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Social Insecurity: It’s Not Wrong to be Concerned about Facts

A December 19, 2023 article An easy-to-click title by MarketWatch's Brett Arends, “These are the scariest numbers for Social Security,” caught my eye. Given the fact that so many corporate media articles today are focused on pointing out how wrong the Louvs' sense is, how absolutely everything is pristine, it's hard to believe that Mr. Ahrendts' I wasn't shocked to learn that there was no mention of accumulated debt. or the anticipated depletion of the trust fund. no, Ahrens argues that the real problem is a cornered population foolishly worrying about its ability to pay Social Security and a “quiet effort” to incite the mob.

the scariest number It could be 71%. This surprising number from a new poll shows how many people are convinced that cuts to Social Security, in some cases deep cuts, are likely or inevitable. And it wasn't due to biased polls conducted by pressure groups. Or nightly polls by startups.That's what we got from a comprehensive study The Harris Poll surveyed 10,000 people on behalf of the esteemed Transamerica Center for Retirement Research. . . .

Achieve new victories in the Resistance is Futile campaign. Convince Americans to accept Social Security cuts they don't want And the program doesn't need it.

If our state pension poachers get their way, it will be because of this.

Mr. Allens then says, “None of this is nearly necessary. It's pure spin.'' His evidence?America is richer than ever, able to remove “billionaires” from the tax code, and here comes the brave Internal Revenue Service (IRS) could uncover additional tax “fraud” worth an estimated $700 billion annually.

But Ahrens' argument here does not prove that Americans are foolish to worry about the health of Social Security or its possible cuts. Let's say I'm walking outside and I see a car coming towards me. At first I feared for my life, but then I remembered that the driver had every option in place to avoid killing me. Therefore, it is foolish to continue worrying. clearly Will either option come true?

reality bites

However, in reality, the social security system is teeth facing serious problems, And these problems are increasing every year.That is, a startup that is not a night flight 2023 Annual Report of the Board of Directors of the Federal Old Age and Survivors Insurance and Federal Disability Insurance Trust Funds (more commonly referred to as Social Security and Disability Insurance) discuss Current path of fund depletion and potential benefit reductions: “Under the Trustees' interim assumptions, OASDI costs are projected to exceed total revenues in 2023, and the dollar level of hypothetical trust fund reserves is reserves It will run out in 2034, one year earlier than predicted in last year's report.” (emphasis added).

The report then addresses what will be needed to maintain the Fund's solvency over the next 75 years.

(1) Revenues would be required to increase by an amount equal to 15.84 percent through an immediate and permanent 3.44 point increase in the payroll tax rate beginning in January 2023. (2) Scheduled benefits will be reduced by an amount equal to an immediate and permanent reduction of 21.3 percent that will apply to all current and future beneficiaries starting in January 2023, or if the reduction is applied to those who first qualify for benefits in 2023. If it applies only to those who have earned it, it must be reduced by an amount equal to 25.4 percent. From 2023 onwardsor (3) a combination of some of these approaches should be adopted. (emphasis added)

So not only is the trust fund expected to be depleted in 2034 (at which point benefits would need to be cut, assuming no changes to the program in the meantime), but this date is earlier than last year's predictions. The report also notes that the total unfunded liability over the next 75 years has also increased from last year's projections, so the outlook is not necessarily rosy for current and future beneficiaries.

This is not a speculation in anticipation of future changes. This is a factual forecast based on current reality and assumes no changes to the program. This is a financially prudent approach to forecasting. Even if I know that my income will only cover 80% of my lifestyle in 10 years, and I ignore the problem by saying I'll change something before then, I don't think my “plan” is particularly wise. No one would think that is the case (especially given their history of not making such changes despite similar predictions).

Hence Ahrens' desire to portray those concerned about Social Security's solvency as somehow being manipulated by the “quiet efforts” of those desperate to strip Social Security. That seems strange to me. Current facts show that those concerned are exactly right – their interests. teeth Barring changes, it is expected to be reduced in 2034.The Social Security Administration says so too..You might argue that it's clear that solutions exist to improve the program's financial health by that date, but after that you They are “spinning” and envisioning future actions that may or may not come true. But the people surveyed seem to have fears that are supported by the facts of the situation, and I don't think they're completely unreasonable.

true operation

At the end of his article, Ahrens concludes that “the battle lines have been drawn.”“Either make the political donor class pay taxes or steal pensions from middle-class retirees.” This statement itself is the epitome of manipulative and fact-free language.

First, the “political donor class” that Ahrens refers to, meaning billionaires, do pay taxes.According to ProPublica investigation IRS records leaked from 2014 to 2018the top 400 earners (those earning more than $110 million a year) paid an effective tax rate of 22 percent, while the top 25 richest Americans paid “Federal income taxes totaling $13.6 billion” (or $2.72 billion annually).

Considering that, expected deficit Social security over the next 10 years will be $2.572 trillion, Even if we expropriate hundred times more tax The 25 richest Americans at the time barely covered the deficit, and the deficit is increasing every year.

The article also explains that the main reasons why the top 400 people paid an effective tax rate lower than the top marginal tax rate (37 percent) were: Much of their income came from investments, which were subject to taxes of up to 20 percent on long-term gains and qualified dividends, and often received large deductions for charitable contributions. Both of these reasons are legal and do not result in you not paying taxes, like most people who take deductions for the amount of real estate taxes paid, children, or business mileage.

Sure, you can argue about tax rates and deductions (although I'm not sure how giving to charity is an abhorrent idea). But claiming that we need to make billionaires “pay taxes” again ignores reality.

Additionally, the idea that cutting social security benefits is tantamount to “stealing money”[ing] “Pensions from middle-class retirees” is also fiction. First, no one steals anything from retirees even if their benefits are reduced.The reason for that is Social Security benefits are not a contractual obligation or “right.”by supreme court In the 1960 Fleming v. Nestor case, it was stated that:

Instilling the concept of “accrued property rights'' in the social security system deprives the system of the flexibility and boldness it requires to adapt to ever-changing circumstances. . . . clearly, Non-contractual benefits of employees covered by [Social Security] This action cannot be fully analogized to that of pension holders whose entitlement to benefits is based on the payment of contractual premiums.. (emphasis added)

In this way, Social Security benefits are always allocated and paid according to the whims of legislators, who can change (or even circumvent) the system at any time they like. We may feel like we are “receiving” a benefit, but again, that is not the reality.

Social Security benefits are also paid primarily in the following ways: payroll tax imposed on current workers, So if theft is happening, it's actually by the current workers and the current beneficiaries. (via The Politician). One common misconception about this program is that you “owe” the money you pay, as if the money were sent to your personal account. Quite the opposite: Money paid into this program will be used for the benefit of current beneficiaries. This means that when current workers finally receive Social Security, they will be forced to take money from their children and grandchildren to support themselves. The truth is, Social Security, like other taxpayer-funded benefit programs, is digging a deeper hole every year, and the only real solution is phased out The program would be applied across the board, allowing people to take responsibility for their own retirements rather than subjecting them to the whims of Congress or Ahrens' confiscatory ideas.


This article Published by Ludwig von Mises Institute Reprinted with permission.

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