Social security is self-funded. It has literally no impact on the deficit or our ability to pay off debt. By statute.

Maybe for now, but it's eventually going to run out of money, and what do you think is going to happen? You think all current and future retirees are just going to shrug and say "oh well, it was good while it was lasted", and not lobby their politicians?

https://en.wikipedia.org/wiki/Social_Security_(United_States...

It will have depleted it's reserves in approximately 10 years. Expenditures exceed revenue, but only by about 15-20% by then. So either there's going to be a cut in benefits and/or the retirement age will be bumped up, just like we did in 1983[1], and as originally intended when designed. Most likely the latter, but it seems legislators are too chicken to do it until their backs are up against the wall. And conservative legislatures are probably content to wait until it's an exigent crisis to maximize their chance at selling privatization.

[1] We only recently just reached the tail-end of the 1983 reforms' gradual shift in retirement age.

> So either there's going to be a cut in benefits and/or the retirement age will be bumped up

Or...raise the contribution limit which fixes the whole thing easily without having to screw over the people that paid in and just want to get back what they were promised.

Raise the retirement age? Really? All this advancement to make our lives better and more efficient, and we're going to conclude that we all need to to work more?

And meanwhile we can piss away cash by the trillion but when it comes to social security suddenly there's no money to be found anywhere.

They've fooled everyone into believing "the fund will be depleted" in x years. Then put some more money in assholes.

But Social Security solvency isn't the only thing that needs to be addressed. Medicare, for example.

Considering that the population has decided it doesn't want any more significant immigration, ensuring the median age (along with median working age) will increase faster than lifespans, it seems foolhardy to think we can have our cake and eat it, too. Any kind of tax increase is a difficult sell.[1] If we can successfully raise the limit on payroll taxes, we better make it count. Note that social security disability benefits exist and presumably would remain an option for those unable to work.

That said, I appreciate you pointing that out. I hadn't realized how much revenue there was still to be had in lifting the payroll cap, at least according to https://crr.bc.edu/to-fix-social-security-increasing-the-wag...

[1] How quickly the left forgets that the president who pushed through devastating tax cuts in 2018 was just recently re-elected.

No, the SURPLUS will run out. The fund will not.

This is a silly argument. It's like saying if you can pay 95% of your mortgage, you can pay your mortgage. That's not really how it works.

Social security isn't analogous to a mortgage. It's a rolling payout to the current population.

From wikipedia:

>Without legislative changes, trust fund reserves are projected to be depleted in 2033 for the OASI fund.[16] Should depletion occur, incoming payroll tax and other revenue would be sufficient to pay 77 percent of OASI benefits starting in 2035.

Paying out 77% of benefits is not the same as running out of funds. You are still guaranteed payments while anyone in this country is making income.

Try paying only 77% of your mortgage and let me know if the bank thinks that you're not in default.

Again, social security is not a mortgage and is not even remotely comparable to one.

You're right, mortgages are consensual.

It's actually not, most retirees receive more in benefits than they've contributed.

How does that contradict anything I said?

If you have issues with what it is, that's fine. But it still doesn't impact our deficit or ability to pay off debt.

Isn't that expected due to some people dying before retiring?

Right, and of course, growth. The same is true for a 401K - you're going to get a lot more out than you contributed.

> Social security is self-funded. It has literally no impact on the deficit or our ability to pay off debt

Technically, yes. Practically, it’s a pair of income and expense streams. Slashing social security payouts to pay for some nonsense is tempting.

Sure, practically I can also rob people at gunpoint.

Material difference when we’re discussing what a legislative body would and would not do!

My guess is we’ll stick it to Gen X.

Maybe you're right. But then I'll be telling anyone who will listen that they're being sold up the river to finance the military and the wealthy against all reason.

> I'll be telling anyone who will listen that they're being sold up the river to finance the military and the wealthy against all reason.

My cat's incredibly convinced of a global scheme against his caviar budget, that doesn't really cause any consequence.

Ok, but you could say the same thing about people being paranoid about social security bankrupting "us", if "us" indeed has any meaning without a welfare state. Ignorance plagues all quarters of society.

? Self-funded to me means an entity or process that itself takes in income sufficient to fund all of its operations.

Social security itself does not take in any income whatsoever.

Social security is a debt. Therefore it itself directly affects the US' ability to pay off it's debts.

Social security is funded with a social security tax. 6% of your paycheck is paid by you, 6% by your employer. (Or 12% by you if you are self-employed.)That by law can only go to fund social security and nothing else. Similarly, the fund is by statute guaranteed to only fund social security payments. It is completely separate from the rest of the federal budget.

Ok, let's chalk the "self-funded" part up to semantics.

> It has literally no impact on the deficit or our ability to pay off debt. By statute.

This however is wrong.

As a simple proof: let's just up social security payments by 3000x... social security is still "self-funded" and "separate" but that would be an untenable debt and the US would immediately default on that obligation. The amount and structure of social security debt matters to the US' ability to pay.

Social security is a promise to pay an amount of money in the future and it is backed by the "full faith and credit" of the US government. The bigger it is, the bigger the debt, the hard it is to pay off. It's a big impact.

Just because it's specifically funded and tied to a precise specific tax does not make it immune from debt considerations.

It says here [0] that the Social Security Trust currently holds about $2.6 trillion is US Federal securities.

https://www.ssa.gov/cgi-bin/investheld.cgi

Cash money from payroll tax is sitting there collecting interest and being drawn down by Social Security disbursements.

So we pay taxes, that revenue holds a gun to Congress and forces them to buy another aircraft carrier... That's semantics for you.

