The coming Social Security fight could be 1983 all over again

[Rjbeach2003]

Taxing all earned income would solve the problem. But we can't because the very highly paid need the money more than we do. I have been self employed for 40 years and have had all my income taxed as self employed, so have paid nearly twice the rate as employed wage earners. I am not complaining about that, but I think it is important that everyone have a stake in the financial health of all the individuals in the country. The prevailing attitude here is that salaried and wage earning folks don't provide much to the value of the company they work for.

 

[Retired2025 aka AlmostRetired]

Taxing all earned income would solve the problem. But we can't because the very highly paid need the money more than we do. I have been self employed for 40 years and have had all my income taxed as self employed, so have paid nearly twice the rate as employed wage earners. I am not complaining about that, but I think it is important that everyone have a stake in the financial health of all the individuals in the country. The prevailing attitude here is that salaried and wage earning folks don't provide much to the value of the company they work for.

Revenue - expenses = surplus/debt. It stands the test of time.

I am fiscally conservative but I agree with you. I didn’t want to post the idea because of being dropped into a political bucket that would not be accurate. I worked since 17, paid my own college, paid my kids college, never been without healthcare, still working:at 69 by choice. I have been humbled by the all to common experience of cancer in the family and the economic hardship it brings even with insurance. I have been humbled by being targeted after 30 years of various management and non management roles because of age. I am grateful for landing on my feet before the end of the 2 week notice. I have a pension, 401k, IRA and collect SS all earned with uninterrupted work.

I am okay with helping others and feel blessed, because I know that if not for the grace…….

 

[4TimeAway]

Begin middle aged and retirement date measured in decades or not at all, my wife and I are considering a second residence in a low-cost country with the thought that eldercare for our parents would be more affordable.

At a minimum getting out of a high-cost region seems prudent, but we have neighbors that moved back to a high-cost region to be closer to their grandchildren. The tradeoffs, expenses, and choices we make determine our personal happiness and that seems more important than having a nicer car, bigger home, etc.

To me being able to cook well is freedom and at some point, the window dressings of life are just that.

May we all have what we need and then have enough. The challenge is as it always has been limiting one’s wants, good luck with that!

 

[Talent312]

May we all have what we need and then have enough. The challenge is as it always has been limiting one’s wants, good luck with that!

As long as there's chocolate (and travel), it's a losing battle.

 

[CaliSunshine]

Social security is cheap. Medicare is the expensive one.

 

[Carolinian]

Taxing all earned income would solve the problem. But we can't because the very highly paid need the money more than we do. I have been self employed for 40 years and have had all my income taxed as self employed, so have paid nearly twice the rate as employed wage earners. I am not complaining about that, but I think it is important that everyone have a stake in the financial health of all the individuals in the country. The prevailing attitude here is that salaried and wage earning folks don't provide much to the value of the company they work for.

The big problem is long term capital gains, where what is being taxed is often largely inflation. The dollar today is worth about ten cents of the dollar when I was in high school. If I sold an item I had all that time for ten times what I paid for it, my real gain would be zero as I would just be getting back the value I paid for it in today's dollars. However, the government would tax me on 90% of what I received as a "capital gain". We have a very unfair tax system where capital gains are not adjusted for inflation.

Even since January 2021, the dollar has lost 20% of its value, so if you bought something then and sold it today for 20% more, you are just getting back the value you paid for it, not a profit.

 

[jp10558]

The big problem is long term capital gains, where what is being taxed is often largely inflation. The dollar today is worth about ten cents of the dollar when I was in high school. If I sold an item I had all that time for ten times what I paid for it, my real gain would be zero as I would just be getting back the value I paid for it in today's dollars. However, the government would tax me on 90% of what I received as a "capital gain". We have a very unfair tax system where capital gains are not adjusted for inflation.

Even since January 2021, the dollar has lost 20% of its value, so if you bought something then and sold it today for 20% more, you are just getting back the value you paid for it, not a profit.

Personally, I don't think we need to privilege capital any more than we already do in this country. That said, it's also why I often look askance at all the "invest your money" vs buying stuff (that will hopefully last). Mostly because I think the investments that would give the rate of return needed to make up for inflation is often quite risky. Though perhaps with bank accounts doing 4.25% now, maybe getting over 10% is possible without going into pretty risky areas? IDK, I haven't looked.

