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> The meaningful number is 2033, the year Social Security is projected to run out of money.

This is the year the trust fund runs out of money, at which point Social Security won't be able to meet its full obligations, only what it can cover with current payroll taxes. Social Security can't run out of money unless the taxes that support it are eliminated. "Social Security won't be available for you Gen X'ers" is misleading propaganda spread by people who want Social Security to go away. When the trust fund is tapped out, unless we remove the income cap, Social Security will be less generous. It won't go away. If we remove or lift the income cap, this problem goes away altogether.

That's correct: the trust fund runs out and it won't be able to meet the full obligation. It will be able to meet partial obligations, though there's no law specifying how.

This isn't GenX complaining that Social Security should go away. That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government, and racking up enormous debts, while patting themselves on the back for being fiscally conservative.

It wasn't the Social Security they were unhappy with, but the other expenditures. Which expenditures, of course, are always hard to pin down -- it's easy to complain about the bottom line but not to say what you want to cut. Many would point to the ballooning military budget -- and that's all before 9/11.

But that's water under the bridge. We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it.

> That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government,

The Silent Generation was politically dominant in the 1980s.

Boomer political dominance was more a 90s and later thing, and the first decade of that was something of a period of relative fiscal responsibility.

> We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it.

Wel, demographically, yes, there's little GenX alone can do about it. It’s pretty trivially fixable, though.

As someone who makes far in excess of the $100k income cap, I find the income cap to be bonkers. I funnel a lot of that excess into my own investments, and maybe that’s the point, but $100k sure ain’t what it used to be. Why not make it $250k?

Removing the income cap is really a clear way to mitigate this problem greatly. From what I understand it doesn't fix it entirely.

I wonder if we could put SS on capital gains, even at 1%. That would help this include investment gains.

Please, no. Social Security was never meant to be funded this way. It was originally supposed to be paid for by a tax on labor, originally a minuscule at ~3% but now it is around 12.5%. It was supposed to be something that would pay out roughly what you paid in. But now it looks like people want to decouple that aspect of Social Security and turn it into a general wealth redistribution program.

Applying the full amount of payroll (both SS and Medicare) tax to income regardless of origin, including capital gains (and the both-halves self-employment style to all non-wage income) or amount (uncapping contributions), while also uncapping benefits (but adding additional “bend points” above the current cap so the revenue-to-obligation ratio for high incomes is better) is a great way to secure the programs, increase fairness of treatment of labor and other income, increase fairness of taxation of low vs. high income, and extend qualification for social insurance to people of moderate means but atypical income patterns.

But it means that people with disproportionate political clout would be taxed more heavily than in the present circumstances, so it would face an uphill battle.

> But it means that people with disproportionate political clout would be taxed more heavily ...

Not really, you could do what the Jeff Bezos does: "0 profit" (by reinvesting everything) and just enough income to live (very well, but still). Meanwhile the stocks he has amass value (and he can trade stocks, which can't be a taxable event if you use the company to do it and "don't do it yourself", for good reasons (for example joint-ventures would become impossible if this were to be taxed)).

So you can still amass large amounts of wealth under these circumstances without getting taxed on them. Plus you can cheat by having the business pay for your expenses (and if you live for your job that's not even unreasonable).

Removing the income cap for social security tax ($142,800 for 2021) would be interesting, because that's also the max for benefit purposes [0]. 35 years at max = max social security benefits.

[0] https://www.ssa.gov/OACT/ProgData/retirebenefit1.html

>ignoring the fact that we'll be collecting taxes all that time.

This is all wrong and it does not ignore this. The calculation only includes the portion of future obligations that can not be funded based on future revenue estimates. It does not simply take future expenses without taking into account future revenue as that would be patently absurd.

Furthermore it only includes future obligations that have currently been committed to, so for example it does not make projections about people who will at some point in the future be enrolled into Social Security (for example people not yet born).

> The meaningful number is 2033, the year Social Security is projected to run out of money.

This comment is excellent, except for one clarification: "Social Security" is not going to run out of money. The "Old-Age and Survivors Insurance Trust Fund" will run out of money in 2033 (the disability insurance fund is solvent until 2057). After this happens -- and assuming no action by Congress -- Social Security will still be able to pay 76% of benefits to retirees based solely on payroll taxes collected. This isn't a great outcome, but it's far from insolvency.

> Social Security will still be able to pay 76% of benefits to retirees based solely on payroll taxes collected.

78% actually. See Figure II.D2:

* https://www.ssa.gov/OACT/TR/2021/tr2021.pdf

It falls to 74% by 2095.

the government can't be insolvent to by owing money to itself.

That specific fund can be insolvent. It's a specific pot of money set aside for the purpose.

