peter diamond

this is a  trick sleeve original 

------------------------------------------

   some lilly livered 
               stuff 
             on ssi "reform"
                         by an old timer

who made  his professional bones 
  building 
various
 intergenerational toy models 



===============================================

facts in and out :

"Life expectancy
 at age 65 
has risen by four years 
for men
 and five years
 for women since 1940"

 -----------fine 
so far
but ....

left out here
the real embedded 
assumption 
going forward
        faster slower what ?

 75 years from now ...
 
why caution?

seriously off 
     prior  estimates 

fact
the actual longevity 
         growth  rate 
in amerika 
has slowed dramatically


so much so 
uncle's actuaries
 in the mid 80's
signifigantly 
       over estimated 
    todays longevity

yup 
 even  now 
  the "how long"  diff
           has proved 
                 to have 
                  added  fuel 
                        back then 
                     to the first
                       false crisis fears 

so iz this at least in part
  more of the same ?

built in here toois there 
a preposturous longevity
 to  " exacerbate exacerbate"

aahhh indeed 
   the law 
   of the righteous demagogue   -----------------



 fact :

" Between 1983 and 2002,
 the percent of aggregate earnings 
above the maximum taxable level 
            ncreased from 10 to 15."

--------------------hot stuff
  my estimate if uncle 
  pops  off the cap

u get an instantaneous
  base increase 
   of 900 bills 
and 900x12.5= 
  over 100 new bills 
     to pour into 
 the" as we go" pot---------------- 

 "Furthermore,
 the extent to which people 
with higher earnings and more education
 tend to live longer 
than those with lower earnings 
and less education has also increased."

  ------------- a  widening gap
                 wow 
okay 
       so the benefit stream
   has a wealth up-tilt 
then re tilt the pay in too -----------


-----------------------------------------------

the legacy debt:


fact :

" The benefits paid 
to almost all 
current and past cohorts
 of beneficiaries
 exceeded 
what could have been financed 
with the revenue
   they contributed,
 including interest"

---------  well 
a pay as u go system 
has no "perfect reason"
    to view itself against this standard

    talk 
about conversion rate here

  and a theory of how
you measure
real inter- cohort burdens 
sure the fucker
gets complicated 
but  
well...read on 
---------------------------------------------- 

 "This  imposes a "legacy debt"
 on the Social Security system. "


---------- legacy debt

get use to this concept
its the good burger
klass- rip 
  term of art---------



 "there's a legacy debt
   if earlier cohorts
in a reirement system
 unless they
   received only 
the benefits 
that could be financed 
by their contributions plus interest"

if that were the system:

"  the trust fund's assets 
would be much greater today."


----in other words 
if the NEW  deal
 FDR GAVE US
wasn't as it iz
"pay   as u go"

but instead
  a  compulsory pay in
             mutual  fund 
where  u're pay in
    bought u individual shares 
that  apon retirementu cashed out 
and bought an annuity 

you'd have got out less
and the funds present value would be greater 


by the way 
how ya like the idea 
of  a mutual fund 
stuffed full of  t bonds ?---------------

 "If those expanded assets existed,
 they would be earning interest 
that could contribute to benefits. "

------------- interesting 
two  possible path  comparison 
brings out ponzi potential of  pay as u go 

once pay out begins
only requirement 
        to perpetuate

the pay in cohorts  pay in
   has
to keep growing 
at least as fast as
         the pay out cohorts pay out  

                     see
the looming
  old  cohort v   young cohort
                             steam boat race here
 notice 
     thiz prick
                "pete "
         iz slippin uz
  selected comments  only ---------------

"A reasonable estimate
 of the program's legacy 
that needs to be financed 
by those younger than 55 years old
 is $11.5 trillion."

---gad zoockz 
attention bushwahzee
new angle of approach here for ya...
unlike yer gibber
thiz number 
 iz already larger 
then the whole economy 

    got one that today
looks  any bigger ? 

i doubt it

put this fucker
in some
 a   fine hellish
           patsy  generation 
       bomb throwers hands and ......           
 

-------------

" the term crystallizes 
the need to allocate the cost
 of the assets 
 that are not there
 across future cohorts "



-----------man re-read that 
"assets that are not there"--------------


" In particular,
 relative to a world 
in which the legacy debt 
   didn't exist,
 future generations 
will have to bear 
  some combination
 of higher taxes 
and lower beneefits "

-------------  boooooom -------------------------------

----------------------------------------------------------- 
enter the doc....


"A Balanced Reform Plan 

Our plan has three components, 
each of which addresses 
one of the factors 
listed above 
that contribute 
to the long-term deficit "


 

 

"Many observers have recognized 
that it makes sense 
to adjust Social Security automatically
 for the effects 
of increased life expectancy."


--------- why ?
cause job time max
 is hiding behind
 all the big boy solutions 


trade off?

raise the rate 
so the longer retirements are supported
by the then
employed wagery

like atlas hefting 
 up a bigger earth 
"just work harder guyz"-------
 

 

"  we propose gradually raising 
the maximum taxable earnings base 
until the share of earnings 
that is above the base—
 slowly declines until, 
in 2063, 
it is returned 
to roughly halfway 
between its current level 
and its level in 1983."


