RE: Re: [Pen-l] Social security

["David B. Shemano" <dshemano@xxxxxxxxxx>]

Doug Henwood writes:

>> > At some point in time, if we continue on our present path, ss
>> > expenditures will exceed ss taxes.  At this point, general tax
>> > revenues are supposed to start paying ss expenditures (i.e. pay
>> > those T-bills the SSA is supposedly holding).  This, tautologically,
>> > means that the Congress will have to reduce or eliminate non-ss
>> > expenditures that would have been funded in the absence of the ss
>> > obligation, unless Congress is willing to raise non-ss taxes.
>> 
>> On the other hand, if all the dire predictions about SS's bankruptcy
>> don't come to pass - and I think they won't - then there won't be much
>> of a problem, will there?

As long as the present level of ss taxation exceeds ss expenditures, then everything will be hunky-dory.  My understanding is expenditures will exceed revenues starting in 2017, at which point Congress will have to make explicit choices.

>> 
>> > I am all for "insurance against poverty," whatever that means.
>> 
>> Using government money to keep people from being poor. That's not
>> complicated, is it?

SS, as presently consituted, is generally neither insurance nor linked to poverty. Insurance implies a pooling of assets to guard against events that will likely not happen and be catastrophic for an individual when it does happen.  If lifespans were 65, I suppose we could characterize SS as insurance against the improbability of living past 65, but since lifespans are edging closer to 80, payments for reaching 65 are not insurance.  And benefits are not linked to poverty or means tested, as you know, which is why the program retains its popularity with the middle class (they are willing to prepay retirement funds for themselves, but not others).

>> >   I don't believe that is what social security as presently
>> > constituted is.  It is simply a scheme to increase present
>> > government revenues to pay for present government expenditures.
>> 
>> Easy for you to say. For most elderly people, SS is about all they've
>> got.

As constituted SS is a redistribution from the middle class to the middle class, with the elderly poor benefiting.  I would prefer that we eliminate the redistributuion from the middle to the middle, and simply pay the poor.  However, if we did that, which would slash SS taxes, the government would lose the benefit of the surplius -- that is the heart of the political matter.  That is why I say something is going to occur when expenditures exceed taxes -- without the ability to spend the surplus, SS will become a drag on other spending, and Congress is not going to like that.

David Shemano
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