Every government policy or financial product is just redistributing the pain of falling living standards. You can dictate that retirees receive transfer payments from working people, as per social security - but it means that they have less money to spend on themselves and their kids. You can transfer earnings within a corporation from current workers and shareholders to retirees, as per pensions - but it means the company will be a less attractive place for new hires, and risks the financial solvency of the whole company. 401(k)s have their own problems - the price of stocks, at any given instance, is set by the ratio of dollars entering the market to dollars leaving the market, so if all retirees try to pull their money out to fund retirement at once, they'll find the stock prices they were counting on crash.
Global warming isn't likely to cut total arable land or food production (if anything, it'll likely increase it), but it definitely changes the distribution of arable land. Current breadbaskets like Southern Europe, South Asia, and Brazil might see frequent droughts; currently desolate areas like the Sahara or Canadian Shield may become fertile again. If countries can work out trade deals so that food gets to where it needs to, things can work out. If they start closing borders and saying "fuck you I got mine", there will be widespread starvation and war in many regions.
Canada and Russia becoming new bread baskets is a possible near-term future, but you'll have a lower total amount of incident input energy at those latitudes, meaning that even greater arable land areas will produce significantly less food.
Those are “positive checks” on population.
That's partly what's so toxic about the meme that social security is, or will be, unaffordable. It embeds within in an implicit endorsement of current and future increasing levels of wealth and income inequality.
I would strongly bet on the latter, as that is how every other major period of rising inequality has ended (along with a war). Prices are just an information-carrying vehicle that reflects what people are willing to pay. No buyers = no price.
> how every other major period of rising inequality has ended
This is an interesting idea. Can you offer an authoritive source, or any canonical examples that are broadly regarded as such by economists (and say which ones think so)?
The canonical example is the Great Depression (precipitated by the series of rolling bubbles in the 1920s, which themselves were fed by the prosperity generated by the new meatpacking/radio/electricity/automobile/airline industries, and which ended with WW2.) Other examples include the Panic of 1893 (overbuilding of the steel & shipbuilding industries and decline of agriculture), which led to the Progressive Era in the U.S, and the Panic of 1857 (overbuilding of railroads, ended in the Civil War).
>Yes, there is a funding problem: absent other changes, the combined retirement and disability trust funds will be empty in 2035.
Which,to me, seems pretty contradictory. The author continues to say there is no problem at all, as long as a specific Act passes unmodified. So - everything is okay, but only as long as X Y and Z happen...
Seems like this is just a really roundabout way of being able to cram "millenials" into another story. They're killing the SS industry with their pessimism!
SS isn’t going away. At worst the benefits will be slashed to some fraction of what the law requires.
Considering the rising cost of living we should all save for retirement using a pension plan or 401k anyway though. Agreed that the framing of blaming millennials makes no sense here.
Unless there is a dramatic economic collapse due to climate change or global thermonuclear war or whatever, you should be able to plan on receiving more than 50% of your benefits. Of course in case of collapse like that my 401k probably doesn’t keep its value either...
Pessimistic assumptions are a good idea in situations like this.
The point is that millennials are being conditioned to expect a vastly watered down social security in order to manufacture consent for watering it down (or handing control over to wall st)
Though the Boomers have been a bit haughty, they're not the worst out there by any means. In the history of the US, the Trancendental and Gilded generations of the antebellum South were literal slavers. We're no where near US Civil War II.
If you look at ancient Roman history, the romans of the Marian Reform era really botched the republic. When they came into their adulthoods, all hell broke loose with Sulla and the like and their kid's generation (that of Cesar) gave up the ghost and turned to Empire. There has been a LOT said about the lumbering fall of the Roman Republic, and any form of generationalism is likely not applicable to the patricians of that age or culture. But, as THoR states, that era of 'the storm before the storm' is dripping with relations to our current era.
You can’t raise an additional $2 trillion a year with a 70% tax rate on millionaires or eliminating the inheritance tax or treating capital gains like income or cutting the military budget. None of that even gets you close. $2 trillion is the entire income of the top 1%, or all the profits earned by US corporations. (Because of dividends and whatnot, a lot of corporate profits are income to the top 1% so there is a huge overlap between those. And you’re already taxing those two groups almost $800 billion a year. You’d have to raise it to $2.8 trillion a year.) The total income of people making above $1 million (much less the $10 million mark AOC has cited) is $700 billion.
You couldn't even raise that money with an "all of the above" approach. Say you doubled the income tax on the top 1% (+500 billion), eliminated the preferential tax treatment for capital gains (+$130 billion), doubled corporate taxes (+$200 billion), and slashed the defense budget to the NATO target of 2% of GDP (+200 billion). You're still only at $1 trillion (barely enough to close the deficit). You've also pushed the U.S. income and corporate tax burden far above the level in our competitor countries like the U.K., Germany, France, Italy, and Spain: https://data.oecd.org/tax/tax-on-personal-income.htm#indicat... https://data.oecd.org/tax/tax-on-corporate-profits.htm#indic....
There are a few ways to get $2 trillion. You could raise income taxes from 10% of GDP, about the OECD average, to 20% of GDP. That would blow past Sweden levels of income taxes (13% of GDP) into Denmark territory. Like Denmark, you’d have to make the income tax extremely broad based. The top tax rate of 56% (combined municipal, national, and labor contribution) kicks in at under $80,000. The tax rate below that is essentially flat, at 40%, with some deductions. (Fun fact: Denmark’s corporate tax rate is just 25%, lower than the US average after accounting for state corporate taxes.)
