The coming Social Security fight could be 1983 all over again

[CalGalTraveler]

Interesting convo: [spitballing] Perhaps they need to start a tax on Robots and AI to contribute to Social Security and Medicare. This would be a job displacement tax into the system. For every % of money spend on Robotics and AI software, there would be a commensurate tax plus some ongoing offset to human capital expense that would have been paid out yearly to pay for labor and HR dept. Businesses still save but there is some offset to pay for the human cost of lost jobs.

Other than big business, I do not see how voters would be against this.

 

[SmithOp]

This is why I took SS at FRA instead of waiting until 70, it's not a factor in any SS calculator.

 

[emeryjre]

Interesting convo: [spitballing] Perhaps they need to start a tax on Robots and AI to contribute to Social Security and Medicare. This would be a job displacement tax into the system. For every % of money spend on Robotics and AI software, there would be a commensurate tax plus some ongoing offset to human capital expense that would have been paid out yearly to pay for labor and HR dept. Businesses still save but there is some offset to pay for the human cost of lost jobs.

Other than big business, I do not see how voters would be against this.

What you are spitballing is not far from some of the proposals being proposed
Economic activity generates movement of money
At every stage of our economic evolution and the implementation of technology
(steam, Coal and oil (could have been replace by nuclear generated electricity), computers, etc., etc.) There have been economic winners
Robotics is just one currently evolving technology
What happens if fusion energy production becomes a reality
Anyway
Where the money ends up has always been a social situation
Societies fight wars over these situations
Does everybody's standard of living increase
Or does the wealth of society flow to only a few
This is our issue with Social Security

 

[jp10558]

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.

Wait, the "Younger Generation" is buying $500 a seat to see Zac Brown Band? This is absurd - Zac Brown Band is an old band. Even somehow expanding the pricing of one band for one concert in one location to "all concerts for all bands everywhere" (which is a huge leap), that still only proves that "enough" people will pay absurd prices for stuff. It says nothing about what generation is going to these concerts. Are you really going to argue that any generation, going back to at least 1900, didn't have a number of people who would spend absurd prices for something - and this is a new thing in the 2020s? And you're going to entirely ignore that if you adjust for inflation, college and houses were multiples cheaper than they are today in the 1950s-1970s?

Now, I'm not going to argue that there's sure a "victim olympics" going on, but it's certainly across all generations and communities as far as I can see. Hell, Trump spends a lot of time playing the victim, and he's the President! He's certainly not a "younger" generation, nor was his life hard, but he partakes just the same.

However, I also tend to agree with Pinker - that on average - life is better today than it was in the 90s, which was better than it was in the 70s etc back through many generations. It's not always the case, there are documented dark ages, but so far we're not in one quite yet. People like to act like "everyone" in the 60s could buy a house, that was far from the case. And much as we decry consumerism, I can't argue that having a smartphone and services like Walmart delivery make my life much better now than it was in the 90s. The Internet shopping in general has opened up so much choice and better options than back when us rural people had like 3 chains and you had to drive 45 minutes to get from the house to one, and the big cities were 1.5-5 hrs away one way.

Medical care is actually so much better when you can get it, and to be honest, I'm not sure it's not a wash between getting someone who can't do anything about your issue because there's no understanding how and struggling to get to the right person or get coverage for the treatment that exists. At least some people are getting treated, so on a societal basis I'd say that's a positive.

Bitching aside, I do think more people are able to travel (so far anyway), get better experiences, have fun in different ways and just enjoy life more. More people aren't doing backbreaking labor, and so live longer and better lives.

Price aside, college and education all around is more accessible than it ever was with more options. These all seem like good things to me. Anyway, I'm rambling - read up on Pinker if you want the long form "many many many things are better now".

 

[jp10558]

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.

It's possible that the reason is simply how percentages work - if the top 10% happen to have 98% of all income, well when you do the percentages, their percentage of income tax will just go up. And "Fair Share" is of course debatable, but it seems to me the percentage of income tax paid obviously ought to follow the percent of income. Guess what, most income now goes to top earners. On the other side of the ledger, you can't get blood from a stone. If someone makes $20k a year, you can have whatever income tax for them you want, even 100% and it would match the $1m 2% contribution to the tax amounts.

The big thing is - you are right, each of the nostalgic periods actually had higher, often much higher, tax rates. I just think every time a country has tried to cut their way to fixing a deficit issue, it's not actually improved the issue. I'd argue because there realistically isn't that much "waste". It very much seems like we're spending IDK $50 million to cut $5 billion which is basically like the average person spending IDK a few pennies to cut $800 from their yearly budget, which in most cases isn't actually going to solve any debt problems they have.

