From the
Associated Press:
As millions of baby boomers flood Social Security with applications for benefits, the program's $2.7 trillion surplus is starting to look small. ...
Since 2010, Social Security has been paying out more in benefits than it collects in taxes, adding to the urgency for Congress to address the program's long-term finances.
"To me, urgent doesn't begin to describe it," said Chuck Blahous, one of the public trustees who oversee Social Security. "I would say we're somewhere between critical and too late to deal with it." ...
Social Security Commissioner Michael J. Astrue said he is frustrated that little has been done to solve a problem that is only going to get harder to fix as 2033 approaches. If changes are done soon, they can be spread out over time, perhaps sparing current retirees while giving workers time to increase their savings.
"It won't be easy but it's just going to get harder the longer they wait," Astrue said. ...
The article does not mention the fact that lifting the cap on earnings subject to the F.I.C.A. tax would solve the problem. It sounds as if Charles Blahous regards that idea as being unworthy of any consideration.
Of course they don't want to lift the cap on earnings. That would make too much sense.
ReplyDeleteLifting the cap on earnings, with no other adjustment, would return 15 cents for every dollar paid, an effective tax rate of 15%.
ReplyDeleteDo you think that is an equitable return, up to "infinity?"
You say that the trust fund is in the black, which I assume means the cash outflow exceeds the cash income.
When that occurs, either general revenues are used by the Treasury (if a budget surplus) or the debt will be increased by the public (if a budget deficit).
It has occurred since 2010, and is projected by the Social Security trustees to continue until trust fund "exhaustion."
In the next breath, you talk about the Social Security fund being exhausted in 2033, implying that there are no financial repercussions until then, although Social Security is in the black.
The same financial mechanism is used when the trust fund is tapped, as when it is exhausted - new general revenues must be used or the debt held by the public must be increased. That is happpening now, folks. We do not have to wait until 2033 to feel the financial effects of negative cash flows.
Don Levit
These articles are designed to get the public use to the idea that the Democrats and Republicans have decided to cut future Social Security benefits. End of story. The fix is in so get used to it.
ReplyDeleteDo you know what the PIA Is of someone who makes 1 million dollars a year for 35 straight years with no cap on the FICA earnings?
ReplyDelete$11,000. Their minor child will get $5,500 each month. Knocking off the FICA cap without any other changes doesn't remotely fix the problem.
There are very few people that can tell me what social security "is", but I can tell you what it "is not". Social security is not child support, it is not college tuition, it is not for your spouse that never worked a day in their life.
Let' s start solving the problems rather than taxing our way out.
"Social Security For The American Worker"
Let's get social security focused on the worker rather than the family. Spread the word.
"Do you know what the PIA Is of someone who makes 1 million dollars a year for 35 straight years with no cap on the FICA earnings?"
ReplyDelete-----------------
Um, of course, tied to a removal of the cap on FICA earnings, would be creation of a cap on benefits.
Um, yeah--which amounts to direct confiscation of earnings, since the taxpayer would then have no return on his FICA contributions, in absolute contradiction to the original promises of the program.
ReplyDeleteFrom each according to their abilities, to each according to their needs, so to speak.
"Um, yeah--which amounts to direct confiscation of earnings, since the taxpayer would then have no return on his FICA contributions, in absolute contradiction to the original promises of the program."
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The rich would get a return on their FICA contributions. Just no more than a newly created cap.
Sorry, times and wages have substantially changed since SS was 1st created.
Why doesn't SSA explain how the partial FICA payroll tax holiday for the last few years impacts the trust fund and contribute to this problem. Why not just give working people a tax credit instead of rob from the SSA trust fund? Both parties contributed to this.
ReplyDeleteAnonymous 12:41
ReplyDeleteCongress is very creative in the ways the SS trust fund can be raided.
In addition to flat out not directing the payroll taxes to the trust fund, Congress has another trick up its sleeve, one that it has been using for years.
Instead of misdirecting the payroll taxes, direct them to the trust fund, and then... borrow from the trust fund the principal and "interest" to pay for current expenses.
In place of those absconded excess FICA dollars (and "interest"), we will issue Treasuries as collateral to pay back the loans.
This has been utilized the last 2 years, while redeeming the interest to pay for the cash shortfall. Of course, it took additional debt held by the public to do so, for the Treasury could not simply be liquidated. Instead, each time the trust fund is tapped, it is the same process as paying any pay-as-you-go expense, like Medicaid.
Either new revenues must be utilized (if a budget surplus) or additional debt held by the public must be issued (if a budget deficit).
So you see, tapping the trust fund makes it no easier to pay SS benefits as it does for any other expense, for new money or new debt must be raised.
Now, that is what I call, from a cash perspective, highway robbery!
Don Levit