Social Security: the little secret that's fooling even most DUers.

[MannyGoldstein]

OK, by now we all know that the Social Security Trust Fund will be depleted in 26 years, and only a portion of benefits will be paid after that.

Actually, that "known fact" is pure BS, a product of cooked numbers. What they aren't telling you is that this projection assumes that over the next 75 years, the US economy will grow at a far lower rate than it has in the past. (They weren't expecting us to check the calculations, were they?)

Since 1960, US GDP growth has averaged 3.2%. Even in the decade before the 2007 crash, which included a recession and jobless recovery, GDP growth averaged about 3.0%. However, in creating its publicized projection, the Obama administration assumes that the future US economy will grow at a rate of about 2.1%, much lower even than the 2.9% rate in 2010, which most of us would agree was a tough year for our economy. Even in this very pessimistic projection, Social Security is still able to pay more than 75% of promised benefits after 27 years. (Note that we need about 2.5% growth just to break even with our increasing population.)

And what if the economy stays the same as in 2010, and we continue to lurch forward at 2010's 2.9% growth rate? The same projection showed that at a 2.9% rate, the Trust fund would remain flush with cash as far as they projected (75 years).



So, unless the US economy is about to get even worse than today and stay that way, Social Security should pay full benefits for our lifetimes and beyond.

If you believe otherwise, then the bad guys have already won: they now have a pretext for stealing you blind in order to "save" you. Remember, Obama's commission voted for more than $50,000 in lifetime benefit cuts for the average Social Security recipient. Can you afford to give away $50,000 that's owed to you? I can't.

It would be great to raise the cap, I suppose, but it's not needed, and applauding it only gives credence to their big lie that Social Security is in trouble.

For references for all of this, and more information on the plot to steal Social Security, please see http://fdrdemocrats.org/the-common-sense-guide-to-social-security">my research paper. http://fdrdemocrats.org/the-common-sense-guide-to-social-security/2/">Here is the section that deals with these projections.

I hope that you'll join me in working to stop this wholesale grab from working Americans, to fund continued historically-low taxes on the wealthiest. Please don't feed the lie that Social Security is in trouble.

Also, if you think it's useful for others at DU to see this, please kick and/or recommend to keep it visible. Even better, send a link to friends and loved ones: they need to know what's being done to them.

Thanks!

[leftstreet]

1. $tarting in 2011, 79 million boomer$ turn 65 and exit for-profit in$urance

Over a 170+ million over the next 2 decades

All those insurance premiums Big Insurance will lose
:cry:

[Snoutport]

7. VERY interesting point! nt

[madinmaryland]

12. Not to worry! Rep. Ryan is working on privatizing Medicare so that his

buddies will be able to continue screwing the American Public.

:mad:

[mountainlion55]

59. off subject

But avatar is funny!:smoke:

[madinmaryland]

78. Welcome to DU!!

:hi:

and..

:smoke:

[INdemo]

191. I thought all legislation had to be passed by both houses and

then signed by the President. This Ryan character is being given way too much credit. He may be gone in a year n 1/2. In fact most of the teabaggers could be gone.

[madrchsod]

66. i started mine at 62.....medicare next january!

[Enthusiast]

108. Never really considered that point.

Well, we can't have that!

[RegieRocker]

133. I brought this up long ago. Health insurance reform

was for the insurance companies more than for the little guy. The little guy has seem a huge loss of company provided insurance which is directly in unison with the attack and demise of unions. The other factor is of course the cost of living increasing and wage level not rising to accommodate it. Many people especially younger adults choose to go without health insurance due to their low income level. This group helped pay for the medical costs of older groups. That is the reason for forced insurance. I am however grateful of some of the positive aspects of the reform but had hoped to see government provided health insurance (insuring ourselves). It boggles my mind how some view the government as something other than themselves. To hate the government is to hate yourself. I despise some elected officials and some of my fellow Americans but I still have hope for this democracy. The power of the internet needs to be utilized to progress further into a truer democracy. That power was utilized by the Egyptians and still is today. Politicians shouldn't need millions of dollars to run for office. It should be done with the internet, restoring the possibility of anyone having the chance of being a elected official.

[LiberalFighter]

142. Not all of them will retire. Not all of them will be alive.

Not all of them will live long after turning 65.

[yardwork]

172. That's it.

[bertman]

179. NOT ALL of those insurance premiums will be lost. Many of us will buy

supplemental insurance to cover what is not covered by Medicare.

So, it's not like the Big Insurance companies are going to lose all of that business--just a large chunk of it.

Of course, we can rest assured that the supplemental insurance coverage costs will rise accordingly.

[northoftheborder]

193. Yes. Seniors still have to have supplemental insurance and pay

a premium taken from their Soc. Sec. each month. So it is not free. As I see it, the real thing that needs to be reformed is the COST of health INSURANCE and MEDICAL SERVICES to everyone, seniors included. There have been several ways to do it put out there, but nothing currently is in effect. Supposedly, under the new health care bill, the Administration will have some enforcement on costs, but I'm unclear about that.

[quiller4]

234. But many of us who had much higher deductibles and co-pays

when we had private insurance will decide not to purchase supplements. When we are accustomed to $3,000 deductibles and &0-30 co-pays, paying a Medicare deductible and 20% co-pay is relatively easy to fit into the budget.

My spouse went on Medicare in February and opted out of part D and did not purchase a supplement. I plan to do the same thing in 4 years and 10 months.

[bertman]

236. The only problem with that is the 20% copay on open heart surgery

or some type of cancer that requires chemo and radiation. The copay on $150,000 is $30,000 if you're paying 20%.

My inlaws have used their supplemental to keep them out of the poorhouse.

[goodnews]

229. Hotdamn! Vitally important info leftsteet, thanks.

This needs to get to Sanders or something.

Do you have any links on this? Even though its obviously correct.

:thumbsup:

[senseandsensibility]

2. Great research

K and R!

[MannyGoldstein]

11. Thanks. I spent a long time on it.

But I wanted to really understand what was going, on rather than just suspect that there was some sort of flim-flam.

[jtown1123]

136. Do you read Bruce Webb (Angry Bear Blog?) He says basically the same thing. Rec!

[MannyGoldstein]

221. No, but it sounds like I should.

Thanks for the tip!

[plumbob]

3. Hey, thanks! I teach economics, and we begin on social programs the

week after Easter. Great stuff here, and I will use it!

Great work!

[MannyGoldstein]

5. Cool! I referenced everything.

Please let me know if anything seems amiss.

[CaliforniaPeggy]

4. I'm happy to K&R! Thank you.

:kick:

[SammyWinstonJack]

6. K&R

[Snoutport]

8. kr important stuff!

[Name removed]

9. Deleted sub-thread

Sub-thread removed by moderator. Click here to review the message board rules.

[Name removed]

10. Deleted message

Message removed by moderator. Click here to review the message board rules.

[JHB]

13. I first saw reporting of this in 1994. Please, please please help it get out of the ghetto.

From Left Business Observer #64 (Dec. 1994), by Doug Henwood

Is Social Security really going under?
The eventual bankruptcy of the U.S. Social Security system is taken for granted by nearly everyone, virtually without challenge. In part, that's understandable; who really wants to delve into the annual reports of the system's trustees? But the reports repay study. Of some interest is the news, for example, that the higher the rate of immigration, the sounder the system is, since immigrants (legal or not) tend to be young, and swell the ranks of those paying into the system rather than drawing it down.

Immigration, however, won't make or break the Social Security's finances. GDP growth will, since the size of the economy decades hence will determine how much money is available to pay retirees. The bankruptcy scenario is based on an assumption that GDP will grow at a rate seen only in depression decades.

As is common in the work of official seers, the trustees present three sets of forecasts, an official guess, an optimistic one, and a pessimistic one. The official scenario assumes the economy will grow an average of 1.5% a year over the next 75 years half the rate seen in the last 75 (2.9%), and a rate matched only in one decade of the last century, 1910-20's 1.4% rate. The economy grew more quickly even during the 1930s, 1.9% (1930-40). The growth rate for the trustees' optimistic vision, 2.2%, is only slightly bouncier than the 1930s rate. The pessimistic guess is 0.7%, slower than population growth, and a rate so torpid as to guarantee a war of each against all. As the graph shows, the system will go bust only if you assume decades of stagnation. If the economy grows in line with the 197394 average of 2.4%, still slower than the 75-year average of 2.9%, it will run a big surplus.

Either the trustees are deliberately projecting slow growth to feed the pension-cutting mania, or they're expressing a deep pessimism about the U.S. economy's future. Big news, whichever it is.

http://www.leftbusinessobserver.com/Pensions.html#SS_bust

[MannyGoldstein]

16. They are doing a good calculation, but using it incorrectly

for nefarious purposes.

In any sort of a pension fund, one wants to see how vulnerable it is to bad things happening. So projections get run with pessimistic numbers to see if the fund will get in trouble quickly, or whether they'll be time to deal with it. The 2.5% projection can reasonably used to say "hey, even if things get bad for a long time, we're in pretty good shape. If something crazy and really unlikely happens, and the economy gets horrible for a long time, we have 26 years before we have a problem. So let's watch and see."

Instead, they're claiming it's a *likely* scenario, and saying we have to cut benefits to deal with it. Which is dastardly and shameful.

[SkyDaddy7]

117. All Obama has said is remove the cap...

That would solve the even the low ball GDP estimated problem, correct? No need to cut benefits or raise the retirement rate which is exactly what the GOP will try to do! I honestly do not think Obama will allow that to happen but I am fully aware many here think Obama is just waiting to cut as many benefits from SS he can! Not sure where that feeling comes from.

[MannyGoldstein]

120. Obama appointed a commission that could only have been designed to recommend deep cuts

in Social Security. 10 of the 18 members were on record as favoring cuts when they were appointed to the commission, only two were on record as being against.

And, in fact, the Commission voted 11-7 to recommend a 22% cut in benefits, which averages $56,000 per recipient. Obama has praised their work.

See: http://fdrdemocrats.org/the-common-sense-guide-to-social-security/7/

[Lasher]

14. You are exactly right.

The only right thing to do with Social Security right now is nothing at all. I'm with Harry Reid on this issue, wake me in 30 years.

[benboot]

15. So you don't have a problem with our kids kids paying 80% income tax on minimal earnings? NT

[MannyGoldstein]

17. I think you have an English comprehension problem

That will likely soon be solved by the good DU Administrators.

[Ikonoklast]

18. Stop being willfully obtuse.

It makes you appear, uh, not smart.

[benboot]

22. So far it appears I am the smarter one. NT

[JDPriestly]

145. benboot, so far you have not explained how you would provide for

the basic needs of people over 65 when you get rid of Social Security.

No one has.

