I'm one of this boomers that was lucky with past choices and investments -
Agree, should be trimmed based on income. Benefits SB trimmed. I receive 5K per month, have high personal income from investments and don't need the extra monthly payments. My cousin on the other hand says these are entitlements that deserve to be repaid back to him so you're up against a stubborn attitude by many.
a fourth category of spending wasn't covered... medicare--- related but not the same. Hospitals have little inventive to cut any services and in fact promote maximum services since the costs are mostly paid out of the federal budget. a few years ago i had a simple operation for an infected gallbladder removal - routine but due to poor care and improper diagnosis, the bill ended up for , 14 days in hospital care and life threatening surgery to cost over $150000 - medicare picked this full amount. There needs to be accountability for medical care thrown at patients and medicare paying the full bill. the waste and over billing of costs is a scandal with hospitals but there is such an incentive to spend since medicare picks up the tab. there should be caps and ranges for what medicare pays,
I know that I’m late to the party on this, but another sobering insightful piece from Ms. Riedl regarding government failure due to the unrealistic expectations, and fearful reprisals, from taxpayers. So what do we taxpayers do? Just wait for the insolvency of the SS system in 2032 and say “oops, we didn’t know this would happen?” 🙄 and then continue to borrow and pay the enormous interest on the debt and hope foreign investors continue to buy soon-to-be junk treasury bonds at even higher interest??? @Jessica, how do we find your recent interviews?
Hi Dave, thanks for the kind words. I have an interviews tab on the Substack, although its a non-exhaustive list of leading interviews over the past few years.
As for what taxpayers should do, there isn't much we can do as long as keep electing lawmakers on promises to keep cutting taxes and hiking spending. That's on us voters.
Thank you! I’m a financial advisor who goes to your well of information often with the hopes of helping my clients cut through the political theater and media soundbytes that fail to explain the whole story. Thank you!
The 2012 anti-Romney Ryan ticket of young people pushing granny off a cliff was such a compelling lie. Reversing the actors - the elderly pushing children off a cliff - would have been so much closer to reality.
I always thought it was funny when people talked about the "trust fund" as if it were an "asset " when it's one part of the government owing another part of the government. If a company did that, and claimed the same thing, that would be Enron type accounting.
I was listening to a clip from the economist Kathryn Ann Edwards, who stated that most of the savings from raising the retirement age came from the increasing number of people who retire before reaching the standard age and pay the penalty for early withdrawal, so to speak. Is this true or are there strong actuarial benefits from increasing the retirement age.
CBO and SSA scoring of eligibility age do assume a healthy share of this phenomenon. But I don't see that as especially problematic. If someone living to 90 wants to spend one-third of the adult life collecting Social Security (age 66 to 90(), then yeah, the federal government cannot fully encourage that with full annual benefit levels.
Hi Excellent Synopsis of the situation. Given the political situation, a likely outcome is that some adjustments are made that help but they are not nearly enough. The law is then changed and the scheduled payments are simply funded with additional borrowing. So instead of worrying about SS insolvency, etc. the worries should be about the possible impact of higher deficits than otherwise would be the case. Isn't that probably the real-world issue down the road? Thanks.
Not to defend the system, but "Ponzi scheme" is the wrong metaphor. A Ponzi scheme falsely promises to pay back more than you put in. It IS, fraudulently, contrubutory.
Social insurnce is NOT contributory. It is a tarnsfer from tapayers to benefiaries.
There's a few other reasons why Washington refuses to confront Social Security (and Medicare which is even worse).
People, young and old, are generally ignorant of how SS works, as you write. It's impossible to reform something without most people having a good understanding of it.
But I think there's broader cultural and moral issues.
As you correctly write, the program is a "Robinhood In Reverse" (I recall this is what Democrats called the Bush era tax cuts).
You're taking 15% of a young cashier's economic compensation and handing it to senior millionaires. There's something immoral about that, whether that senior millionaire paid payroll taxes themselves.
I'm sure there are individual seniors that are in poverty (however, I don't know of any in my extended family, they are relatively wealthy), but the system has been built for this privileged class born roughly between 1945 and 1964.
We had the bailouts after the GFC. We had the Covid bailouts as well. Most of the "benefit" went to incumbent asset holders which are typically older people. I personally know of seniors that wouldn't have been able to retire if not for their home equity doubling in the post-Covid era.
