The latest Nationwide Social Security survey shows older Americans are increasingly concerned about the program’s solvency in the near term, with 75% of adults age 50 and older saying they believe Social Security will run out of funding in their lifetime.
Nearly 25% don’t expect to collect a penny in benefits.
Facts don’t support any of the above, but it’s not hard to understand such views when people hear things like this.
Senator Rick Scott (R-FL) proposed a plan where Social Security would have to be reauthorized by Congress every five years.
*Senator Ron Johnson (R-WI) said that Social Security spending should be considered “discretionary spending” and subject to routine budget negotiations every year, even though the program is self-funded by workers.
Such positions are nonsense and display an ignorance of the program and it’s funding. The program is funded as it is for a reason. As Roosevelt said, “With those taxes in there, no damn politician can ever scrap my Social Security program.”
The shame of it all is that even after years of delay and Congress not doing its job, making Social Security solvent and sustainable is quite easy with several relatively minor changes over time. And yes, of course that includes higher payroll taxes.
One way or another, everyone must fund their own retirement.
Even if we would like it to be otherwise, Social Security is the financial foundation of retirement for the great majority of Americans. Perhaps that should not be the case, but it is reality and will always be so. We should be strengthening the program and funding the trust accordingly‼️
QUINNSCOMMENTARY 
It has always been my understanding that Social Security was never meant to be a sole income for people once they retire. It was established as a supplement to other income in retirement. I realize that, unfortunately, pensions have pretty much gone by the wayside. The onus for all employees should be to set aside as much as they can in IRAs, 401ks, or other retirement instruments. It is hard for me to fathom how some retirees thought they could enjoy a successful retirement drawing just social security. All that aside, for the past 20 years or so, congress (both parties) have been disgracefully negligent in bolstering social security.
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You are 100% correct. Pensions never covered more than half of American workers, ever. The problem is most Americans are not saving sufficiently or at all for their retirement.
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Part of the problem is that many Americans can’t, and shouldn’t, save for retirement.
“Opinion: Stop pushing poor people to save more for retirement
Marketwatch, Sept. 12, 2019
By Andrew G. Biggs
It doesn’t always make financial sense for them.”
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The applies to very few people, those with zero discretionary income. Look at how even lower income people spend their money.
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“…Look at how even lower income people spend their money.”
I disagree. Millions of people with little or no discretionary income* are a legitimate part of the economy, also. It’s not a zero sum game. Their combined so called frivolous spending is as much a stimulus (on a smaller scale) as tax cuts for the rich and semi rich. Their frivolous spending is someone else’s income.
*How do you define discretionary income when over seventy percent of Americans die in debt?
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When Social Security was implemented, BLS estimates show that of the ~47MM Americans age 14+ in the labor force, only 4MM (< 10% were in a pension plan). And, once you adjust for eligibility, vesting, funding, etc. probably less than 1% of workers of the 50's, actually received a pension that, combined with Social Security, allowed them to maintain their pre-retirement standard of living.
That is, once you adjusted for eligibility, turnover, vesting and funding, pensions weren't at all widespread, weren't at all lucrative, and offered only minimum value.
Here is how the Bureau of Labor Statistics described it:
" … In fact, there were certain negative aspects of all pension programs. Typically, in the first half-century of significant plan growth (to 1930), during which more than 400 privae plans were established, almost all plans were discretionary. This meant that employers could modify, suspend, or annul the pension program at any time. Additionally, it was also understood that the company could withhold or terminate the pension of any employee for any reason, at any time.
Vesting, the guaranteed right of an employee to a future benefit, was virtually unheard of in pension plans of the early 20th century. Indeed, … when pension plans were being established, employers felt little pension obligation to any employee who did not stay alive, stay well and stay put until retirement. … If an employee died before retirement, his family usually did not receive anything. … If he quit or was discharged, he probably received nothing. It was also understood that employees should keep working until they became eligible for retirement benefit payments, but this in itself did not guarantee that an annuity or some other distribution would be paid. …"
And, lest you think a lot changed, up until 1989, most pension plans required workers to complete 10 years service to vest. However, over the last seven decades, the Department of Labor confirms that the median tenure of American workers has been less than 5 years of service.
But, my largest complaint is how the majority of Americans, themselves of via their congressional representatives, have no problem saddling future generations, especially those too young to vote and generations yet unborn with hundreds of trillions of unfunded obligations. So, Senators like Scott and Johnson are ridiculed when they suggest Congress should review and reauthorize Social Security on a periodic basis, or that funding for Social Security should be part of routine budget negotiations.
