If he ever bothered to read the Actuarial Report that the SSA publishes every year, he might get a clue as to how it really works. But that would destroy the narrative.
@mmeadway @stopgopfox@libretooth.gr
Every year the SSA's report warns of exactly this problem with funding, though. I'll quote directly from it:
"Social Security’s combined trust funds are projected to cover full payment of scheduled benefits on a timely basis until the trust fund reserves become depleted in 2035."
@volkris @stopgopfox There's no denying that the system needs work. For example, I think the tax limit on earnings should be discarded (you pay SSA tax only on the first $160,000 of income).
Part of the problem too is that Congress has consistently borrowed surplus revenue from the SSA.
Carter addressed some of this during his administration, when the fund was projected to be exhausted in 1983.
@mmeadway @stopgopfox@libretooth.gr
The reason the tax limit on earnings exists is because benefits are tied to taxes, so without the limit the SSA would be paying even larger amounts out to rich people who we don't think need the help.
And no, this is the whole point: Congress DID NOT borrow surplus revenue from SSA, as that's not how the program is legally set up.
From the beginning SSA was legally required to deposit its surplus in the Treasury to be spent on other programs. That's not borrowing. It's depositing, and despite so many politicians' lies over the years (yes, I do believe they know better), that's how this was designed to operate.
@volkris @mmeadway @stopgopfox Re the cap on earnings subject to tax. Yes, payouts are connected to contributions. But they’re not $1:$1. Lower income participants get more than their lifetime contributions in payouts, assuming regular life expectancy. As earnings rise, and tax contributions also rise, the payout ratio declines.
Accordingly, there’s no reason not to raise or eliminate the earnings cap. There would simply be a cap on maximum payout. 2/fin
@nadezhda04 @volkris @stopgopfox I stand corrected on the trust fund. Regarding the "insolvency" question, I would agree that the best option would be to eliminate the contribution cap, BUT limit the benefits received based on income (someone bringing in $500k/yr net hardly needs Social Security).
TPM put out an article on this yesterday that goes through some of the thinking on this:
https://talkingpointsmemo.com/edblog/debamboolzing-the-social-security-scare-talk
@mmeadway @volkris @stopgopfox Very good explainer by @joshtpm who’s been trying for decades to “debamboozle” the GOP talking points re Social Security “bankruptcy,” which is just an excuse for them to cut benefits.
I’d like to see a very high cap - say $500k - with declining payouts down to say $500/month. I’d like to retain the principle - that’s become a significant norm in US politics - that everybody who pays in gets something out.
@nadezhda04 @volkris @stopgopfox @joshtpm There are a lot of potential adjustments that could be made to improve the health of the system; I like the idea of a payment cap based on income.
I thought Josh did a really nice job of an overview without getting too deep in the weeds.
Things have changed a lot since the era of Reagan, which is when I first really took a look at how the system was operating.
@mmeadway @nadezhda04 @stopgopfox@libretooth.gr @joshtpm
An issue is that a lot of these adjustments just end up kicking the can down the road. They may bend the graph a bit, but it still leads to insolvency at some point on the timeline.
We should be able to talk about major structural changes without accusing each other of trying to kill the system in the process of shifting it to a more sustainable model that won't eventually crash and burn during some future generation.
@volkris @mmeadway @stopgopfox You are correct that Soc Sec is actually a pay-as-you go. Even if we had a true trust fund, the funds would have to be invested in something. Treasury bonds would be the best risk-return for that purpose, unless the US wanted to manage the world’s largest sovereign debt fund. The most important figure is the gap between annual tax receipts & payouts and when it starts getting too negative so raises general obligation borrowing. 1/