Tag: "Social Security"

How Much Do You Really Know About European Welfare States?

  • Government takes a large percentage of the total production of the country (up to 50%, say) and the uses this to provide public goods, social and welfare services and to redistribute income.
  • Capital and corporation taxes are low. Sweden doesn’t even have an inheritance tax. The basic national income tax rate in Denmark is 3.76%, the top one 15%. The tax systems of all four countries (Denmark, Sweden, Norway and Finland) are more regressive than the tax systems of either the US or UK.
  • They raise a great deal more money in heavily regressive and high rates of VAT.
  • There is no national minimum wage in any of the EU Nordics.
  • Taxation for social spending tends to be bottom up rather than top down. In Denmark, as an example, the social security taxation is set by the commune, a grouping of as few as 10,000 people. The rate might be 25-30% added to that national income tax noted above. This is collected and spent locally.

More from Tim Worstall. HT: Jason Shafrin.

Aug 10, 2012 | 14 comments | by

Kids Don’t Vote

From 2011 to 2022, federal outlays are projected to grow by almost $1 trillion, but children gain almost nothing from this growth. In comparison, the non-child portions of Social Security, Medicare, and Medicaid are projected to claim 91 percent of the increase.

As a result, children’s spending is projected to fall sharply as a share of the economy, from 2.5 percent of GDP in 2011 to 1.9 percent in 2022, below pre-recession levels.

Source: Gene Steuerle.

Aug 07, 2012 | 7 comments | by

What if Social Security Were Run Like Medicare?

Medicare and Social Security are often tied together as the two great pillars of America’s commitment to the well being of our seniors. But, in fact the two programs could hardly be more different.

Medicare is vastly complicated, paying directly for the health care services of some 50 million people and contracting with hundreds of thousands of health care providers. It fixes the prices paid for every service delivered and prohibits any charges above those prices. “Balance billing” is forbidden. Medicare decides what is and is not an appropriate service for coverage purposes, and is increasingly directing providers on how they must provide the services for which they are paid. Other than some strictly defined supplemental insurance, Medicare is a monopoly insurer.

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Aug 03, 2012 | 18 comments | by

Kotlikoff on Social Security

The $20.5 trillion fiscal gap separating Social Security’s liabilities and assets — its unfunded liability — is enormous; it is 1.4 times U.S. gross domestic product and 34 times annual Social Security taxes…

To pay all promised benefits would require immediately and permanently raising Social Security’s 12.4 percent payroll tax…by 31 percent, or 3.9 percentage points…

What about cutting benefits?…”saving” Social Security this way requires reducing all benefits immediately and permanently by almost one quarter…

How about increasing the retirement age from 67 to 70 for those now 50 and younger?…That’s far too little too late. If we wait 20 years to act, we will need to cut benefits by almost 50 percent to eliminate the system’s funding gap.

More on this issue in Bloomberg.

Jul 25, 2012 | 5 comments | by

How Well Do You Understand Social Security?

Social Security‘s Handbook has 2,728 separate rules governing its benefits. And it has thousands upon thousands of explanations of those rules in its Program Operating Manual System, called the POMS, which provides guidance on implementing the 2,728 rules. Talk about a user’s nightmare!…

One of my engineers and I calculated that for an age-62 couple there are over 100 million combinations of months for each of the two spouses to take retirement benefits, spousal benefits, and decided whether or not to file and suspend one’s retirement benefits. There are also start-stop-start strategies to consider. Each combination needs to be considered to figure out what choices will produce the highest benefits when valued in the present (measured in present value). For some couples who are very different in age, survivor benefits also come into play. In that case, the number of combinations can exceed 10 billion.

More from Larry Kotlikoff at Forbes.

Jul 24, 2012 | 4 comments | by

Posner’s Argument for Paternalism

I am not particularly interested in saving the obese from themselves. I am concerned about the negative externalities of obesity — the costs that the obese impose on others. Some of the others are the purchasers of health insurance and the taxpayers who pay for Medicaid and Medicare and social security disability benefits. Though the obese die on average earlier than the non-obese, which reduces their average health costs somewhat, the reduction is more than offset by the higher health costs that they incur (and by incurring impose, to a considerable extent, on others) because of the effect of obesity on chronic health conditions such as diabetes, heart disease, and joint problems, on mobility generally, and, because of these conditions, on ability to work (and hence on social security disability costs) and on employability (and hence on unemployment insurance costs). Obesity kills, but slowly, and en route to dying the obese run up heavy bills that, to a great extent, others pay.

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Jun 20, 2012 | 16 comments | by

Cigarette Taxes Backfire

Increasing the federal excise tax on cigarettes by 50 cents per pack would eventually increase Medicare and Social Security spending, because smokers would be healthier and live longer, according to a Congressional Budget Office report released Wednesday.

The report found that the tax increase would create short-term deficit reductions. However, by 2085, the costs associated with individuals living longer and consuming more Medicare and Social Security services would outweigh the health benefits and tax revenues, causing the deficit to increase slightly.

Source: California Health Line.

Jun 15, 2012 | 12 comments | by

Elderly Entitlements are Sinking Us

The net cash cost of Medicare and Social Security – the amount by which benefit payments exceed dedicated tax collections – has nearly quadrupled since the last presidential election, rising from $108.7 billion to $402.7 billion. Since our total deficit is about three times that $402.7 billion figure, it is reasonable to say that our two largest government programs are directly responsible for about a third of government borrowing.

This gigantic shift has already happened. It is history, not projection. As recently as two presidential elections ago, the cash cost of Social Security and Medicare was practically nothing – a mere $41.1 billion.

Read entire Scott Burn’s article on government’s trust fund.

May 11, 2012 | 5 comments | by

The Cost of At-Home Caregiving

The MetLife report said that for the typical woman, the lost wages due to dropping out of the labor force because of adult caregiving responsibilities averages nearly $143,000. That figure reflects the wages lost while not working — typically for about five years — as well as lower wages after returning to the workforce with rusty skills. When foregone pension and Social Security benefits are counted, the out-of-pocket losses roughly double.

Full article by Marilyn Geewax on nursing homes quality service in the NPR.

May 10, 2012 | 5 comments | by

The Disability Ponzi Scheme

[D]isability insurance payments, which account for almost $1 out of every $5 spent by Social Security, are growing out of control….

The trustees reported Monday that the government made $128.9 billion in insurance payments to 10.6 million disabled workers and their family members last year, 25 percent more than it received from payroll taxes.

More on disability insurance by Eduardo Porter in the NYT.

May 04, 2012 | 4 comments | by
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