Thank you Saint Ronnie of Raygun.

You died, and still managed to f*** us one last time.

Maybe the smart thing to do would be to turn over social security to Wall St. so the retirees can make some hefty returns.

Or lose every last penny they own.

But hey, that’s capitalism and it is flawless.

-G

If the SS adjustment needed is “slight”, how about a slight raising of the salary level on which SS is paid? Say up to about the first $250k of salary? That would allow benefit enhancement.

Thank you for staying on top of this. There is WAY too much complacency in netroots.

wasn’t that shrub’s project? privatize social security? And one of the few things the Dems actually stood up to him about…. so, instead, he just pillaged the trust funds instead.

Nobody who supported the Bush tax cuts can claim to be a fiscal conservative.

Peter Orszag sounds like a legend in his own mind.

I will not be so presumptuous to think that I speak for all liberals but I can state unequivocally, that speaking for this liberal, Orszag is not only NOT a hero, he is a prime example of an idiot who has no idea of what the reality is like for the bulk of the country when reaching retirement age.

Why is there a cap at all on the SS tax rate? Never really understood that, and seems like removing it completely would go a long to helping, if not solve even any Medicare/caid problems.

The people who want to do this aren’t going to be the ones living on SS. They also aren’t paying on their full income, like the rest of us probably are. I’d support raising the ceiling, gradually, to about a million dollars. Start with raising it to $150,000 in the next two years, then raise it another $10,000 each year after that. (Those who complain should get told that they’re paying for their parents, just like the rest of us are.)

The last letter I got from SSA says that if I work until I’m at least 66 (the current official retirement age for me to collect full benefits) I’ll get the huge sum of $1300 a month. Which is less than half what I’m making now, and might possibly be enough to live on, if I move to someplace where living costs are low. Cutting that amount is not an option, as far as I’m concerned, and people who make less money than I do should be screaming now.

I would like to know why nobody is talking about getting the assets reagan “borrowed” from ss to fund his tax asset give away which went to the wealthy

I would also like to know why nobody is talking about getting the assets clinton borrowed against social security

and I would like to know why nobody is talking about the assets bush borrowed against social security

I want my frigging money back

What a disappointment…

I just got an email from Democracy for America with the subject line “Who should replace Rahm?” and I got all excited, thinking there might be push to move him out of his COS position. Alas, they’re talking about his old House seat.

Seems to me a lot of the discussion is driven by a desire to get Rethugs on board rather than using the bully pulpit to put forth a case for doing the right thing for our country. Orszag apparently wasn’t paying attention when Shrub tried to sell SS privatization.

Short answer is Congress didn’t want to put a heavy tax burden on rich fucks folks.

This gives me a feeling similar to what I experience when policy makers debate whether or not to raise the minimum wage, we should force THEM to live on it for a year and then see how they feel. The sad fact is that Social Security is a sole source of income for a lot of people, myself included.

i’ve been saying for years the only way to “fix” social security is to take the congressional and senate retirement funds ..and yes .. the civil service retirement funds ..and meld them all into SS .. just one big pot ..with equal benefits for all .. as soon as the politicians’ and the bureaucrats’ fates are tied to to our collective futures .. they’ll whistle a different tune ..

ubetcha .. [wink] :)

I figured that part, but how are they “selling” that to voters, or maybe I should say how does Pox Newz “report in a fair and balanced” way about the SS cap?

I can’t see how John Q. Nascar would approve of the cap, since most of them are paying it.

So let me get this straight: The White House thinks it’s fair to ask old people just scraping by on $20K a year to take a “slight” decrease in their income as a personal sacrifice to help save our economy, but goes into a tizzy over salary/bonus caps on CEOs who tuck away multimillions a year. That’s a bridge too far, even though the latter got us into this mess, not the former. Please explain this democracy thing to me again, Mr. Obama…

This is totally obscene. Now I know Obama is a ringer and a one termer put in their by the corporations to kill off SS.
Once they start “cutting” it will be precedent and they won’t stop until they’ve killed it.
Then where we we be? Get ready to starve.

I think he should fund the SSA gap with a reversal of the stimulus tax cuts in 2010 (when we will hopefully be able to hound the last rethug out of the Senate), assuming that’s not already accounted for.

…and there will need to be another round of stimulus anyway.

So, buying stock in dog food companies might be highly profitable?

So where are the gray panthers?
Why isn’t AARP out front on this issue?

We can stop Repugs from messing with SSI but lay down and roll over when a Democrat does? Fuck…..

It’s called “reverse entitlements” from the poor to the rich.

Is there any organized push-back on this yet? The sooner we start the better off we’ll be.

I’m of mixed feelings on this – If you raise the cap, you have to raise the benefit payment as well. Has anyone seen a cost/benefit analysis on this?

