Author
Topic: Federal Debt and Deficit
(Read 30617 times)

Cincydawg · « **Reply #322 on:** July 15, 2025, 12:48:03 PM »

The June surplus had a couple special causes, and May of course was deep into the red, as will be July etc. Folks like to say tariffs are the reason, but the revenue from tariffs was about 5% of overall revenue, so it's comparatively .... not much, irrelevant, a relative pittance, a twentieth, small, helpful but not sustaining, etc.

medinabuckeye1 · « **Reply #323 on:** July 15, 2025, 12:50:40 PM »

Quote from: MikeDeTiger on July 15, 2025, 12:23:49 PM

I haven't had time lately to organize my thoughts on all this. It's also a low priority as I view it as purely an academic exercise that no one in any elected position of power will ever see, let alone consider.

But I've vaguely rolled around in the back of my mind the idea of a 20-year plan which slowly, year-by-year, reduces the amounts of "entitlement" expenditures, particularly social security, and incentivizes the private sector to begin replacing what the government does there (or attempts to do). I don't think it can be done in a short time frame even if politicians were willing. Seems like the shock to the system and more specifically to far too many people either in or nearing retirement would be catastrophic. The idea of just "cutting entitlements" is a pipe dream, imo.

I haven't attempted to put any numbers in place, and I don't even know if 20 years is enough to transition from the current paradigm to a new one without more disruptions than I'm willing to confront. More or less, I'm just noodling around a very general idea and am aware there may be multiple factors I don't know about which need to be accounted for in such a hypothetical exercise. Maybe you have some ideas or could weigh in if you think there is a feasible way to implement a long-term, viable solution.

I totally agree that this is a VERY long-term problem and that any solution would have to be a long-term solution.

The retirement age (for full retirement) was increased to 67 from 65 over many years:

65 for those born in 1937 and prior
65 and 2 months for those born in 1938
65 and 4 months for those born in 1939
65 and 6 months for those born in 1940
65 and 8 months for those born in 1941
65 and 10 months for those born in 1942
66 for those born from 1943-1954
66 and 2 months for those born in 1955
66 and 4 months for those born in 1956
66 and 6 months for those born in 1957
66 and 8 months for those born in 1958
66 and 10 months for those born in 1959
67 for those born in 1960 and later

The above was enacted in 1983 and at that time those born in 1937 were turning 46 so everyone 46 and older was unaffected. Those born in 1960 were turning 23 and saw their retirement age increased by two years.

This did save a bunch of money.

On December 31, 2002 the last of the 65 year old retirees attained eligibility. Then there were NO new retirement eligible people for two full months until March 1, 2003 when those born on January 1, 1938 turned 65 and 2 months.

On March 1, 2004 the last of the 65 and 2 months retirees attained eligibility. Then there were NO new retirement eligible people for two full months until May 1, 2004 when those born on January 1, 1939 turned 65 and 4 months.

. . .

On November 1, 2026 the last of the 66 and 10 months retirees will attain eligibility. Then there will be NO new retirement eligible people for two full months until January 1, 2027 when those born on January 1, 1960 will turn 67.

One major actuarial problem is that life expectancy increased faster over the last 42 years than the retirement age:

In 1983 the retirement age was 65 and life expectancy was 74.5 years.
Today the retirement age is about to increase to 67 and life expectancy is 78.4 years.
Retirement age increased by 2 years, life expectancy by 3.9. Ie, life expectancy grew roughly twice as much.

Gigem · « **Reply #324 on:** July 15, 2025, 01:21:08 PM »

Quote from: medinabuckeye1 on July 15, 2025, 12:50:40 PM

I totally agree that this is a VERY long-term problem and that any solution would have to be a long-term solution.

The retirement age (for full retirement) was increased to 67 from 65 over many years:
65 for those born in 1937 and prior
65 and 2 months for those born in 1938
65 and 4 months for those born in 1939
65 and 6 months for those born in 1940
65 and 8 months for those born in 1941
65 and 10 months for those born in 1942
66 for those born from 1943-1954
66 and 2 months for those born in 1955
66 and 4 months for those born in 1956
66 and 6 months for those born in 1957
66 and 8 months for those born in 1958
66 and 10 months for those born in 1959
67 for those born in 1960 and later
The above was enacted in 1983 and at that time those born in 1937 were turning 46 so everyone 46 and older was unaffected. Those born in 1960 were turning 23 and saw their retirement age increased by two years.

This did save a bunch of money.

On December 31, 2002 the last of the 65 year old retirees attained eligibility. Then there were NO new retirement eligible people for two full months until March 1, 2003 when those born on January 1, 1938 turned 65 and 2 months.

