
Social Security taps into trust fund for first time in 36 years - maxshmax
https://www.marketwatch.com/story/medicares-finances-are-getting-worse-as-social-security-taps-into-fund-for-first-time-in-36-years-2018-06-05
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cepth
This is a calculator from CRFB that is a few years old:
[http://www.crfb.org/socialsecurityreformer/](http://www.crfb.org/socialsecurityreformer/).
I think that the baseline data may be dated, but it's still a useful tool for
getting a general idea of what changes to Social Security are needed to keep
the program solvent.

A more recent one, with fewer options, is available from Wharton:
[http://budgetmodel.wharton.upenn.edu/social-
security](http://budgetmodel.wharton.upenn.edu/social-security).

Bottom line is, there are some tough choices that policymakers will have to
make in the years ahead if they want to keep Social Security solvent. An aging
population and a slower rate of economic growth make for a nasty fiscal
future.

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wahern
Using that Wharton calculator the choices don't seem tough at all. For
example, raise payroll tax from 12.4% to 14.%, raise retirement age by two
years, and increase taxable minimum to $150k. For such an important program it
seems like a no brainer. But no doubt it will be (and is) an existential
battle.

Medicare is where the real tough choices are. It's ridiculous we can't just
implement the relatively minor fixes needed for Social Security.

~~~
cepth
I agree there are a number of easy solutions in a mathematical sense.

But the political battles around any of these paths are going to be intense.

Raising the retirement age has been a non-starter because of the power of
groups like AARP. And there's a fairness question of who to apply it to. Do
you tell 40 year olds that the age is going up? Is that enough time to adjust
your retirement planning? How about for a 50 year old?

Increasing the taxable maximum income would also be an interesting fight. At a
12.4% payroll tax, you're effectively raising taxes on someone making $150k by
$2600 a year, since the current cap is is $128700. I think if you're living in
an expensive city like SF or NYC, or an expensive state, that may be a
political nonstarter.

~~~
wahern
Increasing the payroll tax will definitely hit the working class hard but it's
also inline with the otherwise reasonable Republican argument that people
should be paying for their own retirement. The Republican preferred
alternative is 401(k)s and IRAs, where the working class will simply be
screwed and the middle-class burdened with unnecessary risk and uncertainty.
See, e.g., Chile, which Republicans naively point out as a model for
retirement savings reform but which evidences exactly why their preferred
models simply won't work as intended.[1]

Given the long-standing conservative climate, Democrats really have no choice
but to usher through a bill with moderate Republicans that keeps Social
Security solvent with a less-than-progressive taxation and benefits model. But
the Democrats won't because the moment they do Republicans will paint them as
taxing the working-class and Democrats are too chicken to do the right thing
and deal with the unfair consequences.

Yeah, the solutions are simple and obvious (because of the math, because of
the political landscape) but the path to get there is unfortunately
treacherous and not at all certain. :( I just want to fight the narrative of
the Social Security "crisis", and point out that it's entirely self-inflicted
and largely the product of a very cynical narrative--a self-fulfilling
prophecy--promulgated by an extremist conservative faction, which
unfortunately has enjoyed outsized influence for the past 25 years, ever since
Newt Gingrich's Republican Revolution.

[1] Hint: (1) Banks take a huge, often double-digit premium in management
fees. (2) The working class simply don't fund their accounts because, much
like with Obamacare, it's not politically feasible to enforce the mandate
widely. (It's in some ways worse than the Obamacare mandate because people are
more likely to appreciate the benefits of healthcare as opposed to retirement
savings, though in terms of absolute numbers people _really_ underestimate the
cost of healthcare). (3) People are subject to additional, sometimes severe
market risk because there's simply no more efficient way to provide a defined
benefits plan (what _all_ economists agree is most rationale for retirement)
than a nationwide, government guaranteed insurance program. (Who here younger
than 50 invests in an annuity? Probably no one, myself included, even though
it's what makes most sense. Though I suppose precisely because we have Social
Security we can take on more risk with our personal retirement investments.)