Sorry. The aircraft carrier thing is bitter sarcasm on my part. But I'm put off by dismissing the funded nature of Social Security as the root cause of the Federal debt.

The root cause is deficit spending.

> That by law can only go to fund social security and nothing else.

Eh, that's partly true. The true statement is that social security tax revenue must eventually go to fund social security.

Before it's needed (i.e. while tax revenue exceeds benefits), it has been used to buy US treasuries -- the funds used to do so then appeared for Congress' general use.

You can see the US treasures the social security trust fund is currently holding here: https://www.ssa.gov/OACT/ProgData/investheld.html

The treasuries are effectively zero-risk assets to the trust fund and they also pay interest. Just having the fund sit the on cash would not be efficient.

The money goes to the trust fund, the trust fund buys treasuries and meets it's outlays using the maturing treasuries.

Creating a debt obligation with yourself isn't typically the definition of zero risk. ;)

Or to put it another way, buying special issue treasuries isn't functionally different than Congress directly spending excess money in the trust fund and guaranteeing to pay more back later.

Just with additional steps and a thin veneer of impartiality and financial standards.

> Creating a debt obligation with yourself isn't typically the definition of zero risk. ;)

Is there any other way to run a currency? Serious question.

Just posting this to see if people will also flag this random ish

It does have an impact on intergovernmental debt. Here's a good explanation from GAO[1]:

> Intragovernmental debt holdings represent federal debt owed by Treasury to federal government accounts—primarily federal trust funds such as those established for Social Security and Medicare—that typically have an obligation to invest their excess annual receipts (including interest earnings) over disbursements in federal securities.

> Debt held by the public represents a claim on today’s taxpayers and absorbs resources from today’s economy, meaning that when an investor buys Treasury securities it is not investing that money elsewhere in the economy.

> Intragovernmental debt holdings reflect a claim on taxpayers and the economy in the future. Specifically, when federal government accounts redeem Treasury securities to obtain cash to fund expenditures, Treasury usually borrows from the public to finance these redemptions.

From memory I believe we're at ~100% publicly held debt to GDP and ~122% gross debt to GDP.

[1] https://www.gao.gov/assets/gao-25-107138.pdf

Well, perhaps you're right. I am not a finance guy and it seems to me you can probably pull debt out of any kind of relationship if you squint right. But it certainly is not to blame for our inability to balance the budget, which seems easiest to explain with nearly sixty straight years of cutting marginal tax rates while claiming to be fiscally conservative.

> you can probably pull debt out of any kind of relationship if you squint right.

No, this is pretty explicit. To rephrase what the GAO said when the Social Security Administration takes in more than it sends out it invests the difference in special Treasury securities (that's the trust fund(s)). The money the Treasury gets is spent on general government operations (education, healthcare, etc). The treasure must pay this money back, with interest.

> But it certainly is not to blame for our inability to balance the budget

When the Treasury pays the principal and interest it needs to either have enough tax dollars (higher tax rates or spending cuts) or issue debt to the public. So yes, it does factor into a balanced budget. It still must be paid back and the taxpayer will foot the bill one way or another, now or in the future.

> which seems easiest to explain with nearly sixty straight years of cutting marginal tax rates while claiming to be fiscally conservative.

This is a gross oversimplification. If you think just one side is the issue you're not going to be able to fix the problem.

> This is a gross oversimplification. If you think just one side is the issue you're not going to be able to fix the problem.

And what is the other side, pray tell?

Don't worry, I gave up on this country's ability to fix any problem a long time ago.

Tax rates aren't everything as those affect the size of the economy. Since the end of WW2 the federal government has received ~17.5% of GDP in taxes[1] (+/- ~2.5%). You can decrease effective tax rates, end up with a larger economy, and have a higher absolute value of tax revenue than you did with higher tax rates. So it's more complicated than "lower tax rates => less tax receipts".

If we restrict our view to programs like Social Security or Medicaid we see that demographics are also straining the system. For instance I believe the number of people contributing to Social Security vs the number of people receiving benefits in the 70s was around 3.7 (payer/beneficiary), we're currently around 2.6 and in 10 years that will go down to 2.1. Put simply we're unhealthy, we're getting older, and we're not having enough kids to contribute to these programs that pay for all of these old, sick, childless people to retire and have healthcare.

From a philosophic point of view I would say the fact that about half of the electorate do not want higher taxes while the other half wants more government services should mean that these extra services are non-viable politically. What we've essentially done instead is "compromised" by not having higher taxes but still expanding government services which is contributing to our debt issues. We simply can't have it both ways, but that's exactly what the people voted for through their representatives.

> Don't worry, I gave up on this country's ability to fix any problem a long time ago.

While we are likely on opposite ends of the political spectrum, I can agree that I don't see us actually fixing this problem. I made a comment elsewhere in this thread discussing the fact that Congressional Republicans appear to be going for lower taxes and higher deficits right now while the Democrats are in disarray and not particularly focused on this problem. The unfortunate fact is that this problem is going to get worse and the solutions will get more painful over time. Congress as a whole has really dropped the ball here.

[1] https://fred.stlouisfed.org/series/FYFRGDA188S

>While we are likely on opposite ends of the political spectrum, I can agree that I don't see us actually fixing this problem.

Eventually reality comes calling and problems resolve themselves. You just might not like the resolution.

If you fail to proactively address a cancerous growth, health problems compound but eventually disappear entirely.

> From a philosophic point of view I would say the fact that about half of the electorate do not want higher taxes while the other half wants more government services

Are these not the same people? One half can convince themselves they don't get any payoff from their taxes; the other sees the payoff. Ultimately both expect services from their government they aren't getting, and are upset with services the government does render that seem inherently injust.

