Sanders' Social Security plan won't work

[ProudToBeLiberal]

Like him or not, Sen. Bernie Sanders (I-Vt.) is the most visible politician on the issue of Social Security. He has a plan, one that his campaign claims holds a seal of approval from the actuaries of the Social Security Administration (“SSA”).

While Sanders’ plan is about as good as it gets, there is a downside: It doesn’t work even on a good day. His campaign promotion inflates what the proposal delivers, and avoids the painful fact the results of his changes would directly contradict his reasoning for reform.

The Sanders’ campaign overstates the revenue his plan will generate. The evaluation provided by the SSA, assumes that taxes are collected in 2016, and 2017 for that matter. The fact is that revenue from Sanders’ proposal will not start flowing until he can convince House and Senate Republicans that his proposal is good policy. That process will drag well into 2017 at best.

Sanders promises voters that his proposal will “extend the solvency of Social Security for the next 50 years.” The wording of the commitment conceals the fact that the promise is based on the most optimistic forecast of a fairly optimistic economic outlook. There is no guarantee.

Even so, what does 50 years of solvency mean to America? Solvent for 50 years means that a typical 35 year-old will enter retirement in the exact same position as the new retiree does today. At full retirement, today’s younger worker will expect to outlive scheduled benefits, unless politicians can sell the greatest accomplishment of government to a new set of younger workers who expect to lose money on the system.

More at http://thehill.com/blogs/congress-blog/economy-budget/269323-sanders-social-security-plan-wont-work

[hoosierlib]

1. Won't work?

It does exactly what he says it would; add 50 years of solvency and expanded benefitd without across the board increases for all taxpayers, an increase in the eligibility age or overall cut in benefit due to chained CPI.

Hillary's plan is?

[JoeTheEconomist]

22. Doesn't Work As Promised.

"It does exactly what he says it would; add 50 years of solvency and expanded benefitd without across the board increases for all taxpayers"

Yes Sanders said it. That doesn't mean that it is true. The SSA says that it is possible provided that we have a good economy. Understand that CBO says that it will be something like 20 years less. There is no certainty in the statement.

[Vinca]

36. What's Hillary's plan?

More "no we can't?"

[JoeTheEconomist]

37. Don't Blame Me For Hillary's Lack Of A Plan

Hillary's plan is to evade the subject. Bernie is pushing her, and forcing her to talk about the subject without a firm commitment. She is simply to vague at this point. If she has a plan she should share it with her webmaster.

She is like Bernie in more taxes. She spends less of it on current retirees. I am not convinced about the wisdom of her expansion. I doubt that what she is thinking will do what she is promising.

[saltpoint]

2. The thing that won't work is

Herman Cain's proposal in 2012 to put a giant wall along the U.S. / Mexico border lined by a moat --

-- a moat filled with crocodiles. He may have said alligators. Or he may have said crocodiles. I don't remember if he used only one of those animals or interchanged them depending on where he was on a given day. Most of the time I don't think Herman Cain knew where he even was on a given day.

But back to the lizards. I don't think it will work to have that long and big a wall. I don't think a moat full of crocodiles is a particularly sound idea either. What will the crocodiles eat? Who pays to feed them whatever food it is they will eat? Crocodiles like fish. How many crocodiles will it take before it's too expensive to feed them fish?

So you see it won't work. When you are picking ideas and projects that don't work, I think it's instructive to find one that really doesn't work and for ideas that don't work, you really can't do much better than Herman Cain's moat of lizards. It pretty much takes the cake.

We should all ponder on that moat and the crocodiles. For a while, Herman Cain was the Republican frontrunner.

http://thinkprogress.org/politics/2011/06/08/239145/herman-cain-great-wall-plan/

[ProudToBeLiberal]

3. You raise some good points. I will think hard on this. nt

[Shandris]

4. The crocodile moat was a KEY part of the 9-9-9 employment plan!

How dare you laugh at the job creation that would have saved our economy by feeding crocodiles!

[saltpoint]

5. LOL! eom

[Avalux]

6. Wow. It's fucking scary to see a Democrat post a "no we can't" article about SS.

I really don't know what alternate reality I'm in right now. Wow.

[saltpoint]

7. Social Security is widely understood to

be a "third rail" in politics. Rightly so, I'd say.

