Sunday, October 30, 2011
Social Security shortfall in 2010 getting attention, despite 2011 payroll tax holiday; Social Security was really just "insurance" when it started in the 1930s
Lori Montgomery has an important and detailed front page story in the Sunday Oct. 30 Washington Post, “Social Security adding billions to U.S. budget woes; ‘Cash negative’ milestone comes early; Fearing backlash, parties reluctant to pursue fix”, link here. A secondary headline on p A8 is “Payroll tax holiday depriving Social Security of revenue”.
In 2010, the cost of social security retirement benefits outstripped collections from FICA for the first time since the 1980s. Replacing the revenue loss from the 2011 payroll tax abatement would require $105 billion.
There are graphical charts mapping “year you turn 65” to average annual wage (adjusted for inflation), and (1) currently scheduled monthly benefits (2) what you would receive if the trust fund runs out” and (3) “what you would get under the fiscal commission’s proposal”.
When social security was implemented in the 1930s, it was intended to guarantee a short period of comfort and security before death, not a period of “golden years”. Everyone was expected to keep working as long as they could, she says.
But the idea that you can combine “insurance” with “assets” (and repackage the whole thing as annuities) is a concept that the life insurance industry has been selling for decades.
Pictures: homelessness on DC streets, on way to Halloween party.