Social Security Trustees report that social security will be able to make full payments until 2037(pdf). Tax receipts will dip below outlays before then, but this is precisely why the Social Security program has taken in more money than it needed, so that it could handle baby boomer retirement and increased life spans.
Any projection which goes out 27 years is so incredibly reliant on the embedded assumptions about growth, employment and lifespans that it amounts to a fiction. It is, at best, a guess.
Increase growth by just a little bit and the entire “problem” goes away. Get rid of the taxation cap so the rich are not capped in what they pay and the entire problem goes away. Assume higher employment, and the entire problem goes away. Assume a reduction in inequality, and the problem goes away.
The US has a number of problems which are at or near crisis, such as employment, inequality and healthcare costs, to name just a few. Social Security is not one of them. It isn’t even close, and politicians and billionaires like Pete Peterson who are trying to gin up a crisis should be ashamed of themselves.
If they want the US budget more in order they should look at health care, where single payer could cut costs by at least a third, and at the military, where real spending has doubled since the end of the Clinton administration.
Or they should work on increasing employment and increasing wages for ordinary people. That’s a crisis.
Instead of dealing with real problems, instead of tackling the medical industry or the military-industrial complex, instead of fixing the job situation, they want to steal money from old people.
lambert strether
I guess stealing via the medical industry, the Pentagon, and driving down wages are all reaching the point of diminishing returns, so they have to steal from old people. Let’s be reasonable, here, Ian.
Cujo359
Gee, what else are you going to frighten us with? Climate change? Water shortages? Transportation? Obama knows what will make this country great again! Make those lazy senior citizens work for their cat food.
Formerly T-Bear
Holding some 4.7 TRILLION in government bonds Social Security is like the bank, banksters know where the money is and how to get it. The government is the accomplice driving the get away car. After the bank is robbed, the government will walk away from the mortgage, it’s in the banksters bag. This is the scam of all time, and the brain-dead customers could care less, they’ve American Idol to watch. When are they coming out with the movie of the heist? Obama has got to have a starring rôle with a cast of thousands including Granny Pelosi, Evil uncle Reed, and the 9 buffoons from the supreme in cameo seance …
Z
What a great day in change! First, we find out that the head pr man for the establishment has been servicing corporate amerika … again … by facilitating sending more jobs overseas with federal government money.
http://www.openleft.com/diary/19706/report-obama-launches-new-program-to-help-corporations-take-advantage-of-low-labor-costs-abroad
http://www.informationweek.com/news/software/integration/showArticle.jhtml?articleID=226500202
And this is right after he laughingly told the afl-cio that he would CONTINUE to “fight” for efca.
http://workinprogress.firedoglake.com/2010/08/04/oh-my-sides-obama-says-hell-keep-pushing-for-employee-free-choice-act/
Just as he CONTINUES to “fight” for net neutrality …
http://www.huffingtonpost.com/josh-silver/google-verizon-deal-the-e_b_671617.html
And, of course, as his catfood commission gets closer and closer to stealing people’s social security.
Of course, we can go on and on, he’s a fucking disgrace to this country and an enemy of the american people. And his fandumb that continues to support him are absolutely pathetic and principle-less.
In a lot of ways he’s done the seemingly impossible, the lowlife has been worse than the abominable bush.
Z
Formerly T-Bear
Ian, fyi at end of Malthus’ contemporary’s post if you had not seen it.
John B.
they should be ashamed, but are you surprised that they are not?
David H
Where’s AARP & their votes when they’re needed? The rest of us are too stupid & short-sighted to even begin to understand the problem, but I’d expect the old-ish folks to be turning the screws on Washington. Or maybe they’re putting all their energy into saving America via the Tea Parties. Regardless, we wouldn’t be the 1st people to acquiesce in our own demise.
jawbone
Susie at Suburban Guerilla linked to this response to the report by Dave Johnson at CAP — and he helpfully lists the actions by the MCM (Mainstream Corporate Media) which have been taken to reinforce the Obama/Peterson Cat Food Commission almarmists.
His quick sampling has NPR, CNN, CNBC right there with the rightwing media inn touting the Peterson/Obama Cat Food Commission talking points.
And Obama is there with his bully pulpit and Pelosi with her move to get a vote taken on the Obama/Peterson recommendations right after the fall election.
auntifashism
I share Z’s sentiments. The president we have is worse than Bush.
jcapan
“Instead of dealing with real problems, instead of tackling the medical industry or the military-industrial complex, instead of fixing the job situation, they want to steal money from old people.”
From afar, it’s hard to get a feel for the zeitgeist, but if I were a gambling man I’d double down on “looming dystopia.” OUAT, it was comforting to think the dems were at least committed to palliative care, that things wouldn’t magically improve but that GOP excess would be arrested.
