Social Security could be fixed rather easily even in the face of a dwindling number of working-age people paying in to the fund. Instead of pouring ever larger amounts into the military, which Trump wants, we need to appropriate some of that money for Social Security. The payroll tax can also be applied to a higher level of income, without a correspondingly high promise of future pay-out. Retirement age can be adjusted again, though that is problematic for those who do manual work, since they often cannot do it into their late 60s and early 70s. When Social Security was set up, the life expectancy was much lower, many more people had guaranteed pension funds and the elderly cohort was much smaller than the working-age cohort. We need to address these factors for a long term fix. That will likely be politically unpopular.
I barely know where to begin. I do not plan to read the entire report. But I have seen articles that say the population will level off and then slowly decline as our baby boom generation passes on. That materially reduces Social Security payments if inflation is excluded. And as a recipient of Social Security who has paid in 45 years, I resent the one generation stealing from another. This is a false argument and simply divisive. It has about as much value as a statement by Alexandria Ocasio Cortez or Marjorie Taylor Greene. The demographic and medical treatment changes since the 1950’s, as well as the insane notion that “computers and the internet” could magically replace industrial jobs have put us where we are. Some of us made a large down payment contribution to our child’s house and pre-loaded a large 529 Plan for grandchildren instead of fluffing up the conspicuous consumption economy (which BTW is what keeps the charade going even if I don’t participate.) Others just don’t have the money.
Fixes I would support - ending the social security wage cap, indeed raising the FRA, strongly considering a Friedmanesque model with part of the retirement socially guaranteed and part a mandatory 401k that would be “owned” by the retiree. The obvious split is 50-50. What the employee puts in, the employee keeps with no widow’s penalty or other nonsense. The half the employer pays becomes the government-guaranteed part subject to pay as you go risks.
Where to get additional money? Lots of places. Reforming healthcare is one but that means reforming the voracious drug companies and hospitals as well as the insurance model. A Tobin Tax on velocity trading. Yes, some kind of additional tax on the Musks and Swifts and AI generated revenue. Let’s not forget about reining in ridiculous government spending at all levels. Trump and company are right on this one. We have too many agencies that create zero value. Our government procurement system is a wasteful disaster. That list goes on and on.
I see less of a disaster so long as Congress and the President are willing to step up and be honest. And there’s the bipartisan rub.
The chance of Trump being honest (aside from being thoughtful or wise) is zero, which is not a new assessment. Unfortunately, this Congress is right there with him. We need to change that this November.
Even the anti-Trump original interviewee noted that this problem is bipartisan and long predates Trump. I make one statement about Trump being correct that government has grown too large in an otherwise lengthy comment and that’s what you jump on? Quite sad.
Perhaps part of the fix should be to dedicate a substantial tax on AI to the trust fund: this would compensate (in part) for the narrowing of the age pyramid and the diminution of junior jobs by AI.
My first comment is that reading this interview impressed on me forcibly why we need textbooks (and treatises, organized like textbooks). I was flatly unable to understand the progression and structure of ideas in this discussion, and I suspect that everybody else trying to really understand the discussion was similarly confused. For me, the result was that I blew off all but the most forcefully (if incoherently) presented points.
That said, and recognizing the glaringly obvious fact that we are consistently underinvesting (disinvesting, really) in everything that we are going to need, sooner or later, the disaster that looks so threatening, and very likely will engulf us, will not be because the problem is intractable, but because, collectively, we are not willing to do what we obviously should do. I am no psychologist, but I do vaguely recall some research that basically rates children by their ability to invest (defer gratification in order to get greater gratification later). I think the result was that children who were able to do it did well later in life, and those who were not, did poorly later in life. Throw in some game theory results, and some external cost effects, and you can easily get a society that acts like that second kind of child.
On a little more particular note, I don't think economic action plans based on a 75 year study horizon are all that inferior to plans based on an infinite time horizon. The real problem is that when we see that there is no collapse expected within 75 years, we think there is no adjustment needed for a long time, instead of thinking we should make a small adjustment each year in which we perceive a potential collapse within 75 years. If we keep the insolvency point 75 years away, we won't be in much worse trouble than if we had pushed it out a million years.
Sorry if this is a little incoherent, I am not much of a textbook author.
The forecast is cloudy with a 100% chance of pain.
Not only is OASI running out of money, but the on the books debt is also out of control. there is no way that cutting discretionary spending (including the defense budget), can possibly close the deficit or prevent a debt crisis. The major entitlement programs are also not fixable in the short or intermediate terms. Social Security pensions to current beneficiaries cannot be cut. there would be riots. Reforming the Medicare/Medicaid system will take years. Remember most of those dollars go to wages and the people who collect them will fight like tigers to keep their well paid jobs, and they are now an enormous constituency including the doctors, nurses, and techs and their families who depend on their wages.
We must have a dramatic increase in Federal Tax revenue.
Fiddling with the income tax won't move the needle. We have been fiddling with the income tax for the last century and we have not much changed the amount collected as a percentage of GDP.
That leaves us with excise taxes such as the VAT and the Carbon Tax.
Will this be painful. Yes. Will it cause a recession? Most likely. We have been maxing out our credit cards and living the high life too long. Going cold turkey is painful.
But, the pain will not be a fraction of that which would be caused by a bond market collapse and the hyperinflation that would follow.
