Tuesday, April 23, 2019

Media Continues VSP Story On Social Security

Here we go again.  We have arrived at the time for the release of the annual Social Security Administration (SSA) report.  It got the usual headlines across the media, that the SSA will "run out of money" in 2034. Most of the stories played it all scary, although noting that after the system will still pay 3/4 of what it was.  But, of course, Congress can act now to fix the system the stories say, leaving it vague what that would amount to.  Two points on this.

The first is that basically this is a repeat of the deadlines reported last year, 2034 still the year estimated for the trust fund comes to an end, the moment when the baby boomers arguably stop paying for their own retirement, as was put in place back in 1983, the year of the last major change in the system.  So, no new news on those fronts, although most of the media did not note this.  This was supposed to be dramatic new revelation.

The second is that there actually is a piece of new news, and it happens to be good.  It is that the Disability System seems to have become financially stabilized.  This was probably the part of the system that had been recently in the worst financial shape, but now it is doing much better.  However, this good news was downplayed, to the extent it was reported at all. This would have distracted from the bad news stories, which the VSPs like to push so as to suggest cuts in benefits so those tax cuts for the rich can be preserved.

Barkley Rosser


2slugbaits said...

A couple comments. First, people need to keep in mind that the 25% reduction in benefits represents a 25% reduction in PROMISED benefits, which are greater than today's benefits. So future retirees would not be 25% worse off. Not quite so scary. Second, a lot of the funding shortfall could be corrected simply by raising the income cap to its historical level that captured 90% of wage & salary income. Currently only a little more than 80% of wage & salary income is liable to the FICA tax. Finally, we probably don't want to fall into the trap of massively prefunding Social Security with decades worth of large off-budget surpluses. History has proven that large off-budget surpluses only serve as a temptation for Republican fat cats to cut on-budget income taxes for the rich. We will probably move to something closer to a PAYGO system.

rosserjb@jmu.edu said...

Thanks, 2Slugs. Of course, your first point is what has gone for some time now under the name "Rosser's Equation." Heck, it even has a Wikipedia entry, or did last time I checked. But I figured I would stay away from that old egomaniacal chestnut this time around, :-).

Unknown said...

First sentence of paragraph 2 has a typo:

"The first is that basically this is a repeat of the deadlines reported last year, 20134 still the year estimated for the trust fund comes to an end, the moment".

Or do we have plenty of funds for the next 18000 years?!

rosserjb@jmu.edu said...

Thanks for catching that, U. Fixed now.