Social Security says system's costs will exceed income this year • Hacker News Board

Re: Social Security says system's costs will exceed income this year

#51

Post by lurquer » Wed, Jun 06, 2018, 10:50 PM UTC

rayiner wrote: post #25

gringoDan wrote: post #5

We've known this was coming for a long time...as a Millennial, I don't expect to ever see a cent of Social Security benefits.

I'm not sure why millenials have to worry about it. Social Security is not an aquifer that will be tapped out by the time we get to it. It is a pay-as-you-go system. The current crunch is coming from having a large retiring generation (the baby boomers), supported by relatively smaller working generations. Millenials will not necessarily have the same problems (unless the elect to have even fewer kids than baby boome…

> It is a pay-as-you-go system.

Then who paid for the first generation of recipients?

Re: Social Security says system's costs will exceed income this year

#52

Post by roenxi » Wed, Jun 06, 2018, 10:53 PM UTC

encoderer wrote: post #42

maerF0x0 wrote: post #20

Earlier quoted context omitted.

means testing is super unfair to those who sacrificed lifestyle in their youth to save for retirement. Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news.

Social Security is not a retirement account. We're paying today for the current generation of retirees so we don't have a class of elderly homeless eating cat food and dying in our streets. Means testing is consistent with this outcome.

Incentives are much more powerful than intent. It isn't meaningful to talk about intent when assessing the likely outcome of an economic initiative. I can't emphasise this as strongly as I'd like to; in economics we want fairness and the incentives to align, but if they are not going to then incentives trump fairness. Fairness with poor incentives drives bad outcomes, and usually reveals that 'fairness' is 'fairness for some in groups, at the expense of the rest'.

Resources are no longer growing as quickly relative to population as they were in the 70s and 80s. We need normal people to make uncomfortable decisions _not_ to consume. Otherwise there are not enough resources when they grow old.

Incentivising spending in the present is not a clever idea, even if it isn't intended.

Re: Social Security says system's costs will exceed income this year

#53

Post by eximius » Wed, Jun 06, 2018, 10:54 PM UTC

chiefalchemist wrote: post #36

We have the resources. What we lack are necessary priorities and the resolve to fix them. The latest DoD budget is $700 billion. Russia's DoD budget is approx 10% of that. That's not a typo 10%. China might not be an ally - in the historical European sense - but given our symbiotic economic relationship it would like take quite a bit for a true military conflict to break out between the two countries. Even if our DoD…

I've fantasized about this as a solution before. If you tell the military that in 10 years you're cutting their budget to $250 billion and somehow manage to instill in them that a) you're serious and b) you will not repeal your decision, I have no doubt they would successfully adapt (just like every industry who complains about regulations have ultimately adapted).

I am curious, however, in HOW they would adapt.

I wouldn't want them to drop their research budget (much). Research is almost always good.

For one, you could discharge some of our 1.5 Million active troops [1]. I don't really know why we have that many. That'd measurably cut down on the second largest chunk of the budget (wages) [2].

The highest is 'Operations and Maintenance' and the third highest is 'Procurement'. With a reduction of manpower, they need to procure less. They can retire many assets. I would prefer they NOT sell them to more local police, but thats a different discussion. Procurement could be done MANY times smarter. The F35 is a disaster of design by committee and if each military branch had designed their own plane, I'm sure they'd each have gotten a better one. And, of course, with less money, they have more incentive to push back on the industrial part of the complex for more reasonable prices.

[1] - https://en.wikipedia.org/wiki/United_States_Armed_Forces#Per... [2] - https://en.wikipedia.org/wiki/File:USA_2010_Military_Budget_... (it's 2010, but the proportions should be similar)

Re: Social Security says system's costs will exceed income this year

#54

Post by jakelarkin » Wed, Jun 06, 2018, 10:55 PM UTC

chiefalchemist wrote: post #36

We have the resources. What we lack are necessary priorities and the resolve to fix them. The latest DoD budget is $700 billion. Russia's DoD budget is approx 10% of that. That's not a typo 10%. China might not be an ally - in the historical European sense - but given our symbiotic economic relationship it would like take quite a bit for a true military conflict to break out between the two countries. Even if our DoD…

that's not wrong but for the sake of argument perhaps its better to look at the DoD budget through the political lens ... its a corrupt jobs program in which the government funnels money to a broad swath of American states and counties, mostly via defense contractors.

Yes its incredible dumb and inefficient but many millions of people earn their livelihood, healthcare and pensions by building useless bombs, so its hard (politically) to say we'll take that away to shore-up Social Security or whatever.

Re: Social Security says system's costs will exceed income this year

#55

Post by api » Wed, Jun 06, 2018, 10:55 PM UTC

gringoDan wrote: post #5

We've known this was coming for a long time...as a Millennial, I don't expect to ever see a cent of Social Security benefits.

You'll receive social security. Benefits will be in tomorrow's inflated dollars but at today's amounts.