On March 1, 2004 the last of the 65 and 2 months retirees attained eligibility. Then there were NO new retirement eligible people for two full months until May 1, 2004 when those born on January 1, 1939 turned 65 and 4 months.

. . .

On November 1, 2026 the last of the 66 and 10 months retirees will attain eligibility. Then there will be NO new retirement eligible people for two full months until January 1, 2027 when those born on January 1, 1960 will turn 67.

One major actuarial problem is that life expectancy increased faster over the last 42 years than the retirement age:
In 1983 the retirement age was 65 and life expectancy was 74.5 years.
Today the retirement age is about to increase to 67 and life expectancy is 78.4 years.
Retirement age increased by 2 years, life expectancy by 3.9. Ie, life expectancy grew roughly twice as much.

Life expectancy is one of those weird things anyways. The reason I say that is because if you're already in you're 70's, your LE is greater than the 78.4 mark. It's only 78.4 when you're born, as you get older LE changes. I truly believe that there is a lot more people that are > 80 than they ever expected. I'm not sure LE is the right way to adjust the benefits, it may need to be based off of how long people are truly expected to live.

MikeDeTiger · « **Reply #325 on:** July 15, 2025, 01:32:50 PM »

Quote from: medinabuckeye1 on July 15, 2025, 12:50:40 PM

One major actuarial problem is that life expectancy increased faster over the last 42 years than the retirement age:
In 1983 the retirement age was 65 and life expectancy was 74.5 years.
Today the retirement age is about to increase to 67 and life expectancy is 78.4 years.
Retirement age increased by 2 years, life expectancy by 3.9. Ie, life expectancy grew roughly twice as much.

Seems like another problem is the declining ratio of contributing workers to retirees. Some data I looked up from 2 years ago says in 1960 there were 5.1 workers per beneficiary, whereas at the time of the article it has declined to 2.8 workers per beneficiary. Lots of reasons for that, probably, but it all amounts to the same thing. SS depends on taxpayers paying into the system, and fewer and fewer of them are doing it.

I think--I don't know--the private sector could, in theory, avoid some of these difficulties because it could, again, in theory, generate retirement income from market-driven mechanisms instead of transferring it from working taxpayers to retirees.

Again, I haven't fleshed any of it out, but my subconscious prods me to keep thinking about it.

Cincydawg · « **Reply #326 on:** July 15, 2025, 01:34:37 PM »

The private sector did a lot for my retirement income and wealth.

medinabuckeye1 · « **Reply #327 on:** July 15, 2025, 01:58:39 PM »

Quote from: MikeDeTiger on July 15, 2025, 01:32:50 PM

Seems like another problem is the declining ratio of contributing workers to retirees. Some data I looked up from 2 years ago says in 1960 there were 5.1 workers per beneficiary, whereas at the time of the article it has declined to 2.8 workers per beneficiary. Lots of reasons for that, probably, but it all amounts to the same thing. SS depends on taxpayers paying into the system, and fewer and fewer of them are doing it.

I don't think this is 'another problem', what you have explained is THE problem. Life expectancy is a part of it.

That ratio of workers to retirees is impacted by many things including:

Workers entering the workforce later. More people going to college means more people starting work in the mid-20's instead of their late teens. For those who graduate with a useful degree that is a good trade-off for the SSI System because they make more when they are working but for those who get useless degrees or don't graduate at all it just takes them out of the workforce for about five years.
Retirees living longer. @Gigem is right that LE changes as you age but on a macro-level I think that the basic LE number is at least a good proxy. I'll give you a perfect example: My paternal grandfather was born in 1910 and died of heart disease at 60 in 1970. Consequently the ONLY thing ever paid to him or on his behalf from SSI was the death benefit ($250 I think) despite a lifetime (1928-1970) of contributions. SSI did REALLY well on my grandfather. His son (my dad) had the same heart issues but with the miracles of modern medicine he got stents and lived to 80 so SSI paid him from his retirement (eligible at 65 and 6 months as a 1940 birth) for 14.5 years. The primary difference between the two in terms of lifespan was simply technology. Grandpa would likely have lived to 80 with modern medicine and dad would likely have died in his early 60s with 1970-era medicine.
Crazy checks: @Gigem and I have discussed this but there are, IMHO, WAY too many able-bodied working-age people collecting disability checks for mental disabilities. If your only disability is your addiction you don't need to be enabled by the workers around you, you need a swift kick in the ass.

betarhoalphadelta · « **Reply #328 on:** July 15, 2025, 01:59:13 PM »

Quote from: Gigem on July 15, 2025, 01:21:08 PM

Life expectancy is one of those weird things anyways. The reason I say that is because if you're already in you're 70's, your LE is greater than the 78.4 mark. It's only 78.4 when you're born, as you get older LE changes. I truly believe that there is a lot more people that are > 80 than they ever expected. I'm not sure LE is the right way to adjust the benefits, it may need to be based off of how long people are truly expected to live.

