How Americans Would Balance the Budget
- More than half would repeal ObamaCare.
- Half would impose a 6% national sales tax.
- Only a third would cut Medicare.
- Only a fourth would cut Social Security.
Poll commissioned by Slate.
Tag: "Social Security"
Dec 31, 2012 | 5 comments | by John Goodman
Why Are So Many People Disabled?
There are now 8.8 million workers receiving disability payments from Social Security. I find this number haunting…Thirty years ago, there was a 40-to-1 ratio between the total labor force and those workers receiving Social Security disability payments. Today that ratio is less than 18-to-1…
The steady rise in disability claims presents something of a puzzle. Medicine has improved substantially. Far fewer of us labor in dangerous industrial jobs like the ones that originally motivated disability insurance. The rate of deaths due to injuries has plummeted. Behavior that can cause disability, such as alcohol use and smoking, has declined substantially. American age-adjusted mortalityrates are far lower than in the past…
Duggan and Imberman argue that changes in the award formulas for recipients have made disability substantially more generous for poorer workers. For example, a male worker who is 30 to 39 and in the bottom 25th percentile of earnings distribution could expect disability insurance to pay 41 percent of his previous earnings in 1984 and 49 percent of his previous earnings in 2002.
Dec 27, 2012 | 11 comments | by John Goodman
It’s 71%, Not 47%
Forget the 47%. A new study finds that 71% of Americans live in a household in which at least one member has benefited from one of the federal government’s major entitlement programs. The new data, based on a survey by the Pew Research center, underscore the wide reach of the spending programs that make up the lion’s share of the federal budget. More than half of Americans (55%) have personally benefited from one of the government’s six best-known entitlement programs, including 53% of people who voted for Mitt Romney in November’s election and 59% of those who voted for President Obama.
David Lauter from the LA Times.
Dec 20, 2012 | 3 comments | by John Goodman
It’s All about Health Care
The deficit, that is. Here is Ezra Klein:
Spending on Social Security is expected to rise, but not particularly quickly. Spending on everything else is actually falling. It’s health care that contains most all of our future deficit problems. And the situation is even worse than it looks on this graph: Private health spending is racing upwards even faster than public health spending, so the problem the federal government is showing in its budget projections is mirrored on the budgets of every family and business that purchases health insurance.
Nov 12, 2012 | 10 comments | by John Goodman
The U.S. Has Been on a Six Decade Spending Spree
Larry Kotlikoff takes to task the 500 economists who have endorsed Mitt Romney, including yours truly. He is particularly irritated that we are ignoring this:
In the 1950s, the U.S. saved 15 percent of national income. The net domestic investment rate was equally high. Today, America saves 1 percent of national income and invests only 5 percent of national income, with the four percentage-point difference being made up by the current account deficit — by Chinese and other foreign investment…
Every administration starting with Dwight Eisenhower’s has expanded America’s Ponzi scheme, which takes resources from young savers (including those not yet born whose current spending is zero) and gives them to old spenders. This huge intergenerational redistribution has produced an enormous increase in the absolute and relative consumption of the elderly…
This is just what the life-cycle model of saving predicts. If you take money from the young and tell them they will get it back in spades when old, and then give this money to retirees, the following will, as a matter of theory and practice, happen: The elderly will go shopping, the young won’t bother saving, national consumption will rise, and domestic investment will fall.
Expanding Social Security, Medicare and Medicaid benefits, shifting the structure of the tax system to lower the burden on retirees relative to workers, and cutting taxes have all saddled the U.S. with unsupportable obligations. Running two futile and incredibly expensive wars over the past decade have further contributed to the bills that America’s children face.
Aug 28, 2012 | 11 comments | by John Goodman
Stealth Tax on the Middle Class
It’s the Social Security benefit tax. Here is Scott Burns:
This is not small change. According to the 2012 Annual Report by the Trustees of Social Security, $22.2 billion of the benefits paid out were taken back in income tax payments in 2011. More important, the amount had doubled from only $11.9 billion in 2002 — and that, in turn, was double the $5.9 billion collected in 1992. The same trustees report projects that tax collections will increase even faster over the next 10 years, nearly tripling to $61.7 billion by 2021.
If you are still working and think this doesn’t affect you, don’t go away. The unique construction of this tax — based on one of the only formulas in the entire tax code that isn’t inflation-indexed — means that more and more retirees, at lower and lower levels of real income, will be sending some of their Social Security benefits back to the Treasury in the future. This is a tax that quietly keeps on growing. The younger you are today, the more it will affect you tomorrow.
Aug 24, 2012 | 10 comments | by John Goodman
Shouldn’t this Be the Goal of Financial Planning?
We find that a substantial fraction of persons die with virtually no financial assets — 46.1 percent with less than $10,000 — and many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support. In addition this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s.
So, did these people plan poorly? Or did they plan perfectly?
Aug 14, 2012 | 8 comments | by John Goodman
Just How Progressive Are Elderly Entitlements?
Not as progressive as you might think. This is from Health Affairs via Sarah Kliff:
We know that education has a big impact on earnings and the ability to find employment. It also turns out to have a huge influence on how long Americans live: White men with less than a high school diploma had a life expectancy 12.9 years shorter than those with 16 or more years of education, according to new research in the journal Health Affairs. For women, the life expectancy gap stands at 10.4 years.
The Social Security payout formula is progressive. But less educated workers can expect to receive more than a decade’s worth of fewer benefits. Ditto for Medicare. See our previous post here.
Aug 13, 2012 | 8 comments | by John Goodman