As one who is now over 65, I assure you that investing on Wall Street is no solution -- not at all.

And, you know the average Social Security benefit is less than $1200 per month. Seniors just survive on it. That's all. So, you still have to have Medicare. Most seniors could not begin to cover office visits to a doctor out of their Social Security much less hospital care.

Do you favor just letting older people die? Because that is the choice.

[Lasher]

171. I'm afraid benboot cannot answer.

'The smarter one' has been banished to the troll graveyard. Good riddance.

[freshwest]

204. Thank you Mods... A flood of them this week. Must be lonely over in Freeperville.

[lark]

185. think it makes him look like a freeper

if it walks like a duck, looks like a duck & quacks like a duck, it could be a duck.

[Lasher]

21. What a silly argument, completely pulled out of your ass.

Or someone else's. There has never been a shortage of asses.

[Enthusiast]

111. Obviously you are a stealth Republican.

And not very good at stealth.

[Lasher]

176. The mods seem to agree with you.

On both counts.

[Enthusiast]

195. I'm glad to hear it......nt

[JDPriestly]

144. It's better than our kids having to take care of their mom who has Alzeheimers

It's better than our kids having to pay everything they earn just to keep their parents in nursing homes. It's better than our kids having to live in tiny houses with mom and dad in one of the bedrooms and two children in the other.

You see, those who want to cut Social Security are very shortsighted. They are not dealing with the underlying problem: a very large number of aging people for whom there are no appropriate jobs.

I'm 67. My mind functions very well, but I have various physical problems. They aren't really handicaps in my view, but they slow my movements. (No, I'm not overweight.) Employers do not like having employees who move slowly or lose their balance or are obviously in a lot of pain or have to go for kidney treatments or who have very high blood pressure or are diabetic and vulnerable to all sorts of things like losing their eyesight, etc. I used to work with an elderly woman whose hearing was quite bad. My boss made her life miserable and then fired her just as he fired everyone before they reached 65.

So, you see, elderly people cannot pay their own way at this time. So, the existence of elderly people will either have to be paid for or the elderly people will just be left to die miserable deaths.

Do you have some solution better than Social Security for caring for elderly people, Benboot?

As long as your parents are alive, you will have to pay for their care unless they are quite wealthy. (Social Security just helps spread the cost among working people.) What alternative do you suggest?

[yardwork]

173. Where'd you get that?

[ProSense]

19. "So, unless the US economy is about to get even worse than today and stay that way,

Social Security should pay full benefits for our lifetimes and beyond."

Whose lifetimes, and what year is "beyond"? How does this fit into the "pretty well totally fucked" scenario?

Here's what should happen with Social Security: raise or scrap the cap. There is no reason to protect high-income earners, and this ensures that full benefits are paid well after beyond.

[MannyGoldstein]

23. Whose lifetimes: anyone that will die in the next 75 years.

If the economy grows at even the crappy 2010 rate, the trustees of Social Security (Timmy Geithner et al) have admitted that for as far out as they can project, the Trust Fund will never be depleted. However, they choose to bury that information. I don't think it should be buried.

Admitting that Social Security is in any way, shape, or form in trouble sets the stage for the President to cut benefits during the next hostaging. As his commission voted to recommend, he'll raise the cap a bit then gut benefits.

[ProSense]

28. Let's say your projection

is wrong and it's actually 26 years, per Robert Reich (and others), what exactly is the problem with increasing or eliminating the cap?

Two decades can fly by quickly. Why not address it now and end the debate?

[MannyGoldstein]

29. The moment we say there's a problem, benefits will be gutted

at the next hostaging.

And it's not my projection - it's Timmy Geithner's and Co. I'm just giving it some sunlight and air. Other economists agree with this, which you'd see if you read my research.

I'd love to read what Robert Reich has to say, but your link is broken.

[ProSense]

36. "The moment we say there's a problem" So

your entire point is to avoid saying there is a problem? Is that why you're pushing the date back to 75 years?

Research Desk responds: Could raising the income cap save Social Security?

[MannyGoldstein]

45. I'm not pushing anything. Reality is reality.

And the reality is:

1. unless the economy gets way worse and stays that way, Social Security is 100% solvent. So sayeth Timmy Geithner and company. Do you think they are wrong?
2. if Obama indeed pushes to raise the cap as recommended by his "Deficit Commission" in order to "save Social Security", he'll also be forced to do the rest of what his commission recommended: slash lifetime benefits by an average of more than $50,000 per recipient.

[ProSense]

51. Um

"1. unless the economy gets way worse and stays that way, Social Security is 100% solvent."

Who said Social Security isn't solvent?

The point is that you're claiming it's solvent for 75 years, not 26 years.

2010 OASDI Trustees Report

<...>

Under the intermediate assumptions, OASDI cost is projected to exceed non-interest income in 2010 and 2011 due to increased benefits and reduced tax revenue as a result of the economic recession, and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the Trust Funds in earlier years. For 2012‑14, however, non-interest income will exceed cost as the economy recovers. OASDI cash flow, excluding interest, will then become negative in 2015 due to demographic trends. Throughout the period 2010 through 2024, trust fund income, including interest income, is more than is needed to cover costs, so combined trust fund assets will continue to grow. Beginning in 2025, combined trust fund assets will diminish until assets are exhausted in 2037.

Based on the low-cost assumptions, the trust fund ratio for the DI program increases from 2017 through the end of the long-range projection period, and reaches the extremely high level of 1,799 percent for 2085. At the end of the long-range period, the DI trust fund ratio is rising by 36 percentage points per year. For the OASI program, the trust fund ratio rises to a peak of 422 percent for 2018, drops to a low of 282 percent for 2048, and rises thereafter to a level of 457 percent for 2085. At the end of the period, the OASI trust fund ratio is rising by 8 percentage points per year. For the OASDI program, the trust fund ratio peaks at 376 percent for 2019, falls to 306 percent for 2041, and increases thereafter, reaching 622 percent for 2085. Because the trust fund ratios are large and increasing at the end of the long-range period, subsequent Trustees Reports are likely to contain projections of adequate long-range financing of the OASI, the DI, and the combined OASDI programs under the low-cost assumptions. Thus, under the low-cost assumptions, each program would achieve sustainable solvency.

In contrast, under the high-cost assumptions, the OASI trust fund ratio is estimated to peak at 400 percent for 2011, thereafter declining to fund exhaustion by the end of 2032. The DI trust fund ratio is estimated to decline from 156 percent for 2010 to fund exhaustion by the end of 2015. The combined OASI and DI trust fund ratio is estimated to decline from 354 percent for 2010 to fund exhaustion by the end of 2029.

Thus, because large, persistent annual deficits are projected under all but the low-cost assumptions, it is likely that income will eventually need to be increased, program costs will need to be reduced, or both, in order to prevent exhaustion of the trust funds.
Even under the high-cost assumptions, however, the combined OASI and DI funds on hand plus their estimated future income would be able to cover their combined cost for 19 years (until 2029). Under the intermediate assumptions, the combined starting funds plus estimated future income would be able to cover cost for 27 years (until 2037). The program would be able to cover cost for the foreseeable future under the more optimistic low-cost assumptions. In the 2009 report, the combined trust funds were projected to become exhausted in 2029 under the high-cost assumptions and in 2037 under the intermediate assumptions.

<...>

[MannyGoldstein]

55. "Under the intermediate assumptions"

That's the problem. The "intermediate assumptions" assume that the economy will get much worse and stay that way.

Do you, of all people, think the economy is about to get much worse and stay that way? I'm surprised if you do!

[ProSense]

60. Um

"The 'intermediate assumptions' assume that the economy will get much worse and stay that way."

It does no such thing.

Under the intermediate assumptions, OASDI cost is projected to exceed non-interest income in 2010 and 2011 due to increased benefits and reduced tax revenue as a result of the economic recession, and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the Trust Funds in earlier years. For 2012‑14, however, non-interest income will exceed cost as the economy recovers. OASDI cash flow, excluding interest, will then become negative in 2015 due to demographic trends. Throughout the period 2010 through 2024, trust fund income, including interest income, is more than is needed to cover costs, so combined trust fund assets will continue to grow. Beginning in 2025, combined trust fund assets will diminish until assets are exhausted in 2037.

[MannyGoldstein]

63. Your quote has zero to do with your assertion.

C'mon, you can do better than that.

[ProSense]

64. Your claim

has nothing to do with reality.

[MannyGoldstein]

68. Then prove it. I posted referenced numbers.

You post flailing nonsense.

[ProSense]

73. Start

here.

[Name removed]

74. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ThomCat]

98. Wow, you just went back in a circle

and said, "Just read the nonsense I already posted." Nonsense that basically says you like your assumptions and therefore don't want to actually try to refute anything he posted.

[Name removed]

123. Deleted message

Message removed by moderator. Click here to review the message board rules.

[mntleo2]

183. They also use millions in SS money to destroy low income families

...through the American Safe Family's Act (AFSA), that is corrupting entire court systems because the grab for this money and desperation to keep jobs because of safety net cuts is corrupting family court, DSHS agencies, and the Constitution.

Sometime, read this article on Kos: http://www.dailykos.com/story/2010/07/13/883930/-Thanks-to-CPS,-Robin-Committed-Suicide-Last-Week- , which will explain it all as to why this is happening.

I wrote this article out of agony and grief about a young women I knew. But she is just one of thousands of families ~ and their permanently traumatized kids being taken for no other reason than to sell children. This is because the caveats in AFSA state that, "The more children you take, the more money you will get and we will even offer cash bonuses to individuals who succeed. But if you return them home, you will lose what funding you have, and furthermore, you will lose any future funding as well..."

Furthermore, after receiving millions in AFSA, then child protective agencies go in and take about 1/3 of the welfare monies, in addition to food stamp and Medicaid money for themselves. They spend on the average of $8000 per month per child in foster care rather than spending 1/3 that much to preserve birth families with services.

When they can also deplete Social Security of billions of dollars for this purpose, then they cry that it is being "depleted". HELLO!

Cat in Seattle

[stockholmer]

127. +1

[Hannah Bell]

103. If that happened, the time to raise the cap is in 26 years. Not now. there's already

a 2.5 trillion dollar surplus.

The cap is set at 90% for a reason, & is periodically adjusted to keep it around that level.

[ProSense]

202. Raise the cap now

Take Social Security out of the debate. There is no harm in raising the cap now, and it will strengthen Social Security in the long term.

[JDPriestly]

146. Manny, don't forget to ask those who criticize Social Security

what their plan is for providing for seniors. They don't have one. There really isn't any alternative to Social Security. There is no other way to provide for older people that makes any sense.

[Mimosa]

207. Rightwingers have always wanted to destroy Social Security (and later medicare)

Because these programs represent a sense of community aka 'soshulism'.