I’ve told you this once, maybe you didn’t pay attention. Congress DID this already, back when Reagan was President.

Federal employees began paying into Social Security and Medicare in 1987.

Social Security won’t begin paying out more than it takes in until 2049. All that is necessary to keep it from reaching this point is to raise the cap on wages taxed (ceiling currently $102K IIRC).

GOP’ers, it seems, haven’t left the White House: they’re in the closet with all the keys.

Mr. Obama’s learning curve seems flatter than predicted. Or else the Democrats have elected a Trojan Horse. The cost of GOP cooperation, Mr. President, is a GOP government. Mr. Obama, that’s not what you were elected to achieve. If you do, your stay in Washington will be four instead of eight years and you will send the Democrats into a wilderness more vast than the one the GOP now inhabits.

I want the names of the liberals that back Orszag’s ideas. Are they like those on the Forbes list of most influential liberals that included the like of Fred Hiatt?

Where is the “change I can believe in?”

David Broder?

thank you for this jane. it has been such a frustrating experience to see progressives conned again and again into accepting the planned pre-compromise while the window of sensible or even acceptable thought (or the sphere of legitimate debate if you prefer) shrinks beyond what i imagined was even possible.

social security benefits need to be increased!

Not Nixon, not China.

There is no crisis, there is no problem that raising the cap won’t fix (Bruce Bartlett’s insistence otherwise notwithstanding). Big Business eliminated our pensions and now Wall Street has destroyed our 401(k) accounts. There’s no reason NOT to raise benefits. In fact, it’s intergenerational theft NOT to raise benefits.

Take that, McCain!

Time for regular folks to suit up in the class war that’s been waged on us since St Ronnie.

That “under 55″ jumps out bc it’s also the minimum age for buying into most ‘retirement’ home associations. Irrelevant history: SS didn’t fully kick in until the later 1960s retirement cohort; their SS checks directly funded the housing booms in South FL and AZ; Medicare was indispensable in the mix. (The social contract equivalents of power steering and automatic transmission.)

i wonder how long the pundits will be able to spin Orszag’s “liberal” position when real liberals and the public at large go nuts when something that stupid gets introduced. It would almost be fun to watch the collective heads of the punditry explode, if there wasn’t a real risk that the f*****s would succeed.

Since the Rethugs have the bobblehead shows locked up they’re using them as a forum for turning SS over to Wall St. They tried it when Shrub wanted to sell us that bill of goods and you remember the hue and cry. It went nowhere. The Rethugs aren’t gonna give up until every dime in the country goes through Wall St one way or another.

Exactly.

No real liberals support stealing our money a second time.

Why can’t the “cap” be placed on the benefits side? Remove the tax cap, add one on benefits so a multi-millionaire isn’t getting some massive payment, and we’re good. How’s that?

We’re all WalMart greeters now.

Already been done, at least as far as federal civil service is concerned.

The current civil service retirement plan is a combination of Social Security and a 401K-like device called the Thrift Savings Plan, TSP for short.

I’m not sure about the Congressional pension plans.

The prediction that SS would be OK for about another 30 years was based on the idea that employment would be somewhat constant. Given the dire straits of the economy, that prediction may be a little off. It still could be fixed by raising the cap and I don’t understand why that seems to be off the table except that orzag’s buddies would be affected and that is probably a NO-NO.

Welcome to Wal-Mart
Get yer shit and get out.

Have a nice day.

..and yes .. the civil service retirement funds

Got news for you about those ‘fat’ civil service retirement benefits:
1. They don’t pay much at all under the current system — about 1% per year per K in salary. As an example, for someone who retires at $60K after 15 years that’s about $9K per year for retirement. Wow. Just like everyone else, as a civil servant you’re expected to fund your retirement using the federal equivalent of the 401(k).
2. Even what you do get in pension reduces your SS payment drastically. SS is discounted by 2/3 of what you get from your federal pension.
3. Even though civil servants only get steeply discounted SS payouts, they still pay into SS the full amount. In other words, federal civil servants are subsidizing your SS.
4. So lay off civil servants already. They do a better job for lower reward than you think.