Social Security could be fixed rather easily even in the face of a dwindling number of working-age people paying in to the fund. Instead of pouring ever larger amounts into the military, which Trump wants, we need to appropriate some of that money for Social Security. The payroll tax can also be applied to a higher level of income, without a correspondingly high promise of future pay-out. Retirement age can be adjusted again, though that is problematic for those who do manual work, since they often cannot do it into their late 60s and early 70s. When Social Security was set up, the life expectancy was much lower, many more people had guaranteed pension funds and the elderly cohort was much smaller than the working-age cohort. We need to address these factors for a long term fix. That will likely be politically unpopular.
I barely know where to begin. I do not plan to read the entire report. But I have seen articles that say the population will level off and then slowly decline as our baby boom generation passes on. That materially reduces Social Security payments if inflation is excluded. And as a recipient of Social Security who has paid in 45 years, I resent the one generation stealing from another. This is a false argument and simply divisive. It has about as much value as a statement by Alexandria Ocasio Cortez or Marjorie Taylor Greene. The demographic and medical treatment changes since the 1950’s, as well as the insane notion that “computers and the internet” could magically replace industrial jobs have put us where we are. Some of us made a large down payment contribution to our child’s house and pre-loaded a large 529 Plan for grandchildren instead of fluffing up the conspicuous consumption economy (which BTW is what keeps the charade going even if I don’t participate.) Others just don’t have the money.
Fixes I would support - ending the social security wage cap, indeed raising the FRA, strongly considering a Friedmanesque model with part of the retirement socially guaranteed and part a mandatory 401k that would be “owned” by the retiree. The obvious split is 50-50. What the employee puts in, the employee keeps with no widow’s penalty or other nonsense. The half the employer pays becomes the government-guaranteed part subject to pay as you go risks.
Where to get additional money? Lots of places. Reforming healthcare is one but that means reforming the voracious drug companies and hospitals as well as the insurance model. A Tobin Tax on velocity trading. Yes, some kind of additional tax on the Musks and Swifts and AI generated revenue. Let’s not forget about reining in ridiculous government spending at all levels. Trump and company are right on this one. We have too many agencies that create zero value. Our government procurement system is a wasteful disaster. That list goes on and on.
I see less of a disaster so long as Congress and the President are willing to step up and be honest. And there’s the bipartisan rub.
The chance of Trump being honest (aside from being thoughtful or wise) is zero, which is not a new assessment. Unfortunately, this Congress is right there with him. We need to change that this November.
Even the anti-Trump original interviewee noted that this problem is bipartisan and long predates Trump. I make one statement about Trump being correct that government has grown too large in an otherwise lengthy comment and that’s what you jump on? Quite sad.
Your gibberish stands for itself.
Even sadder that a pitiful insult is all you could muster.
Perhaps part of the fix should be to dedicate a substantial tax on AI to the trust fund: this would compensate (in part) for the narrowing of the age pyramid and the diminution of junior jobs by AI.
My first comment is that reading this interview impressed on me forcibly why we need textbooks (and treatises, organized like textbooks). I was flatly unable to understand the progression and structure of ideas in this discussion, and I suspect that everybody else trying to really understand the discussion was similarly confused. For me, the result was that I blew off all but the most forcefully (if incoherently) presented points.
That said, and recognizing the glaringly obvious fact that we are consistently underinvesting (disinvesting, really) in everything that we are going to need, sooner or later, the disaster that looks so threatening, and very likely will engulf us, will not be because the problem is intractable, but because, collectively, we are not willing to do what we obviously should do. I am no psychologist, but I do vaguely recall some research that basically rates children by their ability to invest (defer gratification in order to get greater gratification later). I think the result was that children who were able to do it did well later in life, and those who were not, did poorly later in life. Throw in some game theory results, and some external cost effects, and you can easily get a society that acts like that second kind of child.
On a little more particular note, I don't think economic action plans based on a 75 year study horizon are all that inferior to plans based on an infinite time horizon. The real problem is that when we see that there is no collapse expected within 75 years, we think there is no adjustment needed for a long time, instead of thinking we should make a small adjustment each year in which we perceive a potential collapse within 75 years. If we keep the insolvency point 75 years away, we won't be in much worse trouble than if we had pushed it out a million years.
Sorry if this is a little incoherent, I am not much of a textbook author.
Regarding your first sentence on the quality of this discussion: there's a barnyard phrase that applies to this gibberish.
The forecast is cloudy with a 100% chance of pain.
Not only is OASI running out of money, but the on the books debt is also out of control. there is no way that cutting discretionary spending (including the defense budget), can possibly close the deficit or prevent a debt crisis. The major entitlement programs are also not fixable in the short or intermediate terms. Social Security pensions to current beneficiaries cannot be cut. there would be riots. Reforming the Medicare/Medicaid system will take years. Remember most of those dollars go to wages and the people who collect them will fight like tigers to keep their well paid jobs, and they are now an enormous constituency including the doctors, nurses, and techs and their families who depend on their wages.
We must have a dramatic increase in Federal Tax revenue.
Fiddling with the income tax won't move the needle. We have been fiddling with the income tax for the last century and we have not much changed the amount collected as a percentage of GDP.
That leaves us with excise taxes such as the VAT and the Carbon Tax.
Will this be painful. Yes. Will it cause a recession? Most likely. We have been maxing out our credit cards and living the high life too long. Going cold turkey is painful.
But, the pain will not be a fraction of that which would be caused by a bond market collapse and the hyperinflation that would follow.