The difference is that those who most adamantly state they contribute the most while getting the least actually contribute the least while getting the most.

> have an obligation to invest their excess ... in federal securities.

The Social Security surplus is pretty much required to purchase US bonds and other guaranteed Federal securities.

But saying that "contributes to the Federal debt" is like saying your 401k contributes to corporate debt.

I am still not convinced that Social Security causes Federal debt the way that a trillion-dollar military budget does.

I don't understand why this is being discussed rationally. The motivation to remove social security isn't economic or rational, it's political and psychological.

A small group of people considers itself superior to the rest of the population. As a group it is convinced it deserves every break, benefit, privilege, and handout, while the second group is only worthy of intrusive oversight, abuse, exploitation, and punishment.

This isn't hyperbole. This is the political belief system that drives the rhetoric about the government spending and debt.

The proof is simple - government debt always increases when the first group is in power.

Always.

This wouldn't happen if it was really about the deficit.

> The motivation to remove social security isn't economic or rational, it's political and psychological.

Yes this is it and this is all it ever was. The second the pen was put to paper and SS was made law it has been under attack. People have been proclaiming it'll go insolvent any day now for almost a century.

It's an ideological attack and we shouldn't even humor these people. The idea of essentially retirement insurance feels unfair to a ton of people and that's that.

The Social Security surplus is used to fund general government operations and the Social Security Administration gets an IOU (Treasury security) in return. So it's still money the government didn't have before that it uses to fund its operations that it borrowed from a different self-funded program that had an excess, and it still needs to pay it back with interest. Usually the Treasury doesn't have enough tax dollars to pay it back, so they auction more bonds to the public and it gets added to the public debt at that point. However, if effective tax rates go up or spending is cut elsewhere then it can pay it back without adding to publicly held debt.

So you're right that it's not the same as publicly held debt. Rather intragovernmental debt is deferring the decision of how to pay for some governmental services to a later time, although usually it becomes publicly held debt. One way or another, the tax payer is on the hook for this spending which is part of the gross national debt, just like they're on the hook for publicly held debt.

not entirely true, American social security is paid for by the current generation.

They'yr not paying for their own, they're paying for the receivers of it. The debt has already accrued. and worse yet, those that did not pay for the social security they're receiving are now living longer and costing more. Its like a "life interest".

> Social security is self-funded. It has literally no impact on the deficit or our ability to pay off debt. By statute.

There is a very real problem that social security is project to be no longer solvent in 2035. (see here: https://www.congress.gov/crs-product/RL33028) It may require either transfers from the general budget or structural changes to remain solvent.

To be fair, republicans have been saying SS will go insolvent from the moment it was written into law. It's been almost a century. After a certain point, we have to call a spade a spade and just admit there's a lot of people ideologically opposed to SS and that's it.

> To be fair, republicans have been saying SS will go insolvent from the moment it was written into law. It's been almost a century. After a certain point, we have to call a spade a spade and just admit there's a lot of people ideologically opposed to SS and that's it.

Actually, SS was going to go insolvent when it was first written. The benefits were far too generous for what was affordable, even with the population pyramid at the time.

Then it actually was going to go bankrupt and the benefits were reduced in real dollars, because it turned out at one point we were dramatically overestimating inflation, and we couldn't afford it.

If social security was an actual insurance or pension plan, it would have been shut down by a state regulator or the PBGC. It's a horrifyingly bad plan for the simple reason that it's structurally insolvent. Even the concept of "uncap the tax" just kicks the can down the road: you now need to pay those people benefits.

The issue is we don't actually know what we want from it, which I alluded to in another comment. If we want some sort of "social insurance" plan where you just get back a portion of what you pay in, we have it and it's functionally in default. If we want a social safety net, we need to have a serious discussion about means testing.

The surplus won't be solvent; the program itself is fine by definition. The entire concept of "social security solvency" is fear-mongering by people who want you to think of the entire country like a sack of gold rather than a proper economy.

Not really. It won't be "solvent" in the sense it can pay out full benefits and people will not receive the face value of what was promised.

And I say this as someone who unabashedly supports allowing it to revert to its statutory payout rat, even if it is below what was promised.

Maybe you should stop lying to your grandparents!

But seriously, nobody was promised anything not dictated by statute. Who gives a shit about what you, specifically understood the statute to mean? By any reasonable understanding of the law it's not even possible for SSI to go without funding, assuming the government is still operational.

What's more real and relevant is that the government only cares about your insofar as you contribute to the private economy. Like what can we do to make those fucks actually pay out and take care of us?

This isn't about the debt, this is about Donald Trump changing the role of the US in the global economy. Although deficit hawks made it a cottage industry to oppose the debt (assuming their party wasn't in the white house) the actual impact of debt over these last 60-80 years has been proven to be minimal. Stability and consistency remain the most valuable currencies, and the Trump administration is working overtime to squander those.

> the actual impact of debt over these last 60-80 years has been proven to be minimal

This time will be different.

I like where your head is at on a lot of this and there's a ton of waste to cut within the military itself, but we don't want to scale it down that far. It's still good to be able to effectively put boots on the ground in other parts of the world and back them with the most effective logistics infrastructure in the world, not to mention we want deterrence options other than a nuclear holocaust.

How would you propose to means-test Social Security?

By adding even more bureaucracy, current SSA administration overhead is already close to $15 billion year.

Which is, checks notes, 1% of the social security budget. While not nothing it’s quite competitive given the scale and impact.

