July 27, 2006

Re: Sheldon's Scaring the Seniors

Justin Katz

You've gotta love political mathematics. Sheldon Whitehouse, from Marc's post below:

We can protect Social Security too. We just need the courage to tell the voters were going to lift the limit on Social Security withholding from $90,000 to $120,000. That makes a lot more sense than cutting benefits and we can keep Social Security solvent for decades to come.

I haven't looked at the specifics in a while, but I don't recall anybody suggesting that the looming Social Security crisis is any nearer than "decades." (The number that pops into my head until problems start to arise is 2027, with the true crisis some time after that, but I don't have the time to research it right now.) In other words, I could declare that all we need to do is nothing to "keep Social Security solvent for decades [plural] to come."

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

2017, or thereabouts, is the point where Social Security is projected to start paying out more than it takes in on a yearly basis.

Posted by: Andrew at July 27, 2006 6:25 PM

that is a tax of almost $2500 on every person that earns over $120,000 per year and their employer would have to match that as well.

$5000 per year.

democrats are such whores to the elderly who put nothing into social security

Posted by: johnpaycheck at July 27, 2006 6:39 PM

That may be where my "20*7" number comes from, but I think there are subsequent milestones that will be more crisis-like (or more indicative of insolvency) — closer to mid-century, as I recall.

Perhaps I'm wrong, but I think my point still stands.

Posted by: Justin Katz at July 27, 2006 7:04 PM

I remember something about Social Security becoming insolvent in 2040something under the current system, but since there is no actual "trust fund", I'm not entirely sure what that means.

The Heritage Foundation website would be one place to go to nail down all the details.

Posted by: Andrew at July 27, 2006 7:19 PM

There are other ways to deal with the eventual evacuation of the SS fund - like introducing a savings account, particularly for younger Americans. All Democrats like Whitehouse can think of is to raise taxes.

Posted by: Phe Propterhoc at July 27, 2006 8:29 PM

Cato has a good site on Social Security.

If memory serves, the "trust fund" is drained circa 2040, and this is the date the Democrats like to use.

HOWEVER, the cash flow turns negative - "benefits" paid out exceeds FICA tax revenue coming in - somewhere around 2013. Since there is no "trust fund" that is when it'll hit the fan as far as SS goes.

Medicare may well collapse before then.

Of course, when the cash flow turns negative the Democrats will somehow find a way to blame Republicans for the "crisis."

Ultimately there aren't enough "rich" people to pay all of the promises made by government (e.g., the four billion dollar unfunded liability for State of Rhode Island pensions; an estimated $65 trillion of unfunded liabilities at the federal level).

So government at all levels will probably raise taxes to even more punitive levels AND renege on "promises" such as Social Security.

The resulting turmoil and economic collapse may well make "The Great Depression" look like a walk in the park.

But ole Sheldon will be fine - no doubt there are enough offshore trusts to ensure that he'll have plenty or resources no matter what occurs to, and in, the United States.

Posted by: Tom W at July 27, 2006 9:42 PM

has sheldon agreed to make his tax returns public????????????

Posted by: johnpaycheck at July 28, 2006 6:50 AM

johnpaycheck, I'm not sure how you can talk about "elderly who put nothing into Social Security". Most of the money in Social Security was put there by the elderly as they worked over the course of their lifetimes. It's the younger workers at the start of their careers who have put very little into Social Security.

The problem is that some generations are larger than others and it makes it difficult to keep the system going when you have a very large generation like the baby boomers retiring. Add that to the increased lifespan and you've got problems.

When Social Security was implemented, 65 was about the average lifespan and nobody thought of retirement as the "golden years". The average person worked until death or until they were physically incapacitated to work.

Posted by: Anthony at July 28, 2006 9:53 AM

Everyone may recall that Bush tried to develop a long-term solution to Social Security, but was blocked by the Democrats.

Posted by: Anthony at July 28, 2006 9:55 AM

An earlier posting has a lot of links to information on the Social Security debate.

Posted by: Donald B. Hawthorne at July 28, 2006 10:20 AM

>>johnpaycheck, I'm not sure how you can talk about "elderly who put nothing into Social Security". Most of the money in Social Security was put there by the elderly as they worked over the course of their lifetimes. It's the younger workers at the start of their careers who have put very little into Social Security.

Anthony,

Don't forget that when the current elderly were "contributing" to Social Security 1) the payroll tax rates were much lower; and 2) so was the income tax above which one stopped paying SS taxes.

So on a relative basis they have put in next to nothing.

I've read that the typical current "beneficiary" recoupts their entire "contribution" within about the first three years.

Conversely, the younger you are the more it changes, and even if the program "benefits" stay the same, on average the younger cohert of baby boomers (and those that follow) will actually get back less than what they paid in.

As with all "early participants" in a Ponzi arrangement, the current elderly are making out like bandits. Little wonder they reflexively vote for any politician promising to keep the game going!

Posted by: Tom W at July 28, 2006 10:36 AM

Who cares about the elderly. Thank goodness they are dying off. I think Steve Laffey was quoted as saying that or something close.

Posted by: Rino Cooke at August 1, 2006 4:01 PM