 

[jp10558]

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

I've thought this for a long time - Capitalism doesn't work in a abundance society. I kinda came to this thought in the early 90s watching Star Trek TNG as a teen. When you (well, someone) can go up to a little box and ask for literally anything, and it spits it out some time later - at most you'd be willing to pay for the raw material and energy. Of course, if energy is actually extremely cheap (no idea if that's at all realistic, but it likely is possible eventually), now you're down to buying matter of some sort to rearrange. This gets good enough, and you end up with a place that just fully recycles everything and rarely needs additional matter to be added.

And I keep saying - people will say we've never seen anything like that so can't predict anything - but that's wrong. The Digital world is basically just energy. No one "has" to pay for much of any music, movies, TV, books etc - anything that's entirely digital that can be copied basically for free and transmitted basically for free. We do pay for it because of legal structures, but we also saw the rise of streaming because laws can't fully stop huge economic savings in a capitalistic society. The price available to sellers of an individual album generally plummeted. Syndicated TV shows as a way to finance series atrophied - instead they're financed by the streamer because you can't get much of a mark-up anymore. Radio dropped so far in relevance that people check Spotify for "top 100" lists etc.

The problem is we're ill equipped as a society to handle this transition - perhaps only the government would pay you just so you have a job - but that's not sustainable. Without a job, you end up starving in the street. When you hit some high percentage of people starving in the street, we tend to either end up with North Korea, or the French revolution. Neither is particularly desirable to me, but I also kinda doubt we'd be able to politically avert it - even if I had an idea what sort of system could avert it that would be palatable to enough people.

 

[HitchHiker71]

My husband just got his first SS check this month at age 70. I have 2 more years until I get mine at age 70. I am not worried about it. To fix SS they will probably grandfather in older people and will change the program for the younger workers.

We should have converted the system over to personal retirement accounts back in 2006, the conversion would have been complete by 2018 and all of this would be a non-issue. But no, we keep endorsing a failing redistribution system for reasons beyond explanation to anyone who understands basic financial principles, and we'll likely double down on the same system when it becomes insolvent unfortunately.

 

[joestein]

We should have converted the system over to personal retirement accounts back in 2006, the conversion would have been complete by 2018 and all of this would be a non-issue. But no, we keep endorsing a failing redistribution system for reasons beyond explanation to anyone who understands basic financial principles, and we'll likely double down on the same system when it becomes insolvent unfortunately.

How would you do that when the current contributions fund the current payments?

 

[joestein]

It's possible that the reason is simply how percentages work - if the top 10% happen to have 98% of all income, well when you do the percentages, their percentage of income tax will just go up. And "Fair Share" is of course debatable, but it seems to me the percentage of income tax paid obviously ought to follow the percent of income. Guess what, most income now goes to top earners. On the other side of the ledger, you can't get blood from a stone. If someone makes $20k a year, you can have whatever income tax for them you want, even 100% and it would match the $1m 2% contribution to the tax amounts.

The big thing is - you are right, each of the nostalgic periods actually had higher, often much higher, tax rates. I just think every time a country has tried to cut their way to fixing a deficit issue, it's not actually improved the issue. I'd argue because there realistically isn't that much "waste". It very much seems like we're spending IDK $50 million to cut $5 billion which is basically like the average person spending IDK a few pennies to cut $800 from their yearly budget, which in most cases isn't actually going to solve any debt problems they have.

Your comment that the top 10% has 98% of income is not the case. The top 10% earned approx 38% of all income, yet paid 72% of all taxes. While 38% is certainly a large percentage, it half of the percent of tax they pay.

Everyone should pay more taxes, however I have lost any faith in our gov't to balance their books or to do the right thing. They only care about being re-elected and will do whatever it takes - including giving away money and building debt.

SO, as my money is just wasted - mostly redistributed - I just want to pay the least and keep the most. I will do my best to game the system and pay as little as possible. I will encourage my children to get any public benefits they can get and help them in ways that will not affect their eligibility for such benefits.

 

[HitchHiker71]

How would you do that when the current contributions fund the current payments?

Long story short - you do what the Sununu bill did back in 2006. You take 2-2.5% of current contributions and start funding personal retirement accounts for the emerging system, after drawing a line in the sand after which the current system no longer intakes new retirees. So anyone older than say age 55 will remain in the current system, anyone younger is ineligible and the minority of funds set aside start funding the personal retirement accounts for younger workers who have more time to benefit from the time value of money and compound returns. As retirees age out of the old system (meaning as people pass on), the current system requires less funding over time, and recovered funding is gradually redirected into the new personal retirement account system. The transition would likely take 15-20 years, but at the end, the majority of retired Americans owns a real personal retirement account with real money that is part of their wills and estates if not fully depleted of course, and bonus, it’s completely out of the hands of the politicians in the process. The few remaining on the current system by that time that haven’t aged out will not be a significant issue to continue to fund until the legacy system literally has zero retirees. You could also offer those over age 55 the option to move to the new system if they so choose for whatever reason, and perhaps even provide incentives for those in the earliest age brackets (such as those 55-60) that may rather elect to move to the new system - like a lump sum contribution instead of the monthly payouts that would come at FRA.

