Fearmongering, Magic Elixirs, and Demagoguery: Democrats and The Social Security Shortfall
Demagoguery is as old as time in politics. I remember the first budget battle between President Clinton and the newly minted GOP Congress in 1995. Republicans released a budget plan that did some tinkering with Medicare calculations. Clinton went before the cameras and defiantly said, “I will not let you destroy Medicare.”
Social Security and Medicare get called the “third rail” of politics. It’s a subject politicians run from because the programs are so popular across political ideologies and parties. But the train, to stick with the third rail metaphor, is running out of electricity and it’s quickly approaching the point where it can go no further. With Social Security, that’s insolvency. And it is no longer a problem that is 20-30 years away. It’s 12 years. That’s when the trustees say the program, without changes, hits insolvency.
Now, “insolvency” doesn’t mean the system goes entirely broke. It’s not as if Social Security checks will stop on day one. Still, the government would only pay out 80% of benefits. For all the fearmongering about “cuts,” those cuts will be real. An actual reduction, not one that Democrats conjure up in their heads.
When George W. Bush delivered his State of the Union address in 2005, he warned of the insolvency. At that time, the year of insolvency was 2042. Bush had a novel idea that would allow taxpayers to direct a portion of their payroll taxes into private accounts as it would make the system a true retirement program, as opposed to an entitlement. Sadly, Congressional Republicans, being politicians, ran away from the idea faster than the babysitter’s boyfriend when the car pulls into the driveway.
“It’s too risky!” is the typical response from naysayers to allow people to divert some of their tax dollars to the market to save for retirement. Is it? Look at the numbers. Let’s assume for a moment, a person turned 49 on January 3, 2005. That’s 18 years away from 67 and full Social Security benefits. The Dow Jones Industrial Average on January 3, 2005? 10,783. The close on January 3, 2023? 33,147.
I don’t know about you, but a 300% gain seems pretty damned good to me. And that is after the Great Recession and COVID crashes. An investment is meant for the long term. It’s not day-trading or pink sheet penny stocks. It’s not entrusting someone like Bernie Madoff with your life savings. A long-term investment in the stock market is a slight risk and as investors get closer to retirement age, they can shift their investments from securities to bonds that have lower risk.
What annoys me most about this debate is the way Democrats discuss Social Security as though it is sacred. Go read the president’s Twitter feed or watch when he mentions it to the press or at an event. “It’s your money!” “You worked hard for it since you were 16!” “You earned it!” However, the money one earns on the opposite side to pay into it? Well, that’s theirs to do with what they wish and if you earn more income than other people and don’t want higher taxes, then you’re “greedy” and lectured on how you must “pay your fair share.” Suddenly, it’s not your money. You didn’t earn it or work hard for it.
Democrats will milk the “cutting Social Security and Medicare” tripe for all its worth, and politically, it will work for them in the short term. But the chickens will come home to roost, eventually. Do they have a plan? Biden does, and guess what it entails?
Raising taxes.
The Democratic magic elixir for all problems facing government shortfalls is more taxes. Currently, the ceiling for payroll taxes is approximately $160,000. That means income above that level is not subject to the payroll tax. Biden wants to increase that threshold to $400,000 with what analysts call a “donut hole” in the area between the $160K and $400K level. That means, a person making $500K a year would pay on the first $160K and then the $100K above the $400K level. Sure enough, when it officially gets rolled out, Democrats will offer the same twaddle about “fair share” and “paying a little more.”
But they will get the short-term political bump from it, especially from the press who will happily go along with framing any reform outside of raising taxes (which is not “reform”) as “cutting Social Security.” But at some point, Biden and other Democrats will have to put their cards on the table. Right now, the higher tax proposal is a relatively silent one that doesn’t have a lot of support.
Contrary to the myth perpetuated by Democrats that the wealthy do not pay “their fair share,” the reality is the top 10% of all income earners in the United States pay nearly 60% of all the federal income taxes. The top 1% pay 26% of all federal income taxes.
The payroll tax is 15.3% split between employer and employee. Add in states such as New York with its 10.9% top income tax rate and California’s 12.3% top rate. Add in sales taxes, local taxes, and high property taxes. Is it any wonder that so many people are packing their bags and moving to Texas, Florida and Tennessee?
And now Democrats will say, “Give us more.”
Republicans should force Democrats to come to the table with something else for once.
Hmmm, there’s something missing from this discussion about Social Security, I just can’t put my finger on it.
He describes the problem, OK, and describes the Democratic proposal to fix the problem, sure.
But something seems to be missing.