medinabuckeye1 · « **Reply #329 on:** July 15, 2025, 03:15:39 PM »

Quote from: betarhoalphadelta on July 15, 2025, 01:59:13 PM

[img width=500 height=357.997]https://i.imgur.com/4Q4C4ia.png[/img]

It is amazing to me just how much that changed in 50 years:

A man born in 1875 who survived to 21 in 1896 had only slightly better than a coin-flip chance to make it to 65 in 1940 and even if he did make it to 65, his life expectancy at 65 was only 75.7.
A man born in 1925 who survived to 21 in 1946 had a nearly three-out-of-four chance to make it to 65 in 1990 and if he did make it to 65, his life expectancy at 65 was more than 80.

My grandpa (born in 1910) was one of the roughly one-in-three who made it to 21 but did NOT make it to 65. My dad (born in 1940) turned 65 in 2005 so, extrapolating from what we have here, he was one of the roughly four-in-five of those who made it to 21 to make it to 65 and his life expectancy at that point was roughly 82 which he fell a little short of.

Gigem · « **Reply #330 on:** July 15, 2025, 03:32:11 PM »

Quote from: medinabuckeye1 on July 15, 2025, 03:15:39 PM

It is amazing to me just how much that changed in 50 years:
A man born in 1875 who survived to 21 in 1896 had only slightly better than a coin-flip chance to make it to 65 in 1940 and even if he did make it to 65, his life expectancy at 65 was only 75.7.
A man born in 1925 who survived to 21 in 1946 had a nearly three-out-of-four chance to make it to 65 in 1990 and if he did make it to 65, his life expectancy at 65 was more than 80.

My grandpa (born in 1910) was one of the roughly one-in-three who made it to 21 but did NOT make it to 65. My dad (born in 1940) turned 65 in 2005 so, extrapolating from what we have here, he was one of the roughly four-in-five of those who made it to 21 to make it to 65 and his life expectancy at that point was roughly 82 which he fell a little short of.

I've been hearing something lately that is kind of new, called reverse transfer of wealth. Now mind you, I haven't paid very close attention to it but it's popped up in a few of my feeds. Essentially from what I can tell there is a bubbling push that people that are older, call them boomers or whatever had life so much easier than today's youth that many of them don't deserve the entitlements they receive. The thought is that a lot of them came up in a time where things were much easier for various reasons. Easier and cheaper to go to college, easier to earn a living on a single income, whatever measuring stick you want to use. Now that many of them are in the 70's and older they're getting a lot of entitlements that they don't really need, whereas many young workers as really struggling. Bear in mind, this is not necessarily my opinion, just something that is making the rounds on current SM.
I don't think they would ever be able to pass anything to remove some of these entitlements just because the boomer block is still very powerful politically.

I do know quite a few older people in their late 70's and 80's who have a solid pension 20-30 years after they retired, live in and own their home that they paid well under $100,000 even in today's dollars for, a million in their 401K, probably would be considered mildly wealthy by anyone's standards. I also know many much older people who only have their SS as income, living in an old ramshackle house held together with rotten wood, and a vehicle that barely runs so I see both sides of the coin.

MikeDeTiger · « **Reply #331 on:** July 15, 2025, 04:40:08 PM »

Quote from: Gigem on July 15, 2025, 03:32:11 PM

I do know quite a few older people in their late 70's and 80's who have a solid pension 20-30 years after they retired, live in and own their home that they paid well under $100,000 even in today's dollars for, a million in their 401K, probably would be considered mildly wealthy by anyone's standards. I also know many much older people who only have their SS as income, living in an old ramshackle house held together with rotten wood, and a vehicle that barely runs so I see both sides of the coin.

And everything in between. That's why it's usually unhelpful and potentially even dangerous to project any certain demographic as a monolith.

medinabuckeye1 · « **Reply #332 on:** July 15, 2025, 05:27:35 PM »

Here is the chart from SSI that @betarhoalphadelta provided earlier but converted to a spreadsheet:

Then, extrapolating from those figures to guesstimate the figures for people currently 90 and younger:

Let me just say right off the bat that I'm sure the numbers I got here just from extrapolating are NOT exactly accurate and if you have a better source, we can switch but I just wanted something to work with.

When SSI was established in the 1930s a man who made it to 21 had roughly a coin-flip chance of getting to retirement age. As of 1990 (35 years ago) that was up to almost three-quarters. Today it is probably north of four-out-of-five and by the time people my age get there in another 15 years it will probably be close to nine-out-of-ten.