[bluestate10]

30. This poster is good with the cap being removed. But.

Once a person retires, benefits need be paid out in proportion to what was paid in. I do not understand the logic of progressives that want to eliminate the cap, AND means test retirement benefits. Progressives are screwing the very voters that have kept the USA from becoming a red swamp. Drop the cap, but drop means testing and pay benefits in proportion to what was paid in.

Then step back and allow republicans to explain to their red voting seniors why they have to greet at Walmart to make ends meet. They certainly won't have time to flood teabagger rallies.

[JHB]

37. Right. The relatively small savings from means testing...

...just isn't worh cracking the principle that SS is for everybody.

[lark]

187. Agree

and you know that as soon as it becomes means tested, it's a program for only poor and middle income folks and so the Repugs will ALWAYS come back and attack it. Raise cap and pay out everyone.

[ProSense]

42. Wrong.

That assumes everyone's situation is the same, the population doesn't fluctuate and there are no other variables. What difference would it make if the cap is about $106,000 or higher if the projection is that it will cover benefits for 75 years?

[bluestate10]

77. Payouts should match payin. The inequity is the very reason why

the South and interior West have turned republican. Seniors in both of the regions don't get their noses held to the fire by having to live on SS and Medicare benefits that are in proportion to what they paid in. I trust my democratic governor more than I trust republicans, I would prefer that my governor keeps and decides how to spend my SS and medicare funds on my home state seniors. As the situation now stands, I send money to seniors in South Carolina and other red voting hell holes.

[JDPriestly]

147. I do not like your idea at all.

What would prevent seniors from choosing to retire to states in which the money is really spent on seniors and allow other states to spend it on building golf courses for politicians?

Don't change Social Security. There really is no alternative to it.

We have had some really terrible Republican governors in California. They got us into disastrous financial trouble. Never again. Governors are less accountable, believe it or not, than are federal governments. That is because busy people pay little attention to what is going on in state government. The federal government gets lots of coverage on TV and in other news media. So people watch the federal government more than they watch state government.

[bluestate10]

213. Miss. I have respect for your posts, but respectfully disagree.

Money should be returned with the only avenue that states have for spending it being for SS and Medicare. There should be no wiggle room. Having states control funds would cause voters in those states to take note and vote in those that truly manage state funds right. Given that democrats have historically done better at managing money that republicans, despite lies to the contrary, the change would bode well for democrats.

[grahamhgreen]

99. Scrap the cap!

[Hannah Bell]

104. High income WORKERS are not "protected". They pay SS up to the limit.

High income *earners* whose income comes from *investment* don't pay SS taxes.

You always blur this distinction.

And you always seem to have amnesia about the quite legitimate reasons for capping SS taxes to cover 90% of all WORKER income.

[JDPriestly]

148. High income workers only pay Social Security tax on maybe the

first $106,000 to $116,000 (not sure which number it is) at this time. If you earn $250,000, the percentage of your income that goes for Social Security is relatively small compared to the percentage of your income that goes for Social Security if you are only earning $18,000 per years.

We need to raise the cap considerably.

[RaleighNCDUer]

149. Nonetheless, the CEO whose direct compensation is a 2.4 million

a year salary only pays FICA tax on the first $106,000 of that paycheck. Wile ALSO paying nothing in on the 7.6 million in stock options, deferred compensation and investments he also makes.

Simple fact is, even if we pay out proportionately to what is paid in after removing the cap, most will never live long enough to recoup even a fraction of what they will wind up paying in, because their income level is so far beyond the cost of living that it is simply impossible.

BTW, what do you mean "capping SS to cover 90% of all worker income". Taxes are 7.6% (or something like that) of ALL earned income up to a cap of $106,000. Where are you getting this "90%" from?

[Hannah Bell]

178. Social Security was set up to tax 90% of *total* covered wages.

Traditionally, the Social Security tax cap has covered 90 percent of the aggregate earnings of
covered workers. That was true when the program began and it was true in 1983, when
Congress last addressed Social Security finances (Ball, 2004).

http://www.nasi.org/usr_doc/SS_Brief_18.pdf


as for your CEO example; typically, a large % of CEO salaries = stock options, not wages. Stock options & other forms of capital income aren't subject to social security taxes. The very rich don't pay social security taxes; their income comes from investment of capital (profits, capital gains, dividends, etc.) -- not wages.

[RaleighNCDUer]

184. Thanks for the link -

I saw where the misunderstanding was - I was talking about individual earning, you were talking about aggregate earnings: I was saying "worker's", you were saying "workers'".

We are in agreement. As high-end salaries have increased, their proportion of payment into the system has decreased as the cap has not kept pace with their salaries - the 'unearned' part of their income is a different matter altogether. So not only are they not paying in proportionately to their total income; they are not paying proportionately to their earned income.

[Locrian]

20. strategy

Their strategy is NOT to kill Social Security. They LOVE that money being paid in (that they can steal). What they will do is raise the age / limit the benefits so its still there ("reformed" of course) so they can still raid it for tax cuts for the wealthy.

[TheKentuckian]

25. Absolutely correct.

[bluestate10]

34. Republicans have no intention of killing SS or Medicare.

Their voters are infinitely more dependent on the payments than democratic voters. What republicans will do is out smart democrats if leaders like Reid, Pelosi, Hoyer, Claybourne, Hastings, Cummings keep holding leadership positions for Demos. Red state are dependent upon government largess, in particular SS and Medicare payments. Democratic leaders must work to send benefits back to the people that paid in 80%+ of SS and Medicare funds to begin, their fucking voters.

[SpiralHawk]

212. + 1,000

you nailed it

[Yo_Mama]

24. This is a good assumption

For many reasons. One is that the average income is expected to keep falling.

Demographics control a lot about economies. The price of energy does also. The price of energy is doomed to rise also. Those two factors alone take US potential growth down to around 2%. And the "green" energies we are now working on all cost more per kwh than those they replace.

In addition, the SS imbalance is much worse than predicted. The income less than outgo date was supposed to be 2018, then 2017, then 2016 and now it is 2010.

Depending on rosy predictions to deliver SS benefits is an acute betrayal of the people who would need them in the future.

And it is not a question of the trust fund. There are almost no external assets in the trust fund. The trust fund is a legal device that legally allows full benefits to be paid until it is exhausted, but actually paying the benefits would require either taxes to be raised or additional borrowing.

If DU'rs want to protect Social Security, then they'll advocate an additional tax levy with its revenue stream dedicated to Social Security, not build some castle in the sky regarding future growth projections. That's how we got in this mess.

[MannyGoldstein]

27. So you're saying that growth is about to plummet?

That prediction's been made for many, many years. Hasn't happened yet.

[Yo_Mama]

76. It's happening.

Do you have any clue how much US growth is predicated on running huge annual deficits? Do you have any clue what's going to happen when we can no longer do it, which is coming up within less than a decade?

Sorry, this is what I do for a living.

Do you even know what deficit level is required this year to keep US economic growth over 2%? Take a guess.

Do you know what the relationship is between that level and total US personal income taxes collected? Take a guess or look it up, and then get back to me.

fms.treas.gov is down for the moment.

Try Debt To The Penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

September, 2001:
Debt Held By The Public: 3.34 trillion
(Intragovernment-trusts): 2.47 trillion
Total: 5.8 trillion

Nominal GDP Q3 2001: 10.3 trillion
Public debt % of GDP: 33%
Total debt % of GDP: 56%

April 19th, 2011:
Debt Held By the Public: 9.68 trillion
(Intragovernment-trusts): 4.64 trillion
Total: 14.3 trillion

Nominal GDP Q4 2010: 14.8 trillion
I'll call it 15 trillion for Q1:
Public debt % of GDP: 65%
Total Debt % of GDP: 97%

If you don't understand that this means that we cannot borrow the Social Security funds when we must legally draw upon them to fund SS, but must pay for them in taxes, you don't understand anything about public finances.

Given wildly positive assumptions, we will borrow more than 1 trillion in fiscal year 2011, which ends in September. It seems likely that nominal GDP will not grow more than a trillion given current energy costs.

Get that? Every year we are slated to get deeper in the hole. If we raise taxes to lessen the deficit (which we must do) we lower the nominal and real growth rate of GDP. When we get to about 90% of GDP in publicly held debt, we won't be able to borrow any more at reasonable rates. The more money we owe to the public (we don't pay interest on the trust bills) the higher our interest costs and the harder it is to keep the deficit down.

Nominal GDP here:
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=5&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Qtr&FirstYear=2001&LastYear=2010&3Place=N&Update=Update&JavaBox=yes#Mid

If we print money to take care of the shortfall you will get what you are now seeing - a drastic drop in real per capita incomes. The reason gas costs are up so high is that the Fed is basically printing money like mad in QE2; the dollar is falling and our energy costs are growing relative to economies with stronger currencies. So that's no way out. Inflation like that is just another way of taxing the poor and the middle class.

I just know you don't want to hear it so you won't look anything up:
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=87&Freq=Qtr&FirstYear=2008&LastYear=2010

That's federal taxes. All personal income taxes were 902 billion (annualized), Social Security, Medicare and unemployment taxes were 1000 billion, thus 1.9 billion. The Obama estimate for this year's deficit is 1.27 trillion; if we wanted to close it we would have to more than double income taxes or raise FICA to about 31% from its current 15.3%.

Now if you really think we could double income taxes or FICA taxes and have a growth rate in the 3% range, you are free to think so, but all those a little better at running the numbers know this is not true.

[MannyGoldstein]

92. Thank you for a well-researched post

I need to go to bed now, but I'll try to read it in the morning.

Thanks!

[Hannah Bell]

106. "If we raise taxes...we lower the nominal and real growth rate" = bullshit.

This claim is based on the assumption that a tax hike would "crowd out" real investment.

But in a depressed economy with wealthy folk 'investing' in government securities & oil speculation, that isn't the case.

[MannyGoldstein]

124. We need to end War! War! War! and hike taxes on the well off

I (think) I understand your numbers, but... military spending alone is something like $700 billion. Slash that, raise taxes on the well off, and we'd be mostly there.

As to raising taxes equating with lowered growth - I agree with Hannah Bell (as I always seem to). The evidence is, if anything, quite the opposite: GDP growth has generally been best in periods when the wealthy have been tax fairly, at blended rates as high as 50%.

[JDPriestly]

151. Again, how are elderly people supposed to live without Social Security?

[stockholmer]

143. the actual real GDP growth of the US is negative, when 'cooked-books' banking/financial chicanery is

held up to the light of legitimate book-keeping standards.

