How Would Joe Biden Reform Social Security and Supplemental Security Income?
By Karen E. Smith, Richard W. Johnson and Melissa M. Favreault of the Urban Institute
October 8, 2020
Abstract
Joe Biden has proposed increasing Social Security revenue, enhancing Social Security benefits, and expanding Supplemental Security Income, a program that provides cash benefits to low-income older adults and people with disabilities. Our projections show that his proposals would lift more than 1 million people out of poverty in 2021 and cut the poverty rate for adult Social Security beneficiaries over the coming decades by more than half. We project that by extending the Social Security payroll tax to earnings above $400,000, his plan would close about a quarter of the program’s long-term funding deficit and extend the life of the trust funds by about five years.
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3 comments:
Take from current workers and give to current beneficiaries is a tried and true method to ruin. Does it make a difference if the program is broken in 2031, 2040 or even 2065? If you cannot pay scheduled programs for all, then the program is broken beyond repair.
How many decades are we going to throw good money into programs that are terrible?
When you take from people, you limit their ability to utilize funds today in an efficient manner.
SS and Medicare took funds from workers and gave them to elderly. This boosted spending by elderly, increasing the economies growth, but at the expense of future years. If you do not invest current resources today to build the future services and products of tomorrow, you will lower the current workers future standard of living.
This really must end. A. J. Altmeyer said it very well in 1943 and 1944 when he testified before congress. Future generations will pay far more for their benefits than they are worth.
Ponzi scheme by any other name is still a ponzi scheme.
www.justsayno.50megs.com/ss.html
Martin Feldstein argued that Social Security cut saving and private investment in half. But that argument has been debunked. With the world awash in savings, it's hard to claim that Social Security imposes some kind of zero-sum burden on the rest of the economy. When the IRS deducts $900 billion from individual accounts for FICA taxes and deposits $900 billion in the accounts of Social Security beneficiaries, the banking system still has the same amount of deposits. Your position neglects the value of future retirement benefits to current workers (it lets them allocate more to equities, e.g.), discounts the relief that current workers get from having to fund their parents' retirements, and ignores the contribution of Social Security benefits to banks' ability to lend.
I'm not sure I'd agree with you on Feldstein's conclusion. Yes, personal savings aren't offset dollar for dollar against accrued Social Security benefits. In particular, low earners don't appear to respond much to changes to Social Security benefits. But middle and upper income earners do appear to respond, offsetting much of Social Security wealth with lower personal savings. I could cite a number of studies, but Bill Gale's for the US finds significant savings offsets of personal savings against DB pension wealth; Rohwedder and Atanasio find significant offsets for the UK, and Lachowska and Myck on pension reforms in Poland.
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