When folks say "… even though the program is self-funded by workers …" that would be a lie. Yes, I agree that both the employee and employer contributions are funded by workers, but, unfortunately, those contributions have never been sufficient to fund the promises Congress made to buy votes.
With respect to Mr. Biggs, some people live their whole lives in poverty. What justifies requiring taxpayers (current or future generations) funding an improved standard of living in retirement?
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That has never been my understanding.
One of many FDR quotes…
“The Act does not offer anyone, either individually or collectively, an easy life–nor was it ever intended so to do. None of the sums of money paid out to individuals in assistance or in insurance will spell anything approaching abundance. But they will furnish that minimum necessity to keep a foothold; and that is the kind of protection Americans want. . .”
The three legged stool metaphor first came out in 1949. Millions today live on SS alone, and it has always been so. I have a pension and moderate savings, but the savings aren’t a third leg, (yet)? With SS, I am able to add to the savings, hopefully for the heirs, or worst case, for extended care
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…What justifies requiring taxpayers (current or future generations) funding an improved standard of living in retirement?”
Enlightened self interest.
For the military, and for private companies*, the workforce is kept more productive by encouraging older, less productive employees to leave, voluntarily, with little or no ill will.
There is also a huge economic benefit in having a large section of the population on a “fixed income”. It evens out the low demand, keeping recessions from becoming depressions.
*or “societies”
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“Enlightened self-interest”? “Self-interest”? So, sure, you should feel free to contribute to charities that favor the societal outcome you prefer. I surely do. However, government edicts burdening future generations to buy votes isn’t “enlightened self interest.” Not for this “self”. If it were so, it wouldn’t require government mandates.
Often attributed to Mark Twain: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Social Security, Medicare and Medicaid have nothing to do with “enlightened self interest”. They look nothing like what FDR envisioned and nothing like what he signed onto. He envisioned a base level of income after decades of employment commencing at age 65 which was 5 years after what was then life expectancy at birth (60.2 years), where employment usually started at age 14 – 16.
Medicare, Medicaid, Welfare and Supplemental Security Income all showed up much later.
With respect to the workforce, it has always included individuals of all levels of productivity. So, no, the workforce is not kept more productive by mandating current and future taxpayers pay more to incent individuals with lower incomes over their decades of employment so that they could have a higher standard of living in retirement than they had while employed.
Similarly, we don’t want income and other transfer payments so the idle are incented not to work.
There is no “huge economic benefit” to America, as a whole, today AND tomorrow, by having a large section of the population on the dole as a means to increase demand. That happens because, for the last 14 years or so, we have effectively borrowed about $1.5 Trillion a year from future generations of taxpayers and passed it to the “enitled”. That’s the economic concept of the last two and the current Administration, where, over the last 14 years, we took the federal deficit from $10 Trillion on 1/20/09 to $33 Trillion today, and where we are prospectively running annual deficits of $2+ Trillion for as far as the eye can see or the CBO cares to predict.
https://www.crfb.org/blogs/cbo-releases-may-2023-baseline#:
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Perhaps you’re not enlightened enough. Who says we don’t want income and other transfer payments so the idle are incented not to work?
We’re all living longer, where you gonna find jobs for all us geezers?
My local family run store was complaining about all the people on the dole. How long would he stay in business without them?
My opinion, Richard apparently doesn’t agree, is the income disparity in the U.S. is crippling us.
FDR isn’t president anymore, and times have changed. He also proposed a 100 percent marginal income tax rate for incomes over $25,000 (during war) about $200,000 today.
I have no problem paying more taxes to benefit those less financially secure than myself. ( that includes most of my family) I also have no problem voting to require you and Richard to pay higher taxes, if you are able.
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Income inequality is vastly overstated once you adjust for taxes and transfer payments:
https://www.cato.org/study/myth-american-income-inequality
https://www.aei.org/carpe-diem/adjusting-transfers-federal-taxes-reduces-income-inequality-50/
https://www.wsj.com/articles/incredible-shrinking-income-inequality-11616517284
The inequality stats are kind of like the gender gap on wages:
https://www.pewresearch.org/social-trends/2023/03/01/the-enduring-grip-of-the-gender-pay-gap/
Once you control for management level, industry, position, hours worked, years of experience and other differences, including differences in on the job injuries and mortality, the gap all but disappears.
https://www.wsj.com/articles/SB10001424052702303532704579483752909957472
https://www.aei.org/carpe-diem/equal-pay-day-this-year-is-march-15-the-next-equal-occupational-fatality-day-wont-be-until-april-23-2032/
Your vote counts the same as mine. I have no problem with that. My problem is that our votes, as taxpayers, don’t count more than those whose who are not taxpayers, those whose votes are bought by politicians’ promises.