In any event, looks like a full-blown mestasis is coming to the body politic. And the worst thing about it is the country will have learned that this is what happens when you put “liberals” in charge. In addition to SS, let’s look FWD to another promising consensus: when the loyal opposition wisely counsels Obama about the best way to tame a depression–wider war. What could be finer for America’s mercenary class.
Z
Auntifashism,
I didn’t say he was worse than bush overall, just in some ways. His principle-less party and his fandumb have allowed him to do more damage than bush on several fronts: making us buy health insurance off of his corporate sponsors and the probable raising of the age for eligibility for social security are two of those ways. In civil liberties, he also is more damaging than bush … even bush didn’t claim the right to kill u.s. citizens. Basically, obama is an evil, disgusting piece of garbage and the dumbasses that blindly follow him and his corrupt party are part of the problem in this country.
This is judging obama at 18 months to bush’s disastrous 8 years and obama is well on his way to being worse than bush. I just hope he doesn’t get another 4 years to further strengthen the corrupt power structure in this country.
Z
lambert strether
Only $4.7 trillion for SS? The banksters got $22 trillion plus in the bailouts. What are we, chopped liver? Don’t answer that.
* * *
Jawbone writes:
What do you mean, “right there with”? Is this surprising?
Escoffier
The social security trust is a endlessly regenerating pool of cash that the current sociopaths in charge find endlessly fascinating. Think of cats surrounding an aquarium. Or perhaps imagine your kleptomaniac niece/nephew stealing grannies jewelry to buy crack. The public is aware of this. And endlessly saying the Republicans are worse is not working. There are many things Republicans are not allowed to do and screwing with Social Security is one of them although they like to talk about it to rev up their base.
While I have only read this most excellent blog and its commenters for a few weeks I have not seen any reference to a political phenomena described as a whipsaw election. With only two generally viable parties the public doesn’t have much choice, therefore it a fit of fury a generally despised public figure will be voted out and replaced by a new despised placeholder who in turn is replaced in the next election. This can clean the decks so to speak and allow viable candidates and parties to continue to function. Those who continue with the same old kleptocracy go away to the margins. The Democrats face this and the Republicans do also but don’t know it yet.
b.
“Social Security Trustees report that social security will be able to make full payments until 2037(pdf). Tax receipts will dip below outlays before then”
This is a profound misunderstanding of the motivation of the Social Security “reformers”, Bygones Habeas Obama first and foremost.
“Social Security expenditures are expected to exceed tax receipts this year for the first time since 1983. The projected deficit of $41 billion this year (excluding interest income) is attributable to the recession and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink substantially for 2011 and to return to small surpluses for years 2012-2014 due to the improving economy. After 2014 deficits are expected to grow rapidly…”
For the elites, the crisis begins the moment that cash ceases to flow from workers to the government (through FICA surplus through the trust fund). Instead of Social Security deductions serving as a convenient subsidy for a hidden deficit (as has been the case since 1983), noney now has to flow from the government to the trust fund to retirees. That money has to come from general tax revenue (implying tax raises or budget cuts), or has to be added to the deficit (which simply delays the tax raise/budget cut).
For the elites, the crisis is NOW.
As a side note, if you, like the elites and Ian, do not really believe in an improving economy, i.e. improvements that would translate into jobs, wages, and increased FICA revenue flow, then the temporary reprieve projected for 2012-2013 is as hypothetical as the 2037 “crisis”.
I am all for challenging the attempted selective default on US government obligations and the misappropriation of funds, but it does NOT help our case to engage in a misrepresentation of the issue.
I also repeat that it is not clear to me at all what the endgame for Obama’s catfood initiative looks like. Benefit cuts and increased FICA deducations will serve to revert the cash flow to the 1983-2009 default, which is clearly the immediate goal, but Obama will no more default on the Treasury IOU’s than Bush would have. Hence, the trust fund will resume growth, and grow in perpetuity, while at the same time millions of senior citizens will slide into poverty. THAT is the chokepoint – any and all rhetorics about the Social Security “crisis” will evaporate if 2037 becomes “never”, and the trust fund sits on three going on four trillion.
Given that Disability and Medicare are indeed in trouble, and that the crisimongers have always sought to lump-sum their “reform”, it is entirely possible that the gambit is to reform the accounting and finance all shortfalls out of the trust fund. But no matter how they slice it, at best it will reduce, at worst absorb in entirety the FICA surplus subsidy, and that cash flow – NOT past obligations – is what this is all about. Because the elites and their retainers, Obama first and foremost, are not prepared to be content with a successfull 30 year heist and cash out their chips – they will want the game to continue, and the stakes to increase. I cannot see yet how they could possibly make this work, but I am loath to explain this away with their stupidity and greed.
b.