John Williams of Shadow Stats has been/is/will be deadly accurate on UE, Inflation, GDP, etc etc. To a large extent, he simply uses the older forms of measurements that the US government utilized for decades before the 1990's and onward brought in magical, wishful, deceitful thinking and practices designed to paper over the fiscal raping of the nation's citizens.

http://www.shadowstats.com/alternate_data/download_gdp?mode=text

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

Annual Growth (Year-to-Year Percent Change) in GDP is shown in the chart on the right. This is not the annualized quarterly rate of change that serves as the headline number for the series.

Note: The GDP headline number refers to the most-recent quarter’s annualized quarter-to-quarter rate of change (what that quarter’s percent quarter-to-quarter change would translate into if compounded for four consecutive quarters).

This can mean that the latest quarter can be reported with a positive annualized growth rate, while the actual annual rate of change is negative. Such was the case for the 3rd quarter of 2009.




Even if you buy into the 'official' GDP numbers, this article will defo make you think twice about ny rosy forecasts happening anytime soon.

http://www.safehaven.com/article/20418/gdp-data-show-that-the-us-economy-has-been-in-the-greater-depression

GDP Data Show That the US Economy Has Been In the Greater Depression

The Genesis of My Forecast of the Greater Depression


I first came to the conclusion that the US economy would enter the Greater Depression in 1998. I came up with the term independently, but later learned that it had been used earlier by Doug Casey. On all forums and blogs I have always posted under my name, Jas Jain, but in early days of my comments in 1990s I would sign as Rabbi Jazzman (rabbi of morality of financial practices and their impact on the real economy and asset classes, e.g., the stock market and the housing market; with moral tone obvious in my use of language). Here is a quote from the period, July 1998:

"May be you are on to something here... What will happen...? The Greater Depression? ...The glory days of the US stock market may be over for good and in few decades the Chinese might assume the place of the supreme economic power in the world. Shalom, shalom. Rabbi Jazzman"

In 1998, I also concluded that fraudulent financial practices, permitted by the US govt and enforcement agencies, e.g., SEC (Securing Entitlements for Crooks), have guaranteed an inefficient allocation of capital, on which the private US economy heavily depends, on top of the theft of the shareholders, would necessarily lead to a weak economy, long-term, and the US economy would enter a period of long-term growth far poorer than during the Great Depression, which was also caused by such practices that had preceded it, but at a lower degree of fraud. It also became obvious to me that a large number of organized group of economists, including Bernanke, have been lying about the true causes of the Great Depression -- bad financial practices, especially related to lending. I also concluded that, historically, the stock market has been a substitute debt market. Hence, I started to sign off some of my comments with: It is the debt, stupid! Not diligently and rigorously preventing the fraud since the mid-1990s had guaranteed outcome similar to, or worse than, the Great Depression. Now, after dozen years we have the data to prove that forecast. My forecast was based primarily on the widespread fraudulent financial practices, e.g., stock options, acquisitions, and related accounting practices, at the highest levels in corporate America and evidenced themselves in the so-called stock market, which I termed as the Scam Market, bubble. It wasn't a bubble but a direct consequence of fraud. It continues to be the primary mechanism to defraud the wider public, including thru pension funds.



After the Tech "Bubble" Burst
The economy was officially in a recovery in late 2001, but a very weak recovery. Here are my comments on July 27, 2003:

THERE HAS BEEN NO ECONOMIC RECOVERY, INCLUDING DURING THE GREAT DEPRESSION, WHERE THE YoY NOMINAL GDP GROWTH RATE DID NOT REACH 5% WITHIN ONE YEAR OF THE RECOVERY. WE HAVE BEEN SUPPOSEDLY IN A RECOVERY FOR 20 MONTHS AND THE NOMINAL GDP SHOWS NO SIGNS OF GROWING AT 5%. A "weak recovery," or "sub-par recovery" is like being half pregnant! If the weak recovery lasts long enough conditions would be as bad or worse than during a recession, or depression. For example, a 2% growth in real GDP over a period of 10 years would create conditions worse than the Great Depression! During the worst 12 years of the Great Depression, the real GDP growth averaged 2.83%! But, that was a full percentage point below the trend-line growth rate before the Great Depression.

At the minimum, the nominal GDP growth rate would have to go above 5% and stay there for at least one year for the trend to be revered. That means that the 10-year Note yield must get above 6% for a year.

Don't let the e-CON-meisters lure you into the con game of predicting bright future for the US economy. There are far more powerful secular trends (the attached gr aph being just one piece of evidence) that point to the opposite. The recent low in the 10-year Treasury yield points to continuing weak growth in nominal GDP, a very bad sign for future employment, the single most important factor. A GDP growth rate above 3.4% that fizzles after one quarter is no good after a recession. And that is what has been happening.








Continuation of the Fraudulent Financial Practices Became a Necessity


The weak economic "recovery" wasn't going to get GW Bush re-elected. In November 2002, two years ahead of the next election, things were getting desperate and suggestions from trade groups (pool and spas!) that a housing boom could be just the shot-in-the-arm to lift the economy from its funk caught the imagination of the managers of the economy. What was needed was low rates and even lower standards of mortgage lending. Enters on the main stage a big actor -- Ben Bernanke to save the economy from replay of the Great Depression (GD). I wasted no time in concluding that the jig was up, i.e., we were already there, i.e., the conditions already existed. There is no way to prove the counter factual: Would GW Bush gotten re-elected without permitting the mortgage fraud, beginning in 2003 and continued thru 2007, and would Bernanke be appointed the Fed Chairman in 2006 (a place was held for Bernanke until Greenspan's term expired for good)? My conclusion in 2006 was that the mortgage fraud was a necessity. Here is what I said on 09/04/2006 (See, or Peak Debt):

Let us see, in 2003, Bernanke wanted to artificially boost the economy in preparation for the Bush re-election in late 2004 and his own future appointment. He had read articles by some self-serving economists in 2002, if it hadn't occurred to him, that low interest rates could boost housing and that may lead the economy out of the recession (it was already out of the recession, but didn't feel like a recovery with the employment falling). So, during the first half of 2003, Bernanke, as a Fed Governor, started to publicly talk about the deflation threat and how the Fed can always stop that by "printing money." Thus, the Fed, under Greenspan chairmanship back then, lowered the rates to "emergency" levels when the only real emergency was the Bush re-election. Greenspan was very happy to play along because his own reappointment in 2004 was contingent upon the economy visibly recovering.

All that the Greenspan-Bernanke did during 2003-2007 was to artificially boost the economy and literally borrow from the future employment and growth. The proof is in the pudding. What fraud giveth fraud taketh away!...................................................



much more at the link
........................................................................................

Have you looked at th US DX lately? It just breeched 74, and is SERIOUS danger now of a waterfall collapse down into th low to mid 60's. This will make prices explode inside the States. It's dropping like a rock: http://quotes.ino.com/chart/?s=NYBOT_DX



Over the next 12 month the Fed needs to sell over $1.7 trillion in new financing (at least) just to cover the budget deficit, AND they have over $2.5 trillion in maturing short term debt to roll over

that is over $4 TRILLION in new treasury sales needed to just keep the Ponzi scheme afloat.


Dollar crisis/huge inflation is probably on the way, especially if the Fed launches QE3 and doesn't raise interest rates.

But, if they do not do QE3, the economy tanks further, plus raising interest rates just several hundred basis points will add hundreds upon hundreds of $BILLIONS to the deficit.

PLUS, the Fed has been fraudulently selling naked put options against its OWN debt to keep LONG term rates down

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x574748

Catch 22, with devastation either way.



-----------------------------------------

edited for bad spell

[JDPriestly]

150. Yo_Mama, so what is your proposal for an alternative to Social

Security. And don't suggest putting the money in the stock market. Nixon tried that with the ERISA law. Those who earn good salaries already tend to put a percentage of it into Wall Street's greedy hands. That has not worked out for most of us.

Savings? Right now the interest rate on a senior's savings are 2%. If the senior averaged maybe $55,000 during his working life, he could not possibly live on his savings.

And, worst -- a fact that is being ignored in this conversation -- millions upon millions of Americans between 55 and 63 lost their jobs in this meltdown and have been living on their retirement savings.

Our economy is like Fukushima -- melting down. Cutting Social Security benefits will not solve the problems. It will just cause widespread misery and panic.

There really is no alternative to Social Security. I have not heard anyone even pretend to suggest one yet. So, if you think that raising the cap and keeping Social Security strong is a bad idea, explain your solution.

[bluestate10]

26. The problem that I have.

Is that democrats want to means test to determine where to make SS and Medicare cuts. Again, democrats help red state seniors that vote against their asses while bludgeoning blue state seniors that paid in 80% plus of SS and Medicare funds to start. How insane can democrats become? What should happen is that pay outs need mirror pay in rates. Then let republicans explain to their loyal voters why their SS checks and Medicare benefits are rightfully smaller.

[former9thward]

31. Your figures are way off.

No credible economist expects the U.S. economy to grow at the rate it has in the past. Our economy dominated the world in the post WW II period but that has come to an end. There are dozens of strong emerging economies all over the world who now compete with the U.S. We had 2.9% growth in 2010 only because we were coming out of a deep recession. It is better not to put our heads in the sand because we don't like what we see.

[MannyGoldstein]

33. First off, credible economists do agree - read my paper for details

Second, your prediction has been made for decades, and hasn't been right yet. And Social Security has been predicting insolvency for decades, they have been wrong, and the date keeps getting pushed (mostly) further out.

[former9thward]

44. The CBO says a deficit this year.

http://www.cnsnews.com/news/article/cbo-social-security-run-45-billion-defic

[MannyGoldstein]

48. Read it carefully: that's excluding interest

Unless you feel that interest shouldn't be paid, as agreed.

Everything that's happening is, more or less, what's been planned for many years.

[former9thward]

50. I read your paper and saw only 2 economists quoted.

And neither was quoted on future growth rates.

[MannyGoldstein]

52. I thought it was pretty clear.

Krugman said tprojected growth rates were very conservative, and Buchanan said they were laughable.

[former9thward]

58. Well regardless with what anyone said I disagree with your prediction

And most economists agree with that. I would love it if we had high growth rates but it just is not in the cards. That is the main reason we have struggled with unemployment after this recession.

[Hannah Bell]

107. if "most economists" agree, why can't you cite them?

[jtown1123]

138. Here's one for starters, also read up on Dean Baker

http://www.angrybearblog.com/2010/09/why-nothing-is-still-2nd-best-plan-for.html

[former9thward]

169. I'll just go with the U.S. Commence Dept Bureau of Economic Analysis.

These are their growth rates averaged per decade. It is a one way street.