Furthermore, the men who DO make it to 65 are also living a lot longer PAST 65. It went from less than 13 years for the initial SSI retirees to over 15 years for men who retired 35 years ago and is probably around 16 years today and heading for around 18 years by the time my cohort gets there.

This is the biggest reason for the decline in the workers:retirees ratio.

Unless we are going to massively increase taxes and this would necessarily be on middle-class people not just 'the rich' because you couldn't raise this kind of revenue on "the rich" alone, the age is going to have to go up.

Last time they increased it they exempted everyone within about 20 years of retirement. Under today's set-up with a 67 year retirement age that means everyone over 47 (born in 1978) would be exempt. To keep it simple, lets go with 1980 and, following the pattern they used in 1983 we'd be looking at something like this:

67 years and 2 months retirement age for persons born in 1980
67 years and 4 months retirement age for persons born in 1981
67 years and 6 months retirement age for persons born in 1982
67 years and 8 months retirement age for persons born in 1983
67 years and 10 months retirement age for persons born in 1984
68 years retirement age for persons born in 1985
68 years and 2 months retirement age for persons born in 1986
68 years and 4 months retirement age for persons born in 1987
68 years and 6 months retirement age for persons born in 1988
68 years and 8 months retirement age for persons born in 1989
68 years and 10 months retirement age for persons born in 1990
69 years retirement age for persons born in 1991
69 years and 2 months retirement age for persons born in 1992
69 years and 4 months retirement age for persons born in 1993
69 years and 6 months retirement age for persons born in 1994
69 years and 8 months retirement age for persons born in 1995
69 years and 10 months retirement age for persons born in 1996
70 years retirement age for persons born in 1997 and later.

This would dramatically impact the overall system in part because increasing the age works both sides of the equation. It decreases the number of retirees AND increases the number of workers. However, the impact would not begin until 2047 (22 years from now) when the people born in 1980 turned 67 and had to wait an extra two months before they could retire.

Since this system only moves the age two months per year I think you could advance it by a decade to:

67 years and 2 months retirement age for persons born in 1970
67 years and 4 months retirement age for persons born in 1971
. . .
69 years and 10 months retirement age for persons born in 1986
70 years retirement age for persons born in 1987 and later.

By doing that the impact would start a decade sooner, in 2037 which is only 12 years from now when those born in 1970 turned 67 and had to wait an extra two months to retire.

Gigem · « **Reply #333 on:** July 15, 2025, 08:55:03 PM »

So what changed from the early 80’s until now that congress essentially refuses to change anything to fix this broken system? 24 hr news cycles? The internet?

FearlessF · « **Reply #334 on:** July 15, 2025, 09:22:22 PM »

congress

medinabuckeye1 · « **Reply #335 on:** July 15, 2025, 09:27:28 PM »

Quote from: Gigem on July 15, 2025, 08:55:03 PM

So what changed from the early 80’s until now that congress essentially refuses to change anything to fix this broken system? 24 hr news cycles? The internet?

First:
It isn't just the retirement age, the SSI rate has also been unchanged for 35 years, historical SSI rates (this is the full rate, for employees it is split 50/50 between employer and employee):

2% 1937-1949
3% 1950-1953
4% 1954-1956
4.5% 1957-1958
5% 1959
6% 1960-1961
6.25% 1962
7.25% 1963-1965
7.7% 1966
7.8% 1967
7.6% 1968
8.4% 1969-1970
9.2% 1971-1972
9.7% 1973
9.9% 1974-1977
10.1% 1978
10.16% 1979-1980
10.7% 1981
10.8% 1982
11.4% 1984-1987
12.12% 1988-1989
12.4% 1990-present

Medicare also was raised from 0.7% when the program was established in 1966 to the current 2.9% 20 years later in 1986 and hasn't been increased in the 39 years since despite the Medicare program being further in the hole even than SSI.

I don't think anyone can answer your question. It can't be blamed on one party because each party has had time in control in the last 40 years and neither has addressed the problem.

As I've said before, at the end of the day I think the blame lies with us, "we the people". Realistically, what is needed is something along the lines of:

Raise the retirement age by three years (my outline above).
Triple the Medicare tax rate.
Increase the OASDI tax rate by roughly one-third.

Realistically any candidate who ran on that platform wouldn't get elected so instead the office holders are the ones who promise to run OSDAI and Medicare on Ferry Dust and Unicorn Farts.

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Topic: Federal Debt and Deficit

Cincydawg

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

Gigem

Re: Federal Debt and Deficit

MikeDeTiger

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Cincydawg

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

betarhoalphadelta

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

Gigem

Re: Federal Debt and Deficit

MikeDeTiger

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit

Gigem

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FearlessF

Re: Federal Debt and Deficit

medinabuckeye1

Re: Federal Debt and Deficit