Welfare for old people who already have money. :)

May'2024: The program’s combined funds are now projected to run out in 2035 — one year later than was previously anticipated. At that time, 83% of benefits will be payable, unless Congress takes action before that date to prevent an across-the-board benefit cut... While the national debt is $34 trillion, Social Security’s unfunded liability is around $22 trillion, Fichtner said. To make the program solvent for 75 years, an upfront sum of $22 trillion would be necessary today.

Apr'2023 (Cato): According to the Social Security and Medicare Boards of Trustees’ 2023 reports, Medicare and Social Security now exceed $78 trillion in long-term unfunded obligations. This equates to an obligation of more than $600,000 for every U.S. household.

• the main bullshit here is that almost all of that is Medicare, esp parts B/D.
• I think this is on an infinite time horizon, vs the "standard" 75 years...
• for SocialSecurity alone:
  • 75-year horizon gives About $6.5 trillion present value shortfall over the next 75 years (in 2023 dollars).
  • infinite horizon gives Roughly $14 trillion (or more)

A kind of Pension/Insurance? Bah, mostly just a Welfare/Transfer Program.

Arnold Kling considers some possibilities. (2003) It is fair to conclude that the Social Security problem is largely an artifact of the retirement age. Raising the retirement age to something like 73 would make Social Security quite manageable.

A big factor is the Retirement Age used to calculate when benefits are given out. Does it make sense that it's still 65 (going up to 67 in 2012 I think)?

Why is there no Means Testing?

Benefits grow based on wages, and should instead probably be pegged to general CPI Inflation.

Why do you need a Social Security Number, if the money you get back really has nothing to do with how much you put in? When I took civics/Social Studies in school, a teacher said that someone suggested eliminating the numbers to FDR, on the basis that managing them just created pointless expense. And he replied that it was important for the american people to feel like they were putting money into their own account, like an enforced savings plan.

Asking ChatGPT (mid'2025) whether Social Security will go under

Here’s an accurate synthesis of the different perspectives on whether Social Security is bankrupt or sustainable:

Social Security: Is It Bankrupt or Sustainable?

Overview: Social Security is a federal program in the United States that provides retirement, disability, and survivors benefits primarily funded through payroll taxes. The debate over its financial health often centers on the program’s long-term solvency and the ability to meet benefit obligations.

Views Claiming Social Security is Bankrupt or in Crisis

1. Trust Fund Depletion Concerns:

   • Critics point out that the Social Security Trust Fund, which accumulates surpluses, is projected to be depleted by the early 2030s (according to the Social Security Trustees Report).
   • Once the Trust Fund reserves are exhausted, incoming payroll taxes would only cover about 75-80% of scheduled benefits.
   • This shortfall is described by some as Social Security being “bankrupt” in the sense that it cannot pay full benefits without reform.

2. Demographic Challenges:

   • An aging population means fewer workers per retiree, stressing the payroll tax funding model.
   • Lower birth rates and increased life expectancy exacerbate the imbalance between contributions and payouts.
   • Some argue these demographic shifts make the current system unsustainable without changes.

3. Political and Fiscal Pressures:

   • The program’s growth adds pressure on overall federal budgets.
   • Critics express concern over the political difficulty of enacting timely reforms, risking benefit cuts or tax hikes later under more pressured conditions.
   • They warn of a looming fiscal crisis if reforms are delayed.

Views Supporting Social Security’s Sustainability

1. Not Technically Bankrupt:

   • Supporters emphasize that Social Security never runs out of money; it can always pay benefits by drawing on the Treasury or adjusting tax rates.
   • "Bankruptcy" is a mischaracterization because the program is a government entitlement supported by ongoing revenue streams.

2. Long-Term Solvency with Adjustments:

   • While the Trust Fund face depletion projections, modest policy changes (e.g., raising payroll tax rates, adjusting benefit formulas, increasing the taxable wage base) can restore long-term solvency.
   • Experts note social security is financially sound for the next decade or two, allowing time for incremental reforms.

3. Economic and Social Value:

   • Social Security is a critical safety net for millions, preventing poverty among the elderly and disabled.
   • Some argue that calling it “bankrupt” could undermine public confidence unnecessarily and threaten broad support.

4. Potential for Growth:

   • Economic growth, productivity increases, or higher birth rates could improve the program’s funding outlook.
   • Changing immigration patterns may also support a larger workforce contributing payroll taxes.

Summary

• Is Social Security “Bankrupt”?