Since we have waited so long, we likely cannot do this without increasing taxes to fund the transition, which we would not have had to do back in 2006 had we been prescient enough and wise enough to do so back then. Hindsight is always 20/20 of course. Even if we had to increase payroll taxes to do this, I’d be 100% in support of it, given the current system fundamentally works based upon the now false assumption that our population is increasing and there will be more workers than retirees, to say nothing about robotics, AI and automation replacing a significant proportion of the current human employment base.


Sent from my iPhone using Tapatalk

 

[kanerf]

So I will reach FRA next June. My plan is to start taking SS at that point. The nice thing is that there is no reduction to your benefit while you are still working after FRA. Hopefully they will pass the no tax on SS also. My state does not tax SS or other retirement, so I am good there. I plan to work until the end of next year, but who knows.

 

[easyrider]

Your comment that the top 10% has 98% of income is not the case. The top 10% earned approx 38% of all income, yet paid 72% of all taxes. While 30% is certainly a large percentage, it half of the percent of tax they pay.

Everyone should pay more taxes, however I have lost any faith in our gov't to balance their books or to do the right thing. They only care about being re-elected and will do whatever it takes - including giving away money and building debt.

SO, as my money is just wasted - mostly redistributed - I just want to pay the least and keep the most. I will do my best to game the system and pay as little as possible. I will encourage my children to get any public benefits they can get and help them in ways that will not affect their eligibility for such benefits.

The system is messed up. It always has been. I get what you are saying and think that's pretty much right.

Bill

 

[billymach4]

Long story short - you do what the Sununu bill did back in 2006. You take 2-2.5% of current contributions and start funding personal retirement accounts for the emerging system, after drawing a line in the sand after which the current system no longer intakes new retirees. So anyone older than say age 55 will remain in the current system, anyone younger is ineligible and the minority of funds set aside start funding the personal retirement accounts for younger workers who have more time to benefit from the time value of money and compound returns. As retirees age out of the old system (meaning as people pass on), the current system requires less funding over time, and recovered funding is gradually redirected into the new personal retirement account system. The transition would likely take 15-20 years, but at the end, the majority of retired Americans owns a real personal retirement account with real money that is part of their wills and estates if not fully depleted of course, and bonus, it’s completely out of the hands of the politicians in the process. The few remaining on the current system by that time that haven’t aged out will not be a significant issue to continue to fund until the legacy system literally has zero retirees. You could also offer those over age 55 the option to move to the new system if they so choose for whatever reason, and perhaps even provide incentives for those in the earliest age brackets (such as those 55-60) that may rather elect to move to the new system - like a lump sum contribution instead of the monthly payouts that would come at FRA.

Since we have waited so long, we likely cannot do this without increasing taxes to fund the transition, which we would not have had to do back in 2006 had we been prescient enough and wise enough to do so back then. Hindsight is always 20/20 of course. Even if we had to increase payroll taxes to do this, I’d be 100% in support of it, given the current system fundamentally works based upon the now false assumption that our population is increasing and there will be more workers than retirees, to say nothing about robotics, AI and automation replacing a significant proportion of the current human employment base.


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Problem is that most individuals are not diligent enough to manage their own finances. So we have to pay the government to manage and make rules for the inept majority of people that can't balance their funds.

 

[TolmiePeak]

Long story short - you do what the Sununu bill did back in 2006. You take 2-2.5% of current contributions and start funding personal retirement accounts for the emerging system, after drawing a line in the sand after which the current system no longer intakes new retirees.

Isn't one of the benefits of the current system is social security collects billions of dollars in taxes from people who aren't eligible to ever collect from the system?

 

[TolmiePeak]

I seriously doubt Seniors are going to accept cuts, and will tend to vote accordingly

Aren't seniors the ones who have voted in politicians that have gotten us into this mess? Why should our children pay for our financial ineptitude?

 

[bizaro86]

Aren't seniors the ones who have voted in politicians that have gotten us into this mess?

Yes.

Why should our children pay for our financial ineptitude?

Why would we expect anything to change now? The people currently collecting didn't want to pay enough payroll tax to cover their own benefits when they were working, they aren't going to want to take less benefits now.

 

[HitchHiker71]

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 is why something like a VAT tax and tariffs are actually a good idea - because the goods - regardless of who or what manufactures said goods - are taxed. Income taxes require human workers, VAT/tariff taxes do not. Personal income-based taxes will die off largely due to automation and a shrinking human workforce.

