Social Security trust funds now projected to run out of money sooner than expected due to Covid

Discussion in 'Social Security' started by Lil Mike, Sep 1, 2021.

  1. Lil Mike

    Lil Mike Well-Known Member

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    Well that's not great news.

    Social Security trust funds now projected to run out of money sooner than expected due to Covid

    • The Social Security trust fund most Americans rely on for their retirement will run out of money in 12 years, one year sooner than expected, according to an annual government report.
    • The circumstances, which were exacerbated by the Covid pandemic, threaten to shrink retirement payments and increase health-care costs for Americans in old age sooner than expected.
    • The financial outlook for Social Security and Medicare, two of the nation’s preeminent safety net programs, has deteriorated over the past year.

    This isn't really a surprise. So in 2033 or there about, Social Security will only be able to pay 70% of it's benefits. Gee if only we had enough time to figure out a solution? Oh well...
     
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  2. Mircea

    Mircea Well-Known Member

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    Congress will wait until the 11th Hour like it always does and then scramble and ram something through that is ill-thought.

    In spite of the propaganda and disinformation on the internet, the only workable solution is to increase the FICA payroll tax from 6.2% for employer and employee to 8.0%-8.4%.

    If Congress acts now, that can be done with step increases, you know, from 6.2% to 6.4% then 6.8% then 7.0% and so on to prevent economic system shock.

    Once the 8.0%-8.4% level is reached, there will be no additional increases necessary for at least 500 years.

    There was a Bill pending that had some good things in it.

    The donut-hole is acceptable. The donut-hole is the earnings between the wage cap and $400,000. Everything over $400,000 is taxed. That would mean you only need 8.0% each for employer and employee.

    The $400,000 point would float with the wage cap, so that 10 years down the road it's everything between the wage cap and $450,000 or whatever.

    Many propagandists claim all that is needed is to eliminate the wage cap, but that only generates an additional $126 Billion per year.

    When you're paying out $129 Billion per month -- and a year and a month are not the same thing and you will be paying out $129 Billion per month in a few years -- Social Security still fails.
     
  3. Lil Mike

    Lil Mike Well-Known Member

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    I do think the very least that Congress could do is begin to raise FICA. But I don't see it on the horizon.
     
  4. wgabrie

    wgabrie Well-Known Member Donor

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    What's going to happen, at least what I foresee, is that when SSA lowers the benefit all someone has to do is file a lawsuit and the judge is going to order that SSA pay its benefits in the full amount, and it will be up the government to raise taxes to cover it because there's no other option that is legal.
     
  5. FreshAir

    FreshAir Well-Known Member Past Donor

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    but republicans told us it was mostly the elderly that were dying, the ones using most of the Social Security funds
     
    Last edited: Nov 15, 2021
  6. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    But will the Left agree to that, since they consider it to be kind of a "regressive tax"?

    But you do realize that proposal would effectively turn Social Security into an income redistribution scheme, since the benefits are going to be capped at a level far below $400,000.
    It would totally turn this specific tax category into something it was not originally intended to be, with a different purpose.

    Maybe they should just reduce the Social Security payouts and supplement it with some other additional separate government payout made from the general funds?

    I predict your prediction will turn out to be very accurate.
     
    Last edited: Nov 18, 2021
  7. GrayMan

    GrayMan Well-Known Member

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    Didn't a bunch of people in nursing homes pass away? It seems like it would be more due to the baby boomers retiring early. Also, Medicare is separate and Covid was covered by the trillion dollar stimulus packages.
     
  8. GrayMan

    GrayMan Well-Known Member

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    People had their whole life to figure out a solution for their own retirement. This is why people should not trust government. It's always a mistake.
     
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  9. Joe knows

    Joe knows Well-Known Member

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    The cost of democrats shutting down society is proving to be a horrible choice
     
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  10. Lil Mike

    Lil Mike Well-Known Member

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    All of the Social Security funding and some of the Medicare funding comes from payroll taxes, and we just had a year with a rather large unemployment due to the lockdowns.
     
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  11. Joe knows

    Joe knows Well-Known Member

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    Lockdowns that republicans were vehemently opposed to. You see it still to this day how republicans are protecting business from hurtful mandates and face coverings.
     
  12. Lil Mike

    Lil Mike Well-Known Member

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    They were not that opposed to it, but at this point, it doesn't matter which party favored the lockdowns; they happened and wrecked the economy and we'll be paying the price for years.
     
