General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forumsby Robert Reich:As if you didn’t already have too much to worry about, Social Security’s funds
are running low. Thats because people are living longer than ever, and thereby drawing more Social Security; boomers are retiring at a rate of around 10,000 per day, and essentially will be doing so through 2030; and Social Security's investment holdings aren't earning much interest thanks to the Federal Reserve, which has kept interest rates low.
How to fix Social Security? Youll be hearing lots from Republicans and conservative Democrats about raising the age of eligibility (a bad idea that hurts the poor because the poor dont live nearly as long as the rich), or reducing benefits overall (also regressive), or raising the Social Security tax (also regressive). The best idea is to raise the payroll tax cap on earnings.
This year, income up to $118,500 is subject to the Social Security payroll tax. The average household earning around $51,000 this year will pay Social Security payroll taxes on every single dollar. But a multi-millionaire pays only on the first $118,500 of income. Only around 10% of the population is earning in excess of $118,500 annually, so raising the cap would only affect a small percentage of the population.
I say eliminate the cap altogether, and use the extra funds not only to save Social Security but expand it.
What do you think?'
https://www.facebook.com/RBReich/?fref=nf
msongs
(67,433 posts)SheilaT
(23,156 posts)Octafish
(55,745 posts)...Ya can't afford the cat food.
They already stole the working class' private pensions and those of public employees in Detroit and Puerto Rico. What else can they do to subjugate the population during the wealthiest times in human history?
SheilaT
(23,156 posts)Social Security has kept millions of people out of poverty.
Oh, and I'm one of those whose pension was gutted because the company I worked for underfunded it for years, declared bankruptcy, and was able to walk away from that obligation. So I currently get less than a third of what I should be getting. But Social Security is paying out exactly what was promised.
Too many people rely on SS as their only source of income in retirement. It was never intended to be that. I know too many people who either always spent every penny, or, worse yet, took great pride in always being paid under the table and so contributed little or nothing to SS, and now are shocked that they're not getting anything.
Octafish
(55,745 posts)Washington ran the printing presses to prop up crooked, looted banks. The same government lets the People suffer, criminally through wars without end and through austerity and associated cutbacks in social spending.
SheilaT
(23,156 posts)If Washington really had run the printing presses to prop up banks, we'd have had runaway inflation. But we haven't. Yes, a lot of social spending has been cut back but Social Security is still a bedrock. I realize it wasn't you that claimed Social Security rips off the recipients, but you aren't making sensible claims.
Urchin
(248 posts)we don't have inflation, is because of all the goods and services that are made overseas.
But what has happened is that the cost those few goods and services that are provided domestically has skyrocketed: education, healthcare and health insurance, and housing.
All the "printed" money has been funneled into those few things that are made or supplied domestically.
If Asia and Mexico didn't exist, we'd still be making everything here and the shirt you buy in Walmart today for $12 would cost $200.
I think they planned it that way, so they can print all the money they want and pretend it doesn't raise prices (except for those domestic items, which they somehow manage to leave out of their inflation calculations).
Almost everything necessary to life: housing, healthcare, education--are barely affordable for most people. But they can still get cheap electronic gizmos, so they're told it's a wonderful system.
Octafish
(55,745 posts)Banks received trillions through Quantitative Easing afterward.
Washington is ready to print whatever amount Wall Street -- the Fed -- asks.
Other than austerity, the people of Detroit and Puerto Rico got zero; the retirees got what was due them cut.
Wish I could be clearer.
hueymahl
(2,507 posts)But the truth is damn complicated. If you don't have a background in macro-economics and a working knowledge of how the fed works, it is a truth hard to understand. Which also plays to our leaders ability to deceive us.
Stryst
(714 posts)When Social Security keeps you at HALF the poverty line, it's not a good deal. It's better than nothing, but only barely. The average social security check doesn't cover the average rent in America. And I'm happy that you and your friends have other sources of retirement and that you've made more money that you absolutely needed. But the rest of us are spending the paycheck from one job on the rent and the other job to afford food that's killing us anyway. I believe you to be out of touch with the average American.
cannabis_flower
(3,765 posts)is to move out of the US to Central or South America when I retire. You can rent a 3 bedroom house in Guatamala for $450 a month and we don't need a 3 bedroom house. My husband already has a 3 bedroom house in Honduras but the plan is to sell it and buy a place in Nicaragua, Panama, Costa Rico, Belize or Ecuador unless things have improved in Honduras by then which will probably be somewhere between 2021 and 2026. You can live abroad and receive social security, no problem.