That’s exactly what I’m getting and why I’m leaving the U.S.; no way I can live decently on that amount of money. Now others will say ‘why didn’t you save more?’ and my answer is I WAS in terms of real estate holdings but then I was laid off, couldn’t find a job, finally managed to find a company willing to refinance the house I was going to retire in but because the second mortgage had been written off by the lender -Wells Fargo who had acquired the initial lender- who was unwilling to go along with the refi until the second had been paid off(despite them having written it off and taken the tax break associated with the ‘writedown’ AND that the refi would have paid the second off), I couldn’t refi -despite having found new employment- and I ended up foreclosed on. This was in the middle 90’s BTW.
As towards ‘Politico’ see here
The reasoning for the limit is the employers contribution part of SS; for some other reason, the idea of exempting employer contributions above a certain threshhold doesn’t seem to get discussed.
And this is not just a U.S. problem, it is an issue for all ‘developed,industrialized’ nations; Europe has problems with retirement issues far greater than the U.S.
But,again, all the talk about SS belies the fact that it is Medicare that is the real issue and that gets the discussion back to healthcare and we all know what a quagmire that discussion is.

The years are more like 2017 and 2040. In 2017 or thereabouts, what goes out will exceed what comes in. The difference until about 2040 is supposed to be made up from SS surpluses. This is money which came in through SS but was spent as regular revenue by the government. In its place, the government gave SS interest bearing IOUs for it. But where will the government get this money that it needs? Well from taxpayers either by increasing income taxes, decreasing government spending or cutting benefits. So taxpayers not only paid this original excess money into the system they will have to pay it back because the government spent it. I have always thought of this as an immense con.

Orszag basically wants to leave government free to spend so he favors cuts in benefits and apparently does not favor increasing taxes, most notably by taking the cap off FICA.

what jim white said…raise the contribution level to 250k, or put in a donut from 100k to 200k and raise it from 200k on up to 1 million.
separately, how about a capital gains and dividend tax hike with those making less than 200k exempt?

There’s no law that says we have to raise benefits with the cap. Impute a maximum salary equal the 75th percentile of personal earned income. Last year the 80th %tile of household income was $100K, so the third quartile of personal income has to be well under that. You pay OASDI taxes on the income, but for benefit purposes you made the third quartile.

When St Ronnie of RayGuns got federal employees to pay into SS, which even as a federal employee at the time I agreed with, the old civil service pension plan was replaced with the Federal Employee Retirement System (FERS). Employees had a choice to remain with the old system or switch to the new. Those staying with the old system would have the amount of SS they received deducted off the top from their pension.

agreed, and that’s the current situation. What I would like to see is a comparison of the “Health” of the SS trust fund with the cap at 150K, 250K…

there is no way you’d get the public to get behind an increase in payroll tax with no additional benefits

but we would get behind an asset reclamation program that used taxes to get our own money back from the bank accounts reagan/bush deposited it

Avoiding chaos and riots if they loom, the President can do a two-year reverse moratorium and lower the SS retirement age to 60 (lesser benefit but certain forever), same for Medicare. Gives money, reduces employment pressures and expenses.

The ‘people’ will be begging for payroll taxes to pay for health care before this depression ends, it’s just warming up now.

I worked for USDA when that happened. It was one of the things that helped me decide to return to grad school for my doctorate.

What I was referring to specifically about St Ronnie of Raygun was the big increase in OASDI taxes that he imposed to ‘fix’ social security for The Rest of Us. So we’ve paid these taxes, the ‘thugs have used the proceeds to fund their wars and other income transfers to the wealthy. Now Orzag and company are saying, “Gee, sorry, but you’re SOL. We’re going to cut your benefits because we can’t afford to keep St. Ronnie’s promise.”

I wouldn’t object to a very modest means-testing of SS benefits. But wholesale cuts are unacceptable to me.

I don’t understant why anyone should have a second mortgage? You can either afford your house and your life, or you can’t….

They got behind Reagan’s increase in OASDI taxes to fund the so-called Social Security Trust Fund.

Oh wait, that’s what the Dim Son raided.

People have second mortgages because life is what happens when you’re making other plans. You get divorced and you need to pay your ex- their half of the property value. You (or your kid) get sick in a really expensive way and you need to pay the health care system several thousand.

Of course, some people have seconds for other reasons, too. Like Normie Coleman. BTW, has the Election Court ruled in Minnesota yet?

Blue Texan is UPSTAIRS!

Because one will get a second mortgage when intially buying a property to make improvements to the property, in my case a swimming pool. And in case you don’t know, one doesn’t qualify for a second unless one has the income to cover it AND that the improvement will add essentially the same value to the property as the amount of the second mortgage.

I owned three houses at one time, I put 20% down on each house. One was for me, one was a vacation home and one home was for my mother. When I could no longer afford the homes, I sold them. I have been renting ever since. I just don’t understand second and third mortgages used to live.

Good luck with that. They don’t call it the third rail of American politics for nothing…

I know from being a tax preparer that most folks have used second and third mortgages to live a life they had no business living.

i have this very weird almost deja-vu kind of feeling lately… it’s the model of imf imposed control structural adjustment i’ve head about and it goes something like this:

1. encourage country to take on far more debt than makes sense (this works really well if the political leaders are crooked because they can be easily bribed encouraged).

