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Re: I'm running for Congress in MD, to make Social Security solvent. Your thoughts please.

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Message 21 of 25

Do the math.SS can be made solvent forever by rasising the cap to $250,000 and indexing the cap to cover 90% of total income.

 

There's $1,983,847,000,000 of personal income between the current cap of $119,000 and $250,000. The increase (+42%) could be phased in over 3 years, just like Reagan phased in his increase in the cap from $25,900 to $48,000 (+85%) over 8 years.

 

That nearly $2TRILLION that is not now contributing will generate $246BILLION in additional revenues to the SS Trust Fund at the current 12.4% total contribution rate.

 

Even with the higher benefits based on the higher cap, the increase in revenues will continue to exceed the higher payments until the number of higher benefit retirees exceeds the number of workers making the higher contributions.

 

 

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Re: I'm running for Congress in MD, to make Social Security solvent. Your thoughts please.

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Message 22 of 25

That's a long and complicated discussion.  There's actually a spreadsheet modeling the whole thing, and I've found it doesn't help unless you're willing to re-derive the model over again to get your head around it.

 

The short version is that I did a two-pass construction on several years of Federal spending.

 

The first pass pulls FICA (the tax source feeding OASDI) into the tax brackets and then strikes it (and some other restructuring) from each bracket and the Corporate tax rate, replacing that portion with a separate tax (like FICA) to feed the Dividend.

 

The second pass resurrects FICA as a payroll tax to cover the gap between the Dividend and the average OASDI benefit.  The payroll tax is less than half of FICA, so it's the employer portion and none is applied to individual paychecks as an income tax.  This essentially re-creates OASDI.

 

In practice, the whole transition would be one step which includes a FICA rate adjustment.

 

(I could also remove the FICA cap, but it wouldn't matter:  the payroll end of FICA goes straight into the cost basis of goods and services, and the poor and middle-class pay the great majority of it; using a lower tax rate applied to the payrolls of the rich would still shuffle the actual cost to the same people.)

 

Pass 1:  Restructure

 

The first pass pulls FICA into the income tax brackets, then strikes the portion of each bracket represented by restructured services.  The restructured services include struck (removed this pass) and diminished-eligibility (less-expensive) benefits.

 

Struck benefits in the first pass include:

 

  • DI Benefits
  • OASI Benefits
  • Supplemental Security Income Program (Discretionary)
  • Supplemental Security Income Program (Mandatory)
  • Payment where Earned Income Tax Credit Exceeds Tax Liability

OASI and DI are put back in the second pass, in the capacity described earlier.

 

SSI is actually just gone:  households with over $719/month of income were ineligible in 2016, and the Dividend was over $730/month per person.  Nobody's actually poor enough to claim SSI.  This is also why you (usually) can't claim SSI and DI at the same time.

 

I'm not sure if I'll put the EITC back.  The Dividend is actually bigger; however, it's not so big as to make you ineligible for the EITC under current rules.  The in-favor arguments for the Dividend (it comes throughout the year instead of at tax refund time; it's larger) are not arguments against the EITC.

 

Diminished-eligibility benefits include:

 

  • WIC (left as-is)
  • TANF
  • Housing Assistance
  • SNAP (grant)
  • SNAP (non-grant)
  • Low Income Home Energy Assistance (left as-is)

I left WIC and the Home Energy credit out of my calculations by assuming eligibility doesn't change at all (it will, because people will be less-poor).  In theory, we could just make these stronger services providing greater benefits.

 

The others are projected to cut roughly in half, between households pushed out of poverty entirely (no eligibility) and those less-deep into the poverty guideline.  If we assume no reduction in cost here, I have to lower the rate to about 13.5% out of the gate, with the Dividend amounting to $8,000/year per person--still viable, although SSI is retained under those conditions, with extreme reductions in cost.

 

Point is this passes viability, and the CBO and various tax policy organizations can help refine the precise adjustments.  Those resources are generally available to Congress, and not to the rest of us.

 

Pass 2:  Keep Social Security's OASDI Program in place

 

The OASDI monthly benefit in 2016 was $1,247.  That includes Disability and Retirement (the Retirement benefit averaged higher itself).