Really no. As much as deficit nuts want to grasp at this as a confirmation of priors, this is absolutely 100% not at all about "The Debt". (In point of fact outstanding[1] debt as a fraction of GDP isn't even all that large, historically; it was much higher in the 80's and literally every one of those bonds is now paid off!)

We could magically pay it off right now and the US would still look like a credit risk. It's all about trade policy right now, and the general existential risk that we blow it all up. The treasury rate spike in April (likely but inconclusively due to strategic dumping) continues to have everyone spooked, and fiscal restraint, tax policy, austerity, etc... don't speak to that concern at all.

[1] Corrected: service cost of the debt

>In point of fact outstanding debt as a fraction of GDP isn't even all that large, historically; it was much higher in the 80's and literally every one of those bonds is now paid off

I think you are very much mistaken: https://fred.stlouisfed.org/series/gfdegdq188S

I did indeed say that wrong, the nominal debt was lower but the cost to service it was much higher (borrowing in the 80's was done at interest rates into the double digits!):

https://fred.stlouisfed.org/graph/?g=iEiV

Again, if the debtpocalypse didn't happen then it's clearly not happening now. This is simply not about fiscal policy. Period. It's about institutional trust in the government's ability to manage payments.

The double digit rates were because of the inflation following the dollar being de-pegged from gold in 1971. It was easy to pay the massive interest rates because the point of the high rates was to bring inflation down. The idea was that people did not want to hold US debt exactly because the inflation was a de facto partial default.

I don't follow that economics. How does interest rates being high make bonds easier to pay? And how to I get some of that action, that sounds pretty magic to me. :)

(No, that's not correct. Borrowing in the 80's was more expensive. Period.)

You’re mistaking rate vs outstanding debt.

If I have a $1M mortgage at 6%, and a $1000 credit card debt at 25%, which is harder for me to pay off, assuming I make $100K per year?

Click on the link. I assure you I am not.

I see your point. I suppose my only response is that a significant amount of our debt is being rolled over annually. It’s currently being rolled over from extremely low interest rates to non-trivially high interest rates. We should expect the spike on the left side of the graph to keep increasing unless rates decline significantly, soon.

If it didn’t happen then it can’t happen now?

Paying off the debt is cheaper (significantly so) than it was then, and we had no trouble then. So yes, if it didn't happen then it won't happen now, at least not for the same reason. You can construct a double/triple-failure situation, sure, but any argument of the form "We can't sustain this level of financing" is simply wrong by counterexample. We already did.

No one guarantees current rates further down the road, that’s a tricky thing. There is some chance inflation will be keep increasing because of a lot of printed moneys in last decade or so, and then fed will be forced to increase rates even further which will make it much harder to pay federal debt, much harder than in 80s perhaps.

> There is some chance inflation will be keep increasing

So what? Inflation is GOOD for the debt, which is dollar-valued and not inflation-indexed! If you inflate the currency by 20% the real value of the outstanding debt drops by 20%. That's always been the joke about federal borrowing, if we ever get in trouble we just print money to pay all the bonds and poof, no debt. Inflation being high makes borrowing cheaper, not more expensive.

The discourse about the subject is cursed. Everyone projects their own (largely political) priors onto it, everyone thinks macroeconomics works like checkbooks. It's just one bad idea after another.

(I think what you're trying to say is that interest rates being high makes borrowing expensive, and that high interest rates are a natural policy response to high inflation. But you have the causality backwards. In fact one reason borrowing doesn't care about inflation is that the fed moves the levers to keep the impact roughly constant.)

> Inflation is GOOD for the debt, which is dollar-valued and not inflation-indexed! If you inflate the currency by 20% the real value of the outstanding debt drops by 20%.

Unfortunately GDP is also dollar-valued, so debt:gdp ratio wouldn't change with inflation. Inflation wouldn't only destroy debt (which is good) it will also destroy currency and to some extent the economy. In the very end it's part of FED mandate - to keep inflation in bay.

> The discourse about the subject is cursed.

I think macroeconomics is very complicated subject, with a lot of uncertainty of how things will unfold.

Your initial claim was that servicing our debt was much harder in 80s, so it's actually not as bad (or at least not worse) these days. What I'm trying to say we can all of sudden end up in a world where interest rates are back to 80s levels, while debt:gdp ratio (which is the real amount of debt in a way) is way higher. And this would be much more complicated problem to solve. Or we would not, because it's hard to predict a) where inflation goes from now on and b) what will FED do in the same kind of scenario to 80s.

But actually scratch it, it is already bigger problem than it was back then: US needs to refinance/issue $9.2 trillion of debt this year. Current USG 10Y is ~4.5%, current GDP is 27.72 trillions. Which means after this year we will add 0.015 to the interest/gdp ratio (assuming very low current cost of the debt which is being refinanced, from https://fred.stlouisfed.org/graph/?g=iEiV). It will bring us above the level in 80s this year! Just this year of debt will bring the cost of servicing the debt above than it was back then. That's where huge issue is, unfortunately. And unless rates will go down it will be getting worse and worse really fast.

> Unfortunately GDP is also dollar-valued

It... what? Good grief. If I buy a candy bar for $1, it counts to the GDP as $1. If it inflates and I have to pay $1.20 for the next one, you're saying that the GDP magically knows to adjust the accounting for how much it used to cost?! No, this is ridiculous. GDP counts currency.

The amount of bad economics being deployed in support of baldly political positions on HN is just astounding.

Yeah, you right about gdp, taking it back.

What about second calculation? I know assuming 0 rates of the refinanced debt is wrong, but it does give a sense of how bad the thing is.

