Social Security Faces Its First Real Shortfall in Decades

[DonViejo]

June 13, 2019 at 7:59 am EDT By Taegan Goddard

New York Times: “Next year, for the first time since 1982, the program must start drawing down its assets in order to pay retirees all of the benefits they have been promised, according to the latest government projections.”

“Unless a political solution is reached, Social Security’s so-called trust funds are expected to be depleted within about 15 years. Then, something that has been unimaginable for decades would be required under current law: Benefit checks for retirees would be cut by about 20 percent across the board.”

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https://politicalwire.com/2019/06/13/social-security-faces-its-first-real-shortfall-in-decades/

[Zoonart]

1. This is an easy fix...

Cut the crap and raise the cap.

[Wounded Bear]

12. Raise the cap and raise the minimum wage...

those two items would finance the system for many years.

[mitch96]

34. Tax the 1% at a higher rate!! easy peasy.... nt

[beachbum bob]

2. always been the GOP's plan for decades and until we democrats can make a campaign issue in

Arizona and Florida as well as Texas and other southern states that have significant population of SS retirees, nothing will be allowed to be done if GOP is in control in any ONE of the House, Senate OR whitehouse

[ooky]

5. Yep. Republicans in Congress would be perfectly happy to do nothing.

When Republicans had the trifecta they could have done a fix, they did nothing. Trump lied to seniors that he would protect their social security and did nothing with both the House and Senate in Republican majorities. It is time to exploit that lie. If this problem is going to be addressed it will be the Democrats that have to do it. Dems have a bill in the House now that has been reported to have support from 200+ House legislators. So close. Time to get it over the finish line in the House and turn it into a big issue for 2020 voters, especially the older voters.

[Hoyt]

3. The simplistic approach of "raising the cap" on the wealthy doesn't work long-term.

Obviously it helps kick the can down the road, but it doesn't solve the social security problem.

Karen Smith of the Urban Institute looked at various options including raising the FICA cap, increasing retirement age, reducing COLA, etc.

https://www.urban.org/urban-wire/how-can-we-make-social-security-solvent
https://www.urban.org/exploring-social-security-reform-options
https://www.urban.org/author/karen-e-smith



Here is a summay of the impact of the research above:


"Taxing high earners doesn’t help much

"Yes and no, says Karen Smith, a senior fellow in the income and benefits policy center at the Urban Institute, a public policy think tank. Smith has spent the last 30 years developing models that predict the financial results of Social Security and other forms of taxation. She says that if the cap were removed altogether in 2016 and everyone paid what they pay now on all the income they made, this would be the outcome:

"-The trust fund reserves would be extended through 2055 (an additional 21 years).

"-Money would accumulate quickly in the trust funds and it would earn significant interest over time.

"-All workers would feel the pain of increased payroll taxes because employers would reduce wages across the board to compensate for their share of the increase.

"-Raising the wage cap would reduce other federal income tax collections because people would earn less money. But overall — adding together payroll and income taxes — the government still would collect more.

"-The impact of high earners paying more into Social Security would be mitigated by increases in Social Security payments to them after they retire.

"The only real answer, Smith says, is to raise the payroll tax on everybody — high and low earners. “We aren’t going to get to solvency without raising the payroll tax,” she says. “The only other way to get to solvency is to lower benefits.”
"

________________________



As far as I'm concerned, raise the cap. Won't affect me and I'll be gone by the time the crud hits the fan again.

But, increasing the cap affects everyone as stated above. Worse, IMO, is that taxing higher earners an additional 12 percentage points is a huge tax increase.

Again, no big deal for me because I ain't in that income category. But that is money we need for healthcare, education, child care, guaranteed income when the time arrives, jobs, bolstering other aspects of the safety-net, cancer/disease research, etc.

[Doremus]

8. We somehow recently found the funds to gift oligarchs $1.3 trillion.

I think they can contribute some of that to keep SS going -- indefinitely.

Asking peons to pay more, yet AGAIN, to receive our paltry stipends is bullshit, Urban Institute or no Urban Institute, imo.

