of elderly poverty while maintaining high levels of popular support. Of course a 78 year old program has had to be readjusted at times to deal with changing demographic and economic realities but I'd like to see any private sector forecasts that even attempt to project out 75 years with any degree of accuracy; the big Wall Street banks didn't know that were about to collapse in 2008 and maybe you can tell me how well the giant private insurance AIG calculated in the period before 2008 (Hint: not so good).

EDIT: Elderly poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939. While poverty was once far more prevalent among the elderly than among other age groups, today's elderly have a poverty rate similar to that of working-age adults and much lower than that of children.

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Applying this estimate to the change in Social Security benefits between 1967 and 2000 suggests that the increase in benefits can explain all of the 17 percentage point decline in poverty that occurred during this period.

http://www.nber.org/bah/summer04/w10466.html

Originally posted by normbenign
As I said before, most recipients view it as and entitlement, or as you say insurance. We already know that it wasn't properly conceived, and planned as it has already had to be "saved" several times before.

Any private insurance company who calculated so badly, would have been bankrupt, and the officers probably jailed for fraud. Still SS is actuall ...[text shortened]... cluded if SS is means tested.

Of course, all that is academic, if our national debt sinks us.

The problem occurred when the government started treating the Social Security taxes just like any other tax that they could dip into to cover shortfalls in other areas that they wanted to spend the tax payers money on. It was the government that became a bad custodian of the so-called Social Security Tax Fund.

What are the Trust Funds?

The Social Security trust funds are financial accounts in the U.S. Treasury. There are two separate Social Security trust funds, the Old-Age and Survivors Insurance (OASI) Trust Fund pays retirement and survivors benefits, and the Disability Insurance (DI) Trust Fund pays disability benefits.

Social Security taxes and other income are deposited in these accounts, and Social Security benefits are paid from them. The only purposes for which these trust funds can be used are to pay benefits and program administrative costs.

The Social Security trust funds hold money not needed in the current year to pay benefits and administrative costs and, by law, invest it in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them.

https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.htm

It is clear that Congress will have to act at some time to increase the amount of taxes taken in for Social Security and medicare and/or decrease the benefits paid out.

Originally posted by RJHinds
The problem occurred when the government started treating the Social Security taxes just like any other tax that they could dip into to cover shortfalls in other areas that they wanted to spend the tax payers money on. It was the government that became a bad custodian of the so-called Social Security Tax Fund.

[b]What are the Trust Funds?

The So ...[text shortened]... amount of taxes taken in for Social Security and medicare and/or decrease the benefits paid out.[/b]

Was that an actual change in US practice? In the UK we have Tax and National Insurance contributions. National Insurance is intended to pay for pensions, unemployment benefits, NHS treatment, and so forth. The treasury do not, and never have, put it into a separate account. In an era of continual growth that's fine as one can expect treasury revenues to grow with GDP and so the government will be able to cover its liabilities. We seem to be in an era of uncertain growth which means the government has started to accumulate risk.

Originally posted by DeepThought
Was that an actual change in US practice? In the UK we have Tax and National Insurance contributions. National Insurance is intended to pay for pensions, unemployment benefits, NHS treatment, and so forth. The treasury do not, and never have, put it into a separate account. In an era of continual growth that's fine as one can expect treasury revenues ...[text shortened]... m to be in an era of uncertain growth which means the government has started to accumulate risk.

This page is helpful: https://www.ssa.gov/OACT/ProgData/fundFAQ.html#&a0=2

Specifically: Money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary.

Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government.