As for your comment about my political position - you’re wrong, and frankly it’s not nicely engaging comment either. In fact I was of your opinion couple of months ago, but since then I changed it. As a meta comment the fact that such giants as Ray Dalio keep ringing the bell about the debt should be enough to, at least, seriously consider there might be an issue.

The second calculation is just spin, no numbers. Any time I see rhetoric like "refinanced debt" or "rolling over debt" I know to just ignore it. You picked it up from a partisan source trying to scare you. The idea is to liken it to irresponsible credit card behavior by consumers or whatever.

But in reality federal interest payments as a fraction of revenue are like 18%. That is well under the median consumer debt load, and very manageable.

The better metaphor, if you insist on using one (don't), would be to say that federal debt is like carrying a mortgage, where the title reflects the US economy as a whole, something that grows somewhat faster than housing real estate.

> The second calculation is just spin, no numbers

I literally gave you numbers. It's quite hard to estimate growth of interest/gdp ratio because of how many different securities are there but here's my try: https://chatgpt.com/share/682b4741-9bbc-8007-94fc-848198c9c3... I got +0.006 this year, which will bring total ratio to 0.043, it's also 15% growth a year. We had this ratio last time in 97.

> But in reality federal interest payments as a fraction of revenue are like 18%.

... and rapidly growing.

> That is well under the median consumer debt load, and very manageable.

Consumer debt service payment to income is around 11.3%: https://fred.stlouisfed.org/series/TDSP

From what I gather ratio between household disposable income to household total debt is about 1:1. Government ratio is closer to 1:7. This is very different ratio.

However I'm not insisting on comparing household finances to gov finances, I'm not sure you can compare those two. At least not in a world where government controls money supply.

You keep accusing me in being partisan where in fact I go and do my own research. I think it's you who made up the mind that debt is not an issue and disregard anything which goes against your (partisan if you will) view of the world.

US has big budget problem. It will pay itself one way or another eventually (most likely through inflation/currency devaluation, affecting everyone and a lot), but so far it was mostly accumulating instead. The real solution is, of course, optimize spending (i.e. health care & military) and (what's even more important) tax the rich. Similarly to what we used to have in 50s. But we never gonna get there because, you know, the rich holds all the cards. So instead we'll get through a suffering of blown up currency, and I, personally, think we should be doing everything we can to avoid it. I don't think it's a problem of today, tomorrow or next year. But it's a problem and further we delay it worse the resolution would be.

> Consumer debt service payment to income is around 11.3%: https://fred.stlouisfed.org/series/TDSP

That's a chart vs. DISPOSABLE income!

I give up.

You choose one very particular detail, critic it, don’t provide neither justification why it’s wrong or what would be better and behave like you’re correct about everything.

Good luck, enjoy being “right”.

> In point of fact outstanding debt as a fraction of GDP isn't even all that large, historically; it was much higher in the 80's and literally every one of those bonds is now paid off!

This[1] shows in the 80s the total debt to GDP ratio started at 31% and ended at 51%. We are currently at about 122% according to the same chart. I'm not sure what numbers you're referring to, could you provide a source?

In terms of the bonds being paid off that's true, but they were paid off by selling even more bonds to cover new spending and old, i.e. total debt grew even if individual bonds matured.

[1] https://fred.stlouisfed.org/series/gfdegdq188S

> Maybe a few hundred billion right there.

Source that such reforms add up to this much? What do the reforms look like in concrete terms?

It makes much more sense to just raise the social security tax cap than to means-test it. Means testing social programs tends to just add needless bureaucracy to them while also weakening support for them by adding an us vs them line of who benefits.

Someone who makes 10 million dollars (or 100 million, or...) a year pays the exact same social security tax as someone who makes $176,100.

You don't even have to raise the cap by very much to fix every foreseeable funding issue Social Security has

Yup.

Means testing is one of this things that fools people - it sounds good, but in practice is wildly bad at what it’s trying to do, and can be borderline evil.

Beyond the bureaucracy dimension - means testing puts up a barrier, not at the top, but everywhere.

Adding “one more thing” to people who are already struggling can be disproportionally difficult for them to meet, and therefore cause them to miss out on benefits they are completely entitled to.

Additionally, it can create incentives for behavior you would otherwise be completely pathological, such as divorcing your sick spouse because as a couple you don’t qualify for support, but individually they do.

> it sounds good, but in practice is wildly bad at what it’s trying to do, and can be borderline evil.

The UK's DWP is a good example (and I'd suggest they crossed the border a long time ago into evil.)

* https://www.bbc.co.uk/news/uk-england-merseyside-68727007

* https://www.bbc.co.uk/news/articles/c20nrv02vz1o

* https://www.bbc.co.uk/news/uk-england-leicestershire-6770464...

* https://www.bbc.co.uk/news/uk-england-nottinghamshire-525003...

* https://www.bbc.co.uk/news/business-51756783

That's just a simple BBC search - going through Private Eye, for example, would bring up a lot more.

Yeah the UK seems to be sprinting towards becoming a third world country with massive inequality just to protect the government's own spending power and of course completely accidentally, the wealth of the rich.

There's "Gary's economics" discussing it, even though the usual economic comment somehow seems to escape him.

(that would be "what about creative destruction" btw)

> incentives for behavior you would otherwise be completely pathological, such as divorcing your sick spouse

We do live in the only country in the developed world where “deathbed divorce” is a thing to try to ensure your surviving spouse doesn’t get crippled by medical debt, so there is that…

> Means testing is one of this things that fools people - it sounds good, but in practice is wildly bad at what it’s trying to do, and can be borderline evil.