2. when tough times come encourage even more debt to be taken on by the public sector – “we really want to help, here, take this loan.” make sure the benefits added public debt goes only to the favored few.

3. when the whole thing becomes an impossible house of cards, the imf comes in as the enforcer because foreign debt obligations must be honored (or watch out for those speculative capital flows)

4. recipe for assistance includes privatization, fiscal responsibility via dismantling social safety net and finally if all goes well massive increase in poverty levels.

any of this beginning to sound familiar?

Probably didn’t NEED a swimming pool…

selise, I think you have something here….

Why not shut down Social Security, have everybody invest in the markets, and have the FDIC insure all these investments?

Maybe you should be making plans that don’t include that value of your home being like a bet in Vegas.

Ezra’s administration sources say that Social Security is not likely to be something jumping quickly onto the agenda, which — given the distinct lack of enthusiasm with which such plans were received by Congressional leadership — is not really a surprise. But the new frame seems to be that Orszag is a “centrist” who is rescuing Social Security from the hands of “extremists” who think there is a “crisis,” and that he’s a hero of “liberals” who won’t mind “modest budget cuts” to deal with the “problem.”

It’s really interesting that The Politico is pushing this so hard — especially the meme that Orszag is somehow not just a lefty but “the most beloved” of lefties.

Is The Politico the Blue Dog/Villager trial balloon launcher of choice?

Gee, my second was at a rate of 7% which is all deductible as opposed to paying 28% on a credit card. No brainer for me.

It’s looking like Obama kind of wants to be a one-term president.

If it caused you to lose your home, maybe the brainer should be different. Why should your credit card debt be that important to me?

nope .. you misinterpreted my post .. i meant no slight .. my intent is/was to tie us all together in the same system … and especially to eliminate the far-too-generous congressional system ..

i once worked for civil service myself .. and am medically separated military .. you’re barking at the wrong dawg…

If people used their credit cards to live the high life, or for any other reason, why should I have to worry about it when they lose their homes due to stupid choices? I have as sad a story as any of you, I just don’t choose to share it for marketing purposes….

You do not have to raise the benefit if you raise the cap. They are independent policy options, and high income earners likely can save, the 6.2% hit to income over the present cap of $107K won’t have too large an effect on their retirement. Social Security is meant to be a safety net, not a pension that maintains a high earner’s lifestyle in retirement.

No one here seems to know what happens to the actuarial insolvency (Table 1, midway down page) in 2043 if the cap is eliminated although it’s clear that the date would be significantly later. It would be really nice if there were a decent publicly available simulator to try out different scenarios, Google finds a broken simulator – I can’t get it to remove income caps.

While we need to increase retiree’s purchasing power now, we also should be thinking about the cost. That means plugging numbers into the actuarial models, examining (and modifying) the underlying assumptions. We’re liberals, we look at the facts and make policy that is fact based. All this talk about “they want to gut SS” is fine for mobilizing people, but it doesn’t address solutions. Again SS isn’t in a crisis, increasing current benefits makes some sense to me. Just be clear on costs and have a plan for paying those costs.

medicare is insolvent in about a decade. While not currently a crisis it needs to be fixed in a much shorter time frame. Fortunately I think that health care cost assumptions will be changing radically within 3 years. I also think a modest increase in Medicare taxes is a reasonable trade for universal coverage.

I’ve already written every congressperson I can find an address for to keep these meatheads away from social security. My retirement’s already been reduced by 50% in the past 90 days and the value of my house has dropped almost 20% since last summer. Help from these fucks, I don’t need.

Thank you for a thoughtful insight into the problems. Really appreciated, by me at least.

or for any other reason, why should I have to worry about it

does “common people for the common good” ring any bells?

The money isn’t stolen, it’s budgeted to be paid out over time. Medicare begins paying out from the “lock box” in 2012, and that money runs out in 2019. Fixing healthcare needs to happen relatively quickly, fixing the elderly’s safety can be done over a longer time period.

A form of opt in government (defined benefit) pension above would be a nice addition to the SS safety net – make it available in addition to 401k savings .

thanks BC .. i had no idea they’d already rolled them together …

Please read the proposal. Orszag proposes to raise the cap (so rich people have to pay more) and lower the benefit rate returned to the top earners. 50 notes of anguished outrage for nothing.

Get a grip people.

I want to note how typical this mistaken outrage has become.

Politico writes a note explaining that Obama has seen the light and embraced some right wing position.

FDL, Digby and others, accepting the Politico analysis as reliable (for reasons nobody has explained) announce that “we’ve been betrayed”

And it turns out to be entirely BS.

