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  #31  
Old 11-10-2011, 05:29 PM
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Originally Posted by bdschobel View Post
They weren't "shot down." They fell apart because of their own internal inconsistencies. You simply can't get there from here. Remember those 54 million beneficiaries, OK?

Bruce
Yes, you can get there from here.

To the extent that revenues that currently fund retirees are moved into private accounts, they are replaced by general revenues. Practically speaking, that means they are replaced by new borrowing. Hopefully, lenders will be more willing to lend to a nation that is seen as fixing one of its long term spending problems.
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  #32  
Old 11-10-2011, 05:34 PM
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Originally Posted by Werewolf View Post
Yes, you can get there from here.

To the extent that revenues that currently fund retirees are moved into private accounts, they are replaced by general revenues. Practically speaking, that means they are replaced by new borrowing. Hopefully, lenders will be more willing to lend to a nation that is seen as fixing one of its long term spending problems.
Yes, it's easy, then just borrow from the private accounts to pay the current benefits!
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  #33  
Old 11-10-2011, 07:03 PM
Mary Frances Mary Frances is offline
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Bruce - please correct me where I've got it wrong. For OASDI (not Medicare), if we do nothing, then when the trust fund runs out in 2036 benefits automatically get cut by around 25%, and then the system goes into approximate equilibrium out into the future.

That is, projected income at 12.4% of subject payroll plus the trust funds is enough to pay full benefits until 2036, and after that income is projected to be enough to pay around 74% of projected benefits pretty much forever. There are lots of possible combinations of relatively modest tax increases and/or benefit cuts (or some changes that do both, like raising the retirement age) that would put things back in equilibrium. If we just leave it until 2036 and then want to keep the current benefits, taxes at that time would need to go up to around 17% of payroll from the current 12.4%.

Current benefits cover about 50% of pre-retirement income for the lowest quartile of the population (those from whom SS is presumably their only source of income - annual SS benefit around $10k) if they wait to retire until 65, or 40% if they start at 62.5. Benefits cover around 20% of the max taxed income (benefits of $22k on income of $106k) for those who have 35 years at the max. If we just let the automatic cut go through in 25 years, then the 40% folks (now getting $8k per year) would drop to 30%, plunging them into poverty at around $6k in today's $$, but not to $0. And for those who expected $22k (in 2011 $$), the drop would put you at 75% of that, or just over $15k.

And oh, yeah - the high earners on average get benefits for significantly longer than the low earners, so the replacement rate gap is not quite that big.

It's Medicare that seems unsolvable.
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  #34  
Old 11-10-2011, 07:33 PM
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Medicare is easily solvable, the government just won't do it because the AMA has them in their pocket.

Reduce payments to doctors to the level Medicare can afford, then raise them only at the same rate of as the tax base goes up.
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  #35  
Old 11-10-2011, 09:08 PM
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No COLA until the program is overfunded.

OK, now off to solve Medicare...
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  #36  
Old 11-11-2011, 01:48 AM
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I'm 35 (today!) and am counting on SS to fund 0% of my retirement, as are many other my age.
I've said this several times, and here I go again:

I'm 62. Thirty years ago I thought exactly the same thing about my chances of receiving any money back from SS.
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  #37  
Old 11-11-2011, 08:03 AM
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I've said this several times, and here I go again:

I'm 62. Thirty years ago I thought exactly the same thing about my chances of receiving any money back from SS.
30 years ago the country wasn't buried in debt of around 100% of GDP (due to the greed of the people of your generation, who refused to pay the taxes for the things they spent), it was more like 35%. Anyway, I've started researching the possibility of having any and all benefits from SS retirement portion being put into a trust for my kids and (future) grandkids. I have no desire to steal money from the young who are just starting out in workforce to support spending for myself. It could reimburse them any SS taxes they pay. My own personal opt out, if you like.
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  #38  
Old 11-11-2011, 08:31 AM
DanielSong39 DanielSong39 is offline
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Let's just make the Social Security program voluntary. The people who complain about the program don't have to pay taxes and will get nothing in return. The people who sing its praises will pay taxes and get whatever's in the pool.