[Hoyt]

9. I think you need to look a little closer at the report, which is by about as good a source

as you are going to get on such matters -- The Urban Institute.

$1.3 Trillion is over 10 years, or roughly $130 Billion per year.

Reversing that tax cut -- which should be done -- won't really help Social Security.

Even if you stuck it all in Social Security fund, it's not nearly enough to solve the problem, especially if you want to do something about healthcare, jobs, bolstering Medicare, reducing Deficit and Debt, etc.

Folks should have listen to Obama when he tried to warn us about this and other impending budget issues. But, hell no, folks criticized him and helped elect trump. Now, we are looking at GOPers being in control when the problems need solving.

[Doremus]

11. Negotiating is an art.

The GOP is coming for SS soon, and hard.

If past deals are any indication, our side needs to focus on answers that do not land in our laps. That's where the pukes want it to land, well, more specifically in our pockets. Our side needs to slam it down that penalizing the 99% is NOT going to happen this time.

Think that'll happen? Let's just say I'm a skeptic. I suspect that the final deal will be a combination of 1) higher taxes for all, 2) lower benefits and 3) later retirement age, none of which serve the majority and all of which serve the 1%. It'll happen because we served it up to them on a golden platter.

There is nothing to lose and everything to gain by focusing instead on the top 1% and the fact that they should contribute more because they have more. The Urban Institute is wrong, imo. Focusing on 1), 2) and 3) before even talking about alternatives gives our opponents EXACTLY what they want. And negotiations haven't even begun. Way to go!

[Wounded Bear]

13. So raise the minimum wage along with the cap...

receipts from low wage earners would increase dramatically without materially affecting their bottom line.

[standingtall]

15. raising the retirement age should be a non starter

nt

[Hoyt]

18. Agree completely, so does expert I cited. At some point soon, we are going to have to do something.

[Kaleva]

22. I disagree with one part of the article

"-The impact of high earners paying more into Social Security would be mitigated by increases in Social Security payments to them after they retire. "

There would be no reason to increase payments to individuals who are taxed more. Social Security is an insurance against living in poverty. Regardless of how much or how little one contributes to SS while working, they should only get enough, when eligible, to keep them just above the poverty line. For those who have outside income besides receiving SS benefits, the SS benefits ought to be reduced or taxed if total income is above a certain threshold.

I get just above $16,000 a year in SSDI and a VA pension, above the 2019 poverty threshold for 1 person which is $12,490, and I live comfortably with the amount I get and want for nothing.

[Hoyt]

25. You are misreading. As it stands now, people who have to pay more if cap were lifted, still get

Last edited Thu Jun 13, 2019, 02:00 PM - Edit history (1)

additional benefits, according to current law. The expert is saying -- yeah, more money is coming in if we lift the cap, but when they retire they are going to get paid more the the maximum ("mitigated by increases in Social Security payments" ) as it stands now.

Of course, you could tell all the people making over $132,900 that they are going to pay an addition 12 percentage points in Social Security taxes above that, but get nada in benefits.

[Kaleva]

33. Cap maximum benefit one can receive at $2,861 a month and adjust for inflation in following years

In the meantime, remove the cap on taxable income which is currently set at $132,900.

The govt. could also adopt the policy of taxing one's SS benefits if total income is above a certain threshold.

As it is right now, I, being below full retirement age, would have my benefits reduced by $1 for every $2 over the threshold of $17,640. One could do the same by setting the threshold at $34,332 ($2,861 a month) and tax at a 100% rate every $1 received in SS benefits for every $2 over that threshold. This money would be designated a FICA tax.

[MichMan]

30. Sounds like you are advocating that people only receive enough SS..

to ensure they are above the poverty line and not a dime more. That would result in many getting a cut wouldn't it ?

It would no longer be based on how much anyone has contributed over a lifetime, but everyone gets exactly the same amount. Is that what you posted?

Anyone who has contributed to a 401k for 40 years would have their SS benefits eliminated?

