Politics

Social Security 1983

Back in 1983 Social Security was in crisis. A commission couldn’t come to any agreement to fix it. Ronald Reagan and Tip O’Neill, the Democratic Speaker of the House, sat down and worked out a plan to fix the system (temporarily as it turns out). 

Today not only can’t our leaders come to any agreement on fixing Social Security, they can’t even admit there is a serious problem. Instead they still talk about the Trust generating a surplus, claim raising the taxable wage limit will fix the problem and even leave funds for expanding the program and  my favorite; Social Security has no impact on he deficit or debt. 

Who are the biggest fools, our politicians or the American people?

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Categories: Politics, Social Security

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  1. The comparison between 1983 and today is faulty.

    First, the problem in 1983 was fairly minor. We projected a shallow insolvency before the Boomers earnings pushed the system back into the black. The crisis we are facing today is one that is deep and prolonged. Charles Blahaus has written on this dynamic.

    Second, at the time it was entirely possible to push almost all of the solution on non-voters in 1983. The largest increases in taxes and benefit cuts hit people who were 17 and younger at the time. It is virtually impossible to possible to protect people who are now nearly 60. See Ribble’s Proposal.

    Third, you had a lot of room to make benefit cuts. They implemented a means-test which now generates 20-30 billion in savings, and that figure is expected to grow to 9 percent of all benefits paid. The low-hanging fruit is gone.

    Fourth, in 1983 there was a supply of ready cash that could be drawn in to kick-the-can. That isn’t true today. We were able to add government workers that brought in quick cash flow. The DI system was in a position to make loans to the OAS system. Now it is the other way around.

    Here is the deal that the proposed in 1983. Our kids will pay the taxes and absorb the cuts that we won’t. This deal may work out, but the seniors who voted for these guys shouldn’t be terribly surprised if it doesn’t.

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