Ha! Problem solved.
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  #39  
Old 11-11-2011, 09:44 AM
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Originally Posted by Werewolf View Post
Yes, you can get there from here. To the extent that revenues that currently fund retirees are moved into private accounts, they are replaced by general revenues. Practically speaking, that means they are replaced by new borrowing. Hopefully, lenders will be more willing to lend to a nation that is seen as fixing one of its long term spending problems.
General revenues, sooner or later, come from the very same people paying Social Security taxes today. You might shift the tax incidence around a bit, but you cannot make this burden go away. Basically, these private-account proposals result in one generation paying twice: once for their own benefits and again (one way or another) for their parents' and grandparents' benefits.
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Yes, it's easy, then just borrow from the private accounts to pay the current benefits!
Ah, force the private accounts to invest in government bonds. Oh, wait, isn't that what Social Security does? Status quo!
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Originally Posted by Mary Frances View Post
Bruce - please correct me where I've got it wrong. For OASDI (not Medicare), if we do nothing, then when the trust fund runs out in 2036 benefits automatically get cut by around 25%, and then the system goes into approximate equilibrium out into the future.

That is, projected income at 12.4% of subject payroll plus the trust funds is enough to pay full benefits until 2036, and after that income is projected to be enough to pay around 74% of projected benefits pretty much forever. There are lots of possible combinations of relatively modest tax increases and/or benefit cuts (or some changes that do both, like raising the retirement age) that would put things back in equilibrium. If we just leave it until 2036 and then want to keep the current benefits, taxes at that time would need to go up to around 17% of payroll from the current 12.4%.

Current benefits cover about 50% of pre-retirement income for the lowest quartile of the population (those from whom SS is presumably their only source of income - annual SS benefit around $10k) if they wait to retire until 65, or 40% if they start at 62.5. Benefits cover around 20% of the max taxed income (benefits of $22k on income of $106k) for those who have 35 years at the max. If we just let the automatic cut go through in 25 years, then the 40% folks (now getting $8k per year) would drop to 30%, plunging them into poverty at around $6k in today's $$, but not to $0. And for those who expected $22k (in 2011 $$), the drop would put you at 75% of that, or just over $15k.

And oh, yeah - the high earners on average get benefits for significantly longer than the low earners, so the replacement rate gap is not quite that big.

It's Medicare that seems unsolvable.
I could tinker with some of your numbers slightly, but you have the substance exactly right. Of course, doing nothing is equivalent to solving Social Security's problems entirely with benefit cuts. Nobody is likely to want that. If they enact corrective legislation, they can solve the problems with an acceptable mix of tax increases and benefit reductions (or slowed growth in benefits, if you will). That's more likely. And the big fact, which the AAA tries to beat into people's heads, is that acting sooner rather than later has enormous advantages. I hope they don't wait until the last second, like Congress did in 1983.
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Originally Posted by Mr. B View Post
I've said this several times, and here I go again: I'm 62. Thirty years ago I thought exactly the same thing about my chances of receiving any money back from SS.
You aren't alone!!!

Bruce
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  #40  
Old 11-11-2011, 01:00 PM
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I fully expect to be penalized for saving for retirement by receiving a bigger proportional cut in Social Security benefits than to the people who were irresponsible with their money.
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Spoiler:
Quote:
Originally Posted by Hydraskull
Turns out, annuitize IS DB. Directed by M Night Shyamalan.
Quote:
Originally Posted by limabeanactuary
I realized WIS was his dump stat a while back.
Quote:
Originally Posted by ShebaPoe
Ideologues should be kept far away from power. Starbucks is a good place for them to work.
Quote:
Originally Posted by nonlnear View Post
There's no such thing as an overqualified barista. You need somebody who can not only make drinks and run a register, but also engage customers who might have questions about the genderqueer or Hegelian subtext of the latest pretending-to-not-be-from-a-big-label album being hawked on their counter.
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