 

The Dividend amounted to $732.21/month.  That represents 58.72% of the OASDI average obligation, bringing the 12.4% FICA rate down to 5.13% (below the 6.2% currently paid in payroll tax now, thus none of this shows up on your paycheck).

 

Between 2013 and 2016, the OASDI benefit adjusted by 6.72%, while the Dividend grew by 8.45%.  That will continue as a long-term trend; it wobbles in the short-term (look at the GDP-per-capita graph and you'll see it).  This was built to survive (and prevent) something like the 2008 Great Recession.

 

At those growth rates, a 5.15% FICA rate will reliably provide positive cash flow to the Social Security Trust by 2022.  The Trustees currently project insolvency of the Trust by 2034, so we've got a little time.  Beyond 2022, it becomes possible to improve retirement benefits and, eventually, begin lowering the FICA rate without cutting benefits.

 

That difference in growth--and the way I've structured the Dividend in general--allows us to be a touch rough with how we implement it, hence why I can just wait for Social Security to fix itself once this is in place.  The whole system relies on technical progress as a general, long-term trend, which has always held true:  we select for those methods of production which cost the least.  In that sense, it relies heavily on market competiton and the pursuit of profit, or simply the tendency of people to economize--to expend the least means for the most ends.

 

Generally I just tell people I fixed capitalism with more capitalism; I get in a lot of arguments with Marxists.

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Re: I'm running for Congress in MD, to make Social Security solvent. Your thoughts please.

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Message 23 of 25
I see a 10% tax on all income in the graphic. The question I have is..how ya gonna open the bag without letting the cat out? lol. Its going to take more than beating cummings in a primary to pass this thru both legislatures and the white house. Then the conservative for the next 40 years will get a shot.
So it begins.
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Re: I'm running for Congress in MD, to make Social Security solvent. Your thoughts please.

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Message 24 of 25

Perhaps I missed something, Mr. Moser, but 

Where Does This "Dividend" come from that is suppose to add this funding?

* * * * It's Always Something . . . Roseanne Roseannadanna
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I'm running for Congress in MD, to make Social Security solvent. Your thoughts please.

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Message 25 of 25
Hi all, I'm new here.  My name is John Moser, and I'm running to represent Maryland's 7th District in Congress.  I plan to seek endorsement from the Maryland State AARP, and I'd also like the feedback of the folks here.  Please, let me know what you think about my approach to Social Security's permanent solvency; it's unconventional, and represents the kinds of new solutions I intend to bring to Congress in my career representing the people of Maryland.
 
Our current representative, Elijah Cummings, takes the following stance on Social Security:
 
I do not support or oppose any particular plan to ensure solvency, but instead look toward a holistic and continuous appraisal of the Social Security program, and equally continuous stewardship over it. 
This is insufficient:  Social Security faces insolvency by 2034, even without the current assault on the program.  Elijah has made it quite clear they're not interested in new, progressive policies, notably when I called his office last year and barely got past naming the plan I've developed before his chief of staff, Mike Christianson, cut me off to give excuses for why whatever it is I'm peddling isn't something that's good for Maryland.
 
That's right:  didn't even want to discuss it.  We had a 2-hour talk about politics in general, but not about policy.
 
I've decided to run against Elijah Cummings for the Democratic nomination in the 2018 primary election.  It's time we bring new solutions to the American people.
 
I've decided to run explicitly to establish a new, revenue-neutral Social Security benefit with a number of effects:
 
  • Immediate, permanent Social Security solvency without benefits cuts
  • A strong aid package for lower-income households, directly raising their income to reduce poverty
  • A reduction of welfare costs by way of making low-income households less-poor in the manner above while keeping welfare eligibility rules unchanged
  • A reduction in tax burden on the middle-class by way of acting as a continuous tax refund
  • Creation of jobs, especially in poorer local economies such as Baltimore City, by way of acting as a continuous economic stimulus (brings outside money into Baltimore)

This post is a bit long, and tries to convey in some detail what I've tried to stuff into an 8.5x5.5 card:

 

  • dividend_5.5x8.5_front.pngA card discussing the benefits of a Universal Dividend.