 

[HitchHiker71]

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

I would argue the opposite - as AI/robotics automate production of almost everything - money itself will gradually become unnecessary. This is a wild concept that most people cannot or will not get their heads around because it's such a foreign concept, but one of the many theories about AI/robotics/automation is that the vast majority of things that cost money today are due to relative scarcity. When we automate everything, we move from scarcity to abundance, pretty much across the board. Humans will no longer need to work, they will only work if they want to do so. Free energy, free food, free housing, free transportation, traveling the solar system and becoming an interstellar species - basically the best parts of Startrek in essence. Crazy to think about, but that is quite likely where we are heading.

 

[CalGalTraveler]

This is why something like a VAT tax and tariffs are actually a good idea - because the goods - regardless of who or what manufactures said goods - are taxed. Income taxes require human workers, VAT/tariff taxes do not. Personal income-based taxes will die off largely due to automation and a shrinking human workforce.

And the rich and not so rich shielding their income via tax schemes such as irrevocable family trusts, real estate losses and side gig writeoffs.

The younger generation has figured out that W-2s and working "for the man" are suckers. They watched their parents burn out and get laid off out of years of loyalty and cannot find better paying work.

Many young adults are building side-gigs, rental real estate and other entrepreneurial endeavors. I applaud them. Everyone should have their own side business.

 

[CalGalTraveler]

I would argue the opposite - as AI/robotics automate production of almost everything - money itself will gradually become unnecessary. This is a wild concept that most people cannot or will not get their heads around because it's such a foreign concept, but one of the many theories about AI/robotics/automation is that the vast majority of things that cost money today are due to relative scarcity. When we automate everything, we move from scarcity to abundance, pretty much across the board. Humans will no longer need to work, they will only work if they want to do so. Free energy, free food, free housing, free transportation, traveling the solar system and becoming an interstellar species - basically the best parts of Startrek in essence. Crazy to think about, but that is quite likely where we are heading.

Although I agree that digital goods and information are becoming free, people still need to eat, live somewhere decent and have healthcare. Atoms such as building materials and food cost money. Those in charge are maneuvering to gain control of assets to create scarcity. Case in point: there is actually an abundance of diamonds in the earth. The minors in control of the mine create the scarcity.

 

[TolmiePeak]

Yes.



Why would we expect anything to change now? The people currently collecting didn't want to pay enough payroll tax to cover their own benefits when they were working, they aren't going to want to take less benefits now.

Agreed, but seniors should at least acknowledge that they are unlikely to suffer from our countries $36 trillion debt. Instead they run around telling youngster to pull themselves up by their bootstraps.

 

[HitchHiker71]

Problem is that most individuals are not diligent enough to manage their own finances. So we have to pay the government to manage and make rules for the inept majority of people that can't balance their funds.

A forced retirement program really isn't applicable to this issue. The monies are taxed and deposited into the individual's personal retirement accounts and are managed by the qualified providers - and would default to something akin to target retirement funds today. I'd actually be in favor of means testing self-management - if you cannot pass a test demonstrating basic financial know-how - you cannot manage your forced personal retirement account and it will continue to be managed centrally by the qualified providers. There are real world solutions to this problem that are easily implemented, this isn't a hurdle that cannot be easily resolved in other words.

 

[HitchHiker71]

Interesting convo: [spitballing] Perhaps they need to start a tax on Robots and AI to contribute to Social Security and Medicare. This would be a job displacement tax into the system. For every % of money spend on Robotics and AI software, there would be a commensurate tax plus some ongoing offset to human capital expense that would have been paid out yearly to pay for labor and HR dept. Businesses still save but there is some offset to pay for the human cost of lost jobs.

Other than big business, I do not see how voters would be against this.

That's what VAT/tariffs taxes are in reality - and it seems like there's quite a few folks who are against tariff taxes, just not for good reasons really. Basically - we need to shift away from income based taxes, toward production based taxes as automation takes hold.

 

[rapmarks]

Problem is that most individuals are not diligent enough to manage their own finances. So we have to pay the government to manage and make rules for the inept majority of people that can't balance their funds.

You hit the nail on the head. I am shocked at the retired people who held professional jobs and say they have no savings other than their homes and live off of ss

 

[HitchHiker71]

Isn't one of the benefits of the current system is social security collects billions of dollars in taxes from people who aren't eligible to ever collect from the system?

Depends on what you mean here. If the person passes away before RA/FRA then yes, they paid into something that they will never collect from, but they are eligible, so I don't think that's what you mean. At the end of the day, only people who have valid SSNs pay into SS. So tolks who only have ITIN numbers for example, no they do not pay into SS, because they do not have a SSN. There's some undocumented workers or non-residents who may have a SSN that really should not, that may pay into the system, but that's an edge case really. There are other edge cases such as certain government workers who are ineligible for SS but do pay into the system, but again, that's a really small percentage of people. By and large, those who pay into SS are eligible to collect from SS.