tag:blogger.com,1999:blog-17206839.post6686848031007514381..comments2023-09-09T09:26:22.175-04:00Comments on Andrew Samwick's Blog: FactCheck.org and Social Security's Unfunded ObligationsAndrewhttp://www.blogger.com/profile/13514024573333057559noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-17206839.post-33242788978608236602005-01-22T08:02:00.000-05:002005-01-22T08:02:00.000-05:00I really appreciate the sense you frequently bring...I really appreciate the sense you frequently bring to this subject of Social Security pension funding Andrew. Thanks.<br><br><br>I especially appreciate the recommended guidelines for these discussions.<br><br>Kirk from ColoradoAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-60943127790792848352005-01-22T12:05:00.000-05:002005-01-22T12:05:00.000-05:00I remain completely puzzled about why everybody ke...I remain completely puzzled about why everybody keeps talking about the "solvency" of Social Security in terms of the trust fund, and over terms such as 75-years and forever -- parsing it all to the nth degree -- instead of in term of the general fund, which of course must provide every penny financed by the trust fund, and which is going to be taking the big hit in the clearly visible future.<br><br>E.g.: The trust fund keeps SS solvent by providing financing for SS from 2018 until 2042. Fine.<br><br>But right in the middle of that period, 2030, the SS Trustees say the _general fund_ needs of SS will be so large as to require a 22% increase in income taxes from today's levels as a percentage of GDP, to cover trust the cost of trust fund operations.<br><br>And then there's the other trust fund that nobody mentions, for HI-Medicare. That's going to require another 13% increase in income taxes. That's a 35% increase in income taxes combined, as a % of GDP, just to cover the operations of the trust funds! And rising forever more after. <br><br>See Chart E:<br>http://www.ssa.gov/OACT/TRSUM/trsummary.html#wp31181 <br><br>Now I submit that when the day actually comes in the 2020s that taxpayers have to vote on raising their taxes by 35% just to cover the trust funds -- on top of another 28% by 2030 to fund Medicare proper (a 63% tax increase total!) -- precious darn few of them are going to be thinking "Thank God we have the trust fund to still finance Social Security for years to come!"<br><br>So why, oh why, is everybody fixated on parsing the discounted liabilities of SS more than 75 years out, with _nobody_ talking about the points of GDP that the trust funds will be addding to the income tax bill just 20 years from now? Isn't that a solvency issue? <br><br>Can someone explain this to me?<br><br>I'll take it even further. The last time Congress had to increase taxes to cover SS benfeits, in 1983, the political crash that resulted produced a significant re-working of the program which changed the benefit structure to cover the financing shortfall 50% with benefit cuts.<br><br>Logic dictates that the next crash comining before 2030, which will be much bigger than the 1983 one -- MUCH bigger -- will result in much bigger structural changes to the program than we saw in 1983. (Taxpayers are not going to just swallow a 63%-and-perpetually-rising increase in income taxes and go happily skipping along their way!).<br><br>With such changes coming it is just totally _nonsensical_ to parse SS liabilities and solvency over 75 years. Angels holding their Junion Prom on the head of a pin have more to do with reality.<br><br>So, when people talk about "solvency" of SS, why don't they talk about in terms of the actual cash demand it (and the HI trust fund) will place on general revenue in 2020, 2025, 2030... which will have the _real impact_ on the solvency of the government and the welfare of the living people involved?<br><br>Reall, I'm at a loss to understand it.JGhttp://www.blogger.com/profile/11164150812219689611noreply@blogger.comtag:blogger.com,1999:blog-17206839.post-69988817096131061552005-01-23T16:42:00.000-05:002005-01-23T16:42:00.000-05:00I note that a 15.9% tax rate would produce additio...I note that a 15.9% tax rate would produce additional surpluses through about 2025-2030; however, by 2080, the last date in current SSA projections, the cost rate (intermediate case) is about 19.5%. How, then, can the 15.9% rate show solvency for the infinite horizon case? Somewhere along the line the "trust fund" will disappear and the cost will exceed an income rate of 15.9%Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17206839.post-87016452543297192212005-01-23T18:32:00.000-05:002005-01-23T18:32:00.000-05:00With a 15.9 percent payroll tax rate, the accumula...With a 15.9 percent payroll tax rate, the accumulations to the Trust Fund are sufficient so that the <i>interest</i> on its balances each year is sufficient to cover the annual deficit when those deficits subsequently appear.<br><br>Whether it is a sensible policy depends on what will happen to the government's spending as a result of the additional years of off-budget surpluses. If the government decides to spend them rather than saving them, then they do nothing to enable future generations to actually cover those deficits. My own view is that these additional revenues will be spent, and that is a good enough reason to force the government to disgorge the money into personal accounts if additional revenues are brought in as part of reform.Andrew Samwickhttp://www.blogger.com/profile/13514024573333057559noreply@blogger.com