      

How does this rescue Social Security?

 

The plan I've designed operates as a Dividend taken from all income, essentially dividing a small portion (the target is 10%) among all adults.  This results in a lower top tax bracket (which lets us allocate taxes for things like expanded Medicaid), more take-home income among the middle-class, and a benefit that exceeds tax liability among the lower class.

 

Consider a year in which the average Social Security retirement benefit (OAS) is $1,500 per month, and the Dividend is $800.  In retirement, OAS might pay you $1,200/month, or $1,800/month, depending on your work history.

 

With the Dividend in effect, Social Security pays $800 to everyone over the age of 18.  If you're to receive $800/month, then Social Security must additionally send $1,000.  Given the scenario above, the average benefit would be $800 Dividend + $700 OAS, totaling $1,500/month.

 

This Dividend grows faster than Cost-of-Living Adjustment, essentially following GDP-per-capita.  Each productivity increase raises its buying power.  The tax rate never has to increase, and in fact can be decreased slowly and still pay out more than a Cost-of-Living Adjustment.

 

This has three important protections:

 

  • Because of this growth, the Dividend steadily takes on a greater proportion of the load from Social Security.
  • Because it doesn't require tax rate adjustment to exceed COLA, it can't become insolvent due to neglect.
  • Because messing with it causes immediate and highly-visible impacts, it's more-difficult to sabotage by mismanagement.

Importantly, Social Security must continue to calculate Cost-of-Living Adjustments for Retirement and Disability.  The OASDI program only changes to pay the remaining obligation after the Dividend.  No more retirement age increases, no more proposals to pin benefits to Chained CPI.

 

The FICA tax rate becomes less a worry:  the Trusts behind OASDI will have net-positive cash flow, and the growth of that cash flow will require lowering the FICA rate to avoid an excessive balance.  Assaults on Social Security have historically come in the form of preventing necessary increases of the FICA cap or tax rate; such assaults are no longer possible.

 

This also gives us a chance to keep the FICA rate unchanged (for a time) and redirect the additional cash flow into the lower end of retirement benefits.  Currently, 10% of OAS recipients are below the old-age poverty line; this new plan allows us to increase the OAS benefit minimum to above the poverty line.

 

What else does this do?

 

Mostly anti-poverty effects:

 

  • Raises the income of low-income households, thus reducing their eligibility for welfare under current income rules by making them less-poor.
  • Eventually adjusts to pay out to Americans age 16+ (but not younger) to keep high-school students in poverty-stricken households in school rather than working to help the household stay afloat (and to give young adults a head start on a tangible understanding of managing their money).
  • Creates jobs by increasing the capacity for consumer spending in low-income areas, giving people a chance to work their way further out of poverty.

It also should increase the pace of innovation, reduce the severity of recessions (by stabilizing households when unemployment starts to roll through our economy), and reduce the duration of recessions (by getting people back to work sooner).

 

This plan pointedly does not meddle with deductions or other credits, although I've considered initially replacing the Earned Income Tax Credit (which pays out annually) with this Dividend (which pays out twice-monthly) and a slightly-larger minimum wage (pinned to a rate representing twice the Dividend's annual benefit).  EITC vs Dividend is kind of complex--especially considering it's entirely-new territory in policy economics.

 

It's not like I learned a lesson from the horrible GOP attempt at wedging a giant corporate tax cut into an enormous budget hole that somehow still doesn't hold it all; I was just never that foolish in the first place.  I've built my plan with an examination of the risks and a great deal of mitigation to control those risks; I don't need to add more unknown and uncontrolled elements.  Some of my contemporaries--people who favor a superficially-similar idea called a Universal Basic Income--would rather eliminate all deductions and all welfare while taking a guess at "how much money a person needs"; I'm instead leveraging productivity against welfare so they can stabilize each other.

 

So, what do you think?  Comments?  Too much, too wordy, too verbose?  This is a pretty straight-forward piece of policy, but it's got a lot of moving parts and takes forever to detail.  I guess that's what I get for innovating instead of just using the same old political talking points.

 
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