It is a bones and blood essential for so many.

[Avalux]

9. Social Security.

Allow me to get personal. With all the push and pull between boomers and millenials in this race, I'm here in the middle, a Gen-Xer, and no one's really talking about us. We are the group that stands to lose the most if SS goes belly up.

My age group, 45-55, pays the most federal tax of any other. I've been paying into SS my whole life and damn well expect to have it when I retire.

Bernie's plan works. Hillary doesn't even have a plan. That's just one of the many issues I care about, which is why I'm supporting Sanders.

[saltpoint]

10. I'm on board with that,

including al points, Avalux.

I think this Sanders guy has it together.

I hope the voters are as well focused as he is.

[Avalux]

13. I hope so too. It's our future, after all. n/t

[SheilaT]

16. And don't let up one nanosecond on your determination

to have SS there when you retire.

I'm a Boomer, and I want you to know that back in my twenties, fellow Boomers kept on say, "Oh, Social Security won't be there when I retire." And I'd tell them they were idiots, and if they started believing that crap, then it would be very easy to take it away from us.

Meanwhile, the ones who said that generally were doing a piss poor job of saving any money.

Anyway, your generation has been crapped on too long. Don't put up with it.

[Glamrock]

17. Preach on!

[Lucinda]

18. "Hillary doesn't even have a plan" ~ Basics can be found here:

https://www.hillaryclinton.com/issues/social-security-and-medicare/

[tokenlib]

24. I think the Third Way website has her real position,,

...just cant trust her words at this point.

[JoeTheEconomist]

29. And where is the plan?

I wrote the piece on TheHill, and had to edit back some of the piece to get it to fit. I strongly praised Sanders for pushing Hillary on the issue, because if she has a plan she really needs to share it with her webmaster.

There is virtually nothing there.

[enigmatic]

30. Welcome to DU!

Hope you keep posting!

[JoeTheEconomist]

25. If you are 49, you ought to pay attention

I wrote the article. The original piece said that Sanders is pushing Hillary and will push the GOP over time. That was part of the 600 words which were axed to get the piece down. Hillary has no plan, and I happen to be trading emails at the moment an expert about what he thinks her plan is. As I told him, if she has a plan she might want to share it with her webmaster.

You might want to define the word 'works'. Bernie's plan will divert 11 trillion away from debt control, and spends 3.4 trillion on current retirees. It is simple math to understand that the CPI adjustment will give most of the benefits to wealthier retirees. It is simple math to understand the impact of 50 years of solvency on a 35 year old. The SSA assessment which is on Sanders' site says that the $250,000 is a fixed number. Again, simple math says that when a typical 25 year-old today reaches 55, the dead-zone that Sanders is creating will have hit people who have wages that are 90K today.

Now if all you care about is working until you leave office.... Then his plan works fine.

[UnBlinkingEye]

8. Proud to be for the future

Establishment politics are so 2008.

[CentralMass]

11. From the Motley Fool on Hillary's SS plan. Questions on how she is going to pay for it.

http://www.fool.com/retirement/general/2016/02/13/hillary-clintons-social-security-stance-6-things-w.aspx
One big question mark in Clinton's Social Security plan
There's just one issue with Clinton's bullet points on Social Security: she hasn't solidified exactly how she'd enhance benefits for the working class or ensure that well-to-do individuals pay more. For instance, we know Clinton has suggested that she might be open to a payroll tax cap increase similar to what Bernie Sanders has called for, but she hasn't endorsed the idea officially.

It's worth noting that in an informal poll from The Washington Post, the idea of raising the payroll tax cap was by far the most popular. Raising the payroll tax cap would only affect a very small percentage of the population, so it tends to be well-liked in polls.

Even if Clinton does plan to boost benefits by using additional contributions from richer Americans, there are still potential pitfalls. For instance, paying more into the system should yield wealthier Americans better benefits come retirement, but the well-to-do would not receive a commensurate boost in benefits despite their increased contribution. Wealthier individuals are also generally considered a strong source for investment and job creation. Taking more money out of the hands of these individuals may hurt job creation.

In addition to revenue creation questions, Clinton also hasn't outlined how she'd ensure widows, caregivers, seniors, and the working class will see their benefits enhanced.