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  13. GrayMan

    GrayMan Well-Known Member

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    You half correct. The lockdowns were much harsher and longer in blue areas but yes Republicans are not exempt from guilt.
     
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  14. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    If you brought in an accountant, or financial manager, they would tell you the logical thing to do would be to cut the payouts down by a certain percentage so the fund would be sustainable.
    That would be the fiscally prudent thing to do.

    But that would be political suicide and so is not going to happen.

    Another likely political escape will be to raise the age at which people can collect. But unfortunately, that's simply not good public policy. The people who are forced to retire first are probably the ones who will need that money the most. Some people experience health problems as they progress in age and for these people it may not be realistic to keep expecting them to work. This is going to hurt the most vulnerable.
    The strategy here will be to keep raising the age so that hopefully a larger share of the people will simply die off before they can ever collect. Or they'll be so old by the time they can finally collect that they will not be collecting too many years until they die.

    Raising the payroll tax is another solution, but that would be seen as a regressive tax and would trigger some outrage from the Left, though they might be willing to do it.
    Another option is to transfer funds from the general budget into the fund, but this would also be difficult due to the large amount of money this fund will require, combined with the government being in a large amount of debt and already running big budget deficits. It would probably trigger outrage from Conservatives because it would be turning this system into something it wasn't originally meant to be, if funds have to come from some source other than a flat payroll tax, and will not be distributed in proportion to how much individuals paid in. Of course Conservatives would not be the happiest about an increase in the payroll tax either, since they do not like tax increases, but would see it as vastly preferrable to the second option.
     
    Last edited: Apr 6, 2022
  15. Lil Mike

    Lil Mike Well-Known Member

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    Ultimately, the payroll tax is going to be increased. That's the only real way to keep the system afloat. In a perfect world, they would start doing that in small increments now, to lessen the pain, but more likely Congress will wait until we're on the verge of collapse and then do a massive FICA tax increase.
     
  16. Bezukhov

    Bezukhov Active Member

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    The Trust Fund will be broke? It is already. As I understand it SS taxes go into the regular budget. Da gubbermint then gives to SS government debt and tells them to treat it as assets. Two questions. Who gives the money to SS to buy that government debt? Since it's government debt, who ultimately is responsible to pay back that government debt? Why, the same group of people!
     
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  17. cristiansoldier

    cristiansoldier Well-Known Member

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    I think they should reduce payments instead of increasing FICA. Obviously the fund was under funded for the payouts they gave. Why have young workers bailed out the elderly again for mistakes they had ample opportunities to fix over their lifetimes. They voted for the governments that managed the funds and determined who received payouts. If they only collected enough to pay out 79% then they should live with those consequences. It is not like the boomer problem snuck up on them. Everyone saw it coming back didn't want to fix it. You want a ponzi scheme retirement plan, you live with it.
     
  18. Lil Mike

    Lil Mike Well-Known Member

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    This sounds like you are blaming retirees for the failures of government. Nobody has a choice about contributing to social security, it's a mandatory tax. Arguing that you are going to cut an 80 year old retiree's social security by a third (the amount the fund will be short in 2033) is a recipe for social disaster.
     
  19. FreshAir

    FreshAir Well-Known Member Past Donor

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    time to raise the caps on the tax.... 99% of Americans pay the SS tax for every dollar they earn, so should the 1%
     
  20. FreshAir

    FreshAir Well-Known Member Past Donor

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    were they though?

    [​IMG]
     
  21. Joe knows

    Joe knows Well-Known Member

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    Trump: ‘We can’t let the cure be worse than the problem itself’
     
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  22. FreshAir

    FreshAir Well-Known Member Past Donor

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    Corporations did not pay people enough to fund their retirement, not everyone makes that much

    without social security, most Americans are screwed in old age....

    and many places now are making it a crime to sleep in your vehicle
     
    Last edited: Apr 10, 2022
  23. FreshAir

    FreshAir Well-Known Member Past Donor

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    yep, did Trump ever change his reopen guidelines, nope
     
  24. Joe knows

    Joe knows Well-Known Member

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    His reopen guidelines? It’s not just Trump either. Republican lead states were the first to open. They made laws banning companies from requiring vaccines, they tried to stop forceful masks, and more. They definitely were more pro business than democrats
     
  25. Joe knows

    Joe knows Well-Known Member

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    Retirement doesn’t have to be “that much”. Investment early in life in small percentages can lead to a retirement of your current standards. You don’t have to be rich to save. I know poor people that do it daily
     
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