  • No, not in the usual sense; it is a government program backed by law and taxing power.
  • However, the term is sometimes used to highlight the problem of the Trust Fund being projected to run out of reserves in about a decade.

• Is It Sustainable?

  • The program is sustainable with reforms.
  • Without policy changes, benefits would face cuts (~20-25%) after fund exhaustion.
  • With timely adjustments, Social Security can remain solvent well beyond mid-century.

Conclusion

Social Security is not "bankrupt" in the way a private company might be, but it faces a financial challenge due to demographic and economic factors. The program's long-term sustainability depends on policymakers acting to adjust revenues or benefits. The debate largely reflects differing views on the urgency and nature of the reforms needed rather than Social Security being fundamentally insolvent.

If you want, I can also provide specific reform proposals or detailed financial projections.

how does this relate to the definition of "unfunded liabilities"?

Great question! The concept of "unfunded liabilities" is closely related to discussions about Social Security’s sustainability and claims of it being "bankrupt," so here’s how they connect:

What Are Unfunded Liabilities?

• Unfunded liabilities refer to the future financial obligations of a program that exceed the projected or available dedicated funding.
• In simpler terms, it’s the gap between the expected promised benefits (over many decades) and the expected revenue that the program will collect under current law.
• For Social Security, unfunded liabilities represent the amount by which scheduled benefits exceed the program’s expected income (payroll taxes plus Trust Fund reserves) over a long-term horizon, typically 75 years or longer.

How This Relates to Social Security

• When Social Security trustees and analysts talk about unfunded liabilities, they mean that over the next 75 years (the standard window), Social Security’s promised full benefits exceed its projected revenues and Trust Fund assets by a substantial amount—trillions of dollars.
• This gap indicates that without changes, Social Security cannot pay 100% of the scheduled benefits indefinitely because the revenue stream is insufficient.
• The “unfunded liabilities” highlight the need for reforms (like tax increases or benefit adjustments) to “fund” these promised benefits and keep the program solvent.

Why Is This Important?

• The existence of large unfunded liabilities is a common feature in social insurance and pension programs worldwide, especially with aging populations.
• It doesn’t imply instant insolvency but rather signals a structural mismatch between benefits and financing that must be addressed to ensure long-term viability.
• The term helps frame the policy debate by quantifying how large the financing gap is and how urgent reforms might be.

Connection to "Bankruptcy" and Sustainability Discussions

• People who say Social Security is "bankrupt" often refer indirectly to the presence of unfunded liabilities and the projected Trust Fund depletion.
• Conversely, those emphasizing Social Security’s sustainability stress that the program’s legal framework and taxation authority mean it can be put on sustainable footing by addressing those unfunded liabilities through policy adjustments.
• Thus, unfunded liabilities are the technical basis for understanding why changes may be needed, but not proof that Social Security will suddenly collapse.

Summary

| Concept | Explanation | How It Relates to Social Security | |----------------------|--------------------------------------------|----------------------------------------------------------| | Unfunded Liabilities | Future promised benefits minus future revenues | Quantifies the shortfall showing Social Security’s long-term funding gap | | Bankruptcy | Inability to meet obligations when due | Often misused; Social Security has no legal bankruptcy, but fund depletion signals need for reform | | Sustainability | Ability to meet all scheduled benefits indefinitely | Can be achieved by policy changes to address unfunded liabilities |

In short, unfunded liabilities are a precise, actuarial measure that explains why Social Security faces financial challenges, but they do not mean Social Security is already bankrupt or that it cannot be made sustainable. They quantify the size and timing of necessary reforms to keep benefits flowing.

Let me know if you want a more technical explanation or historical context!

who uses a 75 year horizon vs an infinite horizon?

Great question! The choice between a 75-year horizon and an infinite horizon is important and reflects different institutional practices and analytical purposes in assessing Social Security’s financial status.

Who Uses a 75-Year Horizon?

• U.S. Social Security Administration (SSA) Trustees:

  • The SSA Trustees Report, which is the official, authoritative financial assessment of Social Security, uses a 75-year projection period.
  • This 75-year horizon is mandated by law (the Social Security Act) and is intended to provide a long-term but “finite” window to evaluate program solvency.
  • It’s considered a practical timeframe:
    • Long enough to cover multiple generations.
    • Short enough to maintain reasonable forecasting accuracy.
  • The Trustees Report bases its unfunded liabilities estimates, actuarial deficit, and program projections on this 75-year period.

• Congressional Budget Office (CBO) and other official budget agencies:

  • Often rely on the 75-year horizon consistent with SSA practice when evaluating Social Security or related legislation.