1950s (1950-1959): 4.17 percent
1960s (1960-1969): 4.44 percent
1970s (1970-1979): 3.26 percent
1980s (1980-1989): 3.05 percent
1990s (1990-1999): 3.2 percent
2000s (2000-2009): 1.82 percent

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=5&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1950&LastYear=2010&3Place=N&AllYearsChk=YES&Update=Update&JavaBox=no#Mid

[former9thward]

54. Delete - Wrong place

[ProSense]

38. Completely off.

From the link:

<...>

c.During 2010, the Social Security Trust Fund increased its savings, running a surplus of about $70 billion1. Even in a bad economy, more money went into the account than came out.

<...>

Footnote 1 is applicable. Take a look

[MannyGoldstein]

39. Uh... what are you claiming?

Thanks.

[former9thward]

43. The Congressional Budget Office disagrees with you.

$45 Billion deficit this year. http://www.cnsnews.com/news/article/cbo-social-security-run-45-billion-defic

[MannyGoldstein]

49. And again, they don't disagree at all. Read my response upthread.

[bluestate10]

40. Right.

A baker's dozen of countries are equalizing with the USA economically. The steady loss of high paying jobs in the USA for the last 4 decades should have served as the warning bell. Some people don't get it. The USA will never again be the economic engine of the world, it's growth and economy will mirror that of France or Great Britain. Economic power is shifting to Asia, the countries in that part of the world still value the power of science and sound educations for young people. Democrats, in particular, must fight to shape SS and Medicare to new economic realities. There are going to be cuts in SS and Medicare, the only question is whether democrats assist republicans in favoring red state seniors while sacrificing blue state seniors. If the latter happens, prepare to live out your lives in a red state hell, or move and die on foreign soil.

[former9thward]

47. I like the foreign soil option.

[bluestate10]

79. Good for you. I don't. nt.

[JDPriestly]

153. So, former9thward, how do you propose to house and feed those

over 65 in your vision of a future without Social Security?

Means testing will not do the trick. Because peoples' savings were wiped out in this meltdown and only the very rich can possibly save enough during their working years to live comfortably or even survive after they are no longer working.

I am 67. When I first started working as a teenager, the government took money out of my paychecks for Social Security. But back then I only earned at most $1.25 per hour. Even if I had saved that part of my pay instead (and I would never have done that because it was too small an amount) and invested it, most of it would inevitably have been swallowed by Wall Street at some point.

Social Security is the only means for supporting older people that has been suggested. If you have a better idea, let us know. But so far no one has suggested a realistic alternative to Social Security.

[former9thward]

168. When I took rhetoric in college one of the first things taught was that any sentence

beginning with "So" is a straw man. And yours certainly was. I never said anything about a "future without SS" . My only point was the OP believes there is no problem with SS because he/she believes growth rates will continue to be high. Our growth rates have been declining every decade since 1950. And they will continue to decline. The CBO says SS will run at a $45 billion dollar deficit this year for the first time ever. Either changes will be made to SS or some other way to finance it must be found.

[JDPriestly]

175. At least you admit that there really is no alternative to Social Security.

It has to be funded. Best way to fund it is to raise the cap. My elderly friends do not have I-phones. A surprising number of them don't even have cell phones.

The tax cuts for the rich have decreased the numbers of good jobs for everyone because the tax cuts have removed incentives for investment in job-creating enterprises.

End the tax cuts and raise the cap and you will be surprised at the growth rate we will have.

Our growth rate will surge even more if we seriously focus on clean, alternative energy sources that allow us to cut our trade deficit.

Republicans are very short-sighted and, although they accuse Democrats of being down on America, are actually overly pessimistic about the resilience of our economy and of us as people.

[Yo_Mama]

32. Under current law disability won't be paid starting 2018

Do you realize that? This is much more of a crisis than people have been led to believe.

As the population gets older, disability rates are rising. The DI part of OASDI has its own trust fund. The income for DI has been less than outgo for several years. The fund itself is now projected to be exhausted by 2018, which would, by law, cause DI payments to be cut.

The likeliest thing to happen is that OAS funds will be transferred for DI use, but that advances the exhaustion date of OASDI.
http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2412-social-securitys-trust-fund-headed-for-bust-in-2035

Maybe you don't care, because you are not receiving disability. But this would be a disaster for people who do. I care, even though I am not receiving disability. It's time to deal with the truth.

[MannyGoldstein]

35. My numbers cover OASI and DI as a single entity

And it still never runs dry.

[Yo_Mama]

84. Well let's check your numbers against historical performance

2002 OASDI projections.
http://www.ssa.gov/oact/TR/TR02/II_project.html#98733

The "high cost" (worst) scenario had the SS trust fund balance in 2010 being 3.131 trillion in 2010. Exhaustion date for OASDI projected 2041. Intermediate cash flow negative date estimated 2017.

And let's see what actually happened in 2010:
http://www.ssa.gov/oact/STATS/table4a3.html

2.608 trillion trust fund balance. Went negative (benefit payments exceeded OASDI receipts plus taxes) in 2010. Payments plus cost 712,526, income 639,790 plus 23,942 taxes on benefits = 48,794 in the hole.

Well golly gee, I guess that just means we should assume growth next decade should be 5% so we can catch up, right?

Or maybe not, if we know what we are talking about. There is no particular mystery as to why the OASDI numbers are so disappointing - we had a terrible decade for job creation.

In March, 2001 there were about 114,617 full time workers.
In March, 2011 there were about 112,775 full time workers.

In fact wages are not increasing nearly as fast as in prior decades.
From 1990 to 2000 wage and salary disbursements increased 76%.
From 2000 to 2010 wage and salary disbursements increased 33%.
NIPA table here:
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=58&ViewSeries=NO&Java=Yes&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1990&LastYear=2010&3Place=N&Update=Update&JavaBox=yes#Mid
From 1980 to 1990 wage and salary disbursements increased almost 100%!

With the wave of retirements coming on, and with increased foreign competition driving private wages down, we are going to see further slow wage growth. This will restrict GDP growth.

You have an assertion only. These are the facts.

[MannyGoldstein]

85. The 1995 projection claimed The Trust Fund would be bankrupt in 2029.

The date moves around - sometimes closer, sometimes further - but mostly further.

An imminent, permanent GDP growth drop has been predicted by the Trustees for decades - but it hasn't happened.

[Yo_Mama]

88. It HAS happened.

You have the right to your own opinions, but not to make up your own facts.

Here is Table 1.1.6
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=6&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Year&FirstYear=1970&LastYear=2010&3Place=N&Update=Update&JavaBox=yes#Mid
Real GDP 1970-2010:
1970: 4,269.9
1980: 5,839.0 (37%)
1990: 8,033.9 (38%)
2000: 11,226.0 (40%)
2010: 13,248.2 (18%)

Growth 2010 to 2020 will be well below 2.5% annually.

[MannyGoldstein]

122. 2001-2010 was bracketed by a bad recession and a depression.

The one in the early part of the decade was bad, and had a jobless recovery thanks to the policies of Bush et al. At the end of the decade, a depression began for working Americans. So you picked a decade that, in effect, had the timing to "hit all of the red lights".

[Yo_Mama]

134. Look at the 70-80 time frame

70 through 80 started with a recession, had an acute recession in the middle and ended in a recession:


Nonetheless we racked up impressive real growth for the decade. The 70s were not a good time but they beat this last decade all hollow.

I agree with you that 2007 started what was in effect a depression. I am very singular in that agreement, but I usually calculate from incomes rather than GDP, which makes me a rare bird indeed. I do it because it is highly accurate for years in the future. In 2002 I calculated a growth rate of 1.8% for the first decade.

However, calculating from income, which is far more accurate for projections, does imply a net real growth rate below 2.3% annually for the next decade. It is intractable. I have 2.1%. It might go to 2.3% if we continue to borrow more, or it might be 1.9%. But it will not be 2.5%.

Further, the "jobless" recovery we all saw from 2001 is smack on the line for US recessions. As US production has dropped, jobless recoveries have become the norm. Each time we enter a downturn the recovery is slower.


We have been moving from one bubble to the next since the dot.com bubble of the 90s.

Further, there is a huge body of economic literature showing that a financial crisis such as the one we just endured (from fostering bubbles) has a very long time frame before economic recovery. You expect a decade; it takes that long to work your way out of it.

The US economy will slowly recover and regain strength by boosting production relative to consumption. But we are not going to boost production that quickly; consumption is going to fall to bring it back in line. We are going to raise taxes which will reduce consumption, and we are going to reduce social spending for the middle class, which will also reduce consumption.

Over time we will move back to a balanced economy, but we will not see 3% average growth for probably another 2 decades. This is not rare among OECD economies. As soon as you get your debt to the 90% level, your growth rate is doomed to slow significantly. There is a very large and empirically-based body of economic work on the function of debt and economies (high personal and high public debt are not that different in effect - we have both).

In part this is a function of demographics. Older people spend relatively little of their incomes on stuff and far more on basic needs. The 1990s change in SS/Medicare projections was due to several factors. The first was the change in CPI calculation, which reduced the growth of SS benefits quite significantly. The second was that the US birthrate rose.

In the US, personal incomes peak in the 50s and this has been true for a very long while. Due to our older population, we would expect to see US household income, on average, drop for over a decade. That has economic implications. The amount of private debt per household has very large implications for future consumption.

Consider student debt, which generally cannot be written off in bankruptcy. The amount of student debt we have racked up is frightening and should lower GDP about 1/2 a percentage point over the next decade at least. We could write it off, but that means the government assumes more debt, so it doesn't really disappear.

[JDPriestly]

157. That dip in employment rates included a lot of people in their 50s

and early 60s who will never re-enter the ranks of the employed at least not in jobs in which they can earn enough to save.

For the sake of argument, Yo_Mama, let's accept your numbers as correct. Explain to me, how are my 55-year old friends who lost their jobs in the recent Wall Street greed fest supposed to pay for their retirements if they don't get good benefits from Social Security?

What is your alternative to Social Security?

[Hannah Bell]

109. bullshit.

[JDPriestly]

154. So raise the cap.

Wealthy people do not pay their share toward social programs like SSI under our current tax system.

[elocs]

41. The problem is that Boomers will live forever. Well, maybe not.

This Boomer won't be 65 for another 6 years and in 26 years I'll be 85. I have a feeling that by that time a good number of us Boomers just might be exiting the stage. And Gen X coming up behind the Boomers is a lot smaller.

[Generic Other]

46. the bad guys have already won

this seems to be the case on DU.

[unkachuck]

53. K&R....n/t

[ProSense]

56. 2010 OASDI Trustees Report

2010 OASDI Trustees Report

<...>

Under the intermediate assumptions, OASDI cost is projected to exceed non-interest income in 2010 and 2011 due to increased benefits and reduced tax revenue as a result of the economic recession, and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the Trust Funds in earlier years. For 2012‑14, however, non-interest income will exceed cost as the economy recovers. OASDI cash flow, excluding interest, will then become negative in 2015 due to demographic trends. Throughout the period 2010 through 2024, trust fund income, including interest income, is more than is needed to cover costs, so combined trust fund assets will continue to grow. Beginning in 2025, combined trust fund assets will diminish until assets are exhausted in 2037.