How about focusing energy on something useful, like pressuring Obama to limit involvement in Afghanistan and to hurry up on getting out of Iraq instead of this constant hyperventilating, MSM driven, “concern”?

Thanks. I’m all for mobilizing people, especially since I wouldn’t put anything past the blue-dogs and elephants.

At the same time I think the problems 10 years and 30 years out are structural problems that do need to be addressed. Health care is a very pressing issue.

The loss of retirement savings in 401ks points to a need for pension reform as well, a separate government annuity option sounds reasonable to me.

I’m a common person who hopes and prays for the common good. However, I don’t expect to pay for “common” mistakes by people who used the system to live above their “common” means.

I believe as you do all the way!

If you operate simply on ‘NEED’ you can do away with this forum, the internet, industrialization, etc.; try living in AZ sometime and see how how having a pool increases the worth of your dwelling.

Yes, this does happen quite a bit, doesn’t it? At least people are staying engaged so when bad stuff happens, it’s being noticed now though…

I believe in protecting the Social Security system with my life. I believe Social Security is the last bastion of protection against the robber barrons and their will to destroy the regular folks they stole money from to become Robber Barons in the first place. Why would you crush the people you robbed to become what you are?

We can begin curing every crisis facing us right now, health care, SS, economic, and infrastructure if we insist that we have a Navy that patrols no further than 250 miles off our coasts, an Air Force that that does the same, and an Army that is stationed on our soil to protect against invasion, and point ot to everyone that we have a nuclear arsenal capable of blowing up not only any ‘enemies,’ but the entire solar system if need be. Ironically, it will be the ‘followers’ of Christ who will require the most thorough convincing of this strategy. If a head of household spent 40+% of their salary on guns and ammo each year as this country does, to the neglect of their family well being, we would call them insane. Somehow collectively as a country, we don’t call it insanity. Go figure.

And because something worked for you -where did you get the money for 3 houses at 20% down on each and when/where was it?- such is supposed to be what everyone does?

A pool is a luxuary to people who don’t have food or heat in the winter. Stop while you are still behind….

well, then you’d actually have to know all the details of their personal lives before you could even make that judgement.

personally, i’m ok with contributing to the common pot – even if it benefits some people i don’t think it should – if what we get is a saner more compassionate system. that’s the common good.

I used a 2nd mortgage to start a business. It’s working out well. Looks like it’ll even end up creating some jobs for the local community.

It isn’t your business where the money came from, I earned it honestly, I paid taxes on the money. I did not buy homes with no money down, or very little money down. You haven’t earned the right to buy a home if you can’t put enough money down to afford the monthly payments. My point is that when I could no longer affort the mortgages, I sold the homes.

jane’s post is, i think, about the frame of the debate and not a policy wonk discussion on the relative merits of any particular option.

Right on. Annie git your drums.

I was shocked to see this recently, where the US spends more than the entire world combined on military each year. China in 2nd place and we’re almost 7 times what they spend. Knew it was bad, but not that bad.
http://www.globalissues.org/ar…..oftheWorld

Guys wearing white, button-down oxford cloth shirts are not to be trusted. Just as a general rule.

Forgive for focusing on image. I know it’s all wrong.

By the way, that haircut…I miss the 60’s, I really do.

Then you are not a profile of what I was talking about…

Why would you comment about something that obviously has nothing to do with you? You are successful, so this has nothing to do with you…

Thank doG you didn’t have an incapacitating health problem, or that the economy didn’t massively tank while you had three mortgages. Couldn’t you have been one of these people you’re now criticizing if some bad, unforeseen things happened to you while you had three mortgages? I think this is what’s happening to a lot of people right now. Sure, there are a lot of people that made bad decisions, but what’s happening now is bringing down a lot of responsible people also, isn’t it?

Janes post:
But in today’s interview with Ben Smith of Politico, White House budget director Peter Orszag confirms what we wrote last week — that cutting benefits is part of the White House’s long-term plan to deal with Social Security:

Except that that’s imaginary. Orszag’s proposal is to raise the cap so that higher income people pay more into the pot, and to reduce the benefit rate at the top – again affecting the 15% of highest wage earners. Janes’ post inspired a multitude of panicked messages about how the Obama administration plans to throw poor people on the street – those posters did not read Orszag’s proposal, but they did correctly understand what Jane wrote – and they incorrectly gave it credence.

Ya know, I was thinking Orzag had a “cap” problem of his own. Not sure, but that photo makes me think so. Maybe George Will could offer some pointers.

You are so wrong, my life did tank while I held my three mortgages. You don’t know anything. How sad it is when we think we know it all. I just knew it was over and got out period. Sorry if you got bit in the ass. Still not the rest of our faults.