Who paid (and continues to pay) the price? Younger people in the form of asset inflation.
So poorer, younger people are being taxed twice for the benefit of wealthier, older seniors.
First, 15% of their economic compensation under $185k is taken. Then, they pay more for housing (which is restricted in supply by, guess who, home owning incumbent zoning boards that are typically older) and other goods and services.
While younger people are earning more than their older counterparts adjusted for age (on a purchasing power basis), this quickly is eroded by the high cost of necessities like housing, education and healthcare.
And, generally, seniors don't care at all. And that's a problem.
They vote.more often (primaries and general), they are more politically motivated (go to a "No Kings" rally, the average age is one foot in the grave), they contribute more to campaigns, they have incumbent status. And younger people generally are also generally approving of entitlement programs.
So nothing is going to happen to senior benefits. Potentially at the margin, some wealthier seniors may be capped but overall the solution is going to be soaking upper-middle class families in higher cost of living areas for the benefit of a generation that has had everything go right for them economically in the last 40 years.
In the 1970’s politicians that dominated politics were from the greatest generation. The first boomer POTUS was Clinton.
Boomers in the 70’s were mostly in high school and college and were either protesting Viet Nam ( in the early 70’s ) or voting for John Anderson later on. To argue that in the 70’s that generation stifled SS reform is goofy.
You act and write as if the entire generation acted with one focus .. screwing everyone else.
That is so simplistic. Efforts to rein in SS and other govt costs were led by lots of boomers ( and others) . Romney was a boomer who picked Ryan to make SS reform a key platform.
The Bush administration efforts to reform SS were championed by John Sununu ( a boomer).
Its wasnt Boomers who crushed them it was the backers of Barack OBama who made the ads of grandma off a cliff. OBama was a boomer but his backers werent. So who do we blame there?
The Greenspan Commission had 3 formal no votes .. they were all born long before WW2 . The Commission was opposed by the AARP ( there were zero boomers in that organization in 1983. The oldest boomer was 37 at the time. )
The Romney OBama election demonstrated that opposition to SS reform was political ( regardless of age) not generational.
You cant be a senior citizen ( given your comments) but you def have a “get off my line” vibe.
When you just rant about a generation that had “everything go right for them economically “ you lose the audience. Your comment becomes nothing but class warfare.
That generation didnt game plan any of this. SS was created before we were born. It was rejiggered in the great society ( before we could vote), all that great economic benefit you describe ignores Stagflation in the 70’s, the oil crunch, 13-15% mortgages in the 80’s when we were first time buyers. Those were not great times.
Are the elderly wealthy today. Absolutely, did most of us work to create that security? Yes we did. No one gave it to us.
Instead keep your arguments focused. As the author says: she sits in rooms with elected officials who can calmly map out a fix ( and have been able to for decades).
Their complete unwillingness to do so ( for decades) and instead create political and class warfare to the short term benefit is what should totally piss you off. It does me.
My kids are screwed because of profligate waste in government . Programs that dont work and never have, inane tax policy, increasing costs with no disregard for long term consequences. SS is one of those many problems.
Are boomers ( as a generation) to blame for this crap? No.
Whenever SS reform was discussed the political parties ( not voters) ginned up so much rhetoric and gaslighting that voters were manipulated to reject any change.
Everyone points to Europe for the social safety net. But no one will do in SS what has made their retirement funds flush .. private investment. Instead we have used the SS taxes to fund government.
Denmarks retirement funds are 2X the Danish GDP. Where are those funds? Invested in private stocks and markets ( overseas which means in America for the most part) . They plan on market returns and are investing wisely over decades.
Every effort to increase the returns on SS funds is ignored and fear mongered to allow the Fed to blow it and issue T Bills at below inflation and certainly below market returns.
Politicians ( not an entire generation of boomers) made those choices to benefit themselves. We cant be blamed as the “ older retirees “ for decades of decisions that were made when we were 20-60. We were working not living off SS. This shit didn’t happen in the last 10 years ( when the first boomers actually retired) .
I disagree with the author that voters “reject” reform and always have. Voters were played by party politics and the chattering class to reject anything because it made great political theater and won elections.
As the Boomers usually say to me, "bless your heart".
It's not class warfare at all, it's generational warfare. You have a politically connected group that has dominated politics since I've been alive eating the young.