The government can fill it, but it will need to pass laws to do so.

The real misleading part, to the point of being actively malicious, is "Each Taxpayer's Share: $951k".

This is intended to make the median viewer, who will never see that much money at once in their entire life (and will take 20+ years to even make that much before-tax), feel that the Federal government is being irresponsible. It's an obvious push for fiscal conservatism which, crucially may or may not be warranted by the actual facts.

To state the obvious, most people out there do not make enough money to plausibly pay one million dollars in taxes. Therefore they will not be paying one million dollars in taxes (you can't squeeze blood from a stone). The inevitable result is that either the U.S. government is doomed to go bankrupt (what they want you to think), or rich people will be contributing more than that to the United States' debt obligation (hint: they already are).

A sovereign can't literally go bankrupt. Instead when debt service inevitably becomes unmanageable then the Federal government will most likely force creditors to take a cram down.

Sure, not in a literal sense (to the extent they manage internal affairs with a sovereign fiat currency, it's not possible for them to be under water in that currency), but it's possible for them to destroy their own credit due to defaulting on debt obligations to the point that the economy suffers greatly and enters a hard-to-control downward spiral for many years. I think that's what most people understand by the concept of the government going "bankrupt".

feel that the Federal government is being irresponsible.

It is.

https://tradingeconomics.com/united-states/government-spendi...

If it really is then why are bogus arguments like the OP used to make it seem so?

If I’ve learned anything during the pandemic, it’s “that’s not how money works”. If it runs out, they’ll just borrow more. The real question is at what point are we so leveraged that we default on bonds because we can’t meet our obligations? 10 years? 100 years? I don’t think anyone can answer this. But this is how it will likely end.

Isn't it more like 3 weeks, according to Janet Yellen?

That’s if we don’t borrow any more money beyond the debt limit before then. The real question is when will people stop lending to the borrower? That will be when inflation gets high enough to our pace the rates you can safely receive elsewhere. For example, if inflation is 3% per year and you are only getting 2% yield, it doesn’t make sense to lend anymore because your getting about -1% return… unless every other country with a guaranteed return is returning even less due to their own inflation. Say Germany’s rates are 0% but inflation is 0%, lenders should simply be holding German dollars and stop lending to the US. Then the US will default dude to not being able to borrow.

> The fact is that Social Security is in trouble: the pay-as-you-go plan doesn't work with an increasing lifespan.

The situation is not ideal, but it isn't cataclysmic:

> The authors of the most recent report even took their calculations out to the year 2095. At that point, they estimate payroll taxes should still be able to cover 74% of payouts to Social Security recipients.

* https://awealthofcommonsense.com/2021/09/can-young-people-st...

The report in question:

* https://www.ssa.gov/OACT/TR/2021/tr2021.pdf

Two possible solutions (non-exhaustive): increase pay cheque contributions, use general revenues to make up the shortfall.

If you were valuing a company you would add the value of the pension fund but subtract the present value of the pension liabilities. When considering the level of indebtedness of the Federal government, I think liabilities such as Social Security and Medicare should be included.

I thought it could be misleading as well but it is not just calculating the “food you’ll need,” it is also calculating receipts over the same time that pay for food. It’s like saying you promised to buy a TV for $900 in December and by December you will only have $300. That means you will have to borrow $600 before then to meet that promise. Does that mean you owe $600 now, no, it does mean you either can’t buy the tv or will have to borrow that much more. It is essentially debt.

> But that doesn't make "$146T" a meaningful number.

If you have to pay annuity to a relative until they die, I don't think it reflects a good picture of your net worth to ignore that number either.

Would also note that if you're incorporating unfunded future liabilities, it also makes sense to cancel out intergovernmental debt, e.g. Treasuries held by the Federal Reserve or by agencies.

You can't quite 'cancel out intergovernmental debt', as their sale (to extract their value) would cause devaluation. I am not sure how you would model the loss in value.

> You can't quite 'cancel out intergovernmental debt', as their sale (to extract their value) would cause devaluation

Not saying the U.S. default on that debt. Just that, for accounting purposes, if you're including far-in-the-future liabilities, you should also take into account the fact that every dollar of interest paid by the U.S. Treasury to the Fed ends up, more or less, back in the Treasury's account.

Wouldn’t the date it runs out of money be pushed out further due to increased deaths during the pandemic?

600,000 over the last two years may seem like a lot of deaths at face value but over the same period of time about 4,500,000 died from other non COVID things and 6,000,000 people were born. So the deaths from COVID are relatively small in comparison. Plus the debt only increased due to COVID as they printed and spent trillions upon trillions of dollars.

That might be confounded a bit by https://www.ssa.gov/benefits/survivors/.

28T or 150T ... either way it is really bad....