These non-specific appeals to emotion aren’t very convincing when we’re discussing a topic where we’re already collecting tax returns for the same people collecting social security.

> Someone who makes 10 million dollars (or 100 million, or...) a year pays the exact same social security tax as someone who makes $176,100.

Very few people earn that kind of money as taxable _income_. More people earn that kind of money as unrealized _capital gains_. Social security is paid for with a payroll tax and what amounts to an income tax. Once you're earning several times the cap you stop caring about it. If you earn 5x or 10x the cap then you will probably not be counting on social security, so there's no us-vs-them dynamic likely there. The problem is that to make this make a big different you'll have to hit hard those who earn only 1.5x or 2x the cap, and that's how you'd get an us-vs-them dynamic.

Instead you can increase the retirement age, increase the cap, increase the tax rates, lower the COLAs, etc., and that's what we've seen so far.

Very few people make a lot of money, it those who do make a shockingly large amount of it.

There’s two drivers to the actual problem here… one is that wage growth slowed a lot since wage indexing and the yield on those taxes is lower in real terms. People who are making more make a lot more, and frankly that’s a well that needs to be tapped.

The other is less popular… but we’re in wind down of nearly 25 years of conflict. The events of 9/11 were engineered to and succeeded in created the same type of economic attrition the US ultimately inflicted on the Soviets.

We’re at a tipping point… our social insurance is approaching entirely avoidable cash flow insolvency. 25 years of war means that the military is worn out and needs trillions of investment to maintain parity. Ignoring the problems our strategies created brought us with a reactionary buffoon destroying the government and a fairly dim decade ahead.

> Someone who makes 10 million dollars (or 100 million, or...) a year pays the exact same social security tax as someone who makes $176,100.

You say this as it's some sort of injustice. But the guy who makes 10 million will collect the same benefit in retirement as the guy who makes $176,100. Or are you proposing that the guy who make $10 MM should pay more, but get their benefit capped? Because if that's what you are proposing, I don't see how that is just or fair. Except maybe following the argument along the lines "screw the rich, they can afford it".

Social security is not a pension. It's more like insurance. It is designed to make life as a senior more equitable, not to stoke the egos of the wealthiest by ensuring they do not feel slighted by payments scaling to be larger than benefits above some certain income level.

It is absolutely a "fair" and "just" thing for a society to do to itself.

I think you are confusing your wishes with reality.

It is in no way like insurance today, and never has been. It has always paid out independent of circumstance. It was never about equity either - The poor get less, and the very poorest get none. Again, this is the way it has been since conception.

It is a state mandated pension with low returns and a progressive fee. Noting more.

I think you misread. There's no "confusion of wishes with reality", we were explicitly discussing the not-reality that is wealthier people paying more and receiving less, and whether that is fair or just.

My analogy to insurance was more about whether you pay into "your" account with your name on it or if you pay into a big fund directly pays out to recipients, and nothing is held aside for you.

I see. I think there is a lot of baggage with the insurance analogy, like probability and conditional payout which are absent.

The money isnt held in a dedicated account with your name on it. However, how much you pay in is rigorously tracked and used to directly to determine how much you get.

The closest thing is a pension. Like a pension, SS pays out X% of your taxable salary. X is progressive with high earners heavily subsidizing low earners.

SS starts by paying out 90% of taxable salary in the lowest bracket. As income goes up, this reduces to paying out 15% in the top bracket. The brackets are referred to SS bend points.

> I think there is a lot of baggage with the insurance analogy, like probability and conditional payout which are absent.

I agree; it was a poor choice of analogy on my part.

The disability part of Social Security is very much like insurance…

So unemployment insurance should cost more if you earn more. What about health insurance? Car insurance? Starbucks latte? All goods and services? Would it not be just and fair if all prices were relative to income rather than absolute?

... you'll notice that taken to absurdity this is the same statement as "everyone should be paid the same". And that's been tried.

If your doctor told you to drink more water, would you drown yourself?

Taking things to absurdity is itself absurd.

Government programs are not the same as commercial products. I have no issue with unemployment or health insurance costing a percentage of one's income.

Let's also add fines and traffic tickets to the list of things that ought be more expensive as one becomes wealthier please.

Why not? California been trying to implement income based pricing for privately operated utilities like PG&E for years. It is already partially implemented for electricity.

It seems to me like government programs is a poor delineation, as government can pass a law to extend its own scope.

Why not groceries or clothes?

> Why not groceries or clothes?

Well, programs like TANF and SNAP exist, which I think are great and their greatest problems are they are not easy enough for people to make use of.

So, fair point, when looking at the most impoverished among us I do not think we should stop at governmental services.

TANF and SNAP are very different than what I am discussing. That are wealth transfers from general taxes to those in need. Very different than wanking into a public grocery store and seeing different prices based on your income.

Where I am, most grocery stores have two prices for items on the shelves. One "regular" price, and a second, lower price that only applies if one is paying with SNAP.

Feels like we're splitting hairs a bit here.

Maybe, I have never seen such dual prices. Are they state mandated?

I guess im still looking for some limiting principle. Why not just mandate that all goods are sold proportional to income.

What are you so afraid of?

That taken to an extreme, this idea is the same as "from everyone according to their ability, to everyone according to their needs". Which sounds great, until you realize that this incentivizes needs and disincentivizes abilities.

Which really is just a manifestation of "when a metric becomes a target, it ceases to be a useful metric".

There are ways to disentangle the undesirable incentives. The Nordic countries in particular have done a great job of this.