In Clinton's defense, we're still early in the election cycle, but voters are going to expect a detailed plan that they can comb through soon. With plenty of questions left to be answered, keep your eyes open for a detailed Social Security reform proposal from Hillary Clinton in the not-so-distant future."

[angstlessk]

15. So if their SS goes up by say 5,000 per year (personal expense)

their company will not hire more people?

[basselope]

12. Too many false assumptions in that article.

The plan works.

[mythology]

38. Such as?

Merely saying the Sanders plan will work, doesn't actually mean that it will.

[basselope]

39. But it does...

The article assumes significant economic downturns and undersells the preservation of Social Security for a generation beyond it's current expected "expiration date".

It also fails to take into account the application of the tax to unearned income.

Whether Sanders plan starts in 2016, 2017 or 2018 doesn't really matter in the long term, because social security is viable in its current state for long enough to cover that period.

Further, his plan is actually quite conservative as it presumes current worker participation levels remain the same; however, worker participation has dropped because a bubble in the the population (Baby boomers) have hit retirement age and are now drawing from the system. As baby boomers expire (something that will likely happen well before 50 years has passed) worker participation levels will rise again meaning more money will be coming into the system than going out.

We are headed into a very unique circumstance, where the number of retired people will be at the highest level.. that will not last forever (as the Sander's plan conservatively assumes it does). in reality Sander's plan continues social security in perpetuity, but the problem is that you can't definitively predict when the baby boomers will expire, thus you have to assume their continued participation in the system forever.

[JoeTheEconomist]

40. What Are Your Assumptions?

My article uses data from SSA. The SSA does not have any economic downturns forecasted, much less significant ones. CBO's forecasts would probably shave 20 years from SSA's projection.

I am not sure what forecast you believe is undersold. Let's say a generation is 18 years. There is no current forecast that supports Social Security to 2053 - (I think) that SSA's forecast to 97% certainty ends no later than 2045. We likely disagree upon the importance of Social Security. I think it is a mistake to use optimistic assumptions. We are dealing with people who don't have a lot of choices.

You are forgetting the compounding of interest. The issue isn't about 2016, 2017, or 2018. The problem is that revenue that is supposed to be collected at that time is assumed to be held in the Trust Fund earning interest. Yes, money not collected in 2016 will have a huge impact by 2065.

We are not heading 'into unique circumstances'. The shortfall for SS continues to into eternity. The 75 year shortfall is about $11 trillion. The infinite shortfall is 25 trillion. Is it your belief that the problems of SS are largely 76 years away or more?

I can't dispute your claims without any source material. At this point you are vastly more optimistic than SSA - which is 20-25 years more optimistic than anyone else.

[basselope]

41. Common sense and debunking false assumptions.

First, I was talking about the ARTICLE'S economic downturn assumptions.

The compounding of interest from 2016, 2017, 2018 is pennies compared to the actual issue.

However, something you said is quite false. We are heading into unique circumstances and that is something that NO PROJECTION considers. The shortfall in social security (which has been operating at a surplus for many years) is a direct cause of 2 things... longer life spans AND the retirement of the baby boomers (the largest bubble in the population).

Here are the two problems in EVERY projection and every forecast. They presume the longer life expectancy will continue AND the bubble never ends. Both of those assumptions are actually false. We've already SEEN a downturn in life expectancy (it was all over the news recently). SO we know for a fact that the two assumptions all of these models are built upon aren't accurate and therefor call into question any long term projection.

The reality is we need to deal with the problem (the bubble in the system)... if NOTHING is done, we run out of money in 2037. Solve the bubble problem and you solve the problem.. not just for 75 years, but likely forever. That solution can come anytime between tomorrow and 2020.

[JoeTheEconomist]

42. There are no economic downturns in the article's assumptions

Where in the article do you find any assumption about 'economic downturns'? The article sites SSA assumptions - there are no downturns.

Until you have a forecast, we can't compare assumptions. This year's retirees expect to live about 18 days longer in retirement than someone retiring in 2015. Someone born in 1960 has a shorter life expectancy in retirement than someone born in 1930. What you are citing as problems are largely clichéd analysis.