Look, I am a tax preparer and saw many, many, many people who had no business, or income to own many houses or multiple mortages doing it because they could, trying to live high on the hog, buying their spoiled children and themselves lives they had no business living. Sorry but this is the truth….

I’m confused now, and gotta run anyway so will be tuning out, but was simply responding to your comment #53:

I don’t understant why anyone should have a second mortgage? You can either afford your house and your life, or you can’t….

Trying to give an alternate take on that.

Dear Mr. Get-A-Grip,

You need to read beyond the introduction of the Diamond-Orzag plan. Check your facts buddy/buddette.

Dear Check-Your-Facts.

You need to go back and read the Diamond-Orzag Plan.

I read through the proposal on the link provided. These 2 paragraphs jumped out at me:

Our plan also includes improvements to Social Security’s financial protections for some particularly vulnerable beneficiaries—workers with low lifetime earnings, widows and widowers, disabled workers, and young survivors of deceased workers.

Workers with low lifetime earnings receive meager benefits under Social Security despite the progressive benefit formula. We increase benefits so that minimum-wage workers with at least thirty-five years of work receive a benefit equal to the poverty line in 2012. After 2012, benefits for workers with low lifetime earnings would gradually increase above the poverty line.

So contra to what is implied in the post the proposal increases benefits for the poorest retirees. That’s progressive change!

I’m a higher income earner. I have no problems having my benefit reduced from $2351 per month to $2000 per month in order to lift the poorest retiree’s above the poverty level. That $2351/month figure is what the SSA says I’d currently get at age 67.

A low income ($14,000 per year) earner’s benefit at age 67 would be $778 per month.

I say increase taxes on me and lower my benefit to pay to raise the poor earner’s benefit above the poverty level is a very progressive idea, and that is what Orszag is saying we should do.

Comments like yours cry out for a citation. What did I miss?

I still drive my 1994 car, I didn’t use my home/s to buy fancy cars or other things. Most people who are in trouble didn’t use their homes for healthcare…..

Exactly. Orszag’s proposal appears to be exactly what you’d expect from a guy who Stiglitz calls his smartest student. And yet, we’re supposed to believe Ben Smith and go into hysterics. What’s going on here?

I read it. Help me out. What did I miss?

truthfully I’d take a bigger cut than $2351 to $2000 in order to assure poorer old people aren’t eating catfood. I also have no problem with paying FICA on income above $107k as is proposed. I could see going further and not having any cap at all, the proposal says keep some cap on income subject to FICA and I don’t get the rationale for that at all.

I think a government annuity program – opt in and financed the way 401(k) accounts are financed would be a good addition to retirement policies. The loss of the defined benefit corporate pension seems to be a fait accompli, and 401(k)s are looking pretty frightening to a lot of people right now.

So the interesting question is why a proposal to make FICA taxes more progressive and to increase benefits to the poorest people by a Democratic administration is falsely depicted as a move to benefit cuts for the poor in Politco Corporate Media. Wait – the answer to that is obvious. The question I cannot answer is why FireDogLake, a supposedly liberal blog, wants to act as a transmitter for Politico’s lies.

Jane,

Could you comment on what’s wrong with the Orszag – Diamond plan, giving specifics from the plan? I’m serious that lower personal benefits and higher taxes for myself is a worthwhile trade – keep low earners out of poverty at the expense of my needing to save to maintain my lifestyle. When I read the proposal that’s exactly what I see.

I get that Blue Dogs and Republicans might like the idea of poor folks eat cat food, but the proposal you link to lessens the likelihood of that. It really seems to be a progressive policy to fix a problem that’s 30 years away (insolvency) and to fix a current problem (low earners benefits are below poverty level).

I still drive my 1997 car. I was shocked in 1964 when I ordered a hamburger at a new popular joint (Burger Boy Foodarama) and it was already ready and wrapped, plus it had ketchup AND mustard for reasons that only became apparent to me when, the next day, I read Matthew Arnold’s lines about how Sophocles also heard, in the Aegean’s surf, that eternal note of sadness about human misery.

I am sorry it has taken me so long to get back to you. I went back to check the premises of the plan we are struggling with. I am sorry if I was short with you, I am not an economist. The premises and the context of the plan are out-of-time and coming at us from 2004. I am afraid that I will have to side with Galbraith, that social security’s fix ought to be an across the board increase to deal with today’s (2009) conditions. Let me write the rest of this and then post it.

Drama for the sake of drama is not useful.

What in the gods sake are you talking about?

Getting people to pay attention to the issues is worthwhile. Mis informing people about what’s being proposed isn’t. I’ve got faith that FDL will do a better job explaining what is being proposed.