 

[Ralph Sir Edward]

Personally, I don't think we need to privilege capital any more than we already do in this country. That said, it's also why I often look askance at all the "invest your money" vs buying stuff (that will hopefully last). Mostly because I think the investments that would give the rate of return needed to make up for inflation is often quite risky. Though perhaps with bank accounts doing 4.25% now, maybe getting over 10% is possible without going into pretty risky areas? IDK, I haven't looked.

It depends on how you measure. Let me give you an example:

Back when I was a little kid, quarters, dimes, and half dollars were made of 90% silver. I converted $5 dollars into dimes. and kept $5 dollars as a $5 dollar bill. How should I be taxed? From the standpoint of a little kid, I saved 10 dollars. Nothing changed, neither the paper 5 dollar bill, nor the $5 dollar of dimes. Why should one be taxed and not the other? They are both stamped $5 dollars (50 times $.10 - stamped on the coins - equals $5.)

 

[Brett]

The Social Security trust fund "insolvency" date is earlier than expected

https://apnews.com/article/social-s...t-fund-trump-74e13292f510739724a555d7ded7c1a3

 

[Roger830]

The trust fund was only for the baby boomers.

Social Security was designed as a pay as you go system, higher taxes in the future will maintain the current level of benefits.

 

[Ralph Sir Edward]

The trust fund was only for the baby boomers.

Social Security was designed as a pay as you go system, higher taxes in the future will maintain the current level of benefits.

Social Security was a form of Ponzi scheme. It was actuarially based on two things - a non-inflating dollar, and a steadily growing population. Neither of those are occurring, hence the problems.

In a growing population (non age-related), you have more people working than getting benefits. 4, 5, 6, even 10 to 1. That makes the burden of the working population lower, per individual worker. In a shrinking population, the number is less than 1 working to pay for another's retirement. Basic mathematics.

It really wasn't the Boomers who got all the benefits, the parents of the Boomers got vastly more in benefits than they put in.

Living longer puts even more strain on the system.

 

[CalGalTraveler]

Meh. Congress will not be able to deal with the political blowback. They will extend the FRA age for future retirees and print more money.

We are waiting because we are investing more in an HSA and Roths. If the new tax bill passes over 65 can contribute to an HSA even if enrolled in Medicare.

Most insurance is a Ponzi scheme. You need to have more paying in then drawing out. Florida is realizing this with homeowners insurance.

 

[TolmiePeak]

Most insurance is a Ponzi scheme. You need to have more paying in then drawing out. Florida is realizing this with homeowners insurance.

That is not what a Ponzi scheme is. Doesn't anyone buy medical insurance hoping for a big jackpot (ie a severe medical condition)?

 

[TolmiePeak]

Meh. Congress will not be able to deal with the political blowback.

If they do nothing automatic cuts will kick in. We need to do something to pay down the $36 trillion in debt we have. Seniors are going to have to accept cuts in social security and medicare. We can't keep printing money to pay benefits.

 

[CalGalTraveler]

That is not what a Ponzi scheme is. Doesn't anyone buy medical insurance hoping for a big jackpot (ie a severe medical condition)?

Good point on the intent however the financial mechanics are still the same.

 

[jp10558]

If they do nothing automatic cuts will kick in. We need to do something to pay down the $36 trillion in debt we have. Seniors are going to have to accept cuts in social security and medicare. We can't keep printing money to pay benefits.

I seriously doubt Seniors are going to accept cuts, and will tend to vote accordingly. It's happened the same every time this comes up. Plus, with all the "out of the normal" thinking lately, I'm less sure the govt just could decide to say they're not paying the debt back, or indeed print money to pay it off. It's also IMHO false that the only option is cutting benefits or services. We could always raise taxes. Trump sort of got buy in for Tarrifs which kinda are new taxes, so IDK, maybe some other increases are possible. Not that he's telegraphed interest in doing that, but he's also kinda random. At the very least it seems like it'd be pretty easy to just remove the cap for social security and medicare taxes.

Social Security was a form of Ponzi scheme. It was actuarially based on two things - a non-inflating dollar, and a steadily growing population. Neither of those are occurring, hence the problems.

