
Social Security says system's costs will exceed income this year - gscott
https://www.cbsnews.com/news/social-security-says-costs-will-exceed-income-this-year/
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gringoDan
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.

~~~
encoderer
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 "early" retirement ages and force the "full" age

\- Extending minimum retirement age to 70 and beyond

~~~
maerF0x0
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.

~~~
encoderer
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.

~~~
prklmn
Means testing gets you nowhere because there are so few people who would
qualify as too rich- it would be less than a drop in the bucket "saved." It
would be purely symbolic, and it's another way for those in power to say that
we punish the rich and social security is a wealth transfer to the poor, then
use that as a reason to abolish it. The idea of means testing is totally
counterproductive to your goal.

Also as an aside, there are wealthy elderly people already not cashing their
social security checks, you just don't know it because it makes nearly no
difference in the scheme of things.

~~~
encoderer
Probably true, though separate from the argument that means testing is
"unfair".

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vannevar
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 majority of the income growth has been
captured by a small portion of the population, who don't pay withholding taxes
on it. If we had sane progressive tax policy in the US, the SS shortfall would
evaporate.

~~~
rayiner
> 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...](https://www.theatlantic.com/business/archive/2012/02/us-taxes-really-
are-unusually-progressive/252917).

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/...](http://www.politifact.com/truth-o-
meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo).
The system is set up so not only do the needy get a public subsidy, but _most
people_ do.

Caps on retirement taxes are not specific to the U.S. Germany and France, for
example, have similar ceilings. Germany, for example, has a 19.6% payroll tax
up to $80,000. The U.S. tax is 12.4% up to $127,000.

~~~
TheLoneAdmin
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.

~~~
traek
That's already accounted for in the "paid-in" figure:

> (Remember, the couple didn’t literally pay out $600,000; that’s the current
> value of what they paid out over the years, plus an additional 2 percent
> they may have gotten had it been invested.)

Even accounting for inflation and investment, the average worker _still_ is
paid out more from Social Security than they paid in.

~~~
dragonwriter
> Even accounting for inflation and investment, the average worker still is
> paid out more from Social Security than they paid in.

The source cited combines “Social Security and Medicare”, it doesn't (at least
in the quoted excerpt) address SS separately. These are different programs
supported by different Trust Funds funded by different taxes applicable to
different income and with different dynamics driving costs.

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chiefalchemist
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 budget was 2x Russia's, the ~$550+ billion is still a lot of
money. Money cant love, nor evidently priorities rooted in the 21st century.

~~~
jakelarkin
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.

~~~
Apocryphon
If only it's politically feasible to slowly redirect their activities to
peacetime activities, like reassign a lot of that personnel to the Army Corps
of Engineers, and have them fix America's crumbling infrastructure.

~~~
megaman22
It does seem a little insane that we don't adopt the part of the Roman
professional military system that was arguably one of the most effective.

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maerF0x0
"This year, like last year, Social Security’s trustees said the program’s two
trust funds would be depleted in 2034. ... It should be stressed that the
reports don’t indicate that benefits disappear in those years. After 2034,
Social Security’s trustees said tax income would be sufficient to pay about
three-quarters of retirees’ benefits." [1]

We can argue about how honest this is, but the claim is that it will still be
there for Millennials. It seems feasible because by the time Millennials are
67, the bulge of babyboomers will be gone.

[1]: [https://www.marketwatch.com/story/medicares-finances-are-
get...](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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ghouse
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...](https://en.wikipedia.org/wiki/Social_Security_\(United_States\))

~~~
Avshalom
>>Income derived from Social Security is currently estimated to have reduced
the poverty rate for Americans age 65 or older from about 40% to below 10%

When 40% (or an extra 30%) of a country ends up in poverty without it kind of
does become a retirement program. Or at least an 'old-age' program.

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AnimalMuppet
One interesting side effect of this will be on the interest rate.

Social Security has been investing the surplus, most (or all?) in Treasury
bonds. As outflows exceed income, they're going to have to sell bonds. That
should drive prices down, and therefore interest rates up - to what degree, I
don't know.

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mjevans
Why don't we focus on using government bulk and "peace"-time military support
to provide some of the services that "social security" (tax the young now to
support the retired now) provides; directly, instead of as money or vouchers?