Without seeing your forecast source, we can argue is-so, is-not all day. It isn't productive. From your 2037 comment, you are clearly using old, antiquated. You need to stick to 2015 Trustees reports and later. Mind you that is out of date, and fairly optimistic by the standards of forecasting SS.

Your statement that 'if NOTHING' is done, is entirely myth. Check page 182 of the 2015 Trustees Report - cited in the article. You need to look at the stochastics.

[basselope]

44. That is the point of the article...

"The wording of the commitment conceals the fact that the promise is based on the most optimistic forecast of a fairly optimistic economic outlook"

To make its statements it relies upon economic downturns.

Meant 2034.

My comment remains true. The problem remains with the key assumptions of the forecasts which are incorrect.

I stated them above, you have ignored them.

[JoeTheEconomist]

45. Look At The Economic Assumptions from 2026 on ... Where is the downturn you keep talking about?

The article uses the SSA forecasts, and explains that they are the most optimistic of the three generally accepted forecasts. This has nothing to do with economic downturns. My article uses the SSA date and it has no economic downturns built in.

The SSA does not say that Social Security will pay full benefits until 2034. I provide the link in the article that shows SSA believes that is about a coin-flip. The Trustees in fact warn users that these forecasts include a lot of uncertainty. That is why they provide three forecasts to show that they aren't certain. You are taking the intermediate as some kind of guarantee. This is a long misstatement than I have room for here : Here is another article if you are interested. http://thehill.com/blogs/congress-blog/economy-budget/215777-the-social-security-solvency-dodge

"Here are the two problems in EVERY projection and every forecast. They presume the longer life expectancy will continue AND the bubble never ends. "

I didn't ignore you statement about longer life expectancy. The year-over-year increase is about 18 days per co-hort. Is it your belief that people will start living shorter lives? If so where is the research?

I am not sure what bubble you are talking about. SS works like a loan. You contribute today, and in the future you expect to get your money back on an inflation adjusted basis. $1 in, and $1 out in the future. All you are doing is shifting the time of the crisis. This is why the shortfalls grow to eternity without any reference to the baby boomers. If we open the immigration door to increase the number of workers it fixes the system until they start drawing benefits. " The guy who ran SS in 1944 said this would happen, and he never even knew the name Baby-Boomer.

[basselope]

46. You're joking right?

I didn't ignore you statement about longer life expectancy. The year-over-year increase is about 18 days per co-hort. Is it your belief that people will start living shorter lives? If so where is the research?

http://www.aarp.org/health/brain-health/info-02-2013/americans-face-shorter-life-span.html
http://www.nejm.org/doi/full/10.1056/NEJMsr043743
http://www.shfwire.com/millennials-facing-shorter-life-expectancy-due-obesity/
https://news.usc.edu/45586/dying-young-americans-less-likely-to-make-it-to-50/
http://www.usnews.com/opinion/blogs/policy-dose/2015/11/04/white-americans-are-dying-because-we-ignore-mental-health
http://www.usnews.com/news/articles/2015/11/13/yes-death-rates-for-middle-aged-whites-are-rising-but-why


And if you don't understand the bubble that is the baby boomers, i am not quite sure how to help you. SS doesn't REALLY work as a loan. That is the basic concept, but it isn't how it actually works. If you believe that, your name is obviously not related to your field of study.

[JoeTheEconomist]

47. It is just facts

I can't tell you which source is better. The SSA actuarial study 120 is from 2005 shows the expectation of someone reaching retirement is rising. It is about 80% now, and SSA expects it to be 90% by 2050. Longevity is an area where they have academic research.

http://www.forbes.com/sites/janetnovack/2015/05/08/harvard-study-social-security-in-far-worse-shape-than-official-numbersshow/#1c23a8d643cc

(Forget what Forbes writes and look at the research from the American Journal Of Economic Perspectives. It says that it has looked at the mortality tables of the SSA and found.... systemic bias towards understating actual mortality rates. Long story short, the SSA doesn't believe that people are living that much longer, and you seem to think that the SSA does. Mind you, CBO does believe that people are living longer than SSA. Pick a source that you trust.

I understand that the bubble is the Boomers and I understand that you think it is terribly important. If it were, the shortfalls would level-out over time. They don't.