Based on the low-cost assumptions, the trust fund ratio for the DI program increases from 2017 through the end of the long-range projection period, and reaches the extremely high level of 1,799 percent for 2085. At the end of the long-range period, the DI trust fund ratio is rising by 36 percentage points per year. For the OASI program, the trust fund ratio rises to a peak of 422 percent for 2018, drops to a low of 282 percent for 2048, and rises thereafter to a level of 457 percent for 2085. At the end of the period, the OASI trust fund ratio is rising by 8 percentage points per year. For the OASDI program, the trust fund ratio peaks at 376 percent for 2019, falls to 306 percent for 2041, and increases thereafter, reaching 622 percent for 2085. Because the trust fund ratios are large and increasing at the end of the long-range period, subsequent Trustees Reports are likely to contain projections of adequate long-range financing of the OASI, the DI, and the combined OASDI programs under the low-cost assumptions. Thus, under the low-cost assumptions, each program would achieve sustainable solvency.

In contrast, under the high-cost assumptions, the OASI trust fund ratio is estimated to peak at 400 percent for 2011, thereafter declining to fund exhaustion by the end of 2032. The DI trust fund ratio is estimated to decline from 156 percent for 2010 to fund exhaustion by the end of 2015. The combined OASI and DI trust fund ratio is estimated to decline from 354 percent for 2010 to fund exhaustion by the end of 2029.

Thus, because large, persistent annual deficits are projected under all but the low-cost assumptions, it is likely that income will eventually need to be increased, program costs will need to be reduced, or both, in order to prevent exhaustion of the trust funds.

Even under the high-cost assumptions, however, the combined OASI and DI funds on hand plus their estimated future income would be able to cover their combined cost for 19 years (until 2029). Under the intermediate assumptions, the combined starting funds plus estimated future income would be able to cover cost for 27 years (until 2037). The program would be able to cover cost for the foreseeable future under the more optimistic low-cost assumptions. In the 2009 report, the combined trust funds were projected to become exhausted in 2029 under the high-cost assumptions and in 2037 under the intermediate assumptions.

<...>

[MannyGoldstein]

57. "Under the intermediate assumptions"

That's the problem. The "intermediate assumptions" assume that the economy will get much worse and stay that way. Hence my OP.

Do you, of all people, think the economy is about to get much worse and stay that way?

[ProSense]

61. Actually

"The 'intermediate assumptions' assume that the economy will get much worse and stay that way."

...it does no such thing.

Under the intermediate assumptions, OASDI cost is projected to exceed non-interest income in 2010 and 2011 due to increased benefits and reduced tax revenue as a result of the economic recession, and to an expected $25 billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the Trust Funds in earlier years. For 2012‑14, however, non-interest income will exceed cost as the economy recovers. OASDI cash flow, excluding interest, will then become negative in 2015 due to demographic trends. Throughout the period 2010 through 2024, trust fund income, including interest income, is more than is needed to cover costs, so combined trust fund assets will continue to grow. Beginning in 2025, combined trust fund assets will diminish until assets are exhausted in 2037.

[MannyGoldstein]

65. And again, your quote has zero to do with your assertion.

If you're going to use quotes that have nothing to do with your assertion or mine, might I suggest Mark Twain? He has some of my favorite quotes. FDR has some great quotes too, of course.

[ProSense]

67. And again,

your claim has nothing to do with reality.

[MannyGoldstein]

70. You tried to prove me wrong, and failed.

Show that my references are wrong. Good luck.

But posting stuff that has zero to do with what I claim, and hoping that nobody notices... I think you're better than that, ProSense.

[ProSense]

72. You're trying

to deflect.

FAIL!

[MannyGoldstein]

75. I guess we'll leave it to the good people of DU to read our respective posts

And determine for themselves who's the FAIL.

While we're on the topic - if Obama agrees to gut Social Security benefits when he's next hostaged, will you disown him?

[ProSense]

80. Hmmm?

"While we're on the topic - if Obama agrees to gut Social Security benefits when he's next hostaged, will you disown him?"

Is this another challenge like your bet that the President was going to announce Social Security cuts in his SOTU?

One day we're "fucked" and the next day Social Security is solvent for 75 years because the economy is going to thrive!

With such a poor record of predictions, this is easily another FAIL!

[MannyGoldstein]

81. Obama mentioned Social Security cuts in his SOTU, just as predicted.

He announced that it wouldn't be cut for current retirees, but it wouldn't be "slashed" for future retirees. Just a little shave, I suppose. Like the little 22%, $56,000 cut proposed by his very own "bipartisan" "Deficit Commission".

And that's why we're fucked: even a Democratic President is working hard to gut Social Security benefits. And you seem to be OK with it.

Let's try this: will you simply state that any cut in Social Security would be a mistake by Obama?

[tavalon]

82. Alas, to some of us, it seems you are arguing with ignored

And I'm not going to try to figure out which of my five ignored posters it might be. I'll just side with you since you're not on my ignored list.

[ProSense]

86. Well, I'd like everyone besides you to know that

I appreciate this announcement.

:rofl:

[Hannah Bell]

112. intermediate assumption is gdp at 2.1-2.2% growth from 2018 through 2085.

average gdp growth 1947 through 2010 = 3.3%.

http://www.ssa.gov/oact/tr/2010/V_economic.html

http://www.tradingeconomics.com/united-states/gdp-growth

[ProSense]

128. This is great news.

It's wonderful that many people have full faith in a booming economic recovery.

I'll take it. Over the next three to six decades, GDP growth will average more than the intermediate assumption and extend the life of Social Security beyond 26 years.

Now, what exactly is the problem with increasing the cap?

[MannyGoldstein]

132. No boom needed. Only needs to suck not much worse than 2010.

All other things being equal, I'd gladly take a raise in the cap even though I'd be affected. The problem is that if we accept one part of the Deficit Commission's findings in this regard, we'll be hostaged into accepting the other part: $56,000 in lifetime benefit cuts per recipient.

We should just leave it alone. It's fine.

[ProSense]

135. "All other things being equal, I'd gladly take a raise in the cap even though I'd be affected."

Interesting!

Scrap the cap!

[Lasher]

182. How selective of you.

Manny is saying the cap should not be raised or eliminated and he's right.

[ProSense]

192. Selective?

I was pointing out that it was interesting that poster would be affected by raising the cap.

"Scrap the cap" was my assertion unrelated to poster's point.

[Lasher]

197. Oh OK, I didn't understand.

I guess because I wasn't surprised by Manny's statement. Unselfishness is a characteristic of a good Democrat. Advocating exclusively in one's own personal interest, not so much. And affluence is not confined to the GOP.

[GreenTea]

62. K

:kick:

[sabrina 1]

69. Thank you for doing this.

I get tired of trying to make this point, and you have done an excellent job of doing so.

And even in this economy, with unemployment so high, the SS still had a surplus last year because the fund has two other sources of revenue.

:kick: for excellent information which everyone should have ~

[democracy1st]

93. yep just Manny being Manny! I appreciate good work and research also.

[MannyGoldstein]

206. Aw shucks.

:blush:

[slipslidingaway]

71. knr nt

[lumberjack_jeff]

83. +100. K&R

[ProSense]

87. Please respond to

this poll.

[MannyGoldstein]

91. Which part of response #1 of that poll are you having trouble reading?

I can see it really clearly, but then again I just got nice new glasses today. I waited about 5 years between eye exams, but my vision was almost unchanged. Still, I got new glasses and the difference is notable.

You might consider an eye exam too.

[ProSense]

94. Oh sorry

I was under the impression that while this is in response to your OP, others (some without glasses) are able to read it too.

My bad!

[democracy1st]

89. K & R

[defendandprotect]

90. K/R --

[inna]

95. most excellent work! thank you so much for sharing with us.

:thumbsup:

[glinda]

96. Thanks and kick

[Hannah Bell]

97. Excellent work.

[HankyDubs]

100. the truth eh...a novel concept

thanks!

[Sherman A1]

101. Good Research!

Thanks for posting.

[indimuse]

102. KNR! n/t

[Enthusiast]

105. K&R!

Well done, Manny!

Why did the administration use that little bit of subterfuge. It sounds like something the C.I.A. would pull on the unsuspecting citizens of some third world nation to prevent their slide into socialism. You know, that C.I.A. has to make the world safe for capitalism, at all costs.

Things like this fuel my mistrust of the Obama Administration.

[BzaDem]

110. Why do you assume that future growth will match past growth (or even be particularly close)?

You might very well be correct that future growth will match past growth -- I am not an economist, so I don't know the research on that. But from the little reading I have done in the past, I don't think there is a consensus (or much agreement at all) that the growth rate in the future will match the average growth rate of the past 50 years.

There are many reasons I have read why growth might be significantly lower -- from the necessary measures we will eventually have to take to curtail global warming, to a massive reduction of our future deficits compared to past decades (either through cutting spending or raising taxes or both), to reasons specific to the high-growth rates of the past several decades, etc.

It certainly doesn't make sense to look at the growth rate in 2010 and extrapolate. It is always much easier to grow out of a hole. For example, let's pretend that in one year, GDP went down 10% (say due to some cataclysmic event), and in the next year, GDP grew 11%. That would mean we were approximately back to where we were before the cataclysmic event. But it wouldn't make sense at all to take the 11% and extrapolate that growth rate decades into the future -- what allowed us to get to 11% growth was the fact that we dropped so much the previous year.

So as you point out, it all comes down to assumptions about future growth rates. Perhaps they are being too conservative. But in your OP, you are assuming out of hand that the growth rates they give are ridiculous -- and I don't think that is something that should be assumed out of hand.

[paulkienitz]

113. after Peak Oil, 2.1% growth might be wildly optimistic

...or on the other hand, other advances might make 3.2% pessimistic. Never know.

[sofa king]

180. I concur.

The rest of our lives will be devoted to holding on to what we have left. It's all contraction from here until some magic and unforseen free energy source takes the place of oil. Which it won't.

[Turbineguy]

114. It's about letting Wall Street steal the fund.

That's what the GOP wants to do. By reducing benefits they make it possible. The surplus will be available for stealing.

[Hannah Bell]

115. it's what finance capital wants to do. therefore it's what politicians generally want to do.

[liberal N proud]

116. All they have to do is pay back what they stole from it

They called it borrowing the surplus at the time but they never had any intention of putting it back.

This depletion is intentional to kill the program and if we don't fight for it to get it back, learn to like cat food.