[Kaleva]

35. Social Security is an insurance program

"ITLE I- GRANTS TO STATES FOR OLD-AGE ASSISTANCE

APPROPRIATION

SECTION 1. For the purpose of enabling each State to furnish financial assistance, as far as practicable under the conditions in such State, to aged needy individuals,..."

https://www.ssa.gov/history/35act.html

One can argue that well off people are entitled to old age assistance but I usually see that argument made over at places like FR.

[MichMan]

42. Means testing of SS is controversial with many

Many who oppose feel that Means testing of Social Security would make support of the program plummet drastically. May be one reason why you dont hear of hardly any politician supporting it.

[Kaleva]

43. Well off people can still get SS. it just will be taxed.

[Kaleva]

24. Here is my budget

$1192.00 SSDI
$140.05 Veteran Pension

$1332.05

----------------------------
$10.00 VA Co-pay

$10.00
------------------------
$40.00 Electricity (averaged out over 12 months)
$13.99 Amazon Prime
$11.99 Hulu
$10.00 Great Courses Plus
$25.00 Cell phone with unlimited text and talk
$40.00 Natural gas for heating, hot water and cooking (averaged out over 12 months)
$43.00 water & sewer
$67.00 Land line and internet

$300.43
------------------------
$140.00 Property taxes and homeowners insurance

$140.00
---------------------------
$37.00 Credit card payment
$40.00 Credit card payment
$54.00 Credit card payment

$91.00 (two credit cards should be payed off by mid summer and the third by the end of the year)
---------------------------
$200.00 Food, personal hygiene
$100.00 Miscellaneous, clothing
$25.00 Donation to Kamala Harris campaign
$5.00 DU

$330.00

$1332.05 - $871.43 = $460.62 available for discretionary spending

[SWBTATTReg]

27. Don't you have any co pays for Medicare/ roughly $130+- a month (or do you have it already ...

netting out, from your SSDI payment)?

Also, I noticed you do own your house. Good for you. I suspect that you do have some occasional repairs so I'd add some dollar amount to cover these types of expenses. In my budget, I allowed $200 a month for these types of unexpected house repair bills, e.g., bad water heater, leaky faucets, checkup on furnaces/AC every spring and fall, etc.

[Kaleva]

36. As a former HVAC repairman and plumber, I do all my own repair work.

I installed my own central A/C last summer. My discretionary and misc. money can and does go for minor repairs. If need be, I can get a loan to cover major ones and then put the monthly payment into my budget.

[SWBTATTReg]

37. Smart! This is a big budget buster for a lot of folks, the ongoing maint. on a home. I used to ...

a mobile home park and so got pretty good w/ rudimentary electrical (do everything but the main box) and a good chunk of the plumbing too. This adds up to a pretty good penny. Take care.

[Kaleva]

39. I have also watched a lot of you tube videos on how to fix things.

Microwave, washer, dishwasher, laptop, and zone damper are just a few of the things I was able to repair on my own after watching some videos.

[SWBTATTReg]

40. You Tube is a great reference...I use it too. Just about everything and anything is out there...

I am constantly amazed at just how much is out there, and multiple, multiple videos of just about everything too, if one particular repair shown is still confusing, go view another one, etc.

I like the hands on approach, with the videos instead of checking out a repair book out of the library and reading it. I'm impressed...I don't know if I would attempt to repair my laptop if I needed to...take care and thanks!

[Generic Other]

4. And no republican will ever win election again

20% reduction means the whole government goes down.

[Guy Whitey Corngood]

6. The damage will have been done. Plus they'll just blame Democrats for

their own scumbag policies. The voting public in The US of Amnesia will go "Duhh.... I guess that's true....". And they'll keep slithering their way into office by hook or by crook.

[Generic Other]

14. You think 1 in 6 Americans will roll over for 20% reduction

When half have no other source of income? Yeah. They will do this over a lot of people's dead bodies. Including mine.

[Guy Whitey Corngood]

17. I didn't say they'd like it. I said as usual they will misdirect their anger. How long did it take

them to blame Democrats for Jr's and the Repukes' fuck ups? Hope to be proven wrong. In fact what I do hope is it never gets to this. As the damage will be incalculable. But I don't put anything past these snakes and the eternally gullible.