[basselope]

48. Its the facts you are ignoring.

And yes, the shortfalls level out over time.

[JoeTheEconomist]

49. It isn't me. It is the SSA that is ignoring your facts

https://www.socialsecurity.gov/OACT/TR/2015/IV_B_LRest.html#462733

If you look at the cost as a percentage of wages, it is rising through-out the 75 year period. When does it level out - with the visit of the four horseman?

I appreciate the exchange. I don't know whether the SSA is the best source. It is the one that I have come to accept. I don't believe that they are always right, but I am confident that not paying them to be wrong.

[basselope]

50. Both.

[DefenseLawyer]

14. Of course Social Security is the Holy Grail of privatization

If Wall Street could ever get "investors" to have their "investments" mandatorily pulled from their paychecks every week by the government and handed directly to them... It's a capitalist's wet dream. So of course they want to claim that Social Security is unsustainable and ready to rip us all off.

[catnhatnh]

19. Writer of this crap

Founder of "Fix Social Security Now LLC" which was his lovechild by way of Paul Ryan.....'nuff said?

[JoeTheEconomist]

27. Not a Bush or Hillary fan

That is from the website, and I wrote it. It is not the job of the site to say what is right and what is wrong. The point is to explain the impact of these proposals on average people. I had hoped that most viewers would realize the fallacy of making minimum wage workers fend for themselves.

Jeb Bush tells people that his plan will reduce the benefit levels of wealthier retirees - those people are what we call minimum wage workers today. You will be sad to find out that I do not support the Bush dynasty.

http://www.orlandosentinel.com/opinion/os-ed-social-security-blalme-072815-20150727-story.html

What you have to ask yourself is (a) what is factually wrong in the piece (b) why are you depicting facts as a 'hit piece'?

[Cheese Sandwich]

31. Possibly I misunderstood the statement about Bush

I took it as a statement of support for Bush's plan.

[JoeTheEconomist]

33. Tell me what to write...

I don't want anyone getting that idea.

Jeb is a warehouse of dumb when it comes to Social Security. Generally I stay out of right and wrong, and stick to dumb and dumber. He is a wealthy politician unaware of his own age of eligibility. Instead of a vital system, he sees it as a go-cart with a bunch of levers that he wants to take out for a joyride.

His brother was an idiot as well :

http://thehill.com/blogs/congress-blog/economy-budget/253260-bushs-plan-would-not-have-fixed-social-security

[Cheese Sandwich]

34. I don't know man.

I deleted my original comment since you are coming to talk about it.

[AgingAmerican]

21. A poorly formatted gaggle of falsehoods

[LondonReign2]

23. Posting Paul Ryan approved attacks. So very Liberal of the OP

I wish the Third Wayers would crawl back to their Republican cesspool rather than pretending to be Dems

[guillaumeb]

26. The title of your post should really read:

Sanders' Social Security plan won't work unless it actually gets passed by Congress.

Expand taxable income to include all income from every source, earned and unearned, except retirement/pension income. That way, everyone pays the tax on all of their income.

[mike_c]

28. USA! USA! No we can't! We're number 27! USA!

I respectfully disagree.

[jillan]

32. AARP disagrees as well as economists at Forbes.

And then there is this WaPo piece about how Bernie's plan for SS is so much better than Hillary's.
https://www.washingtonpost.com/news/wonk/wp/2016/02/12/we-just-learned-a-lot-about-what-kind-of-democrat-hillary-clinton-really-is/

http://www.forbes.com/forbes/welcome/

http://takeastand.aarp.org/candidate/bernie-sanders/

[JoeTheEconomist]

35. You can keep the Forbes' economist

Here is the link to the Forbes piece :

http://www.forbes.com/sites/jamiehopkins/2016/02/16/what-would-president-bernie-sanders-mean-for-social-security/#3211e35a3a45

The writer seems to struggle with the impact of time on present value numbers.

Seriously what analysis in that piece makes you think it is worth reading. Sanders' taxes will approximate 11 trillion. Instead of making sure that the system is there for future retirees he spends about 3.4 trillion - mostly on wealthier seniors. His plan does exactly zero for the seniors who do not qualify for benefits - about 1/5 of those in the lowest income quintile.

[Armstead]

43. (Fill in the Blank) won't work