SheilaT
(23,156 posts)nearly $1,200 a month, some $14,400 per year, which is not only a bit above the poverty line but nearly three times half the poverty rate, you clearly do not know what you are talking about. If that's all you have, then yes, you are no doubt hurting financially.
My Social Security check, which is less than that average, is more than my mortgage payment. And I live in a city -- Santa Fe -- that locals consider very expensive. Clearly none of those locals have ever tried to rent or buy in NYC, California, or Chicago just to name a few genuinely expensive places.
And here's the part that continues to amaze me about how so many people never save a penny: Even when I was married our income at best was just above the median.
When friends tell me the sad story of their young adult child whose new car was totalled in an accident (no one hurt, which is genuinely wonderful) but because the loan amount was more than the value of the car at that point, I simply wonder what that young adult was thinking to buy an expensive car with a loan like that. So many people make such bad choices about basic things.
Yes, Social Security needs to be expanded and shored up. And we need a genuine single payer health care system of some sort.
But please don't misrepresent what we do have.
George II
(67,782 posts)w4rma
(31,700 posts)than *any* private insurance program could ever be.
1939
(1,683 posts)but the amount I have drawn totally overwhelms what little i did put in to the pot.
bjobotts
(9,141 posts)increase benefits to a livable wage. Corporate welfare amounts to billions every year which should be used to widen our social safety net...and end income inequality. We have the solutions to all our problems but they are being blocked by a greedy few. Ending the SS cap is one huge step to aid those on SS without harming anyone.
Loudestlib
(980 posts)Thinkingabout
(30,058 posts)Full retirement age from 65 to 67 and increasing the max cap. One event which has brought many more people into SS was the baby boomers became of age. To continue SS there will need to be more reforms and it will probably require early retirement to increase to more than 62.
a kennedy
(29,696 posts)I have been working, well I am retired now but shoot I started working when I was 18. Worked every year until 2006. My SS isn't much but d'mn it is what I worked for. Just raise the dang cap.
Thinkingabout
(30,058 posts)Hortensis
(58,785 posts)was unfortunate but the swell early retirement that followed was an event, not a trend. The decline of incomes as a cause is a big problem, yet another reason why we need to arrange for incomes to rise to where we and our nation needs them to be.
Eliminating the cap would certainly help immediately, but Robert Reich might also have mentioned income redistribution to raise the wages of people during their working lives. America's working classes cannot pay SS taxes on the national wealth they created that has been diverted to the pockets of a few extremely wealthy, much less use the rest to achieve income security.
Thinkingabout
(30,058 posts)Romney who makes their money from dividends, etc those earnings is not included in FICA or Medicare taxes. On these two taxes, 6.2% FICA and 1.45% or 7.65 for those earning wages is low. One of the things Hillary wants to look at is placing taxes on other "earnings" than wages such as dividends. This would also bring more funds into the trust fund.
Hortensis
(58,785 posts)to eliminate from the social engineering of vast wealth accumulation the other day, but it wasn't an 80% tax bracket so is escaping me at the moment.
I'd remember if I'd been benefiting from it and fears losing it, and especially feared what it meant for what else was coming under any Democratic administration, of course.
Silver_Witch
(1,820 posts)And what do you advocate that we raise the age to? 80?
Thinkingabout
(30,058 posts)In order to extend the benefits until 2034. I did not have a problem with raising the age for full retirement if not I would not have received benefits. When first started the life expectancy was 65, it is higher now.
Jim Beard
(2,535 posts)in construction or other physical labor. For some 65 does not come soon enough.
Thinkingabout
(30,058 posts)Not having the funds available at any age is not acceptable to me.
Silver_Witch
(1,820 posts)Thinkingabout
(30,058 posts)retirement age. If you are getting a monthly benefit then thank those who pushed for the reform.
Silver_Witch
(1,820 posts)I am 12 years away from full retirement under social security. And social security is my only retirement so I hope to unicorns it is there still or I work till I die!
So I work till I am 72 and you protest another raise in the cap. Why is that?
Thinkingabout
(30,058 posts)and there needs to be an increase in the full retirement age and perhaps the retirement age. If you were born in 1956 the current reform provided benefits until 2034. If there is not more reforms then the benefits will run out when you are 78, what happens then?
fasttense
(17,301 posts)You don't get your full payments on Social Security unless you wait until you are 70 to start drawing it. But most people are usually too sick to wait that long. Something comes along that disables a person before they reach the magic number of 70. So they either get disability or early retirement.