“so they have to steal from old people”
They cannot steal from retirees, because retirees do not pay into the system anymore, they receive payments – or not. If you think this is about benefit cuts, you are missing the point. It is about the future cash flow raised by FICA deducations – the past subsidy without which Congress and administration would have to face the issue of tax raises or (defense/security) cuts immediately.
The retainers – Obama et.al. – do not need or have a master plan beyond their minimum terms of incumbency required to obtain elite sponsorship for their own retirement, but their paymasters have brain trusts to outsource their own strategic thinking to. The question is, what endgame has been conceived by the elites, and what do they expect the steady state to be?
b.
Correction:
“trust fund sits on three going on four trillion”
Make that “again” – they might not implement cuts effective immediately, but phase them in – but that would mean they would have to accept several years of cash flow reversal and payback to the trust fund, setting a precedent and taking away Obama’s slush fund during election season, unless they add the paybacks to the general deficit.
Maybe they really have convinced themselves that 2011-2013 is the window to get this down while cash flow reverts temporarily, and 2014 (post-election) is going to be when the cuts become effective.
Ian Welsh
I’ve read the Diamond-Orszag plan, it didn’t impress me. If you really feel a need to do something now, just remove the cap.
Ian Welsh
I have explicitly pointed out in the past that cash flow is what is motivating them.
I am not misrepresenting the situation, I am pointing out that fixing SS is not a crisis, and that if that’s what you want to do, fixing other things fixes SS and that even if you don’t fix those things simply removing the cap fixes it. In the time period of 27 years the US had better fix at least some of its problems, if it doesn’t, SS isn’t going to be a crisis, because the US will have bigger problems than seniors eating catfood.
In fact, if those things aren’t fixed, SS will have problems before 37. But this is a short rebuttal post, not an essay, a distinction some people seem unable to understand. Because I did not touch on your personal bugaboo does not mean I am not aware of it, it means that I chose to leave it out in the interests of making the post work for what it’s meant to be.
If you feel I’m lying, however, then please don’t read me. Thanks.
Barry
Many of my younger friends don’t want to contribute to SS because they’re sure that SS won’t be there for them when they retire. They have already written SS off emotionally.
This is different from the argument I expected from them; that they can do better than SS returns if they are allowed to invest their own money.
They have either bought into the PR that SS is in crisis and doomed to insolvency, or they understand that the PR means that the money elites intend to take SS down. Figuring they’ve already lost it, they’re now against it.
My friends are by no means representative of the general US population, but they do make me wonder how much political will there is to protect Social Security. To me it looks like another indication of our overall learned helplessness.
MH
Lifting the cap is an obvious response to shoring up the program.
But what about lowering the rate simultaneously while lifting the cap? Measured against a straightforward cap lift, the immediate intake would be less. But wouldn’t a quick stimulus effect also be seen, as those in the bottom 50-60% income-range would have more cash to circulate through the economy?
b.
“simply removing the cap fixes it.”
This is another issue on which I think you are making a profound mistake. Removing the cap without increasing the payouts changes Social Security from a beneficiary-financed retirement and disability
insurance the payees are entitled to, to subsidized welfare.
There is a crisis because the money to pay back the trust fund has to come from somewhere, starting today. The fight is over who is going to pay, the elites and beneficiaries of Bush tax cuts, or the retirees and wage tax payers. To claim “there is no crisis” is ineffectual in countering the attack on Social Security because, no matter your
definition of “crisis”, the voting pulic is predisposed to agree with that hook – just as with the “deficit” hook. In a conflict of interest, the best approach is to boil the conflict down to its essence and drag it out in the open, not by ofuscating the matter and validating the “He said” with an “I said”. “Crisis!” “No crisis!” is not a discourse. Social Security is threatened because there is a real problem, and that problem is “who will pay”.
To borrow from Einstein, if you are doing a rebuttal, you can make it as short as possible, but not shorter.
b.
“US will have bigger problems than seniors eating catfood”
No argument there. Krugman on the Wealthfare Queens:
“The lights are going out all over America – literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.
Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.
And a nation that once prized education – that was among the first to provide basic schooling to all its children – is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead.
But isn’t keeping taxes for the affluent low also a form of stimulus? Not so you’d notice.
The antigovernment campaign has always been phrased in terms of opposition to waste and fraud – to checks sent to welfare queens driving Cadillacs, to vast armies of bureaucrats uselessly pushing paper around. But those were myths, of course; there was never remotely as much waste and fraud as the right claimed.”
http://www.nytimes.com/2010/08/09/opinion/09krugman.html
I’d say there is indeed a small army of wealthfare queens driving Rolls Royce that certainly has a near-monopoly on waste and fraud. They are called millionaires.