I've been predicting huge inflation for a long time for the simple reason that housing has inflated so much. Housing is so unreasonable and house prices are so sticky (people hate to take a loss and most are on loans) that the only reasonable way out of the housing affordability crisis is for the rest of the economy to inflate until house prices are reasonable again. This will also neatly "solve" the social security funding problem.

Re: Social Security says system's costs will exceed income this year

#56

Post by allthenews » Wed, Jun 06, 2018, 10:55 PM UTC

craftyguy wrote: post #48

encoderer wrote: post #42

Earlier quoted context omitted.

Social Security is not a retirement account. We're paying today for the current generation of retirees so we don't have a class of elderly homeless eating cat food and dying in our streets. Means testing is consistent with this outcome.

> so we don't have a class of elderly homeless eating cat food and dying in our streets. Too bad we already do, and the number seems to be increasing rapidly: https://www.nytimes.com/2016/05/31/us/americas-aging-homeles... So if Social Security isn't helping with that, what other excuses are there?

The fact that elderly homeless people exist does not imply that current social security policy does nothing.

Presumably, if we did away with SS, there would be more on the streets.

Re: Social Security says system's costs will exceed income this year

#57

Post by TheLoneAdmin » Wed, Jun 06, 2018, 10:55 PM UTC

rayiner wrote: post #32

vannevar wrote: post #30

There are two problems with SS, one fixable, one less so. The hard to fix problem is slowing population growth. SS depends on young workers to fund the payments to retirees. But this is really only a problem if aggregate income growth declines with population growth, and it hasn't; the aggregate income of all Americans has quadrupled since 1982, the last time this shortfall occurred. The problem is that the vast majo…

> If we had sane progressive tax policy in the US, the SS shortfall would evaporate. Our tax policy is among the most progressive in the developed world: https://www.theatlantic.com/business/archive/2012/02/us-taxe... . The real problem is that the average income earner doesn't pay enough Social Security taxes to cover what they will receive in benefits: http://www.politifact.com/truth-o-meter/article/2013/feb/01/...…

From your link "...and turning 65 in 2010 would have paid $722,000 into Social Security and Medicare and can be expected to take out $966,000 in benefits."

So basically, employees are giving the government a 45 year loan at zero interest. Even at just a 1.5% rate, the typical employee pays their own way.

Re: Social Security says system's costs will exceed income this year

#58

Post by rayiner » Wed, Jun 06, 2018, 10:58 PM UTC

mikeash wrote: post #46

rayiner wrote: post #32

Earlier quoted context omitted.

> If we had sane progressive tax policy in the US, the SS shortfall would evaporate. Our tax policy is among the most progressive in the developed world: https://www.theatlantic.com/business/archive/2012/02/us-taxe... . The real problem is that the average income earner doesn't pay enough Social Security taxes to cover what they will receive in benefits: http://www.politifact.com/truth-o-meter/article/2013/feb/01/...…

Is our tax policy still among the most progressive if you account for the full payroll tax (not just the employee side as apparently that study does) as well as the many other federal, state, and local taxes we pay?

Yes: https://www.washingtonpost.com/news/wonk/wp/2013/04/05/ameri...

Looking at those additional taxes for both U.S. and Europe generally makes the U.S. even more progressive. For example, sales taxes are highly regressive. European countries rely heavily on 20-25% VAT taxes to raise revenue, while U.S. states typically have 5-10% sales taxes. The maximum rates and various caps just generally kick in much earlier. In Germany, the income tax rate is 42% for $63,000+, just a few percent below the maximum bracket of 45%.

Re: Social Security says system's costs will exceed income this year

#59

Post by arebop » Wed, Jun 06, 2018, 10:59 PM UTC

maerF0x0 wrote: post #20

encoderer wrote: post #7

Earlier quoted context omitted.

As a millennial, I do. There are just too many easy mitigations here that will extend life several decades: - Remove the cap and tax income above $120k, just like medicare and income tax - Increased tax rate, possibly just on payroll not income (the employer-paid portion) - Limited forms of means-testing (Maybe, attenuated survivor benefits as your estate value clears a certain high mark like $3 million) - Eliminate…

means testing is super unfair to those who sacrificed lifestyle in their youth to save for retirement. Consider the person that could have, but didnt, live a lavish lifestyle and instead responsibly saved. Then a benefit (which they paid into, and maybe rely upon) is removed after the fact? Bad news.

If it's not a hard cutoff as suggested upthread but just a progressive phaseout then the responsible person still has a reward and yet the benefits can be focused on the needy.

I'm a proponent of BI but I have to point out that means-testing doesn't imply perverse incentives.

Re: Social Security says system's costs will exceed income this year

#60

Post by ghouse » Wed, Jun 06, 2018, 10:59 PM UTC

Social Security is a insurance program, not a retirement program. Old-Age, Survivors, and Disability Insurance (OASDI) https://en.wikipedia.org/wiki/Social_Security_(United_States...