This generation knew 40 years ago (Greenspan Commission) that it was all going to fall apart one day, and the day is coming in a few short years.
The "no one gave it to us" argument is telling. Your parents fought WW2, created the Hegemonic American system after suffering through the Great Depression. That was "given" to you.
Then, the Boomer leveraged its political capital in the late 70s rewriting the rules to benefit capital over labor since they were able to accumulate wealth through labor when there was little international competition. This divide exists to today.
Most recently, those seniors that accumulated capital were bailed out twice. Once after the GFC and again after Covid. The cost? Massive inflation for everyone else.
And now seniors have the gall to fight for property tax rebates on their excessive property values as a result of the money printing that bloated their equity.
Now, the Boomer, which has been in power for the last three decades (Biden was a little older), wants to screw the young again with a massive tax increase to protect their welfare benefits.
All this hand wringing in your post is telling. The Greenspan Commission knew that social security was unsustainable. This was in the early 1980s. Nothing substantive was done. Now benefits must be cut, by law.
The wealthiest generation in the history of mankind continues to eat its young.
Not sure which planet you’re on but even in my Ca Santa Monica neighborhood of working class folks seniors are NOT living large and many are in rent controlled little apartments.
No one over 60 is far with cash in LA.
You’re taking about a handful of people and not the majority of seniors.
To suggest we might be getting too much of the pie is insane.
We worked our entire lives just like our parents and grandparents did and like the younger generations had to do now.
Now that everyone seems to make their living as an influencer or writing articles on social media do we really know how much SS we are losing due to these folks not claiming all that they make online?
The great thing about payroll taxes taken out of your checks are they are accurate.
With all of this free lance stuff how much money are we losing each year.
We already know the wealthy aren’t paying their fair share.
> Not sure which planet you’re on but even in my Ca Santa Monica neighborhood of working class folks seniors are NOT living large and many are in rent controlled little apartments.
Nowhere in this article does she suggest that low-earning seniors should have benefits reduced. Moreover, you seem to imply that living in a rent-controlled apartment is a downgrade - but renters in rent-controlled apartments pay significantly below market rate, which is another government benefit. In particular, a senior living in a rent-controlled apartment in Santa Monica would likely be saving thousands of dollars per month relative to market rates - a significant benefit in and of itself.
> You’re taking about a handful of people and not the majority of seniors.
The top 10% of seniors retire with $3 million or more. This isn't the majority of seniors, but it is a large group of people that probably don't need extra help. In keeping with your tax-the-rich ideals, I would think that you would consider that a reasonable option to keep on the table.
> Now that everyone seems to make their living as an influencer or writing articles on social media do we really know how much SS we are losing due to these folks not claiming all that they make online?
Underpayment of self-employment taxes is quite a problem, on the order of $500 billion per year. I agree that better IRS enforcement to pull in more of these unpaid taxes would be a great idea.
> We already know the wealthy aren’t paying their fair share.
This may be true, but as the author points out, even eliminating the cap on FICA income would not fully fund social security. Something further must be done on top of that, even if we went maximalist on this idea.
If a boomer maxed out their IRA for two and a half years in the early 80's, and put the money in the S&P 500, they would have a million dollars today. Maxing out said IRA would have cost them $5000 over two and a half years.
Why didn't they save and invest for their own retirement? Were they spending all their money on lattes and avocado toast?
Really excellent piece. Nothing much to add but I do worry that as 2032 approaches, Congress may reach for what has become the easy button: general fund borrowing to cover a pressing need. And borrowing would accomplish exactly the transformation you warn against, converting Social Security from a self-financing social insurance program into a general obligation, perhaps with relatively little debate or acknowledgment of what’s being changed.
> Raising the cap without raising earned benefits severs the link between tax contributions and benefits, and would make Social Security just another tax-and-spend redistribution program.
That link is a myth. You can get wonderful Social Security benefits without ever spending a nickel in payroll taxes. Spousal benefits and widow benefits are both examples of this.
Johnny Carson had four wives, and every wife was able to base their benefits on Johnny Carson's earnings record instead of their own. One input of payroll taxes, five outputs. Where's this link?
Instead, the rational thing to do is to recognize that Social Security is just another tax-and-spend redistribution program. It always has been.
Wrong! Financing Social Security (and Medicare) with _payroll_ taxes was the original mistake of these programs. It created the idea that they were contributory and that one "got back" what one put in. If that is what one thinks, of course one will oppose changes, tax increases or benefit reductions.