[Generic Other]

19. It should be a hot button issue for every working American

We earned that money. They spent unwisely even as we all protested. They enriched themselves. It is so maddening that we must fight tooth and nail to protect the legacies of our parents and grandparents' generations! Brave people fought these battles for you and me before we were born. They sacrificed for the common good. And we are watching as the greedy pigs destroy it all.

I guess all we can do is keep raising our voices. I try.

[Guy Whitey Corngood]

23. It's truly messed up. I see no end to their fuckery. They seem to take

pleasure in others' misery. I can't say I'm surprised anymore. But I am disgusted that they get worse by the minute.

[Beartracks]

31. Hell, they blame Obama (elected in 2008) for 9/11 (which happened in 2001). n/t

[Guy Whitey Corngood]

32. That one really took the cake. And these morons vote!!!! nt

[Corgigal]

7. Trump can do what Putin did.

Just raise the age another ten years or so. It went over so well in Russia.

[former9thward]

44. Putin did not raise it 10 years.

Retirement age in Russia was 55 for women and 60 for men. Putin signed a law increasing it to 60 for women and 65 for men. Still lower than the U.S.

https://www.forbes.com/sites/ebauer/2018/10/04/putins-russian-retirement-age-hike-and-u-s-social-security/#49878712a74c

[marlakay]

10. Did they ever pay back the money they borrowed from the fund?

How dare they give rich a tax cut then make some retired gramma eating almost nothing and halfing her pills 20% less!

This pisses me off!

[customerserviceguy]

16. That's discussed in the article

The NYT refers to these borrowings as "the so-called trust fund", and goes on to state that it will be depleted soon if nothing is done.

It will take a combination of things to fix the problem, much like what happened in the early Eighties when the last fix was made. It will be a combination of raising the retirement age, maybe doing away with early retirement at 62, a higher FICA tax on both the employer and employee side, and raises to the cap, along with a fourth tier of lowered payout for the highest earners.

There is no single magic bullet, and it will have to be done on a bipartisan basis. My prediction is that it will be too late, and there will be a 20% reduction in benefits. My advice to my fellow retirees is to save as much as you can if you expect to live that long.

[Hoyt]

20. Probably true. Obama made a tentative attempt to do something viable, he was almost lynched,

even though it would have increased payments to those at the lowest level.

Everyone is going to kick this can down the road to the point that GOPers might be in control of the decision, the world economy may be reeling to the point paper wealth is not nearly as valuable as now, and younger people -- who will actually have to pay the retirement for the elderly -- will say screw this chit. It will be a mess. Hope I'm gone by then.

[customerserviceguy]

21. It's an unsolvable problem

if there is no bipartisanship in solving it. By getting buy-in from both sides of the aisle, it kept the 1983 Social Security reforms from being used as a political weapon in future elections.

I just don't think we're capable of bipartisanship any more, especially on such a third-rail issue.

[ProudMNDemocrat]

26. ELIMINATE the Gross Earned Income cap....

Problem solved.

Subject all Earned Gross Income to SS taxes and problem solved. Those who make $5 Million or more annually pay the same taxes as those who make $50,000. SS is secured for well over 150 years without cutting benefits.

[FakeNoose]

28. +1000 K & R

This comment deserves its own OP.
Thanks!

[ProudMNDemocrat]

29. You are welcomed......

[Downtown Hound]

38. Keep voting Republican, seniors and Boomers. n/t

[DeminPennswoods]

41. There is no social security savings fund

Social security is a pay-as-you-go program with OASDI income from current wage eaners going to pay current beneficiaries. While social security is legally obligated to invest any funds above required payouts in treasury bonds, they will cash out the bonds to fund shortfalls when needed. When there are no more bonds to redeem, then whatever difference between income and outgo will be made up from the general revenues. It's been awhile, but I did read an analysis that estimated this would amount to 2% of the federal budget. That's an easy cut to DoD spending.