Social Security Trustees Report

You may have read about the trustee's report that Social Security will become "insolvent" when the trust fund runs out in 2033-34. This is nonsense. SS can't be insolvent. Projected benefits may be reduced by 21-23% by then, but as long as there are people people paying SS taxes, SS cannot be insolvent or bankrupt or any of those other scare words.

There are also scare stories about tax increases and benefit cuts. Here's the real scoop:

"Today Maya MacGuineas, president of the Committee for a Responsible Federal Budget, issued a statement in which she said: “Acting today, we could fix Social Security with a 27 percent tax increase or 21 percent benefit reduction.”

What makes this a lie, though technically “true,” is that MacGuineas knows that the “27% tax increase” is 27% of a 6.2% tax…or about a 2% of payroll increase. On the other hand, the 21% benefit reduction is indeed 21% of the whole benefit. An average benefit is about 1500 dollars…so the benefit cut would amount to 300 dollars, leaving the retiree with about 1200 dollars a month to live on.

But the 2% of payroll tax increase, that would eliminate this benefit cut, would be 2% of about a 1000 dollar per week paycheck.. or about $20 dollars per week. And CRFB knows that this $20 per week increase in the tax does not have to happen all at once, but can be phased in about a dollar per week per year at a time, while wages are expected to grow by over 200 dollars per week (at 10 dollars per week per year).

MacGuineas also says, “Not only is this year’s outlook worse than in last year’s report,..” but it’s not. Not materially. The long-predicted shortfall in Social Security finances is the same as it has been since 2007 or earlier. SS will require a 4% increase in the tax in about 2030 or so, which can be reached by phasing it in at one-tenth of one percent at a time (if we start now). That 4% is the combined tax for both the employer and the worker."

https://angrybearblog.com/2021/09/social-security-trustees-report-out-crfb-lies-about-it?fbclid=IwAR3NbWhUkchahXxR0MdkpbnvtFY2d_O3mmpyKFN63_Ez7R9YeHE7YXsfOxo#more-79244