[Unvanguard]

118. That's true, but misleading.

Unfortunately, you only reference the Neil Buchanan articles rather than going back directly to the source. He's not lying, but he's not telling the whole truth either--which is not a problem with his article, because the growth argument is not the central point, but is a problem with using it as a guide to the Social Security Trustees' economic approach.

What you really want to look at is the Economic Assumptions and Methods part of the 2010 Report. It explains the GDP issue fairly well. The first thing to remember is that GDP is a product of several factors. The most purely "economic" in the narrow sense is productivity growth. The report does not estimate lower productivity growth than in the past. Here's the relevant quote:

Total U.S. economy productivity is defined as the ratio of real GDP to hours worked by all workers.2 The rate of change in total- economy productivity is a major determinant in the growth of average earnings. For the 40 years from 1968 to 2008, annual increases in total productivity averaged 1.7 percent, the result of average annual increases of 1.7, 1.3, 1.5, and 2.2 percent for the 10-year periods 1968-78, 1978-88, 1988-98, and 1998‑2008, respectively. For 2009, the estimated annual change in productivity is 2.5 percent.

It is most useful to consider historical average growth rates for complete economic cycles, because productivity growth can vary substantially within economic cycles. The annual increase in total productivity also averaged 1.7 percent over the last five complete economic cycles (measured from peak to peak), covering the 41-year period from 1966 to 2007. The annual increase in total productivity averaged 2.3, 1.2, 1.2, 1.8, and 2.1 percent over the economic cycles 1966-73, 1973-78, 1978-89, 1989-2000, and 2000-07, respectively.

The ultimate annual increases in total economy productivity are assumed to be 2.0, 1.7, and 1.4 percent for the low-cost, intermediate, and high-cost assumptions, respectively, and are consistent with ultimate annual increases in private non-farm business productivity of 2.4, 2.0, and 1.7 percent. The private non-farm business sector excludes the farm, government, non-profit institution, and private household sectors. These rates of increase are the same as those used in the 2009 report, and reflect the belief that recent strong growth in private non‑farm business productivity, after the relatively poor performance from 1973 to 1995, is consistent with future long-term growth that mirrors the long-term trends of the past.

So, why, then, the lower projected GDP increases? It has to do, not with economic stagnation per se, but with a lower projected rate of growth in total employment. Here's what the Report has to say on this topic:

The real growth rate in GDP equals the combined growth rates for total employment, productivity, and average hours worked. Total employment is the sum of the U.S. Armed Forces and total civilian employment, which is based on the projected total civilian labor force and unemployment rates. For the 40-year period from 1968 to 2008, the average growth rate in real GDP was 3.0 percent, combining the approximate growth rates of 1.5, 1.7, and ‑0.3 percent for its components — total employment, productivity, and average hours worked, respectively.

For the intermediate assumptions, the average annual growth in real GDP is projected to be 3.0 percent from 2009 to 2019, the approximate sum of component growth rates of 1.1 percent for total employment, 1.7 percent for productivity, and 0.1 percent for average hours worked. This projected average annual growth in real GDP of 3.0 percent can also be separated into an underlying sustainable trend rate of change of 2.3 percent for this period, plus an above-trend growth rate of 0.7 percent that is mostly associated with a relatively rapid increase in employment as the economy recovers and the unemployment rate falls from near 10.0 percent in 2009 to its assumed ultimate level of 5.5 percent in 2018. After 2019, no economic cycles are projected. Accordingly, the projected annual growth rate in real GDP is determined by the projected full-employment growth rate for total employment and the assumed full-employment growth rates for total U.S. economy productivity and average hours worked. After 2050, the annual growth in real GDP is 2.1 percent due to the assumed ultimate growth rates of 0.4 percent for total employment, 1.7 percent for productivity, and 0.0 percent for average hours worked.

Note also that the GDP growth under the intermediate assumptions is 2.1 percent only after 2050. This is about long-term demographic trends, not any conviction on the part of the Report's authors that we are due all of a sudden for perpetual economic trouble.

What long-term demographic trends? This is clarified in the labor force participation section:

The annual rate of growth in the size of the labor force decreased from an average of about 2.1 percent during the 1970s and 1980s to about 1.1 percent from 1990 to 2009. Further slowing of labor force growth is projected due to a substantial slowing of growth in the working age population in the future — a natural consequence of the baby-boom generation approaching retirement and succeeding lower-birth-rate cohorts reaching working age. Under the intermediate assumptions, the labor force is projected to increase by about 0.7 percent per year, on average, through 2019. Thereafter, the labor force is projected to increase by 0.5 percent per year between 2019 and 2050, and by 0.4 percent over the remainder of the 75‑year projection period.

The projected labor force participation rates are not basic assumptions. They are derived from a historically-based structural relationship using demographic and economic assumptions specific to each alternative. However, the participation rates are not highly sensitive to most of the demographic and economic assumptions. Accordingly, the projected labor force participation rates do not vary substantially into the future and across alternatives.

In other words, we can only discount the growth projections of the Report if we have good reason to believe that is demographic projections are wildly wrong--and while undoubtedly they are not exactly correct (the future is not very predictable), they seem perfectly plausible to me. As noted in the above excerpt, the decline in labor force size growth is ongoing already.

[MannyGoldstein]

125. So *this* time it's really real?

We see upthread that in 1994, the Trustees were predicting 1.5% growth in the future: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x931203#933434

I think we can agree that did not happen.

In fact, the Trustees have been dramatically lowballing expected growth for decades. Why do yiu think that they are correct this time, when they've been consistently wrong before?

[Unvanguard]

140. So this is pure, unsupported speculation on your part?

Okay.

I'll prefer to rely upon actual attempts to extrapolate from data, even given the inherent difficulties of predicting the future.

(Incidentally, do you have any evidence that the reports have repeatedly dramatically underestimated economic growth? And if you do, could you reference the actual reports themselves rather than secondary sources about them? It's important to actually look at the logic of the predictions rather than just the conclusions: otherwise evaluating them, and figuring out where they might have gone wrong, is impossible to do in a serious way.)

[Yo_Mama]

189. The 1999 summary seems pretty accurate

(If you look at the intermediate assumption)
http://www.ssa.gov/history/pdf/tr99summary.pdf

As noted earlier, the future cannot be predicted with certainty, and three
sets of assumptions are used to project the range of possibilities. The year
in which the trust funds are projected to be exhausted varies significantly
under the three sets of assumptions. The table below shows this range.

YEAR OF TRUST FUND EXHAUSTION
Set of Assumptions OASI DI OASDI HI
Alternative I (Low Cost) . . . . . . . . Never Never Never Never
Alternative II (Best Estimate). . . . . . 2036 2020 2034 2015
Alternative III (High Cost) . . . . . . . 2028 2011 2024 2007

Last CBO estimate is that DI is exhausted in 2017, and payments to beneficiaries are cut then. HI is exhausted in 2021.
(see page 139). OAS exhaustion date is about 2037.
http://cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf

You keep talking about errors, but if you look at the details there have most often been legislative changes that affected the projections. We're always adjusting these programs. We made major cuts in Medicare reimbursements to extend the life of HI, for example. We made a big relative shift of tax income from OAS to DI to keep DI funded in the 1990s.

You believe this because you want to believe it, not because you have any evidence to believe it. We have never had certainty in this program. We've been constantly adjusting it to deal with circumstances, but you seem to believe now that those adjustments are suddenly off the table!

This may not be quite intuitive, but as we get closer to the baby boomer retirement zone (we have just entered it, really) the uncertainty in these projections becomes less. The reason is that we know the short term population numbers pretty accurately. Estimates of higher or lower fertility rates, for example, contributed much more uncertainty to these projections 20 or 30 years ago.

Medicare is the big budget killer, not Social Security. Medicare will have to be cut, but Social Security can be fixed to be viable. Your claim is what will prevent that fix from happening, and your claim is very insupportable. It doesn't match history and it doesn't match any feasible economic future.

[MissDeeds]

119. K&R

[fasttense]

121. Thanks for digging through the numbers and explaining this.

Very informative.

[Overseas]

126. K&R and Many Thanks !

[Buenaventura]

129. as a 65-YO SS recipient

i'm not in the least surprised by these numbers. the corporatists have done their damnedest to make us believe that the sky is falling. it is not. K&R and thank you for the post.

[Bragi]

130. I support lower growth rates

If the US economic growth rates in coming years match historic levels of economic growth, it will be accompanied by an environmental and social catastrophe of an unprecedented magnitude.

America needs less economic growth in the future, not more.

[florida08]

131. Manny you are the man

and that doesn't do you justice. Had read or heard something about this online somewhere a week or so ago but totally forgot about it. Thanks so much for all the hard work putting it together. Explains why they want to privatize it doesn't it. All that capital for Wall Street flim flamming. Booked and saving to hard drive. A 5 thumb report

:thumbsup: :thumbsup: :thumbsup: :thumbsup: :thumbsup:

ahh here it is:
http://www.dollarsandsense.org/archives/2004/1104econ.html

[abelenkpe]

137. Economy may well get worse

And it has been projected by many economists to limp along for a decade perhaps more as some see a Japan type scenario as a possibility. So that would be a reason for raising the cap to offset lean times.

[Bragi]

139. America (and the world) needs LESS economic growth

A good future for America means lower economic growth and far greater economic equality.

I don't think this is possible to do, however, within the framework of the current economic system.

[robcon]

141. False setup of the problem, IMO

The problem is (mostly) the number of retirees vs. the number of contributors. It's the aging of the population.

Baby boomers (like me) are starting to retire now. There will be an unprecedented increase in the number of Social security recipients, and the ratio of contributors to recipients will decline sharply.

THAT's the Social security problem... not the economic forecast implicit in the plan.

[Hotler]

152. Kicking. Thank you sir. May I print this and pass it to my neighbors? n/t

[MannyGoldstein]

222. I'd be grateful if you did!

Thanks.

[Bryn]

155. K&R

:kick:

[FlyByNight]

156. Yet another K & R

:thumbsup:

[Yo_Mama]

158. Yeah, well

It takes a heck of a lot of belief to overcome that reality.

This graph covers the Dept of Labor's survey of state unemployment accounts (i.e. jobs recorded that are paying unemployment insurance).

[TBF]

159. Excellent post -

they stole our 401Ks and this is the next grab (along with gutting public schools). Disgusting.

[Jakes Progress]

160. Privatizing everything. The neocon goal.

It's not just the DUers who are falling for this crap that is the problem. It is the supposed Democrats in Washington too stupid to figure this out and the suppose Democrats who promulgate and use this lie to further their careers.

[Chisox08]

161. I'm getting the feeling that they are planning to sink the American Economy

In order for their prophecy to come true. Look around jobs are getting shipped over seas, and the jobs that people are getting to replace those are min. wage part-time jobs. They are trying to steal every penny they can before it all crashes and they high tail it out of here leaving us to pick up the pieces.