Changing the age of Early Retirement will only cause more and more older folks to go on disability. Let's face it, the odds of living to the ripe old age of 70 without getting injured or disabling sick are
very small.
Social Security was designed to be the major source of old age retirement funding becuase no one knows how long they will live, so they usually can't save enough money.
CrispyQ
(36,497 posts)Traditionally, the full benefit age was 65, and early retirement benefits were first available at age 62, with a permanent reduction to 80 percent of the full benefit amount. Currently, the full benefit age is 66 for people born in 1943-1954, and it will gradually rise to 67 for those born in 1960 or later.
Here's a chart from the SSA site: https://www.ssa.gov/planners/retire/agereduction.html
If you put off collecting SS, you can get an additional 8% benefits per year for 4 years. So if your full retirement age is 66 & you choose not to collect until you're 70, then your monthly benefit will be 32% more than if you had collected at 66.
My husband has this dilemma. He's fit, in relatively good health, but can't find a tech job. He reached full retirement age in a few months. He wanted to wait until he was 70 to retire, to collect the extra benefit, but he may have to start collecting this year.
Thinkingabout
(30,058 posts)until age 70 does increase those benefits. After age 62 each year increases the benefit about 8%.
Silver_Witch
(1,820 posts)I hope I can make it to 72. Thinking it is not to likely. But then led money to pay outeh?
bjobotts
(9,141 posts)Silver_Witch
(1,820 posts)Hoyt
(54,770 posts)unless you tell those that pay in more they won't get any more benefits than those earning at today's cap. And, that roughly 13% point increase in taxes should also be used for health care, education, welfare, jobs, etc. We have a problem, and it's good folks like Reich are finally admitting it, that will take more than a simpleton's approach to solving it and other societal needs that can't be ignored.
Cryptoad
(8,254 posts)a progressive tax,,,,,,,,,,
Response to elleng (Original post)
Snarkoleptic This message was self-deleted by its author.
hedda_foil
(16,375 posts)I know it's what always gets mooted around, but I can think of no earthly reason for it.
Abq_Sarah
(2,883 posts)The self employed already pay SS taxes. Every quarter, I have to send the Fed 15.3% of my net earnings for SS and Medicare.
1939
(1,683 posts)do pay social security. In fact, they pay double because they have to pay both the employees share and the employers share with their income taxes. There is a special form in the income tax package for them to fill out.
tk2kewl
(18,133 posts)Moostache
(9,897 posts)Put it this way, the solution is finding a way to ensure that a hedge fund BILLIONAIRE does not pay LESS in FICA than an office janitor or small business owner. The free ride at the top end of the income scale is not part of the problem, its the whole damn thing!
Progressive taxation of wealth accumulation is the answer. When the government programs of the New Deal were introduced and expanded, the thought that people would make Billions of dollars as heirs to a discount department store concept or that others would make Billions more in the casino stock market and investment advice game was never included in the logic.
Taxing ONLY wages and at that doing so in a regressive manner by capping the contribution limits is a destructive thing that should be remedied by ensuring that if high income and high wealth acquisition people wish to pay LESS in taxes, then they better start spending a ton MORE to buy down their taxes. And I do not mean through shady "gifts" or "donations" to dummy corporations or holding companies in their children's names...I mean actual spending in hiring and wages paid to employees or physical, tangible items that provide the flow of money in a healthy economy versus the stagnation and hoarding we see today.
Raising the income tax, without adjusting how it is applied and what it encourages is just more short sighted stupidity.
Sophiegirl
(2,338 posts)And I am fine with eliminating it altogether.
lakercub
(659 posts)I'm pretty sure I'll never get anywhere close to the money back from SS that I've put into it (which irritated me a lot when I was in my 20s), but I really don't care. Those of us who are fortunate enough to make a good long-term wage should be able to effectively plan for retirement without entirely counting on SS payments.
If I have to contribute more money that I will never see returned, then I can take solace in the fact that the money will have helped more people who don't have means eat or clothe themselves. That's an easy trade-off. Raising the cap wouldn't bother me in the slightest.
If anyone in my family gets seriously ill someday and it bankrupts us, I'll hope others felt the same way as I do now.
Zoonart
(11,875 posts)CUT THE CRAP...RAISE THE CAP
CUT THE CRAP...RAISE THE CAP
Everybody...
a kennedy
(29,696 posts)WHEN CRABS ROAR
(3,813 posts)rgbecker
(4,834 posts)Obama also has wanted to do this, but seems to get no help from even his Democratic friends in Congress.
