Tag: "Social Security"

Lying With Statistics?

Scot Winship reviews Thomas Piketty’s book, Capital in Twenty-First Century:

The Piketty and Saez data for the U.S. indicate that between 1979 and 2012, the bottom 90 percent’s income dropped by over $3,000.

But this ignores transfer income, such as Social Security. It ignores employer benefits, such as health insurance. And it ignores charges in household size over time.

When I incorporate these improvements using the Census Bureau data, I find that median post-tax and -transfer income rose by nearly $26,000 for a household of four ($13,000 for a household of one) between 1979 and 2012.

Young Workers are Better Off with Social Security Benefit Cuts…

…than they are with payroll tax increases. That’s the conclusion of a new National Center for Policy Analysis study:

social-security-pen-cropped-proto-custom_28Retaining the current benefit structure will require an immediate and permanent increase in the Social Security payroll tax of 3.3 percentage points. In contrast, a long-run balanced budget for Social Security could also be achieved by retaining the current tax rate, but making the following two benefit reforms.

  • Gradually raising the retirement age for workers who become eligible for benefits in 2023 and after.
  • Making the benefit formula less generous for higher earning workers through progressive price indexing.

What difference do these changes make?

  • With the baseline program, average-earning men born in 1985 will have to pay 13.5 percent of their lifetime income in taxes and receive benefits equal to 9.6 percent of their income.
  • However, the same workers in the reformed program would pay a lower tax rate of 10.2 percent to receive reformed benefits of 8.2 percent.

Is Social Security Racist?

We findss-cards that for many decades, Social Security redistributed from blacks, Hispanics, and other people of color, to whites. These transfers will likely to continue in future decades. Our findings suggest that future reforms that place the burden of Social Security reform solely on younger, more diverse generations may have undesired distributional consequences if the aim of the program is to provide greater relative protections to more vulnerable groups.

Source: Eugene Steuerle, et. al.

Does it Pay to Work?

The highest marginal tax rates are faced not by the very rich, but by low-income families. The reason? In addition to direct taxation, low-income wage earners find they lose means tested welfare benefits when they earn higher incomes. As Nancy Folbre at Economix explains:

As a result of losing eligibility for means-tested benefits, low-income and middle-income families sometimes experience much higher marginal effective tax rates (sometimes exceeding 90 percent) than those at the top of the income distribution.

But she then goes on to criticize fellow blogger Casey Mulligan, who estimates that a major reason for our sluggish growth and as much as half of the excess unemployment we are experiencing on these high marginal tax rates. Her complaint: Mulligan incudes Social Security payroll taxes in the calculation of the overall marginal tax rate, but ignores the future benefits those taxes give rise to.

As it turns out, Folbre’s criticism was addressed in a study for the National Center for Policy Analysis by Jagadeesh Gokhale, Laurence J. Kotlikoff, and Alexi Sluchynsky (NBER version here.) The authors explicitly incorporate future Social Security benefits as well as current payroll taxes to calculate lifetime marginal tax rates.

Findings below the fold.

Hits and Misses

0cef36002dfab43ea781410a2a008670David Freidman on why the debt limit has no effect on the government’s ability to make Social Security payments.

Can knees predict the weather?

Michelle Rhee’s teacher evaluation program actually worked.

Mosquito found with 46 million year old blood; but alas, animal DNA (unlike the premise of Jurassic Park) can’t survive inside fossilized insects.

How People are Retiring

In a survey of people 65 to 69: retirement-sign

  • Only the top 10 percent of all households has more in actual financial assets than they have in virtual Social Security wealth.
  • Even at the seventh decile, Social Security wealth is twice as great as financial assets. This means that Social Security provides more income than financial assets provide for a very large majority of Americans.
  • Pensions mean little to most households because most people don’t have them. Pension wealth registers at zero for the bottom 70 percent of all single-person households. It’s at zero for 60 percent for all married households.

Scott Burns in the DMN. Study by James M. Poterba et al.

Disability

The problem

[T]he ticking time bomb of entitlement reform is Social Security’s Disability Insurance Fund…The number of people collecting disability benefits has soared, especially in recent years, to almost 11 million in June, up from 2.7 million in 1970. The 2012 price tag was $140 billion, up eightfold, adjusted for inflation, from 1970.

The cost

A new 50-year-old enrollee — the mean age of those who go on disability — will collect to age 66, at which time he or she will transfer to regular Social Security. The present value of disability-insurance benefits, plus Medicare costs, per new disabled worker is more than $300,000.

Some causes

More than 20 states today try to shift people from their welfare and Medicaid rolls onto disability insurance and Medicare, which are fully paid for by the federal government. Some unions help their members obtain disability insurance—for instance, when companies are downsizing and laying off workers.

Michael Boskin at the WSJ.

Headlines I Wish I Hadn’t Seen

Unemployed workers are more likely to leave the job market than to find work.

The IRS mistakenly exposed thousands of Social Security numbers.

With access to a health tracking watch that monitors your heart rate minute-by-minute, your spouse can tell when you had sex — but not necessarily with whom. HT: Tyler Cowen.

America’s second-largest employer is a temp agency.

Headlines I Wish I Hadn’t Seen

Social Security paid 1,546 dead people $31 million — deceased collected benefits up to 20 years.

The only Medicare demo program that actually worked is getting a new lease on life — but it’s only 18 months.

What if your insurance company leaves the market and there is no exchange for you to turn to?

Veterans must navigate 613 forms across 18 agencies to get benefits.

Do You Know What the ObamaCare Data Hub Is?

HHS said the ObamaCare data hub will “interact” with seven other federal agencies: Social Security Administration, the IRS, the Department of Homeland Security, the Veterans Administration, Office of Personnel Management, the Department of Defense and — believe it or not — the Peace Corps. Plus the Hub will plug into state Medicaid databases.

And what sort of data will be “routed through” the Hub? Social Security numbers, income, family size, citizenship and immigration status, incarceration status, and enrollment status in other health plans, according to the HHS.

“The federal government is planning to quietly enact what could be the largest consolidation of personal data in the history of the republic,” noted Stephen Parente, a University of Minnesota finance professor…

[A] regulatory notice filed by the administration in February [filing]…describes a new “system of records” that will store names, birth dates, Social Security numbers, taxpayer status, gender, ethnicity, email addresses, telephone numbers on the millions of people expected to apply for coverage at the ObamaCare exchanges, as well as “tax return information from the IRS, income information from the Social Security Administration, and financial information from other third-party sources.”

Source: John Merline, Investor’s Business Daily. But see my post on why this may never work.