In a growing population (non age-related), you have more people working than getting benefits. 4, 5, 6, even 10 to 1. That makes the burden of the working population lower, per individual worker. In a shrinking population, the number is less than 1 working to pay for another's retirement. Basic mathematics.

It really wasn't the Boomers who got all the benefits, the parents of the Boomers got vastly more in benefits than they put in.

Living longer puts even more strain on the system.

There's still the question of what do we want to do - shore up the system? Try and fix it? Do we want to go back to pre social security where a huge number of people become homeless as soon as they cannot work anymore? Or further drag down economic activity of whoever is currently working to try and take care of their elders alone? Maybe we should propose logans run?

I really don't know, but it's also a serious discussion we can't seem to have, so my bet is continue to inflate cause that seems to be the only way to tax people that doesn't have a lot of people up in arms.

 

[emeryjre]

When, not if, Robotic technology reaches the promised point of development
The entire basis of our economy will shift in a new direction
Will this shift occur soon
People such as Musk say yes
Robotic Taxis will replace Uber Drivers
Self Driving Semis will replace Truck Drivers
The list of people left unemployed by Robotics will grow exponentially
Leaving Politicians of any stripe in charge will not provide the thinking needed to evolve as this new economy overwhelms the old economy
This will probably be the problem that Social Security faces in the next 10 years

 

[joestein]

Easyrider, it is more of an attitude than a matter of control. What sort of attitude? A viewpoint of substituting capital for cash flow (income). For example, buying and owning a modest car (and paying cash up front) over leasing a nicer one, and keeping the one you buy for a long as possible, My car is a Hundai Elantra, almost 13 years old, costing 23K up front. So far, it has cost me $150 a month, and the price keeps dropping as my car gets older.

With that attitude in life, my cash flow needs have dropped over the years. Paid for house? No tax deduction, but no need for the income (taxed) to be earned for the same standard of living. And on and on. Miser? No, just a careful planner. (another example: A couple of years ago, I upgraded my computers with 5 year old, dirt cheap, used computers. Quality HP corporate used computers. Why so cheap? They couldn't be upgraded to Windows 11. Shrug. I run Linux for my home computers (with virtual XP and Windows 7 machines under Linux). Solid computers for less than $100 each, plus another $200 to upgrade to big SSDs, put in new batteries, and bump up the memory. I expect to run them for another 10 years. Equivalent Win 11 machines would cost over $1,000 each new.)

The tax system can't tax you on income you never earned, yet I don't feel i have a lesser standard of living.

I guess this sums up my worldview.

View attachment 93155

It really is an attitude. I am a fan of Zac Brown Band. They came to Atlantic City to play a concert. The tickets would have ran me about $1000/pair for mediocre seats. I can easily afford this, but seems outrageous to me, so no Zac Brown for me. This younger generation seems to have money for everything except important things (like college loans or saving for a home) and just like to say how much harder their life is and they are victims.

Meanwhile Adam Ray as Dr. Phil (check out his Netflix special) - is coming to AC this weekend - a more reasonable $200 for a pair of very good seats - we are going Sat Night.

 

[GetawaysRus]

It's free and fun to make predictions, so here are a few.

1. The middle name of any politician who tries to seriously address this issue is Toast. So the can will get kicked down the road for a while. In the meantime, there will be large amounts of logorrhea spewing from the mouths of politicians. They shall bloviate.
2. Our gutless, spineless Congress will hire a "special commission" to study the problem and make recommendations. That will shift the responsibility. Those recommendations will be enacted because, after all, it's the other guy's fault. (Here's a wild idea. Maybe Congress will let AI "fix" things rather than a human commission. How can we be angry at AI?)
3. FRA will gradually rise a bit.
4. The portion of FICA tax that employers pay (as well as the self-employed) will go up.
5. SS benefits are currently taxed at 85%. That will rise, probably to 100%, for higher income individuals above some income threshold.

I expect to be a loser in this game. I was self-employed for nearly all of my career. I paid in a small fortune. I doubt that I will get that money back. In any Ponzi scheme, some people are losers. I feel like there's a target on my back. It's just reality.