Inability to work and create for my own benefit and that of my family. Collectivization and theft of my labor value.

Good idea!

It really is not. To see why not, imagine how you'd feel if you had a coworker who would come to work drunk (if they came at all). They would still be paid the same as you. Your only recourse would be to talk to this person as a "meeting of the peers", which they would proceed to ignore.

This was reality under the Soviet system, and was one of the main reasons it failed.

Now, I understand why I am getting all the cheeky responses and the downvotes. People are hurting. Capitalism in the US is currently failing under a different failure mode. The capitalists are relentless optimizers, even past the point where optimizing their metrics stops making sense. Their metric is "extract as much wealth from the populace as possible", and it's gotten to the point where the people are disillusioned, and very soon there will be nothing left to take.

The rich are rich because they live in a modern just society. They get more benefit from that society as they have more wealth backed by that society.

> Or are you proposing that the guy who make $10 MM should pay more, but get their benefit capped? Because if that's what you are proposing, I don't see how that is just or fair.

You get to live in a stable society, in relative order, safety, and peace. Your life is (financially) richer than 99.99999% of people in the world. All of this in exchange for a small portion of your wealth, and yet you STILL want to complain about the unfairness of this arrangement?

Push it too far, and the only alternative you're going to get is having to look over your shoulder everywhere you go, living in constant fear that someone will pillage your property and threaten your personal safety.

> Push it too far, and the only alternative you're going to get is having to look over your shoulder everywhere you go, living in constant fear that someone will pillage your property and threaten your personal safety.

But that's the thing: is Social Security a safety net or is it welfare? If it's a safety net, means testing (can at least in principle) preserve the safety net aspect.

If it's welfare, you're transferring wealth from people currently working to those retired, many of whom are much more comfortable than those paying the tax. Why are we transferring wealth to those with more from those who must work?

I don't know, I've never heard of this distinction before. As far as I'm concerned we decide which types of programs we want to have in our society, and then we find the funds for these programs. The only moral option then is to take more from those who can contribute more through progressive taxation.

> I don't know, I've never heard of this distinction before. As far as I'm concerned we decide which types of programs we want to have in our society, and then we find the funds for these programs. The only moral option then is to take more from those who can contribute more through progressive taxation.

It's an increasingly common distinction today, and is actually cited as a reason for social securities high support (see: https://www.cbpp.org/research/social-security/top-ten-facts-...):

> Finally, Social Security’s nearly universal nature ensures its continued popular and political support; 79 percent of Americans oppose cuts to the program.

It is not an exaggeration to say that politicians explicitly argue against means testing because they want universality to keep it a third rail and became an increasingly prevalent sentiment during the COVID crisis when money was cheap. For example (https://www.vox.com/2021/10/15/22722418/means-testing-social...):

> “We can choose to strengthen the bond Americans have to one another by proposing universal social insurance benefits that broadly benefit all Americans, or we can pursue complicated methods of means testing that the wealthy and powerful will use to divide us with false narratives about ‘makers’ and ‘takers,’” leaders in the Congressional Progressive Caucus wrote in a letter to House Speaker Nancy Pelosi on Wednesday.

while simultaneously arguing social security is necessary for the economic security of every family (https://www.vox.com/2021/10/15/22722418/means-testing-social...).

And that's the point: there is a very real portion of the party that, rather than cutting Jeff Bezos', Warren Buffets, Bill Gates' and other wealthy individuals who can survive without the cuts social security would rather raise taxes to pay more benefits because it is good politically. It's absolutely absurd, and highlights how the discussion is manipulated to ensure that social security as a political third rail continues rather than addressing seniors actual needs.

Screw the rich, they can afford it.

If the purpose of society is for people to work together for the common good, then I don't see why it's unjust for people who are better able to contribute to do so.

>"screw the rich, they can afford it".

are you really getting screwed though, if you can't feel it?

>"screw the rich, they can afford it".

   > are you really getting screwed though, if you can't feel it?

Also: "Why not? The rich have been screwing everyone else since the invention of rich people." :shrug:

I say this kinda-sorta in jest, but in truth, there's a somewhat huge contingent of the ultra-richest of the ultra-rich who are absolutely guilty of such "Screw the poors." behavior. The ongoing and worsening effects of this specific outta-control inequality speak for themselves. Worst part of it is that the things they're doing these days aren't only going to harm just some of humanity, but rather all of humanity, as well as most all other life on Earth.

They could choose to spend the money they've spent doing outright "evil" (bad things that harm everyone) doing good instead, and cemented their places in the history books among many other great humans who made the world a better place during their time here on Earth, but instead they actively choose to do harm, many of them full-well knowing they're doing harm.

I mean, in the period of history from the 1980s to now, in contrast to other periods, wealth disparity increased as a direct result of laws being changed, policies being amended, and which regulations the government chose to enforce or not enforce.

It's hard for me to look at the idea of "law, policy and regulation should now move the needle in the other direction" and see that as grossly unjust. We can debate whether social security is the right place to do it, but it seems like one of the top options to me, considering the huge wave of people who are going to be jobless, old, poor and alone, and therefore vulnerable, as the Millennials age.

The argument is indeed “they can afford it.” The addition of “screw the rich” is some bullshit that makes it sound like someone making $10 million and paying $5 million in taxes is worse off than someone making $10,000 and paying $0 in taxes.

Yeah, people who make more money should pay more to fund the government. Apparently this is a wild concept for some.

They can afford it. It's fine.

> I don't see how that is just or fair

It's not and it doesn't need to be. If I make 10 million dollars a year, I don't need social security period. I'm going to be fine no matter what. I personally would not mind, at all, giving up a portion of my income to other people who are not so fortunate.

