Ted Strickland favors taxing wealthy to preserve Social Security

[happyslug]

14. Please note, the 75% is only under the worse economic growth pattern

Last edited Wed Apr 13, 2016, 11:37 AM - Edit history (1)

When estimate are made for SS payouts and income growth, three "assumptions" are made.

1. The Best Probable Economic Growth Pattern, no problems with SS, no one ever mentioned this one
2. The Most Likely Economic Growth Pattern, this tracks past economic growth and has been fairly accurate
3. The Worse Probable Economic Growth Pattern.

Under number 2, the Most Likely Economic Growth Pattern Social Security pays 100% in 2034 and beyond. It is only under the worse probable economic growth pattern that revenue drops to support only 75% of payments. The economy has NEVER followed that pattern but mentioned as worse probable situation.

The Worse Probable Economic Growth Pattern is liked by the Far Right, they compare it to private investments based on Best Probable Economic Growth Pattern to show that private SS would be better. Notice the comparison, it is #1 for the private system compared to #3 for SS. The reason for this if you compare SS with private SS under the ANY of the economic assumptions provided it is the same economic assumption for both, SS comes out on top under ALL of the economic assumptions. It is only be comparing the best economic assumption for private SS with the WORSE economic assumption for SS that private SS beats out SS.

Just a warning when siting SS predictions (and by the way I believe it is 85% payout not 75% under the Worse Economic Assumption). I mention this for I suspect the 75% payout is a right wing lie, but shows how such lies even creeps into left wing debates.

Here is the trustee report:

The Trustees project that the annual deficits for Social Security as a whole, expressed as the difference between the cost rate and income rate for a particular year, will decline from 1.31 percent of taxable payroll in 2015 to 0.98 percent in 2017 before increasing steadily to 3.52 percent in 2038. Annual deficits then decline slightly to 3.32 percent in 2050 before resuming an upward trajectory and reaching 4.65 percent of taxable payroll in 2089

https://www.ssa.gov/oact/trsum/

Please note SS Retirement is still earning more money then it is paying out and will continue to do so till 2022. SS Disability and Medicare are the problems.

.........................................................................................Retirement..Disability..Combined...Medicare
Year of peak trust fund ratio....................................................2011...........2003........2008.........2003
First year outgo exceeds income excluding interest......................2010...........2005........2010.........2021
First year outgo exceeds income including interest.......................2022...........2009........2020.........2023
Year trust funds are depleted...................................................2035............2016.......2034..........2030


What they mean by "Trust Funds Are depleted" is when the money paid into SS from 1982 till 2011 but NOT spent is finally spent. Come 2035 SS returns to being a pay as you go program, which is what is was from 1935 till 1982.

Please note the peak year for the baby boom was 1957, thus they will be 77 years old at that time. Thus this was expected when the rates were increased in 1982. Life expectancy is still only 76 years of age at birth for males, 80 for females.

https://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

Thus 2035 was expected as the year SS "Broke even" since 1982. I suspect the main problem started in 2010, when income from taxes first fell below out puts, and Congress could no longer count of SS taxes to pay for Defense spending, which Congress has been doing since 1982. Given baby boomers are expected to die off after 2035 in increasing number, it is expected for SS to break even for the foreseeable future.

The baby bust started in 1965, when you saw a significance drop in birth as oppose to the gradual decline from 1957 through 1964. Males born in 1965 turn 76 in 2041. women born in 1965 turn 80 in 2045. Notice those dates are NOT mentioned, for the costs of SS will DROP after those dates.