Who Uses an Infinite Horizon?

• Academics, pension analysts, and some independent researchers:

  • Use an infinite horizon or very long extended horizon (sometimes hundreds of years) to assess the full lifetime present value of obligations.
  • This approach evaluates the present value of all future promised benefits without an arbitrary cut-off, viewing Social Security as a perpetual program.
  • Used to generate metrics like the infinite horizon actuarial balance or the "open group" measure that includes future generations indefinitely.

• Some international organizations or actuarial analyses:

  • May prefer infinite horizon analyses for theoretical completeness or cross-country pension comparisons, as it captures the entire scope of future liabilities.

Why the Difference Matters

| Aspect | 75-Year Horizon | Infinite Horizon | |----------------------|-----------------------------------------|----------------------------------------| | Timeframe | 75 years (roughly 3+ generations) | All future years, indefinitely | | Common users | SSA Trustees, CBO, U.S. policymakers | Academics, actuaries, some independent analysts | | Advantages | Practical, legally required, more stable forecasting | More complete measure of total obligations | | Limitations | Ignores obligations beyond 75 years | Projections far into distant future have greater uncertainty | | Use cases | Official policy evaluation, budgeting | Theoretical valuation, full actuarial balance assessment |

Summary

• The 75-year horizon is the official standard used by the SSA Trustees and Congressional agencies for assessing Social Security’s finances and informing policy decisions.
• The infinite horizon is primarily used by academics and some analysts to provide a comprehensive theoretical picture of Social Security’s total future obligations.
• Both approaches have merits; the 75-year period balances realism and practicality for policymaking, while the infinite horizon captures the entire promise of the program over all future generations.

If you want, I can provide examples of how unfunded liabilities differ under these two horizons or explain the actuarial concepts behind them!

Yes please give me the numbers.

Certainly! Here are key numbers from the most recent official reports (as of 2023-2024) for Social Security and Medicare, showing the unfunded liabilities (or actuarial deficits) measured over the 75-year horizon and infinite horizon where available.

Social Security

75-Year Horizon (SSA 2023 Trustees Report)

• Unfunded Obligation (Actuarial Deficit):

  • About $6.5 trillion present value shortfall over the next 75 years (in 2023 dollars).
  • This means scheduled benefits exceed projected income by about this amount under current law.

• Actuarial Balance (perspective):

  • A deficit of about 1.8% of taxable payroll over 75 years, indicating an average financing gap of 1.8 cents per dollar of wages.

Infinite Horizon

• Estimated Unfunded Obligation:
  • Roughly $14 trillion (or more), roughly twice the 75-year figure.
  • Captures the cost of providing scheduled benefits indefinitely into the future.
  • This is a wider measure but less commonly used in official policymaking.

Medicare

75-Year Horizon (2023 Medicare Trustees Report)

• Hospital Insurance (Part A) Trust Fund Deficit:

  • Unfunded obligation over 75 years is about $1.4 trillion.
  • Projected depletion of Part A Trust Fund by 2028 or soon thereafter.

• Broader Medicare Program (Including Parts B, D financed by general revenues/premiums):

  • The present value of total net Medicare obligations minus dedicated revenues over 75 years is estimated to be much larger, roughly $50 trillion or more on a unified accounting basis.
  • (Note: This includes all program costs net of premiums and federal revenues, discounted to present value.)

Infinite Horizon

• Infinite horizon estimates for Medicare are less routinely published but can be roughly double or more than the 75-year estimates, similar to Social Security, reflecting the full lifetime obligations.

Summary Table of Numbers (approximate, trillions USD)

| Program | 75-Year Unfunded Liability (PV) | Infinite Horizon Unfunded Liability (PV) | |--------------------|---------------------------------|------------------------------------------| | Social Security | $6.5 trillion | ~$14 trillion | | Medicare Part A | $1.4 trillion | (Not routinely published, likely $3+ trillion range) | | Total Medicare | $50+ trillion (including all parts B/D) | Significantly higher, possibly $100+ trillion range |

Notes:

• All figures are present values (PV) as of 2023 or the latest reporting year using discount rates specified in reports.
• These numbers reflect the gap between projected program costs and projected dedicated funding sources under current law, before any reforms.
• The Medicare figures are larger and more complex because Medicare involves multiple funding streams (trust funds, premiums, federal general revenues).
• The Social Security gap is primarily funded through payroll taxes and trust funds.

If you want, I can also provide historical trends or projected depletion dates!