 

[joestein]

Taxing all earned income would solve the problem. But we can't because the very highly paid need the money more than we do. I have been self employed for 40 years and have had all my income taxed as self employed, so have paid nearly twice the rate as employed wage earners. I am not complaining about that, but I think it is important that everyone have a stake in the financial health of all the individuals in the country. The prevailing attitude here is that salaried and wage earning folks don't provide much to the value of the company they work for.

If they do nothing automatic cuts will kick in. We need to do something to pay down the $36 trillion in debt we have. Seniors are going to have to accept cuts in social security and medicare. We can't keep printing money to pay benefits.

Maybe we can raise taxes on income. Back in the 90s when we had a surplus, the bottom 50% of taxpayers paid in 12% of income tax and the top 10% paid 62% of income tax. Today, the bottom 50% pays 2% and the top 10% pays 72%. So, the wealthy are MORE than paying their fair share.

Truthfully taxes are the lowest they have ever been in my lifetime, they need to increase across the board. No society can survive with only the top 10% paying for the rest. We should go back to Clinton taxes and eliminate the deficit.

Of course, NO POLITICIAN has any stomach for raising taxes, even if necessary. That is why I had so much respect for Bush I who raised taxes when needed, even though it was his death knoll. Too bad his kid, Bush II ruined it - starting off this century of taxes that are just too low to support the gov't. Every President since has double down on the policy.

 

[rickandcindy23]

The price of candy bars has gone up way more than 10X in 52 years. Just sayin'. Used to be 5 cents for a Snickers. Went up to 10 cents in about 1974. Now that same bar is $7.88 in a six pack at Walmart or $1.31 per bar.

 

[CalGalTraveler]

When, not if, Robotic technology reaches the promised point of development
The entire basis of our economy will shift in a new direction
Will this shift occur soon
People such as Musk say yes
Robotic Taxis will replace Uber Drivers
Self Driving Semis will replace Truck Drivers
The list of people left unemployed by Robotics will grow exponentially
Leaving Politicians of any stripe in charge will not provide the thinking needed to evolve as this new economy overwhelms the old economy
This will probably be the problem that Social Security faces in the next 10 years

This. I do not think anyone in government is running scenarios on what will happen when you don't have a traditional labor based economy. This will be disruptive and it is happening in the next 10 - 20 years. There was a computer scientist who shared an interesting scenario that the population of the planet will decline significantly by 2300 because people will not want to bring children into poverty with few job opportunities.

[I do not know if I agree with this but it is one of many scenarios. However, everytime I hear a prediction that AI is taking over, I remind myself how useless my last chatbot conversation was with a customer service interaction and why we need humans.]

AI predicted to shrink Earth’s population to 100 million, META replaces human analysts, ChatGPT altering human psychology, experts warn of cognitive decline - Citizen Watch Report

AI is advancing at breakneck speed, reshaping industries, economies, and even human behavior. Experts now warn that its impact could extend far beyond - Citizen Watch Report

citizenwatchreport.com

 

[billymach4]

Fed politcians know how to solve this. The solution is easy. How to pass the legislation is the hard part.

They will wait until 11:59PM to pass the legislation solution.

 

[T_R_Oglodyte]

There was a computer scientist who shared an interesting scenario that the population of the planet will decline significantly by 2300 because people will not want to bring children into poverty with few job opportunities.

Would be interesting to know what data was used to support that scenario. Particularly given that history indicates that improving economic conditions leads to less childbirth.

 

[emeryjre]

Would be interesting to know what data was used to support that scenario. Particularly given that history indicates that improving economic conditions leads to less childbirth.

There are many computer models being run all the time for many things
My Economics degree specialized in "Econometrics"
It involved creating Mathematical Models to determine the results of some change in the Economy
It was early on in the process and involved the use of mainframes
The process has evolved over time and the number of variables that can now be considered are larger (Much larger)
One way of measuring the value of a computer model is to examine predicted results against the current results
What did a model run in 2020 predict for 2025
How well do current results in 2025 match the 2020 prediction for 2025
The Social Security model is making predictions for the future as to when Social Security will go broke
If the labor market changes as we switch to more robotics
The assumptions in the model will no longer be valid
The predictions will be flawed
Now what happens??