Again, the long term problems with OASI solvency (retirement) are not a big problem today, there’s 30 years to fix. Real time there’s a problem with low earners not getting enough to live on, and the proposal fixes that while spelling out how to pay for those increases at the low end (stick it to high income earners with both taxes and benefit reductions).

The problems with medicare are more pressing, with insolvency about a decade away. part of this should be fixed with broader changes to health care policy, I doubt that will fix it entirely without some tax changes as well. I’d be willing to have Medicare taxes increase, a change to a progressive rate structure on Medicare taxes is also worth modeling and likely implementing – let higher income earners pay a larger portion of their income to assure health care for all of us.

A good simulator would be really nice. It would be nice to say that Medicare (Single payer system) could be solvent under various assumptions (eg health care costs increase at CPI + 1%, medicare tax is 1.65% up to median income, 2.0% from median to 80th percentile, 3.5% thereafter… I don’t have anyway of testing that model though). I’ve got some recollection that the 2020 insolvency date assumes health care cost increases are CPI + 10% or more, and fixing health care has a lot of potential to negate that assumption.

It is so nice to see that you have some well thought out response. It is genuinely appreciated.

Ok. No problem.

The D&O plan was created to respond to an increased life expectancy of four years in the cohort of future recipients younger than age 55 years. The second premise it responded to was the prospect of high benefits/high earners in 13 % of the projected recipients earning over 44,000. The third premise was that the economy would continue to expand/grow and that inflation would create a cohort of medium-high wage earners (now age 25) who would be rated to receive unexpectedly high benefits. Those are the premises upon which the plan is based.

Now, if you follow the premises, you arrive logically to Orzag’s interventions: an increased cap for high wage earners, a gradually increased payroll tax over a long period of time, reduced benefits for the top 13% wage earners, reduced benefits by 1% if you were 45 at the time of the plan and by 9% if you were 25 at the time of the plan; increased benefits to low wage earners and vulnerable groups; and no change for those who were 55 at the time of the plan.

Those are my gleanings. Please add to them and correct as needed.
My next post will address the premises upon which these interventions are considered to be necessary.

I was probably too polite, it’s my worst fault.

The assumption of increased life expectancy among persons then 0 to 55 years is a basic premise of the D & O plan. It creates a seemingly real problem, an actuarial identity which if challenged may result in different interventions.

Considering the new economic conditions in which we live in 2009 with its attend stressors of unemployment, lack of medical care, homelessness, food stress/malnutrition, underemployment and job worry; the unprepared and insufficient safety nets of public assistance and voluntary charities; and for the ‘middle class’, reduced pension/401 K funds to use as resources and mortgages to pay,,,,,,,this is a different context and the premise of increased life expectancy ought to change with it.

It would seem based on the above change that the need to increase the size of the SS fund might be false. Next premise…….

I’m not an expert on SS, but I think you’ve left out some key proposals in the plan: particularly raising benefits for low income earners, orphans and widows. We can argue about the validity of the plan – and about whether Orszag would propose the same thing now as he did then – but I think it is not very accurate to describe this plan as blue-dog, lower-benefits, increase taxes. The plan lowers benefit rates for higher wage workers and increases benefits for the very poor – and rather than cutting benefits claims to be limiting the rise in benefits that would accrue due to increases in average wage.

Jane’s argument is very clearly that Orszag wants to smuggle in some of the old Blue-Dog slash and burn of SS – and there is very little material to support her argument.

And I want to quote a key part of the plan
Unlike many other proposals for Social Security reform, our plan does not call for the creation of individual accounts within Social Security. Individual accounts, which include tax-favored private sector accounts such as 401(k)s and IRAs, already provide an extremely useful supplement to Social Security, and they can be improved and expanded. But they are simply inappropriate for a social insurance system that provides the basic tier of income during retirement, disability, and other times of need.

The second premise is that high wage earners will draw down more than their fair contribution of the fund due to their higher retirement wages, their longer life expectancies, and their cap on contributions. Orzag’s increase in the cap height would solve this dilemma. But again, I challenge the life expectancy statistics here.

The third premise is that we are moving into an ever expanding economy in which 25 year olds will be expected to be earning more than the current group will be earning at retirement. If we are headed for a more or less level economy with slow growth over a long period of time, that would eliminate the need to reduce benefits for younger than 55 year olds.

What I come up with at the end of this ? writing is that revenue could be added to accommodate higher earning beneficiaries by raising the cap on their FICA. There is no reason to reduce anyone’s benefits. They should be temporarily increased across the board to help older folks and vulnerable groups to survive with dignity.

My apologies to all the real economists.

Keep the heat on this, Jane. We can’t trust the Dems out of our sight. If they are playing this down, that just means you’re being effective. It doesn’t mean they don’t want to screw us. They’re just setting us up for an ambush by the “extremists”.