The most recent example of that bias is the current Administration promise of student loan debt relief to buy votes in the 2022 midterms (and look for it again in 2024). While 44% of Americans over age 25 have a degree (100+ million), the vast majority of us didn’t stick taxpayers with debts we voluntarily assumed to fund education for ourselves and our children.
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“Only” eight times more…
“After adjusting for both government transfers and federal taxes paid, the average household in the top quintile received less than 8 times more after-tax income ($188,200) than the average household in the bottom 20% ($24,100).”
Mark. J. Perry
$24,000 is poverty level for a household of three, and millions of these workers are full time, lifelong employees of low level jobs. Ask me how I know.
The U.S. is the outlier of OECD countries in income inequality both before and after taxes and transfers. A lot of these changes occurred after 1980, with the demise of 70+ percent marginal tax brackets.
https://cepr.org/sites/default/files/styles/popup_small/public/image/FromMay2014/causafig1.png?itok=_6BXZjgI
From the tenor of this and his other articles, I’ll go out on a limb and assume Mark Perry is one of those* who believe these taxes and transfers should be reduced as part of debt reduction/balanced budget priority.
I respectfully disagree.
*along with Andrew Biggs, also with AEI.
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With the “demise” of 70% marginal rates came elimination of many deductions and exemptions. In 1979, the highest quintile paid an average federal income tax rate of 26%, to today, when they are paying an average of 24%. For comparison, the lowest quintile had an average income tax rate of 11.6% in 1979 where today it is at 6.7%. Bottom line, from Reagan, Bush I, Clinton, Bush II, Obama, Trump and Biden, it is the lowest income Americans no longer pay income taxes – where 57% of American households paid no federal income tax at all in 2021. .
At the same time, the amount of transfer payments jumped from $265 Billion in 1980 to $4.7 Trillion in the 2nd Quarter 2020, and $5.1 Trillion in the 1st Quarter 2021, back down to “just” $3 Trillion in the 2nd Quarter 2023 – that’s $12 Trillion a year after COVID.
In 2022, the federal government spent over $1.6 Trillion on welfare programs, and in 2023, the spend will be “down” to $1.3 Trillion (that’s more than we spend on defense) – $147 Billion on Nutrition Assistance ($28 Billion to children), $81 Billion on housing assistance ($31 Billion for tenant-based rental assistance, $19 Billion to public housing, and $14 Billion to project-based rental assistance), $25 Billion on unemployment, and $536 Billion on Medicaid (mostly due to expansion triggered by Health Reform).
Again, no problem with your vote and others who pay the taxes. I just have a problem with certain Presidents and members of Congress, idiots like Obama, Trump, Biden, Warren and Sandars, who would be happy to buy the votes of the households by promising them stuff to be paid by others, including those too young to vote and generations yet unborn.
I’m amazed and saddened by all the Americans who vote for those who promise free stuff, including those who would vote for Trump or Biden in 2024 – they ignore the burdens they have created and how continuing the current practices will worsen the standard of living for future generations of American taxpayers, workers and households.
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1. It is difficult to find apples to apples data comparing “(in)equality” between nations.
2. Maybe more difficult to explain the reasons for the increasing inequality.
3. Market forces by themselves, according to Adam Smith, should even out the highs and lows, and lead to less inequality, not more.
4. Also according to Smith, less inequality should lead to a more prosperous and stable nation.
5. According to Smith, a society is “flourishing and happy” only when the workers are “tolerably well fed, cloathed, and lodged”
and not when they are “poor and miserable”
Are the idiots trying to buy votes, or just to correct the uneven distribution of the GDP? There is no need to worsen the standard of living for future generations of American taxpayers, workers and households, there is enough money today. Tax the rich. Not an unbearable tax on the super rich, but a reasonable tax on (at least ) the highest quintile.
