How to fix Social Security in one graph

[Hannah Bell]

"The revenue loss over the next 75 years just from extending the tax cuts for people making over $250,000 -- the top 2 percent of Americans -- would be about as large as the entire Social Security shortfall over this period," write Kathy Ruffing and Paul N. Van de Water at the Center on Budget and Policy Priorities.

"Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat."

We do have fiscal problems in this country: health care, for instance. We have to get growth in that sector down or we'll bankrupt the country. But that's not the case with Social Security. Social Security is just a question of priorities. And the legislators who are saying that we can extend the Bush tax cuts without offsets but that we need massive benefit cuts in Social Security are showing where their priorities lie, not stating a sad economic reality.

http://voices.washingtonpost.com/ezra-klein/2010/08/how_to_fix_social_security_in.html

[FreakinDJ]

1. K&R - Be sure to recommend this on your Facebook page too

[indepat]

The extent of the cravenness of some is chillingly unfathomable, no inhuman and inhumane

;)

[DirkGently]

2. Not just excellent. Nor merely fantastic. This post is Fantexcellent.

[grahamhgreen]

3. "Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while,

the Social Security shortfall constitutes a dire fiscal threat."

K/R

[Kaleva]

4. Rec'd

[newtothegame]

5. I'm confused. Hasn't most of DU been saying Social Security has no shortfall and isn't going broke?

:shrug:

[DirkGently]

6. "...over the next 75 years." Eventually there will be a shortfall. There is no present emergency.

[mistertrickster]

9. It depends on what scenario one uses. This says even with the most pessimistic

scenario, their arguments don't make sense.

[FogerRox]

30. For SS to go broke by 2037 you need a recession for over 20 years

The only thing that makes me nervous is we've been in a recession for over 3 years, not a good start

[Hannah Bell]

11. it will never "go broke" unless they break it because it's funded via dedicated taxation.

there is a *projected* shortfall over a 75-year window.

name me any other part of the government budget that uses a 75-year window.

75 years ago it was 1936. Tell me how accurate predictions about 2011 were.

[newtothegame]

12. Very good point. nt

[maryf]

19. 1936 future

looks accurate to me! ;)

[Pacifist Patriot]

27. I know I have one of those green wingy duds in my closet, how about you?

[FogerRox]

21. Those that have actually read the report, yes

http://www.ssa.gov/oact/TR/2010/IV_LRest.html#371491

Note the part that says SS is good to 2085




Heres my Kos Dairy that explains it

http://www.dailykos.com/story/2010/12/17/929335/-Its-gonna-take-27-yr-recession-to-make-Social-Security-go-broke-by-2037

[Cleita]

7. In spite of the propaganda astro turf being spread in

the media to convince people that Social Security is failing with the purpose of convincing them that they need to go to a privatization scheme, there is nothing wrong with Social Security. What is needed are news articles about how such schemes failed in Chile and in Great Britain, forcing those countries to think about looking into our Social Security system to fix the failure.

[mistertrickster]

8. K'd and R'd. nt

[Starry Messenger]

10. k&r

[Hannah Bell]

13. k

[Starry Messenger]

14. rekick!

[Codeine]

15. So simple you can guarantee it'll never happen.

:mad:

[maryf]

16. Knockout graph!

K&R

[slipslidingaway]

17. knr ... 744 billion in reduced revenues ...

yet we need to focus on SS. :(

page 108 of the report, page 126 of the pdf

About that Social Security "deficit" this year.
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=281533&mesg_id=281533
http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf

"...As a result of legislation enacted since August—most
significantly, the 2010 tax act—CBO has reduced its
projections of revenues for 2011 and 2012 by a total of
$744 billion and its estimate for 2013 by $68 billion and
raised its projection of revenues for the 2014–2020
period by $98 billion..."

[lonestarnot]

18. Looks to be a directly proportional loss to people who work to live and a windfall for the top 1%.

[FogerRox]

20. SS Trustees say SS is good to 2085, but you would know that if you read the report

Its gonna take 27 yr recession to make Social Security go broke by 2037


http://www.dailykos.com/story/2010/12/17/929335/-Its-gonna-take-27-yr-recession-to-make-Social-Security-go-broke-by-2037

Heres the Trustees report, note the part that says 2085.........

http://www.ssa.gov/oact/TR/2010/IV_LRest.html#371491

[Hannah Bell]

24. I wrote this in 2007:

There’s no Social Security crisis. There never has been. If you’re not convinced yet, how about this: the projection used to hype the phony crisis assumes a growth rate of 1.8% over the next 75 years.2 That’s lower than the 1.9% average growth rate of the Great Depression, 1929-1940.3

But there are actually three projections; an optimistic one, an intermediate one, and a pessimistic one. In the “optimistic” scenario, long-term growth averages 2.6%, the Trust Fund never runs out, and there’s a 17-trillion dollar surplus in 2080.4 So far, reality has always turned out closer to the optimistic projection than the other two. Since 1980, growth has averaged 3.1%.5 Whee! Feel better?

Not that a projection 75 years into the future has any bankable accuracy anyway.

