Ted Rall's thoughts on the Social Security "crisis"

[OnlyInAmerica]

Pretty good opinion column.

http://story.news.yahoo.com/news?tmpl=story&cid=127&ncid=748&e=1&u=/ucru/20041222/cm_ucru/savesocialsecuritywiththeflattax

<snip>

"Unless something changes, the system's trustees project that Social Security will run up a total shortfall of $3.7 trillion (in 2004 dollars) through 2080. But that could easily be fixed by overhauling the current 12.4 percent Social Security payroll tax, a highly regressive burden that falls only on people who earn less than $87,500 a year. "

"The U.S. workforce is made up of 228 million employees who earned a total of $6.7 trillion last year. The richest one percent took away a whopping $1.8 trillion, or over 26 percent of America's national income. Wanna guess where the one percent-99 percent divide is? Interesting coincidence: at $87,500 a year. Slap the same 12.4 percent FICA payroll tax on the over-$87,500 crowd--the kind of "flat tax" that makes Steve Forbes (news - web sites)' cheeks flush--and you bring in $219 billion a year. That puts the system into the black starting in 2037 and as far beyond that as a CPA can see."

More at the link above

[MadAsHellNewYorker]

Wait, so the real SS problem is

the SS tax burden falls only on the lower classes...

Oh I get the "crisis" now, the wealthy won't be able to keep stealing from the poor!

[stray cat]

1. I would definitely support that kind of reform.

However, I doubt if Bush would - it increases taxes on his base instead of the rest of us.

[OnlyInAmerica]

2. Agreed

Why cap it at $87,500? Remove the cap, fill the gap. Hey, I just made up a new rallying cry!

[bahrbearian]

3. Yeah but those people making over 87k work hard for their money

It's hard work, hard work being rich.

[MrMonk]

4. Out here in the Blue States, 87.5 k$ is NOT rich.

You can live in a nice house, put plenty of good food on your family, and maybe take a nice vacation trip if you can find some time free of work, but you are by no means test rich.

[Karenca]

9. No, 87K is NOT rich in NYC,,,,far from it. nt

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[Karenca]

8. And I am sure your charitable nature

is creating a warm feeling in the pit of your tummy.

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[ThomasJackson]

11. rall rong

Bust out the math book, sparky. The $3.7 trillion dollars is the PRESENT VALUE of the shortfall. That means we would have to come up with $3.7 trillion bucks TODAY ( and invest it at current rates of return )to plug the whole. Do the arithmetic. Incomes over 87,500 total 1.8 trillion; times 12.4 percent = 224 billion. Subtract that from $3.7 trillion; leaves a 3.5 trillion hole. SO eliminating the cap doesn't even come CLOSE.

[OnlyInAmerica]

13. Really Sparky?

What's $224 billion times 15 years come out to? And that's assuming that the median income doesn't rise over the next 15 years. It may not make up for the entire shortfall, but it would help considerably. And FICA is one tax where there is no loophole to use to avoid paying it (except for that pesky cap).

[ThomasJackson]

15. really sparking now.....

you just aren't getting the idea of "present value". what is the future value of 3.7 trillion 15 years out? about 6 ot 7 trillion. so the target number keeps running away from you. you raise 3.7 you still owe 3.7 i can't keep giving you guys these free math lessons

[OnlyInAmerica]

16. You're pretty funny

I actually mastered the concept of Present Value while completing the course work for my MBA and via my subsequent work experience. What you don't get is that still owing $3.7 trillion is better than still owing $7 trillion. As i said, simply removing the cap won't solve the problem, but it will certainly help.

[patdem]

17. NO...not the PRESENT VALUE of the shortfall....read the dern column!

Unless something changes, the system's trustees project that Social Security will run up a total shortfall of $3.7 trillion (in 2004 dollars) through 2080. But that could easily be fixed by overhauling the current 12.4 percent Social Security payroll tax, a highly regressive burden that falls only on people who earn less than $87,500 a year.

This is not the PRESENT VALUE of the shortfall it is the shortfall thorough 2080 in PRESENT DOLLARS which means they are not considering inflation or deflation...so if you raise the PRESENT AMOUNT of DOLLARS you increase the ACTUAL DOLLARS IN PRESENT VALUE!

[Eric J in MN]

18. We have a budget deficit in the general budget TODAY.

We don't we fix that before trying to fix a Social Security defict from now through 2080?

[Poppyseedman]

19. Ted Rall is missing an important piece of the SS puzzle

He points out that

Mark Weisbrot and Dean Baker, coauthors of "Social Security: The Phony Crisis" point out that Social Security can continue to pay out full benefits through at least 2042,

That is true ONLY if the use the "trust fund" that has been building up since the 80's. The only problem, it's full of IOU's Treasury bonds we have NO MONEY to but back to pay out benefits. The year we start tapping into the "trust fund" is around 2018.

[stevebreeze]

20. The trust fund is comprised of T-Bills

Would you suggest that the US stop paying out on T-Bills? If so it would be the first time in US history. The value of the dollar would plunge to now unthinkable levels if we stop repaying our debt.

[Poppyseedman]

22. The US has never stopped

paying out on T-Bills.

What do you do to pay them off? We have a deficit so you either borrow money or lower benefits.

Same problem, same time frame, Rall missed the boat

[stevebreeze]

21. It is also worth noting that the Bush economic projections are schizophrenia

Their projections from the President's council of economic advisor's predicts a growth of over 3% for every year in the next decade. This is important for his projections for the 7% return the stock market will return on diverted SS money(ignoring for now the bite that wall street brokers take). On the other hand the SS trustee's (also Bush's guys) predict that growth will be 1.8%. This is slower growth then any 20 year period since the civil war. If we grow this slow (a) yes SS is in trouble and (b) the rest of the economy is in very very deep shit. If we grow as fast the the council of economic advisor's think for the next couple of decades...THERE IS NO SS SHORTFALL.

Bush is just lining his ass off to get wall streets hands on OUR money!!!