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Comment by Mz | Hacker News Reader

I do not know about medicare per se, but when social security was designed to support people 65 and over, I think life expectancy was around age 62. So it was designed to support a relatively small number of retirees in their extreme old age. Then people began living longer.

Somewhat similarly, welfare was aimed at a tiny fraction of "the deserving poor" but was poorly worded/thought out and thus inadvertently changed the social contract and thereby actively grew the number of poor moms. At the time it was created, having a kid out of wedlock was strongly taboo. Poor single moms were thus mostly widows. The authors apparently could not imagine it becoming more socially acceptable to have children out of wedlock.

I worked at bigco for five years. Similarly shortsighted wording for contracts and the like is pretty rampant from what I have seen.

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> I do not know about medicare per se, but when social security was designed to support people 65 and over, I think life expectancy was around age 62. So it was designed to support a relatively small number of retirees in their extreme old age. Then people began living longer.

This is true, but the real problems with Social Security began when Lyndon Johnson combined the Social Security fund, then entirely separate, with the rest of the federal budget. Instead of maintaining a very close eye on how much money was coming in and going out for Social Security, there was no longer any urgency to keep that money around. In other words, money taken out of paychecks for Social Security was spent on everything else, and Federal income taxes were paid out as Social Security.

From what I have read, it is complicated, probably too complicated for me to ever debate off the cuff. And I am especially not qualified right now.

But thanks for contributing.

The Republican-invented meme of social security insolvency because it didn't account for life expectancy increases is tired and worn out. The reality is that the architects of it were nowhere near that stupid, and they accounted for evolving life expectancies with a fairly high degree of accuracy. Had they not, the fund would have been bankrupt long ago.

Even now, the system faces not a crisis, but a need for adjustments. In the 2030s, incoming taxes are expected to be at approximately 75% of payouts. If no changes are made, once the trust fund is exhausted, people will continue receiving at least 75% of their entitlement indefinitely.

Not being able to pay your outgoings is the definition of insolvency, friend.

On the other hand, the government is not quite a 'corporation,' and isn't entirely subject to those kinds of notions, is it?

> Not being able to pay your outgoings is the definition of insolvency, friend.

Didn't say it wasn't. Try not randomly reshuffling the words. You'll get a much clearer picture of what I actually said.

Only paying part of your outgoings is considered 'not paying,' or grounds for a default, typically? So that 'meme' is pretty much factual reality, if your statistics are correct?

disclosure: non-American with no knowledge of your welfare scheme

Not being able to pay something twenty years from now given current income is much different than defaulting. Specially given historically low tax rates and an economic depression, and a spenditure that has mostly not been made yet.

I agree, but that doesn't seem particularly relevant. The system in question would generate significant revenue shortfall if that fellow's comments are accurate. Typically in public policy we make plans for these kinds of scenarios, instead of just assuming that Future Murika will have a tax base robust enough to pilfer from and a political scenario permitting us to actually legislate.

On the other hand, that strategy is working fine for Twitter...

Look very closely at what I actually said. The meme I speak of is not "insolvency" generally, but insolvency due to a specific cause.

> disclosure: non-American

Which may explain why you're not familiar with the particulars of the meme I refer to, but does not excuse randomly shuffling my words.

> with no knowledge of your welfare scheme

Social Security is not a "welfare scheme", it is a government-administered pension program. Everyone who has paid into the system, from the very poor to Bill Gates and Warren Buffet, is entitled to benefits at retirement in proportion to their contributions.

You are badly misinformed. There is no trust fund, only government IOUs to itself. The program already requires revenues from the general Treasury, and the accounting collapse of the fictional trust fund is now in 2020, not the 2030s.

http://www.ssa.gov/oact/TRSUM/index.html

If USA government "IOUs" are worthless you better tell market traders who consider them one of the safest investments out there.

The treasury bills owned by SSA are special non-marketable ones that are only sold to the SSA. They do not have any market value.

I have no opinion regarding the solvency of social security.

What this critique amounts to is saying that the US will always honor its commitments to the market but not to it's tax payers. But why would that be? Are the financial elite more powerful than millions of retiring voters? Social Security taxes were raised in 1983 with the expectation of the baby boomers retiring 30 years later. But in those 30 years the surplus SS money was used to paper over deficits caused mostly by tax cuts on the top income percentiles. In effect the wealthy have raided the fund, but now they are wealthier than ever and we should hold their feet to the fire to pay the money back.

But in those 30 years the surplus SS money was used to paper over deficits caused mostly by tax cuts on the top income percentiles.

This is getting way off topic, but the lower and middle class portions of the Bush tax cuts, for example, contribute way more to the deficit than those for the upper class. And your claim doesn't really square with the trend of more % of all income taxes being paid by the top percentiles over time.

Well of course they are paying more taxes, they are earning way more money.

A Ponzi scheme is also really safe, if it's clear that there are a ton of gulliable fools willing to support the pyramid long enough for you to get in and get out. :)

I am aware of all the information behind your assertions, so no, I am not "badly misinformed", thanks, I simply reach very different conclusions than you do.

What it did not account for is a shift in the wealth gap and a stagnation of wages, relative to inflation, for a majority of people.

The wage base will need to be adjusted to reflect these changes. The last time it was changed was 20 years ago under Reagan.

20 years ago under Reagan

30 years ago, to the nearest decade. That was the change in Social Security policies that raised my retirement age and the tax rate that I pay into the system. My standard retirement age is just after Medicare "exhausts," that is runs out of accumulated funds to pay full benefits to people who have been paying into the system for their entire working lives.

Yes and no.

The original New Deal guys had mechanisms in place to deal with those sorts of things. But in order to keep funding in place for the Vietnam War and other things, the Congress accelerated cost of living adjustments in the 60s and 70s -- basically using Social Security as a political tool.

Since adjustments were made long ago, many other tweaks have affected Social Security. Welfare reform pushed folks who were chronic public assistance recipients onto the SSDI rolls. The ceiling for payroll tax adjustments hasn't kept up with inflation. And of course, the Obama administration decided to cut the payroll tax in the short term to stimulate the economy.

> I think life expectancy was around age 62

You are thinking of life expectancy at birth, which averages in childhood death.

SS only pays people who worked for at least a few years, so life expectancy for people who reach age ~20 is much higher.

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