Social insurance should be about allowing people in certain life circumstances -- old age, sickness, unemployment, child rearing -- to consume more _while they ae in the circumstance_ than their incomes otherwise would allow. The resources for the transfer logically come from reducing the consumption of people not in those circumstances. Although in practice there will be some redistributive transfer of consumption from people with higher lifetime consumption to those with lower, social insurance is not primarily about redistribution.
We should pay for Social Security and Medicare (and unemployment insurance and a child allowance) with a VAT, taxing consumption to pay for consumption.
And _fully_ pay for it. The drawing down and extinction of the Social Security Trust Funds are accounting signals of a more important underlying reality. The systems in their current state transfer resources from investors who purchase USG bonds and notes to social insurance beneficiaries, reducing investment and growth. When younger generations complain that they are being taxed to pay for older generations, they are correct. The soial insurance deficit reduces future income.
Should we also raise the age for receiving SS benefits? Yes, even if we were financing benefits with a VAT and there were no aggregate excess of benefits over revenue. We should undermine the idea of age-related withdrawal from the labor force and 67 is a poor proxy for when most people are no longer able to be productive.
Should we also increase the relative redistribution of the system by reducing top benefits. Probably so, but unless the new formula were applied to current beneficiaries and not just future ones, the aggregate effect woud be small. A more productive tack would be to make Social Security benefits fully taxable.
Of course, if we went over from an _income_ tax system to a progressive _consumption tax system as we should, this would happen automatically
How can we get you a bigger megaphone? This is concise, accurate and fair.
Thanks!
Jessica,
I'm one of this boomers that was lucky with past choices and investments -
Agree, should be trimmed based on income. Benefits SB trimmed. I receive 5K per month, have high personal income from investments and don't need the extra monthly payments. My cousin on the other hand says these are entitlements that deserve to be repaid back to him so you're up against a stubborn attitude by many.
a fourth category of spending wasn't covered... medicare--- related but not the same. Hospitals have little inventive to cut any services and in fact promote maximum services since the costs are mostly paid out of the federal budget. a few years ago i had a simple operation for an infected gallbladder removal - routine but due to poor care and improper diagnosis, the bill ended up for , 14 days in hospital care and life threatening surgery to cost over $150000 - medicare picked this full amount. There needs to be accountability for medical care thrown at patients and medicare paying the full bill. the waste and over billing of costs is a scandal with hospitals but there is such an incentive to spend since medicare picks up the tab. there should be caps and ranges for what medicare pays,
brian Rowbotham
Jessica: You speak my language. What's sad is that so few people know this "dialect"...and sadly, most don't want to learn it. 🫤
As one might deduce from my bio, my experience is that Huxley was generous here with “…vast majority…”.
I know that I’m late to the party on this, but another sobering insightful piece from Ms. Riedl regarding government failure due to the unrealistic expectations, and fearful reprisals, from taxpayers. So what do we taxpayers do? Just wait for the insolvency of the SS system in 2032 and say “oops, we didn’t know this would happen?” 🙄 and then continue to borrow and pay the enormous interest on the debt and hope foreign investors continue to buy soon-to-be junk treasury bonds at even higher interest??? @Jessica, how do we find your recent interviews?
Hi Dave, thanks for the kind words. I have an interviews tab on the Substack, although its a non-exhaustive list of leading interviews over the past few years.
As for what taxpayers should do, there isn't much we can do as long as keep electing lawmakers on promises to keep cutting taxes and hiking spending. That's on us voters.
“That's on us voters”. Yeah, well kudos to you for keeping this front and center..
I think Congress put a working group together last month to make this a priority.
I think they waited too long but I do know there is a committee dealing with this now.
And I believe they put this committee together a few weeks ago.
It would be great if you could somehow offer guidance or your research.
Thank you! I’m a financial advisor who goes to your well of information often with the hopes of helping my clients cut through the political theater and media soundbytes that fail to explain the whole story. Thank you!
Happy to help!
The 2012 anti-Romney Ryan ticket of young people pushing granny off a cliff was such a compelling lie. Reversing the actors - the elderly pushing children off a cliff - would have been so much closer to reality.
Really great and clear article! Too bad that many people don’t understand this!
