"If you default, the federal government helps itself to a chunk of your Social Security check."
This, to me, is the buried lede. This is worse than payday lending, and it's being perpetrated by our government upon desperate parents.
This, to me, is the buried lede. This is worse than payday lending, and it's being perpetrated by our government upon desperate parents.
All health care costs in the US are going up. The US government has to pay HMO corporation profits, Americans have to pay higher drug prices unlike other countries. The government can continue paying current Medicare rates, or it can hand more money to health companies if it wants to. As the government is still handing extra money to health companies apparently no one thinks it is a problem as of yet.
The typical conservative plan is to abolish SS and replace it with private savings. We tried that. It didn't work. Low income earners don't always have the capacity to save at the levels required to avoid destitution in old age or disability.
Not everybody will be able to retiree on their personal savings. Many of those people will get that way through no fault of their own. Some people just have bad luck. They get injured and disabled. They have extenuating family circumstances. They might just be stuck in a dead-end, minimum wage job.
Working young people have to take care of non-working old people. That’s true in a Bangladeshi village and that’s true in America. There’s no policy knob you can turn to make that fundamental dynamic go away.
Both are controlled by policies enshrined into law by congress.
One of the things that can and has been done to control expenses is raising the retirement age.
There's a lot of elder-care that is fundamentally non-scalable and non-automatable. But there's also a lot that is. Policy can both incentivize development of / investment in the latter and paying people competitive wage and benefits to step up and work the former.
Meanwhile, with productivity per person higher than it's ever been thanks to general industrial and service automation, there should be more GDP than ever free to invest in such social programs.
> There’s no policy knob you can turn to make that fundamental dynamic go away.
Are all the productivity increases in the past century completely meaningless?
To take the most facile, direct example possible, if all the fast food jobs are automated, can't we train those people to take care of the elderly? Not medically, but as orderlies and other employees in nursing homes?
Based on the change in prices for long term care and skilled nursing facilities, the productivity increases due to automation/outsourcing have not offset supply and demand in labor for elder/disabled care.
It is highly undesirable work, plus medical advances keep people alive longer and longer who need assistance to live. Even during my life, the past 30+ years, these jobs were almost always done by immigrants because they were willing to accept low wages. It is not something an American with options is going to opt for without higher pay.
The increased productivity from the economy. The money is there. It's obvious it's there because we produce way more than ever before with far fewer workers.
I'm talking about productive capacity in the economy, not cash in a vault. It exists. Instead of battering workers with higher taxes, try taxing companies more directly. They're the ones benefiting the most from productivity increases. Tax land value, since real estate prices also benefit from productivity increases in rich metro areas.
> That money is currently being spent on or invested in other things
If you pay care workers more money, they will also spend or invest it. It's not just stacks of dollar bills going into a furnace.
The money is out there. The wealth generated by all that increased productivity is just being captured by a small group of ultra-wealthy.
We could "easily" tax those massive accumulations of wealth to fund societal needs. We only need to convince all the temporarily embarrassed millionaires that doing so is in their own best interest.
Or, tax income over $130k.
Or, reduce payments.
Like I said, the plan only goes bankrupt if we allow it.
Or, tax income over $130k.
Or, reduce payments.
Like I said, the plan only goes bankrupt if we allow it.
Income over $130k is heavily taxed at 24%. Retirement age can only be increased so many times before retirement is effectively gone for the lower class - I think I've heard the statistic that the majority of Americans will only ever collect on three social security checks.
However, I would bet pretty strongly that one of those constraints won’t hold - probably the amount paid out to each person will be lowered, although the tax percentage could also increase.
The social security program is separate from the federal budget [0], and that's why you see it as a separate tax on your paycheck (if you're American). Every dollar you pay into it, goes into a trust fund, whose sole asset is US Government bonds.
Social security can go bankrupt if the US defaults on it's debt, which although almost unthinkable (see Russia as a recent example of paying bonds despite being under heavy sanctions, and having to pay them in another currency) comes up every few years [1].
[0] https://www.reuters.com/article/us-column-miller-socialsecur... [1] https://www.cnbc.com/2021/12/16/biden-signs-debt-ceiling-inc...
The problem is many millennials and Gen Z have already given up on social security, do not believe in it in the future, and will not vote to keep a dead or dieing SS program alive when they themselves had abandoned it long ago. And once they hit critical mass the SS can actually die without voters to backup it up and along with it all the terrible old precedences of that program will disappear. That will leave a huge hole for retirement funds, but it also means a new program can be implimented into its place, something like a basic income that has become more popular or just another social security model that has different specifics and rules.
Current social security is relying heavily on population rising or at the least not falling, but even that is very questionable at this point and could end up being the nails in its coffin.
Good.
Let's be brutally honest and ask who's really to blame for this.
I think Gen Z is against a government riddled with incompetent clowns that mismanage SS. Until all of those idiots are gone, Gen Z doesn't care.
I recommend a refresher on “literal slavery.”
The people who designed SS to be funded out of payroll taxes instead of corporate taxes, buybacks, and dividends. No seriously, hear me out.
As the economy became more efficient, fewer and fewer highly-paid workers are needed to work in it. This leads to overall lower SS tax per head being collected as the economy becomes more productive. What you really want is for the growth of the economy to be captured in supporting seniors - so tax the indicators of that growth.
Unfortunately they had real, political reasons for setting it up that way. Funding it with payroll taxes was the only way to get the bill passed, and ensure it wouldn't be gutted. (I'm paraphrasing from books I've read). And the people who paid into the program would feel morally entitled to receive benefits, and thus would always support the program.
Once Millennials are the majority getting the benefits, they should feel free to refuse them and shut down the program.
Everyone but the boomers has had a 401k for most of their working lives, and comparing 401k payout to social security, the "trust fund" looks like it has a terrible ROI.