Or, you could create a 20% VAT to get our consumption taxes up from 4.3% to the OECD average of about 10%: https://data.oecd.org/tax/tax-on-goods-and-services.htm#indi.... And you could increase FICA taxes to 25% or so (from 15%) to get our 6.3% social insurance tax rate up to the OECD average of 9%. That, plus a millionaire's tax, if you're so inclined, will get you to $2 trillion.
All of these would impose a large tax increase in the middle class. That’s politically untenable even for Democrats. That’s why you see things like the Sanders health plan, that has like a half-page bullet point list of possible revenue sources (none of which comes close to raising 10% of GDP in tax revenue). There is only a single way to increase U.S. taxes to European levels without rendering ourselves economically noncompetitive by taxing high earners and corporations more than Europe. And that is massive tax increases on the middle class. Democrats are willfully blind to that reality.
Contra: Before the dot com crash and 9/11 some non-lunatics were worrying that Treasuries would go away and there'd be no safe place to store money because all the debt looked like it was going to be paid off before too long.
But even looking at mortal humans: in 2008 many of them have realized that no, it's not possible to keep borrowing indefinitely. Some day the creditors may ask for their money back.
Some people suggest we'll just print the money we need. The problem is that now I can take this money and buy half of your country before you realize what's going on.
The majority of voters don't care: they want low taxes and high spending on their pork project and they don't really care about the consequences.
Most news media has perpetuated this. Instead of reporting facts they talking heads yell at each other for hours.
Which is no different than talking heads yelling at the audience through a display and speaker, it's only through mental gymnastics that a degree of separation is established.
And of course this is not a hypothetical at all. Bush and Obama followed this pattern perfectly. Bush’s average deficit was $443 billion. Obama’s was $816 billion. But Bush inherited a surplus, and left office with a deficit of $1.4 trillion. Obama inherited that and left office with a deficit of $665 billion. Am I really supposed to conclude that Bush was better at controlling spending?
There was a sharp rise in income around 1994, and at the same time spending flattened (due to lower unemployment/lower safety net costs). The two met in 97, then fell off sharply in 2000.
This exactly mirrors the "Dot-com bubble" period start, middle, and end:
So neither Bill Clinton or the Republicans can really claim credit. This just happened to be a strong period of economic activity that happened to also drive down costs.
I don't think it's unreasable to expect people to save enough to cover then between their age of retirement to say 70 or 75. Then let the insurance kick in after that.
This is absolutely untrue. Here is FDR's address as he signed Social Security into law: https://www.ssa.gov/history/fdrstmts.html#signing
This doesn't sound at all like it's not meant to be a retirement program. He even explicitly uses the word 'pension.'
"Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.
This social security measure gives at least some protection to thirty millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions and through increased services for the protection of children and the prevention of ill health.
We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."
I would like that too. It's much easier to save until a defined age instead of having to save for potentially a very long life.
It got that way over time, but it does solve (or at least address) the retirement problem the country faces right now. Going back to the old insurance service is both politically impossible and would just leave the retirement plan problem completely unsolved.
We would need to figure out another solution. Which leaves us right back where we started.
I would rather the government just give me all my social security money back and let me invest it. I have probably given them a couple hundred thousand dollars by now.
"I paid premiums for fire-insurance, and my house was never destroyed in a raging inferno, how is that fair?"
Basically if you die, then you're definitively not at risk for "being old and poor." It's also an excellent time to stop paying the premiums, which fortunately occurs automatically...
Just for context, do you happen to know the change in life expectancy at age 30 over the relevant time period?
It's not question of financial viability as much as it is a question of how much value we, or The US, puts on the lives of the elderly. Or otherwise framed as: How little we can spend on the elderly without the reemergence of poorhouses.
There are obvious concerns about having a healthy and productive tax base, but that will always be the case. Implicating the tax base for the existence of a government service is just politics.
Here are my concerns, and why I don't have faith in Social Security.....
1) Retirement age is going up. I probably won't be eligible until I'm 80.
2) Life expectancy is going up. Grampa will probably exhaust his SS before he passes away.
3) More and more doctors are putting too many underage work-eligible people on disability/SS just because they can't find work/aren't productive employees. This breaks the work/eat feedback loop that everyone else relies on.
4) My current contribution level won't mean shit in 50 years after infaltion.
When older generations complain I usually use the joke "Yeah well at least you're gonna be able to collect social security. I'm never going to retire." It's a lighthearted joke but I am 100% convinced that it's going to become reality.
Major changes that drastically affect Social Security
- Changing the Retirement Age, even adding a 3rd progression delay (for people who will keep working or have some savings) and pegging this to U.S. life expectancy.
- Changing the survivors benefits payouts and required minimum distributions (arguably, if the middle and lower class has more 2 family incomes, these make less sense.)
- (Biggest) Changes to healthcare. A large portion of Social Security right now goes right back into the hands of long term nursing homes. In addition, you have medical expenses related to "retirement living communities"; I'm not very sure that as boomers age even more into nursing homes, that those well prepared will be able to find supply.
I also look forward to the eventual reform of Social Security to allow more diverse investment methods. Whichever President is in office when age based asset diversification is added to SS will see a huge market boom!
The parent poster's stance is the correct one to have: make no plans for SS to exist, so if it does, you're just in a little better shape than you expected.
Most people who post on HN will experience a negative ROI on the money they paid into SS, unless they live well into their 90s.
If they want to tax me to pay for Social Security, then they will, and I don't really have much recourse. It does as much good to shake my fist at the weather as fuss about other things I can't control.