I always thought it was funny when people talked about the "trust fund" as if it were an "asset " when it's one part of the government owing another part of the government. If a company did that, and claimed the same thing, that would be Enron type accounting.
I was listening to a clip from the economist Kathryn Ann Edwards, who stated that most of the savings from raising the retirement age came from the increasing number of people who retire before reaching the standard age and pay the penalty for early withdrawal, so to speak. Is this true or are there strong actuarial benefits from increasing the retirement age.
CBO and SSA scoring of eligibility age do assume a healthy share of this phenomenon. But I don't see that as especially problematic. If someone living to 90 wants to spend one-third of the adult life collecting Social Security (age 66 to 90(), then yeah, the federal government cannot fully encourage that with full annual benefit levels.
Hi Excellent Synopsis of the situation. Given the political situation, a likely outcome is that some adjustments are made that help but they are not nearly enough. The law is then changed and the scheduled payments are simply funded with additional borrowing. So instead of worrying about SS insolvency, etc. the worries should be about the possible impact of higher deficits than otherwise would be the case. Isn't that probably the real-world issue down the road? Thanks.
Yes - a general revenue bailout just shifts the terrible outcome to a potential debt crisis.
For all intents and purposes, a Ponzi scheme.
Worse, it's compulsory.
Not to defend the system, but "Ponzi scheme" is the wrong metaphor. A Ponzi scheme falsely promises to pay back more than you put in. It IS, fraudulently, contrubutory.
Social insurnce is NOT contributory. It is a tarnsfer from tapayers to benefiaries.
Thanks for the very honest and factual article.
There's a few other reasons why Washington refuses to confront Social Security (and Medicare which is even worse).
People, young and old, are generally ignorant of how SS works, as you write. It's impossible to reform something without most people having a good understanding of it.
But I think there's broader cultural and moral issues.
As you correctly write, the program is a "Robinhood In Reverse" (I recall this is what Democrats called the Bush era tax cuts).
You're taking 15% of a young cashier's economic compensation and handing it to senior millionaires. There's something immoral about that, whether that senior millionaire paid payroll taxes themselves.
I'm sure there are individual seniors that are in poverty (however, I don't know of any in my extended family, they are relatively wealthy), but the system has been built for this privileged class born roughly between 1945 and 1964.
We had the bailouts after the GFC. We had the Covid bailouts as well. Most of the "benefit" went to incumbent asset holders which are typically older people. I personally know of seniors that wouldn't have been able to retire if not for their home equity doubling in the post-Covid era.
Who paid (and continues to pay) the price? Younger people in the form of asset inflation.
So poorer, younger people are being taxed twice for the benefit of wealthier, older seniors.
First, 15% of their economic compensation under $185k is taken. Then, they pay more for housing (which is restricted in supply by, guess who, home owning incumbent zoning boards that are typically older) and other goods and services.
While younger people are earning more than their older counterparts adjusted for age (on a purchasing power basis), this quickly is eroded by the high cost of necessities like housing, education and healthcare.
And, generally, seniors don't care at all. And that's a problem.
They vote.more often (primaries and general), they are more politically motivated (go to a "No Kings" rally, the average age is one foot in the grave), they contribute more to campaigns, they have incumbent status. And younger people generally are also generally approving of entitlement programs.
So nothing is going to happen to senior benefits. Potentially at the margin, some wealthier seniors may be capped but overall the solution is going to be soaking upper-middle class families in higher cost of living areas for the benefit of a generation that has had everything go right for them economically in the last 40 years.
This is nonsense.
In the 1970’s politicians that dominated politics were from the greatest generation. The first boomer POTUS was Clinton.
Boomers in the 70’s were mostly in high school and college and were either protesting Viet Nam ( in the early 70’s ) or voting for John Anderson later on. To argue that in the 70’s that generation stifled SS reform is goofy.
You act and write as if the entire generation acted with one focus .. screwing everyone else.
That is so simplistic. Efforts to rein in SS and other govt costs were led by lots of boomers ( and others) . Romney was a boomer who picked Ryan to make SS reform a key platform.
The Bush administration efforts to reform SS were championed by John Sununu ( a boomer).
Its wasnt Boomers who crushed them it was the backers of Barack OBama who made the ads of grandma off a cliff. OBama was a boomer but his backers werent. So who do we blame there?