The projection, like “crisis” it predicts, is a fraud, a cynical Big Lie, a con. They want your money. That’s all they’ve ever wanted, and they’ll keep pushing until they get it, unless they know you understand the con.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=326490&mesg_id=326500


However, there *will* be a general crisis if they don't start taxing the top. I'm talking INCOME & CAPITAL GAINS TAX, NOT FICA.

As witness by the number of cities, counties & states supposedly on the verge of bankruptcy & the calls for austerity in the federal budget -- justified by the supposed shortfall of funds that is entirely a result of two things: reductions in taxation at the top (individuals & corporations) & the multi-front wars.

The federal budget shortfall = justification for saying SS (because the TF has to be repaid out of general funds) is causing the deficit.

It's a lie, but there's just enough facty-ness there to be a plausible lie.

[FogerRox]

22. Please consider the facts, not some right wing scare tactics

http://www.ssa.gov/oact/TR/2010/IV_LRest.html#371491

Note the part that says SS is good to 2085




Heres my Kos Dairy that explains it
http://www.dailykos.com/story/2010/12/17/929335/-Its-gonna-take-27-yr-recession-to-make-Social-Security-go-broke-by-2037

[Statistical]

28. You misrepresent the report

The intermediate demographic and economic assumptions shown in table II.C1 reflect the Trustees’ best estimates of future experience, and therefore most of the figures in this overview depict only the outcomes under the intermediate assumptions. Any projection of the future is, of course, uncertain. For this reason, alternatives I (low-cost) and III (high-cost) are included to provide a range of possible future experience. The assumptions for these two alternatives are also shown in table II.C1, and their implications are highlighted in a separate section, beginning on page 15, on the uncertainty of the projections."

http://www.ssa.gov/oact/TR/2010/II_assump.html#95492

The provide a baseline, worst case scenario, and best case scenario. To look at the best case scenario and then claim the trustee report says no changes are needed is intentionally deceptive. Statistically speaking the trustees as saying it will NOT be better than the best case scenario (upper bound), nor will it be worse than the worst case scenario (lower bound). There is a 50% chance things will be better than the intermediate projection but also a 50% chance things will be worse.

Using the upper bound for planning would be like saving for retirement based on a 32% annual stock market return. While it might happen it isn't what most people would consider prudent.

What they actually said:

Under the intermediate assumptions, OASDI cost generally increases more rapidly than tax income through 2035 because the retirement of the baby-boom generation increases the number of beneficiaries much faster than subsequent relatively low-birth-rate generations increase the labor force. From 2035 to 2050, the cost rate declines somewhat due principally to the aging of the already retired baby-boom generation. Thereafter, increases in life expectancy generally cause OASDI cost to again increase relative to tax income, but more slowly than prior to 2035. Annual cost is projected to exceed tax income in 2010 and 2011, to be less than tax income in 2012 through 2014, then to exceed tax income in 2015 and remain higher throughout the remainder of the long-range period. Interest earnings on trust fund assets alone will be sufficient to cover the annual difference between cost and tax revenue until 2025. The dollar level of the Trust Funds is projected to be drawn down beginning in 2025 until assets are exhausted in 2037. Individually, the DI fund is projected to be exhausted in 2018 and the OASI fund in 2040. For the 75‑year projection period, the actuarial deficit is 1.92 percent of taxable payroll, 0.08 percentage point smaller than in last year’s report. The open group unfunded obligation for OASDI over the 75‑year period is $5.4 trillion in present value and is $0.1 trillion more than the measured level of a year ago. If the assumptions, methods, starting values, and the law had all remained unchanged, the unfunded obligation would have risen to about $5.7 trillion due to the change in the valuation date.

And in Conclusion:

Under the long-range intermediate assumptions, annual cost for the OASDI program is projected to exceed tax income in 2010 and 2011, to be less than tax income in 2012 through 2014, then to exceed tax income in 2015 and remain higher throughout the remainder of the long-range period. The combined OASI and DI Trust Funds are projected to increase in dollar level through 2024, and then to decline and become exhausted and thus unable to pay scheduled benefits in full on a timely basis in 2037. However, the DI Trust Fund is projected to become exhausted in 2018, so some action will be needed in the next few years. At a minimum, a reallocation of the payroll tax rate between OASI and DI would be necessary, as was done in 1994.

For the combined OASDI Trust Funds to remain solvent throughout the 75‑year projection period, the combined payroll tax rate could be increased during the period in a manner equivalent to an immediate and permanent increase of 1.84 percentage points,1 scheduled benefits could be reduced during the period in a manner equivalent to an immediate and permanent reduction of 12.0 percent, general revenue transfers equivalent to $5.4 trillion in present value could be made during the period, or some combination of approaches could be adopted. Significantly larger changes would be required to maintain solvency beyond 75 years.

The projected trust fund shortfalls should be addressed in a timely way so that necessary changes can be phased in gradually and workers can be given time to plan for them. Implementing changes sooner will allow the needed revenue increases or benefit reductions to be spread over more generations. Social Security plays a critical role in the lives of 54 million beneficiaries and 155 million covered workers and their families in 2010. With informed discussion, creative thinking, and timely legislative action, present and future Congresses and Presidents can ensure that Social Security continues to protect future generations.

[FogerRox]

29. so you believe we will have a 20+ yr recession?

[BigBearJohn]

23. Truth is simple. Great OP

[deacon]

25. K + R

[mdmc]

26. r