George II
(67,782 posts)rgbecker
(4,834 posts)Preserve Social Security for decades to come by asking the wealthiest to contribute more. Social Security must continue to guarantee dignity in retirement for future generations. Hillary understands that there is no way to accomplish that goal without asking the highest-income Americans to pay more, including options to tax some of their income above the current Social Security cap, and taxing some of their income not currently taken into account by the Social Security system.
Is anyone talking about including all the local and state workers who seem to have their own systems?
mrr303am
(159 posts)and turn it over to be administered by Wallstreet.
Major Hogwash
(17,656 posts). . . clear across America espousing the idea of investing Social Security Trust Funds in the stock market?
I remember how almost all of the other Congressional Democrats called Bush's idea preposterous, idiotic, lame, stupid, etc.
But, I don't recall ever reading about Clinton saying a bad word about Bush's idea.
rgbecker
(4,834 posts)klook
(12,164 posts)KoKo
(84,711 posts)rhett o rick
(55,981 posts)Phlem
(6,323 posts)IMHO.
Spitfire of ATJ
(32,723 posts)I wonder how the fund would be if the government repaid the 2 trillion (with a T) it has "borrowed from the SS fund?
airplaneman
(1,240 posts)Spitfire of ATJ
(32,723 posts)spud_demon
(76 posts)projected to hit $0 in 2034.
The "Prescription Drug Benefit" is a big, unfunded giveaway to the drug companies. Those prices should be regulated.
Raising the cap would solve all the problems.
Spitfire of ATJ
(32,723 posts)Jim Beard
(2,535 posts)the wealthy keep paying Medicare Premiums?
Spitfire of ATJ
(32,723 posts)Wounded Bear
(58,691 posts)as the tax is based on a percentage of income, raising worker incomes increases contributions proportionally.
roamer65
(36,747 posts)To go easy on small businesses, let the cap remain for their half of FICA. But the more you make the more you should pay.
newthinking
(3,982 posts)in their balance sheet.
They already pay for up to 128k, so we are not talking about general cost of labor for a small business.
Silver_Witch
(1,820 posts)She will NEVER raise the cap let alone eliminate it. As long as it only affects the middle class count on age increases and payment reductions.
Scruffy1
(3,256 posts)It often conflates life expectancy at birth with life expectancy at retirement which are two different things. The life expectancy at retirement has only increased less than two years since 1990, or about 9 %, which, of course, adds up to some dough but is hardly catastrophic. But in the main he is right. Even Milton Friedman thought the cap was wrong. The problem is that the average working person knows nothing about how the well off live. If all your income is from capital gains, interest and dividends you don't pay payroll taxes at near the same rate as the working people because you don't get a paycheck. If you are self employed you pay the 15% to cover social security employee and employer share. If you are rich, you pay nothing because most of your income is not from payroll. Instead you get the capital gains deal which cuts your income for tax purposes.
Of course Reich is right in the main in that the cap sucks. Even Milton Friedman saw no reason for it.
Another factor is that in reality only the rich live much longer, which skews the whole graph. Also there is a huge disparity between the poor, middle class, and rich in lifespan.
To really fix the problem capital gains tax exclusion (notice I don't use the misleading term capital gains tax:it's an exclusion which means those that don't work pay less than those that do) needs to go, along with the stupid rule that inheritances are only taxed at the original purchase value and excluded from capital gains. Same with the carried interest. These are bought and paid for tax dodges for the oligarchy.
1939
(1,683 posts)Estates are taxed at the valuation on date of death.
If a person buys ABC Corp stock at $20 and holds it till they die and the value at date of death is $100, the estate tax is based on the value of $100 at estate tax rates (much higher than LT cap gains rates). The tax that is never paid is that the deceased never paid taxes on the $80 "profit" in ABC because he never sold the stock and realized the profit. A capital gain (or loss) is never realized until something is sold until then it is just "paper profits" (or paper losses). The heir now owns the ABC stock (assuming it wasn't sold to pay the estate tax) and his "cost basis" going forward is $100.
rgbecker
(4,834 posts)Never more than 40%, lower than top income tax brackets before Reagan.
https://www.chernoffdiamond.com/services/private-client-executive-life-insurance/private-client-resources/federal-estate-and-gift-tax-tables/
seabeckind
(1,957 posts)If we close a factory where the average wage is $40,000 and the replacement job is $30,000 the worker usually just sucks it up and cuts living expense to compensate.
But the SS fund lost $10,000.