The Greenspan Commission had 3 formal no votes .. they were all born long before WW2 . The Commission was opposed by the AARP ( there were zero boomers in that organization in 1983. The oldest boomer was 37 at the time. )
The Romney OBama election demonstrated that opposition to SS reform was political ( regardless of age) not generational.
You cant be a senior citizen ( given your comments) but you def have a “get off my line” vibe.
When you just rant about a generation that had “everything go right for them economically “ you lose the audience. Your comment becomes nothing but class warfare.
That generation didnt game plan any of this. SS was created before we were born. It was rejiggered in the great society ( before we could vote), all that great economic benefit you describe ignores Stagflation in the 70’s, the oil crunch, 13-15% mortgages in the 80’s when we were first time buyers. Those were not great times.
Are the elderly wealthy today. Absolutely, did most of us work to create that security? Yes we did. No one gave it to us.
Instead keep your arguments focused. As the author says: she sits in rooms with elected officials who can calmly map out a fix ( and have been able to for decades).
Their complete unwillingness to do so ( for decades) and instead create political and class warfare to the short term benefit is what should totally piss you off. It does me.
My kids are screwed because of profligate waste in government . Programs that dont work and never have, inane tax policy, increasing costs with no disregard for long term consequences. SS is one of those many problems.
Are boomers ( as a generation) to blame for this crap? No.
Whenever SS reform was discussed the political parties ( not voters) ginned up so much rhetoric and gaslighting that voters were manipulated to reject any change.
Everyone points to Europe for the social safety net. But no one will do in SS what has made their retirement funds flush .. private investment. Instead we have used the SS taxes to fund government.
Denmarks retirement funds are 2X the Danish GDP. Where are those funds? Invested in private stocks and markets ( overseas which means in America for the most part) . They plan on market returns and are investing wisely over decades.
Every effort to increase the returns on SS funds is ignored and fear mongered to allow the Fed to blow it and issue T Bills at below inflation and certainly below market returns.
Politicians ( not an entire generation of boomers) made those choices to benefit themselves. We cant be blamed as the “ older retirees “ for decades of decisions that were made when we were 20-60. We were working not living off SS. This shit didn’t happen in the last 10 years ( when the first boomers actually retired) .
I disagree with the author that voters “reject” reform and always have. Voters were played by party politics and the chattering class to reject anything because it made great political theater and won elections.
That is “my get off my lawn” rant 👍🤣
As the Boomers usually say to me, "bless your heart".
It's not class warfare at all, it's generational warfare. You have a politically connected group that has dominated politics since I've been alive eating the young.
This generation knew 40 years ago (Greenspan Commission) that it was all going to fall apart one day, and the day is coming in a few short years.
The "no one gave it to us" argument is telling. Your parents fought WW2, created the Hegemonic American system after suffering through the Great Depression. That was "given" to you.
Then, the Boomer leveraged its political capital in the late 70s rewriting the rules to benefit capital over labor since they were able to accumulate wealth through labor when there was little international competition. This divide exists to today.
Most recently, those seniors that accumulated capital were bailed out twice. Once after the GFC and again after Covid. The cost? Massive inflation for everyone else.
And now seniors have the gall to fight for property tax rebates on their excessive property values as a result of the money printing that bloated their equity.
Now, the Boomer, which has been in power for the last three decades (Biden was a little older), wants to screw the young again with a massive tax increase to protect their welfare benefits.
All this hand wringing in your post is telling. The Greenspan Commission knew that social security was unsustainable. This was in the early 1980s. Nothing substantive was done. Now benefits must be cut, by law.
The wealthiest generation in the history of mankind continues to eat its young.
Not sure which planet you’re on but even in my Ca Santa Monica neighborhood of working class folks seniors are NOT living large and many are in rent controlled little apartments.
No one over 60 is far with cash in LA.
You’re taking about a handful of people and not the majority of seniors.
To suggest we might be getting too much of the pie is insane.
We worked our entire lives just like our parents and grandparents did and like the younger generations had to do now.
Now that everyone seems to make their living as an influencer or writing articles on social media do we really know how much SS we are losing due to these folks not claiming all that they make online?
The great thing about payroll taxes taken out of your checks are they are accurate.
With all of this free lance stuff how much money are we losing each year.
We already know the wealthy aren’t paying their fair share.
> Not sure which planet you’re on but even in my Ca Santa Monica neighborhood of working class folks seniors are NOT living large and many are in rent controlled little apartments.