It's like giving the fat king and the starving orphan both one slice of bread. Sure, it's fair, but does the king need the bread? Who cares about fairness when the playing field is already so skewed in favor one side?

Also: the reality here is that rich people pay WAY less taxes proportionally compared to the poor. If we want to talk fairness, we have to start there. Poor people are spending 100% of their income on consumption, it's going straight into the economy. It's getting income taxed and it's getting sales taxed.

If rich people had to pay anywhere close to the amount of taxes the working class or the poor do, they would turn to dust. I'm sure they're fine in their already extremely favorable position. In short - give me a fucking break.

I think younger generations are tired of getting a worse deal than older generations. If you means-test, some old people get less social security. If you increase the cap, working people pay more tax.

"Working people"

i.e. people that are not retired and are doing a job to make a living.

The vast majority of working people wouldn't pay a penny more if the cap was lifted and the people who would be affected would still continue to enjoy a standard of living most can only dream of.

This is the biggest argument I have against DOGE. There are easy wins you could make when it comes to government spending and efficiency and they are doing none of it.

I have yet to hear a convincing argument that DOGE is anything less than a poorly camouflaged data grab.

Hopefully everyone involved goes to jail, once the government changes and starts charging people who break the law again.

DOGE is a poorly camouflaged ideological purge.

It takes a super special type of incompetence to fail to find any provable fraud, waste or abuse in US government spending.

The idea is that if you repeat "fraud, waste or abuse" it wont matter whether it is teue or not.

And to be fair, the tactic of repeating lie worked of conservatives wery well in the long term.

I do not know about the US, but have have worked for a state admin. To be honest, there is a lot of inefficiencies, but the large majority of those exist to _prevent_ fraud. I could once again describe why, but the details aren't really important: i swear all waste and inefficiencies i've seen not caused by out-of-date software are in place to avoid fraud from low to mid-level employees.

From that you have a choice: either you allow low level government employees to partake in the corruption and remove a lot of rules, or you leave those rules which makes running the admin cost more. I think the second solution is better even if it were to cost more (i'm not sure it does, corruption is expensive), because once government low level employees start to accept bribes, your country is fucked.

there are not easy wins without reducing entitlement spending or increasing receipts, both of which are politically quite hard

The problem with means-testing Social Security is that the government's promised some people "Social Security will be there for you" when they were in their 20's and 30's, and now you're taking it away in their 50's or 60's, when they can't go back and adjust life / retirement plans that were made taking into account "SS will be there for you."

In my humble opinion, this kind of broken promise borders on "the government defrauding the people".

It would be more legitimate to say "SS won't be there for you if you make too much" to those in their teens and 20's just entering the workforce -- but that won't have a major effect on cash outflow needed to satisfy SS obligations for 40-ish years (except for the small fraction of rich unfortunates who get SS because they become unable to work at a young age.)

You might also argue that the level of prying into people's finances implied by "means testing" is a form of illegitimate government overreach. If you believe this, in theory you should, for consistency, also believe that individual income tax ought to be eliminated (which many people consider a radical proposition).

All those promises are "parchment guarantees", to use Madison's term. For example, social security distributions were promised to be tax exempt, and they were from the institution of the program in 1935 up until 1983 - talk about reliance interest!

And presumably they’d take away my social security tax, too, right? If I was not going to get it? Right, right?

You don't see the problem with funding things like social security or food stamps purely from the people relying most on those services?

But SS isn't a tax like the rest of our general taxes. I pay a specific SS tax on my payroll so that when I retire I'm entitled to a payout. If you take away the payout you need to take away the tax. Once you means test SS it becomes more like a welfare program for seniors and ought to be paid for out of the general tax pool like other welfare programs.

I'm not necessarily opposed to social security being switched to a more conventional tax (assuming that the new tax was at least equally progressive and raised at least as much revenue). However, I also don't see how that makes much of a difference. Social security is a welfare program, it always has been.

If SS tax was repealed, and income tax was adjusted to increase by exactly the same amount, would you be happy with it?

I'm happy to vote for rearranging the labels of what the things are called if that's what the sticking point is for you.

Our deficit is $1.8 trillion last year. Closing the carried interest loophole would only save $1-2 billion annually. https://taxpolicycenter.org/fiscal-facts/tax-treatment-carri...

Explicit fuel subsidies are only $3 billion: https://www.eesi.org/papers/view/fact-sheet-proposals-to-red.... (Implicit subsidies are arguably much more, but anything that would make energy more expensive is an economy killer and would tank revenue.) What’s lost to corporate tax havens?

I think you're directionally correct that military spending could be much lower and more effective but the notion of relying on a single sub as a deterrent is far too extreme. In that scenario an enemy only needs to compromise a single sub and your entire deterrent is gone. That's not a stable equilibrium.

The whole principle of a triad is based on the expectation that an adversary could compromise your retaliatory ability to a high degree so you need to mantain robust options.

>> means-test social security

Why would you means-test insurance? A means-test is for something like welfare, not insurance.

Whyy means test when you can use income tax to claw it back? Instead we have politicians giving away benefits to people who opted out.

> that could lower the debt that would result in little to no austerity.

I like your ideas, but I'm not sure this is possible without austerity or major tax reform. The deficit is massive.

If I was King, I'd choose tax reform and go with a land value tax. It's what economists agree is the least bad tax.

> It's what economists agree is the least bad tax.

9/10 of economists agree!

agreed on the means testing social security. nothing else you mentioned would make a dent.