[On the Road]

162. It's My Impression That Acutaries are Conservative by Nature

and would guess that the ~2% growth estimate was originally intended to be conservative and ensure the stability of the system.

What is particularly maddening is that the anti-SS proponents have used those numbers in an attempt to destroy the system.

[thomhartmann]

163. Forwarded to Senator Sanders

I didn't know this - amazing stuff (thanks!) - and forwarded it to Bernie. I hope it holds up and he or others can carry it into Congress and the larger press...

[senseandsensibility]

170. Thanks for doing that, Thom!

I enjoy listening to you and Bernie on your show. If anyone can do something with this research, it's Sen. Sanders!

[MannyGoldstein]

205. Wow! Thanks.

I've been in the car for the past few hours, driving to see my dad in NY. I didn't realize that all heck was breaking loose regarding this post.

Thank you for your great work, and please send the Senator my regards - he's one of the few keepers.

[Raksha]

210. Thank you, Thom.

[fascisthunter]

219. Thom, I think you are right about pigeons

kidding... well, maybe not. Thank you for the great work you do.

[mckara]

164. Free Market Capitalism Brought Lower Growth Rates

Neoliberal policies that condemned the public sector, and instituted artificially low interest rates, brought lower growth, which will simultaneously doom your assumptions of 3.2 percent growth. The sooner we rid politics of Paul Ryan, and his ilk, the sooner we return to greater prosperity. Democrats do a poor job of making this point when talking to the public.

Book recommendation: Chang, J. 23 Things They Don't Tell You About Capitalism

[Cali_Democrat]

165. This cannot be stressed enough.

[DainBramaged]

166. So WE (and I use that we cautiously) KNOW SS will be depleted in 26 years?

[amborin]

167. K&R

[Gold Metal Flake]

174. This thread just mentioned on Hartmann.

He gave the source (DU and Manny) and quoted the contents of the OP.

[Lars39]

177. He was posting in this thread.

:D

[Lasher]

198. Transcript?

I'm looking myself.

[bertman]

181. Rec and kick. nt

[Zorra]

186. Thank you so much for your awesome work. nt

[bvar22]

188. K&R

Who will STAND and FIGHT for THIS American Majority?
Lofty Rhetoric, Broken Promises, and Whiny Excuses mean NOTHING.
"By their WORKS you will know them,"
and by their WORKS they will be judged.

[toddwv]

190. The economy will not grow at a significant rate until the wealth disparity decreases.

In order to do that, taxes must be returned to the levels that they were during the most prosperous period of growth in US history. A 65% top rate must be reinstated and the estate tax must be reinstated or our economy will just remain tepid for the majority of wage earners while the upper crust continues to accumulate wealth at an astonishing rate.

[Uncle Joe]

194. I would also be willing to wage that in 26 years, if not sooner, demographics will change

as the Baby Boomers start dying off.

I would imagine the stress on the system will be reduced as a result.

Thanks for the thread, MannyGoldstein.

[Yo_Mama]

231. You are very mistaken

We begin to hit peak retirees about then (20-25 years)


A lot depends on how many in the younger generation can find work, but you can see how quickly the ratio of retirees to workers is set to grow.

[Uncle Joe]

232. Your own graph supports my contention, why do you believe those

colored lines start shrinking so dramatically at around age 50+?

It's because the mortality rate increases, that graph isn't static.

Furthermore the younger people are more likely to find work if the older people; have security in receiving Social Security thereby making it easier for them to retire and not losing it all in the stock market or having it gutted by the corporate supremacists.

[Yo_Mama]

233. Those lines aren't smaller from deaths

They're smaller from birth rates.

Not that mortality doesn't increase as we all get older, but not by that much. Right now, even though the leading edge of the much larger baby boomer generation has begun to move into their 60s, US death rates are still dropping:
http://www.reuters.com/article/2011/03/16/us-usa-deaths-idUSTRE72F93520110316

Here's another graph showing how US birth rates shot up after 1945. That's why those lines are bigger.


For mortality stats you can't do better than SS:
http://www.ssa.gov/oact/STATS/table4c6.html

So for males, you can see from the graph that the current 65-69 cohort is about half that of the current 45-49 cohort.

At 49, of every 100 males born about 92 1/2 are still alive.
At 69, of every 100 males born about 73 1/3 are still alive. Make it 19/100 dying in those 20 years.

So if we have a current cohort of 1000 replacing a cohort of 500 in 20 years, we expect 810 to replace 500. However the worker/retiree ratio shifts much more, because there is a somewhat smaller group coming after the baby boomer bulge.

The history of the worker/retiree ratios is here:
http://www.ssa.gov/history/ratios.html

You'll note that the big baby boomer bulge kept things pretty static between 1985 and 2007. The ratio fluctuated between 3.3 and 3.4. In 2009 it had fallen to 3. By 2035 it should be 2.1-2.3, given plenty of work. That's why we needed to save!

I agree that more retirees help to drop unemployment rates, but even given a 1/1 ratio swap, the worker/retiree ratio keeps dropping.

Assume 12 workers, 3 retirees. If one of the 12 workers retires, making 4 retirees, and his job is taken by another person who wasn't working, we now have 12 workers and 4 retirees.

Edit to add 2035 projected population pyramid:

[truedelphi]

196. Thank you so very much. n/t

[ooglymoogly]

199. The big lie by all this propaganda is that the trillions belonging to the people of this country

Is an entitlement to be dolled out at the kindness of polititians.

The next time someone tells you SS is an entitlement or a charity program for the people of this country when instead
it is an entitlement program for the Government to entitle itself to steal those funds.


Tell them that SS is not an entitlement program for the people of this country and it is not the governments to entitle; that it is NOT funded by the government in any sense other than it's being collected.

And yet it is stolen by the government to fund its tax-cuts for the rich, It's wars and its deceits and so it has become by theft an entitlement not for the people but for the Government. The government has entitled itself to those vast reserves of not only the 2.3 trillion but even the projected 4 trillion into perpetuity.

Now that, that theft is complete even into perpetuity, there is the little problem of the full faith and security bonds they the government were forced by law to put in their place and do not want to pay back these the full faith and credit bonds they were forced by law to put in the actual fund's place.

And so now there is nothing left but the full faith and credit bonds that must at some point be paid back, that now they are trying every desperate propaganda measure and cocked up bullshit story and every loophole to change the law and make us believe the bonds are useless, so they do not have to pay back the full faith and credit bonds which unless we buy into their jingo mumbo jumbo; drilled incessantly into our heads, they will get away with.

We must work toward eliminating governments heavy foot on the purse strings of medicare or any influence or access to it at all.

SS IS NOT GOVERNMENT'S TO ENTITLE...ESPECIALLY WHEN IT ENTITLES ITSELF TO THOSE TRILLIONS BELONGING TO US TO FUND BOONDOGGLE WARS AND TAX CUTS FOR THE RICHEST.

There is only one change, imo, that can be made to this amazing and miraculously successful, self sustaining program and that is to eliminate any cap, which should have been done a long time ago, so that payout can actually reflect the costs of our time and if anything more, lowering, not razing the retirement age.

[wiggs]

200. People also forget that some shortfall is due to the fact that most of the income growth

over the last 30 years has gone to the upper 2%, where it is untaxed wrt social security. If that growth had occurred in middle and lower income levels, there would have been more ss contributions.

[Mimosa]

201. K&R and Thanks for the info! n/t

[midnight]

203. Thank you... Wisconsin Public Radio had an economist on a few

weeks ago talking about this subject in tandem with Paul Ryan's entitlements and how they add to the deficit. I called in to clarify if he was actually saying social security was adding to the deficit and he told me yes, and then I was cut off without asking how?

[ck4829]

208. K&R

[Raksha]

209. K & R - I saved your research paper.

I haven't had a chance to read it thoroughly yet, but it looks like one of the saner and more honest documents I've seen about Social Security.

[WillyT]

211. HUGE K & R !!!

:yourock:

:hi:

:kick:

[DollyM]

214. I am going to try and get mine early . . .

I have decided that if I can't find a job in 6 months, I am filing for disability. I have pretty severe osteoarthritus that limits my ability to walk and stand but I have tried to work. I am just pretty limited in what kinds of jobs I can do with this condition. But here is another little secret, if you don't work or pay into social security for seven years, you will lose your chance to file for disability. We learned this the hard way as my husband worked in the Illinois community college system which does not pay into social security. After it became evident that he was not going to be able to continue working (he has been in a nursing home for nearly a year now) he tried to apply disability and was told that he was no longer eligible since he worked for the college system for seven years and they did not pay into social security. They have their own disability fund but you have to file for it within 2 years after leaving it or you lose it also. We didn't know that either and he was trying to work and kept losing jobs when he when end up in the hospital. So I am not waiting around to see the system depleted or me be unable to apply for disabiity because I didn't get enough work credits in during the "right" years.

[L0oniX]

215. Thom Hartmann approves.

[fascisthunter]

217. I heard that too

[McCamy Taylor]

216. So, if you want to rob SS, you have to plunge the US into recession first.

[fascisthunter]

218. Thank You Manny, a Dynamite Thread

:thumbsup:

[Corruption Winz]

220. K/R. Very good post.

I didn't know about these numbers to tell you the truth. I'll have to check into this a bit more. Interesting stuff.

[Dappleganger]

223. k&r for visibility

[Vattel]

224. Thanks for the information.

I'm not convinced that Obama will recommend cuts to benefits, but I agree with you that we shouldn't accept the mantra that SS is in trouble because under Obama or under a Republican President that may translate into cuts in benefits.

[ReggieVeggie]

225. kick

[pscot]

226. K&R

[mascarax]

227. Congrats on making Thom Hartmann! K&R

And he sent on to Sen. Sanders...excellent.

I'm so tired of these lies and fear tactics.

[defendandprotect]

228. Think we should raise the cap, nonetheless -- to shift the burden from poor and middle class --

the "baby boom" escalation of FICA increased the burden mainly

on the poor and middle class --

It would be great to raise the cap, I suppose, but it's not needed, and applauding it only gives credence to their big lie that Social Security is in trouble.

[RainDog]

230. kick!

[Tx4obama]

235. Congrats on getting your OP talked about on front page of Alan Colmes' website

Front Page: http://www.alan.com/

Regarding YOU and YOUR article: http://www.alan.com/2011/04/22/the-truth-about-social-security/

[upi402]

237. rec! End FICA cap and end Bush tax cuts

done.

Growth? Restore rational trade law, sustainable power jobs program.

Media? End Telecommunications Act and restore Fairness Doctrine.

Elections? Paper ballots with paid professional staff to count and monitor, publicly funded campaigns only, mandated free TV airtime on our public air waves.

Which party promotes this stuff?...