Nowhere in this article does she suggest that low-earning seniors should have benefits reduced. Moreover, you seem to imply that living in a rent-controlled apartment is a downgrade - but renters in rent-controlled apartments pay significantly below market rate, which is another government benefit. In particular, a senior living in a rent-controlled apartment in Santa Monica would likely be saving thousands of dollars per month relative to market rates - a significant benefit in and of itself.
> You’re taking about a handful of people and not the majority of seniors.
The top 10% of seniors retire with $3 million or more. This isn't the majority of seniors, but it is a large group of people that probably don't need extra help. In keeping with your tax-the-rich ideals, I would think that you would consider that a reasonable option to keep on the table.
> Now that everyone seems to make their living as an influencer or writing articles on social media do we really know how much SS we are losing due to these folks not claiming all that they make online?
Underpayment of self-employment taxes is quite a problem, on the order of $500 billion per year. I agree that better IRS enforcement to pull in more of these unpaid taxes would be a great idea.
> We already know the wealthy aren’t paying their fair share.
This may be true, but as the author points out, even eliminating the cap on FICA income would not fully fund social security. Something further must be done on top of that, even if we went maximalist on this idea.
If a boomer maxed out their IRA for two and a half years in the early 80's, and put the money in the S&P 500, they would have a million dollars today. Maxing out said IRA would have cost them $5000 over two and a half years.
Why didn't they save and invest for their own retirement? Were they spending all their money on lattes and avocado toast?
Really excellent piece. Nothing much to add but I do worry that as 2032 approaches, Congress may reach for what has become the easy button: general fund borrowing to cover a pressing need. And borrowing would accomplish exactly the transformation you warn against, converting Social Security from a self-financing social insurance program into a general obligation, perhaps with relatively little debate or acknowledgment of what’s being changed.
Right - then we just move towards a debt crisis.
Doug. Sorry . Had not seen your comment and mine was fairly redundant with yours. Thanks.
> Raising the cap without raising earned benefits severs the link between tax contributions and benefits, and would make Social Security just another tax-and-spend redistribution program.
That link is a myth. You can get wonderful Social Security benefits without ever spending a nickel in payroll taxes. Spousal benefits and widow benefits are both examples of this.
Johnny Carson had four wives, and every wife was able to base their benefits on Johnny Carson's earnings record instead of their own. One input of payroll taxes, five outputs. Where's this link?
Instead, the rational thing to do is to recognize that Social Security is just another tax-and-spend redistribution program. It always has been.
"... levers: raising payroll taxes, ..."
Wrong! Financing Social Security (and Medicare) with _payroll_ taxes was the original mistake of these programs. It created the idea that they were contributory and that one "got back" what one put in. If that is what one thinks, of course one will oppose changes, tax increases or benefit reductions.
Social insurance should be about allowing people in certain life circumstances -- old age, sickness, unemployment, child rearing -- to consume more _while they ae in the circumstance_ than their incomes otherwise would allow. The resources for the transfer logically come from reducing the consumption of people not in those circumstances. Although in practice there will be some redistributive transfer of consumption from people with higher lifetime consumption to those with lower, social insurance is not primarily about redistribution.
We should pay for Social Security and Medicare (and unemployment insurance and a child allowance) with a VAT, taxing consumption to pay for consumption.
And _fully_ pay for it. The drawing down and extinction of the Social Security Trust Funds are accounting signals of a more important underlying reality. The systems in their current state transfer resources from investors who purchase USG bonds and notes to social insurance beneficiaries, reducing investment and growth. When younger generations complain that they are being taxed to pay for older generations, they are correct. The soial insurance deficit reduces future income.
Should we also raise the age for receiving SS benefits? Yes, even if we were financing benefits with a VAT and there were no aggregate excess of benefits over revenue. We should undermine the idea of age-related withdrawal from the labor force and 67 is a poor proxy for when most people are no longer able to be productive.
Should we also increase the relative redistribution of the system by reducing top benefits. Probably so, but unless the new formula were applied to current beneficiaries and not just future ones, the aggregate effect woud be small. A more productive tack would be to make Social Security benefits fully taxable.
Of course, if we went over from an _income_ tax system to a progressive _consumption tax system as we should, this would happen automatically
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See: https://thomaslhutcheson.substack.com/p/social-insurance-repost