Your changes seem to point to insolvency earlier than 2041.

Increasing benefits would mean paying out more benefits at an earlier date. This would exhaust the “lock box” earlier.

Life expectancy has been increasing. Improving health care access (something I really want as a liberal) means less death from treatable conditions, because people would get treatment.

If the economy is contracting then revenue from payroll taxes is dropping. This also would make insolvency occur earlier. Higher growth means higher FICA receipts, flat or slow growth means less received into the system. So the your change to the 3rd premise also means less money available to pay out over the long run.

I find it reasonable and just to tax richer people to pay for increasing the benefits for poorer people. I say that as someone that’s reached the cap on earnings in 3 years out of the last 5 – the change to my spending would be nil from paying the additional FICA tax, my savings would have dropped on the margin (I directed the increase in my later paychecks to savings).

it really is worth looking at the SSA website about the assumptions underlying the 2043 date for insolvency. For me the biggest assumption is that health care cost increases will continue to be substantially above CPI. Fix the health care system and a lot of nice benefits happen.

I’ll say it again, cut my benefit by 20% if it allows a minimum wage earner’s benefit to be greater than poverty level. I want a safety net that gives poor elderly people dignity and I’m willing to pay for it.

You are right about the proposed increases for low wage earners, widows and orphans, and especially for younger disabled people whose benefits are reduced through inflation as time goes by. However, the figleaf of these improvements will not hide the out-of-time premises of the plan.

Your struggle with the politics involved is interesting. Have you never applied for public assistance or food stamps?Have you never been to a food bank to ask for food?

What’s needed now from leadership is some reassurance that this ’summit’ is not the power play which Peterson and his ilk had hoped for. That only programs for the common good and not the bloated military and defense budget are mentioned for this summit does not bode well.

Sorry, I’m not willing to let go of almost 20% of my retirement income, even if I’m in the top 20% of wage earners. $2351/mo is not that much to live on, especially when it is the only part of my retirement savings that is not subject to market fluctuations and risk of disappearing (especially since my high wages have not started until late in life, so I don’t have much savings).

I have a better idea. Tax my measly estate at 50% (hell, take 100%). I don’t care once I’m gone. I just don’t want to give up any SS bennies when I can’t even be sure what I’m already due will be enough. Tax everyone’s estate! Call it the DEATH TAX even! It’s a good thing, it doesn’t even hurt. Why we’re talking about reducing workers’ modest livelihoods when it is impossible to raise the idea of taxing the parasites’ inheritances I’ll never understand. Hell, there’s widow and orphan’s bennies for the parasites too.

I had never thought about the possibility of insolvency because I don’t believe it is true.

You could be right. I am just a reader not an economist like you.

If what you say happens, then I guess we will just have to sell some more bonds to get us through or take from the general revenue stream as Orzag suggests.

Let’s be generous no matter what happens:

“The quality of mercy is never strained” Anonymous?

Your struggle with the politics involved is interesting. Have you never applied for public assistance or food stamps?Have you never been to a food bank to ask for food?

What does that have to do with it? Orszag, who Stiglitz calls his best student, makes a proposal in 2005 which involves mostly increasing the cap and increasing payments to people at the bottom of the schedule, and then tweaking benefit payments in the “pre-full” years so that people at the highest income levels do not increase as much as they would under the current plan – and Politico spins this as BlueDog SS cutting – and then Jane endorses their take.

If your goal is to protect and expand SS, echoing Ben Smith’s analysis, fearfully, seems a poor tactic.

You hit the critical nail on the head. I recently read a report which indicated we are spending 36 percent of our national budget on the military andhttp://static1.firedoglake.com/common/images/editor/underline.gif armaments. I’m sure, given that they hide military related costs throughout other departmental budgets, we are spending more than a trillion a year on worthless military expenses.

If we cut our military budget by two-thirds, we would not have any problems with social security or medicare — or probably any other damn thing. The money left over after funding SS and medicare could be invested in funding alternative energy and other programs which produce jobs and real value.

When they say cut SS benefits, we should be saying “No”, cut the military budget, loud and clear.

I believe SS should be a safety net. which means that no one should be below poverty level in retirement. How to pay for increasing benefits for those that have low lifetime earnings is a big question. I’m willing to get less back, I’ve been planning with this assumption for years (I’m 48). I’m also willing to have more income subject to FICA taxes.

Reducing military spending is a great idea, and over the next decade I hope we accomplish significant reductions. It will be a tough job, there are a lot of powerful interests that will fight this, and the whole “democrats weak on national security” meme means that we’re starting as underdogs.

Selling bonds to pay for SS can be done; unfortunately it comes at the cost of inflation and/or higher taxes eventually.