Enlightened self interest would suggest keeping the lowest quintile “tolerably well fed, cloathed, and lodged”
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In another arena, those who would KEEP the lowest quintile “tolerably well fed, cloathed, and lodged” might be thought to be those who harbor “low expectations” – those who assert there wasn’t or isn’t any (or sufficient) economic mobility in America. Well, I was consistently in the bottom quintile throughout my first twelve years of employment in the 1970’s. After over a decade in college classes at night, and another 25+ years of experience, at one point in my 50+ years of employment, I was once in the top quintile.
Promising people ”free stuff” to buy votes is often a form of discrimination that is a part of “low expectations”, that those in the bottom quintile have little chance of change, so, why not placate them with government transfers? What is the reason for intergenerational poverty? Is it “the bosses”? Is it “the rich”? Is it because of income inequality?
If you have a picture of income inequality handy, it should include people like Steve Jobs and Bill Gates. No envy there. My life, and that of hundreds of millions of others, was improved by their innovations.
Those who believe “the government is here to help you” must ensure the politicians and bureaucrats don’t create and perpetuate bad systems. Instead, too many have been led to believe that they can’t survive without government assistance.
Amazing what promises in exchange for votes will buy in America these days.
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I do not disagree.
However?
IMHO, the “blame”, and therefore, the remedy, seems to fall on the lowest level of workers.
You are lazy.
You are irresponsible.
You are stupid.
You are unethical.
You are wasteful.
If you didn’t get ahead, it’s your fault.
“Sire, the peasants are revolting.”
(Sorry, old joke.)
Worst of all, it’s true! I can give you almost countless examples!*
Welcome to the Pareto Principle. Lazy, unethical, wasteful people occur in every occupation, at every income level. Some of them, in fact, may be cause of the very disparity we see at the lowest income levels.
According to continuing Gallup polls, only about 30 percent of employees are actively engaged. About 20 percent are actively DIS engaged.
“…engaged employees are involved in and enthusiastic about their work and workplace. Actively disengaged employees are disgruntled and disloyal because most of their workplace needs are unmet.”
Look around you, how many co-workers are really carrying the load? Look in the mirror, you never know.
* The difference between anecdotal and empirical evidence.
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But, what about my father? The greatest man I’ve ever known. The poor but honest sharecropper. (Figuratively speaking.) Guaranteed, cradle to grave, in the lowest quintile. Along with millions of others, and the world NEEDED them. Right there. Working the farms and factories. Stocking shelves, running registers, sweeping floors, cleaning bathrooms (he did that too, for a while, as a second job.)
Congratulations on success in your career. My “household” made it to the fourth quintile, barely. But you and I should understand that not everyone can do that. Literally. It’s impossible. Its math. Its called the fallacy of composition. “Anyone” can grow up to be president*, but “everyone” can’t. (And shouldn’t. We still need them, right where they are.)
Dad left the labor market at about the time things (inequality) really began to change… in the U.S., but NOT in most OECD countries.
“Free stuff” and buying votes is a very visceral image. As well as “the government is here to help you.” What about “the government is, or should be, here to protect you?”
What if a major corporation(s) (don’t use Wal-Mart, my niece works there) can only survive if they pay most employees less than a livable wage? If government (us) transfers to those workers, who are we subsidizing, the worker or the corporations? “Don’t feed the bears, it makes them dependent.” And what if we (taxpayers) decide to stop?
About 44% of U.S. workers age 18-64 are low wage workers. Some are just passing through, but most will always be there and, I repeat… Through no fault of their own. It really does behoove us, as taxpayers, as government, as a society, make sure these people survive, even prosper, and reproduce.
Enlightened self interest, and common decency. My Dad, my brother, most of my sisters, worked low paying jobs, raised families, and retired on SS alone. (One still working at 70). Myself and one sister managed to get decent pensions. The oldest sister, I understand, is a millionaire several times over (farming). And I love them all just the same.
*or “successful”
P.S. Nice thread, Richard. Thaks for the use of your soapbox. Sorry about using up your band width.
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SD – Your FDR quote says it all.
Why should the high paid worker (boss, business owner, middle management) get the bigger SS check from SS.???? As we all should know that NO ONE has paid for their SS benefits. If you collect SS for 8 to 10 years you get all the FICA taxes paid by you and your employer back, That is why economist Melton Freidman called SS the biggest wealth transfer to the rich ever devised. I believe the best fix to SS is have employees pay 10% FICA and Employers pay 10% FICA and then everyone gets the same benefit amount. But the rich or should I say the top 50% of retirees would never go for that.
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