~~~
ahoy
That'd be because a lot of US politicians are ideologically opposed to any
welfare program.

~~~
magduf
As are the countless people who elect them, even though those same voters as a
bloc rely far more on Social Security than those who vote for the other party.

~~~
ahoy
If you poll those same voters on individual social welfare programs,
particularly Social Security, you'll find they support them.

It's really upsetting.

~~~
magduf
If the voters are so dumb that they're voting directly against their own
stated interests, then maybe they shouldn't have those programs.

~~~
mjevans
Maybe we should actually have a meaningful test that is based on scientific
evidence of understanding things like consequences and the current (at the
time) structure of the government.

Failing the test, BTW, doesn't mean an individual can't vote (ever, just until
they re-pass "high school"): it means society has failed them and they now
qualify for extended schooling to correct their lack of education. Including
provided room and board while they are studying as well as medical care to
correct for sources of learning defects (such as poor vision, etc).

If someone is too impaired to be able to pass high school in that supporting
environment then they should be 'retired' the same way someone with a more
obvious disability is.

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mcthorogood
Some comments by millenials say that they expect to receive SS benefits, but
this is not a secure basis for financial planning. A person's retirement
planning should be independent of any expected SS receipts and if you happen
to receive SS then it's just a windfall.

~~~
ams6110
I'm less than 15 years from retirement age, and I don't expect to get any
Social Security.

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imbokodo
Congress repealed the creation of the Independent Payment Advisory Board, that
would cut the cost of Medicare without cutting service much. Thus Medicare
costs are higher, thus spending exceeds income. Reinstate this board, as well
as some other measures, and it will be back on target.

It is a manufactured problem. Anything benefiting the taxpayer like Social
Security or schools is always being cut, while the funds to move the US
embassy to Jerusalem or send the Navy to the South China Sea seems to be
bottomless.

~~~
assblaster
>Congress repealed the creation of the Independent Payment Advisory Board,
that would cut the cost of Medicare without cutting service much.

Medicare services are already being rationed covertly via wait lists and via
the increasing numbers of physicians who refuse to take Medicare or Medicaid.

The IPAB would most likely decrease access to services by cutting payments
even further below market rates which would decrease supply of those services.

~~~
jeffreyrogers
Market rates are inflated due to lack of price controls in programs like
Medicare and Medicaid, plus employer-sponsored insurance plans are not as
incentivized to negotiate for lower prices as individual consumers are.

Couple that with the supply side problems where doctors need 7+ years of
training before they can perform simple procedures like testing for strep
throat or prescribing antibiotics, and the fact that a large fraction of
medical spending does very little to prolong life or improve quality of life
and you can see that the current health care system is incredibly wasteful.

~~~
assblaster
Medicare and Medicaid are the definition of price controls for paying
physicians: they pay below market rate such that private insurance is billed
higher to offset. There are week price controls for medical equipment and
pharmaceuticals and the failure to address overuse of unnecessary equipment
costs way more than the savings from price controls.

Testing for strep and prescribing antibiotics represent the smallest fraction
of healthcare resources. Why didn't you include brain or spine surgery on your
list of things that _shouldn 't_ require 7 years of training? Expensive end of
life care isn't the fault of hospitals or clinicians: it's the fault of
families who can't say no to excessive and futile end of life care.

If you want to get into getting rid of "wasteful" spending, why aren't you
recommending everyone should smoke a pack of cigarettes per day? Most people
would work and live a productive life until they die of lung cancer at age 65?
Saves 15-25 years of unnecessary "end of life" care.

~~~
jeffreyrogers
Sorry, you are right about price controls. I think it's still a problem that
they incentivize unnecessary care.

I don't think we're actually that far apart on what we think the problems are.
I wasn't trying to say that requiring large amounts of school in order to test
for strep and antibiotics are the only cause of our high costs of healthcare,
but they obviously contribute.

I agree (and I think any thinking person would agree) that you should have
training to perform more specialized procedures.

Expensive end of life care is partly the fault of clinicians who get paid to
authorize expensive procedures and who don't want to tell their patients and
their families that there is very little they can do to prolong their life, so
they should just surround themselves with loved ones and prepare to die.

And we can both agree that there is wasteful spending without arguing that
people should kill themselves sooner. Just looking at our healthcare expenses
relative to other countries shows we pay somewhere between 1.5-2x more for
roughly the same level of care. That's obviously a market failure.