---------- no no
go all the way 

besides if if not
  why just split the diff ?
shit
 the devil steals ten bucks 
from ya 

so what do you do?
take five back 
and call yourselves even ?----------------



 Second, to make Social Security
 somewhat more progressive,
 and thereby offset 
the effects of disproportionately
 rapid gains in life expectancy
 among higher earners, 
we propose a benefit reduction
 that affects only relatively high earners.

--------- super principle guy 
pete i sure kin kinda love dis bit   -------------------

"  Currently, about 15 percent
 of workers newly eligible 
for Social Security benefits 
have sufficiently high earnings 
that a portion of those earnings 
falls in the highest tier
 of the Social Security benefit formula.
 Our benefit adjustment
 for income inequality 
includes a gradual reduction 
in that highest tier 
           of the benefit formula."


----------- lets move on this one gang 
top 15% get their  shortz  tightened ------------- 



" to distribute the  burden
    more fairly, 
 stabilize the ratio 
of the legacy debt 
to taxable payroll 
from one generation
 to the next "

------------------  here it fuckin come 
                                ham string junction -----------------

analogy:

" a sensible goal
 for the federal budget
 is to stabilize 
the ratio
 of public debt 
to the economy"

----------- oh really ?
thats a flat tax for the generations 
 what about the progressive principle
we use for household incomes?
                          is that unfair   non sense ?

how about taxation without representation then 
now theres a wickedly sound precept
our nation cherishes -----------



 " we would impose a legacy tax 
on earnings above the maximum taxable earnings base,
 thereby ensuring that very high earners
 contribute to financing the legacy debt 
in proportion to their full earnings. 
The legacy tax above
 the base 
would start at 3.0 percent
 and increase "

 

" we would impose a universal legacy charge 
on future workers and beneficiaries,
 roughly half as a benefit reduction 
for all beneficiaries becoming eligible 
in or after 2023,
 and the rest
 as a very modest increase 
in the payroll tax
 from 2023 onward. 

We start these changes
 after the last of the changes 
legislated in 1983 has taken effect.
 This universal legacy charge 
would gradually increase 
over time to help stabilize 
the ratio of the legacy debt
 to taxable payroll. 


============================================
the rest of this beasty boy 
to be plowed thru later......

This approach to financing 
the legacy debt 
reflects a reasonable balance 
between current and distant generations,
 between lower earners and higher earners,
 and between workers
 who are currently covered 
by the program 
and workers who are not. 

It is meant to keep 
the full cost of servicing 
the legacy debt 
from simply being pushed further 
into the future 
for our children and grandchildren 
to pay. 

As an alternative
 to some of our proposals 
for benefit reductions 
or revenue increases,
 policymakers could dedicate 
revenue from another specific source
 to Social Security.

 For example, the estate tax
 could be reformed
rather than eliminated entirely,
 and 
some or all of that revenue 
could be dedicated 
to Social Security. 

---------------love this
 take the rich guys treasure 
and use it to support retired workers -----------------



 


unexpected inflation rip ?
 
Currently, there is no protection 
against unexpectedly high inflation 
in the years between ages 60 and 62.

 For example

 a repeat of the inflation rates 
of 1980 and 1981 (14.3 percent and 11.2 percent)
 would reduce the real benefits
 for a cohort by almost 25 percent.

 Extending indexing in a no-cost fashion 
protects against this risk. 

bene cut ?

 the 1983 reform 
reduced benefits 
by about ten percent 
for those 25 years old 
at the time of the reform,


. 

Individual Accounts? 

 

 " recent individual account plans 
typically do not provide 
genuine funding

instead, they simply assume 
that money will be provided 
        from the rest of the budget.
 Despite growing concerns 
about the magnitude
 of the budget deficit"


-------- no the borrowing 
power of the general social budget out of the trust funds will be scotched
thats the immediate objective 
 of these  wally world scams 
generate a  deeper federal fiscal crisis
so the meat axe 
can be taken to the social budget ---------------



 

" Without real funding, 
individual accounts 
do not accomplish anything 
for the economy."

-------------odd passage 
"real funding"
must mean  ripped by taxation
   out of funds headed toward household consumption ------------
 

 
  "magic asterisk" 
approach:
      simply assuming 
that trillions of dollars
 will be provided 
from the rest of the budget
 despite the nation's 
substantial fiscal gap
  puts 
 the future 
of Social Security
itself at risk. 
if payroll-tax revenue 
is taken 
from Social Security
to fund private accounts 
and no alternative funds 
are provided
to pay beneficiaries
this 
creates  
grave new risks  
for workers and retirees. 


--------- but of course 
isn't  that
   wall streets
  " final solution" anyway  pete  ?------------------
 

Peter A. Diamond 
            is 
           an Institute Professor at MIT.