Social Security benefits formula might change

[southsider2k5]

The White House is pondering using dollar indexing instead of wage changes to determine benefits.

 

http://money.cnn.com/2005/01/04/news/econo...dex.htm?cnn=yes

[mreye]

"We want to spark a national debate about the problem before we really embrace solutions," an administration official said.

 

Needs to be done! Jump on that third rail and hump it! We'll never solve anything by keeping it in the dark.

[southsider2k5]

Needs to be done! Jump on that third rail and hump it! We'll never solve anything by keeping it in the dark.

 

I just wish more people understood the problem. So many end of the worldists are running around screaming about "fixing" social security, like there is some magic formula that will do it, without making tough decesions. There are two practical ways to do it. Either, one, raise taxes, or two, cut benefits.

[mreye]

I just wish more people understood the problem.  So many end of the worldists are running around screaming about "fixing" social security, like there is some magic formula that will do it, without making tough decesions. There are two practical ways to do it.  Either, one, raise taxes, or two, cut benefits.

 

I don't think there's a "magic formula", but I don't agree that raising taxes or cutting benefits are the only way. Let me say, that I'm not a big fan of SS in the first place. I think it discouraged saving for more than a generation by wrongly telling the workforce that they would be fine when they retire. But, since it's here, we're obligated to fix it for our elderly. The first thing I would do is allow people to opt out of it. You would still pay a portion of the SS taxes to help pay for the current SS benefits, but not near as much. I'm not an economist and I'm damn glad I'm not on the team that has to handle this.

[jackie hayes]

I don't think there's a "magic formula", but I don't agree that raising taxes or cutting benefits are the only way. Let me say, that I'm not a big fan of SS in the first place. I think it discouraged saving for more than a generation by wrongly telling the workforce that they would be fine when they retire. But, since it's here, we're obligated to fix it for our elderly. The first thing I would do is allow people to opt out of it. You would still pay a portion of the SS taxes to help pay for the current SS benefits, but not near as much. I'm not an economist and I'm damn glad I'm not on the team that has to handle this.

 

Problem is, even w/o cutting tax receipts, SS taxes will fall below payments in about 10 years. At that point, the SS Admin will start drawing on the "Trust Fund", so essentially the shortfall in SS benefits will be paid for by the general federal government. Under your plan, tax receipts will fall further, making the shortfall even greater. So you need to cut benefits or increase taxes, now or in the future (issuing bonds today requires higher taxes in the future). There's just a fundamental accounting problem here -- the old in the past received, and the old today are promised, more than they paid into the system. Someone's gotta make it up eventually, either by paying more or getting less.

 

All plans reduce to essentially a tax increase or a benefits cut, all that differs is the timing and the creative description of the tax/cut.

 

As for the change from wage inflation to price inflation, that's long overdue.

[AddisonStSox]

Damn you Baby Boomers!!!

 

By the time I'm ready to recieve Social Security the well is going to be dry.

 

I'll let Chuck take this one...