In the case of the last few closings around here, that job went to Mexico so it really is a loss of $10,000. Directly.
But what of that spending the worker was doing. That $10,000 went into someone else's salary and they paid into SS for it also.
A twofer.
Time for a very serious jobs program to offset those closings. Ok, the factory here closes and goes away. Just what prevents a replacement? Last I checked we still have an eminent domain law.
Maybe instead of asking mother may I to the owners, we ought to say: Use it or lose it.
My 2 cents.
senseandsensibility
(17,108 posts)a million as far as I'm concerned.
seabeckind
(1,957 posts)Goes along with this wiki paragraph:
https://en.wikipedia.org/wiki/Household_income_in_the_United_States
Of course productivity has been going up which means we're also losing jobs because the labor isn't needed.
senseandsensibility
(17,108 posts)apparently. And we are working against a corporate media that is very "uninterested" in facts. Yet our only hope is that individuals, such as you, will unearth and communicate the facts. So I salute you.
Jim Beard
(2,535 posts)Really, I have been talking to them of course they never have voted much. You just have to wonder ehy the ones being affected the most don't do something about it. Maybe just want to stay seen but not heard when they did not have papers.
We always have a pitiful turnout with the Hispanics.
Silver Swan
(1,110 posts)But also fiddle with the way benefits amounts are computed so that higher taxes paid by the very rich only result in small increases in benefit amount. ( I was a career employee at SSA, so I know how benefits are computed.)
I would argue that earnings over what the cap would be under current laws, when added into the benefit computation should only increase the benefit by one one-hundredth of one percent, which is what interest rates on savings have been for the last several years.
elleng
(131,067 posts)with your valuable experience.
SheilaT
(23,156 posts)do not get a much higher Social Security payout. And you should be very aware of that.
JonLeibowitz
(6,282 posts)You need to re-fiddle the system when you remove the cap.
scscholar
(2,902 posts)Whatever happened to that?
PatrickforO
(14,586 posts)Jim Beard
(2,535 posts)Betty Karlson
(7,231 posts)eliminate the cap and use the extra funds to expand social security.
still_one
(92,358 posts)isn't done make absolutely no sense
If the Democrats are somehow able to get back Congress, there will be no excuse
merrily
(45,251 posts)elleng
(131,067 posts)merrily
(45,251 posts)downeastdaniel
(497 posts)klook
(12,164 posts)he said to remove the cap on Social Security premiums.
marble falls
(57,152 posts)n2doc
(47,953 posts)Funny how SS 'has' to be self-funded, yet other government functions don't.
Give SS and medicare the #1 priority for funding. Let the other areas suffer cuts if needed if we don't want to tax the 1% more.
pansypoo53219
(20,987 posts)ELIMINATE the cap. lower the rate, FICA WALL STREET TOO!!!
bvar22
(39,909 posts)That is what this guy said when he was running for President:
Unfortunately, Obama never again mentioned Raising-the Cap AFTER he was seated in the Oval Office.
NOW, it is 8 years later, and the problem has compounded.
The problem will grow exponentially until something is done.
scottie55
(1,400 posts)Tax capital gains for Social Security.
Raise the cap.
Why should people who work pay full boat, while people that live off their "assets", of whom many don't need to work, get off? Doesn't seem fair to penalize people for "working".
There Robert.
I solved the problem.
And I never even went to kollidge.
nolabels
(13,133 posts)What the heck does anybody want to retire for? You do know what comes after that by the way, don't you ?
Stevepol
(4,234 posts)"reasonable" is the kiss of death in our "democracy."
Any governmental action that takes more than a sixth grade education and a sociopath's understanding of society to understand will never see the light of day.
The_Casual_Observer
(27,742 posts)monthly payout remain as it is? I don't believe I've ever seen the mechanics of this addressed anywhere,
YOHABLO
(7,358 posts)10% of the population? I don't know about that. I think we have a awful lot of rich folks in this country that are getting away with murder. $118,500 is way too little. Make them pay on their entire income. They're already getting tax loop holes out the wazoo.
Uncle Joe
(58,389 posts)Thanks for the thread, elleng.
Warpy
(111,327 posts)Now either the Pentagon will have to go on a serious diet or they'll have to raise that laughably low earnings cap on OASDI taxes.
They can't raise the rate because wages are so low that it wouldn't make a difference and would throw this country into recession as more of the demand side got choked off.
Excuse me if I'm very unsympathetic to Congress crying poverty over Social Security. They've got choices. If they don't make the right ones, we old Boomers are fully prepared to go Sixties on them.