[jfengel]

The date for the collapse of Social Security has always been the same: the early 2030s.

We do have a pretty good idea of what the demographic trends are: a baby boom, followed by a baby bust. That was why we moved from Social Security as a pay-as-you-go program to having a Trust Fund. We knew when the Trust Fund would top out, with more money going out than coming in (i.e. right about now), and how long it would take to deplete (i.e. roughly a decade).

Life spans have not radically increased. They have slightly decreased, extending the fund a couple of years.

But it's actually the least of our problems. That "trust fund" isn't a pile of money. It's just Treasury Bills. The government "borrowed" the money, and is now having to pay it back. That means we're going to have to either cut the budget dramatically, raise taxes, or borrow from somebody who will give us a worse interest rate than... uh, ourselves.

So indeed, the ~2034 date for the Social Security failure is something of a red herring. But only because it's actually worse than that.

[tzs]

Making the payroll tax apply to wages beyond $176,100/year would greatly extend the life of the trust fund which should allow getting past the death of most of the last baby boom.

[dragonwriter]

Lifting the cap, converting the tax from a payroll to a general income (including capital gains) tax (and therefore also including other income in benefit calculations), and adding several additional bend points rather than capping benefits would stabilize the fund forever, while broadening the kind of income generating activities people could rely on while benefiting from the safety net retirement system.

But simply uncapping the tax without other reforms is probably the easiest short-run solution.

[s1artibartfast]

How is that better than just funding it from the general fund as a welfare wealth transfer?

from the political perspective, I suppose there is a pretext/misconception that social security is self funded on an individual basis, when payments are already extremely progressive, with higher earners subsidizing the low.

The high bend point already diminishes additional benefit for additional contribution nearly to zero.

Someone's last 50k of SS taxable income is already returning only 20% of their first 50K of SS taxable income.

More specifically, below the first bend point, recipients get 90% of their average taxed income. After the last bend point, they are getting 15% of their marginal taxed income . 15% doesn't leave much room for additional reduction bend points.

[dragonwriter]

> How is that better than just funding it from the general fund as a welfare wealth transfer?

Its a wealth transfer regardless of how what you name the pockets the funds pass through on the way to effecting it, another rotation of the names is irrelevant to the function of the solution. The issue is where you get the money (through additional revenue, reduced other spending, or additional debt) to pay for the stabilization, and I think additional revenue in roughly this manner is one of the better ways to do this (I'm actually fine with stopping calling it a separate tax and fund, rolling this tax into income tax, and also making the income tax apply to all income, including capital gains, gifts, and inheritances, equally, and also allowing both voluntary recognition of income for tax purposes in advance of earning/realization and allowing certain taxable events -- especially isolated capital gains windfalls and inheritances -- to be recognized for tax purposes over a period of several years after they occur, but that's getting farther and farther off the immediate topic of funding of Social Security, though the whole set of ideas is interconnected though they aren't all strictly dependent on each other.)

[jfengel]

Funding it from the general fund is probably fine. The whole "trust fund" idea was pretty bogus.

The pay-as-you-go idea never anticipated a baby boom and baby bust, but a trust fund wasn't a good solution, either. It just obscured the fact that it was a tax increase on the lower and middle classes.

Water under the bridge, now. The fact is that social security is an entitlement. If the SS budget does not have enough money to pay it, the government is in violation of the law. The money will come from the general fund, and it will be raised by either taxes or borrowing.

[reseasonable]

Collapse and failure are terms that imply an outcome that would not reflect reality if we did nothing to change the system. Reduction of benefits by about 15% is the insolvency we’re expecting. That is an important distinction that could easily be remedied by a couple policy tweaks or an uptick in immigration. And the collapse even has been predicted to occur for decades, with the tipping point as far back as the 80’s.

[Gibbon1]

I remember a Democratic primary debate where they asked the question what the candidate would do to fix social security. Jerry Brown said there was nothing to fix. And everyone in the room laughed at the fool.

And that was 45 years ago.

It's a mystery to me what it is about social security the makes the over class who don't pay squat into it so absolutely enraged by it. It drives them absolutely apeshit and I don't get it.

[reseasonable]

I think it’s odd that they instantly refer to the US as a third world nation when they see an influx of homeless on the streets, and yet they apparently don’t want to continue funding the program that keeps 60% of the elderly out of poverty.

They clearly:

1. Do not want us to be poor (or see the effects anyway.)

2. Don’t know the history of shanty towns and almshouses in our nation.

3. Don’t know the difference between the SSI Trust Fund, vs SSI policy.

Otherwise the path forward would be patently obvious, remove the cap and increase payments to match inflation. I’d personally roll up 401ks into voluntary additional contributions that are accessible to anyone regardless of employment status.