Can anybody point it out for me?Report
Can you give me a T, can you give me an A, can you give me an X? What does it spell? Tax.Report
https://rescueamerica.com/steps/6-government-reform-debt/Report
You mean, like this?
https://banks.house.gov/uploadedfiles/rsc_2023_budget_final_version.pdfReport
Its an interesting read. Too bad you didn’t start with that and include quotes from it in what you like about it. We might have had a great productive discussion.
Interesting that the study report – which isn’t even from a committee of jurisdiction – hasn’t led to legislation. Now that Senate Democrats have put a bill on the table – see Chip’s comment way down below – it seems to me the RSC needs to do the same.Report
It’s interesting because it’s documented evidence that they want to cut Social Security, and are lying their a$$es off now.
Let’s bookmark this, because I have a feeling we’ll have to post it from time to time.Report
SS is, at it’s core, a Ponzi scheme. I’m far more concerned that private pensions are gone than SS. The existing political situation means no real change will be made. Patch here, there, etc., cover it over with over optimistic forecasts and they are done. It’ll take some major to change the tide.Report
“SS is, at it’s core, a Ponzi scheme.”
This analogy is hauled out all the time and it’s decidedly unserious.Report
SS makes no investments and just uses money from new “investors” and gives it to the older ones.
SS (thus far) has given out more money to everyone than they’ve put into the system.
That description matches a Ponzi. Presumably the gov will step in and change things at some point so there’s that.
SS stops being a Ponzi scheme if we let it pay out 75% of benefits, thus establishing who the losers are. At that point it’s just a redistribution scheme.
Getting rid of the cap would do the same thing by also establishing who the losers are.
The GOP’s idea of privatizing SS, i.e. having it make investments, would have done the same thing by turned it from a Ponzi into an actual investment/retirement scheme. The big question is what to do with the previous claimants, presumably they’d have to be paid off by the gov.Report
False.
You know who else holds Treasury bonds? Japan. China, Luxemborg, India, Hong Kong, Saudi Arabia. Call me nuts but if that rate schedule is good enough for the $1.3 Trillion Japan has invested, it’s good enough for Social Security recipients.
https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.htm#:~:text=The%20Social%20Security%20trust%20funds%20hold%20money%20not%20needed%20in,guaranteed%20by%20the%20U.S.%20Government.Report
That is a description of the Trust Fund, not SS as a whole without it.
The Trust Fund is going away and was an exception to how SS functions.
The Trust Fund is also NOT an investment in normal gov bonds.
“Special Treasure Bonds” is code speak for “not available to the normal public and could be erased by Congress with the stroke of a pen without affecting the gov’s credit rating”.Report
The assertion that it’s the Democrats who are inflexible on this is silly. Philosophical arguments about who owes what aside, the reality is that the balance of power of the Democratic party is held by Joe Manchin, Kyrsten Sinema, Joe Biden, and a bunch of people who are at furthest a stone’s throw away from the Clintonian Third Way. These are all people who would 100% be willing to put cuts on the table in exchange for various tax increases and other modifications to keep the programs funded at 100%. It’s the Republicans and their various pledges they’ve been making to anti-tax fanatics since 1992 that perpetually prevent the possibility of the kinds of grand bargains that we all know a sufficient number of Democrats could be marshalled to go along.Report
Somehow the cuts to various programs seem to never appear, while for all the talk about how “unflexible” the GOP is on the subject of tax increases, taxes have in fact been going up.Report
Federal taxes have not under GOP controlled Congresss, and particularly under GOP Presidents.
Even now, the GOP controlled legislature here in Mississippi is going to cut r eliminate state income taxes because the the “budget surplus” created by the pandemic support to states. Which means in a few years we will be even more impoverished as a state. But hey, they will have cut taxes.Report
So clearly if someone else takes money out of my other pocket in some other way, it doesn’t count as raising my taxes.
Below link is only for most recent 10 years, not the last 50 as I’d like, but it still shows the trend lines. What we probably want to focus on is the “total” black line at the top since “other” and “business” are mostly just different ways to collect taxes.
https://www.google.com/imgres?imgurl=https%3A%2F%2Fwww.irs.gov%2Fpub%2Fimage%2F21dbmainchart.png&imgrefurl=https%3A%2F%2Fwww.irs.gov%2Fstatistics%2Fsoi-tax-stats-irs-data-book&tbnid=F8Sm2f1qkcfcsM&vet=12ahUKEwizqsGN85L9AhWjxSkDHW36AT8QMygHegUIARDEAQ..i&docid=z_jlmMk5NOPWuM&w=1209&h=542&q=us%20tax%20collected%20graph&ved=2ahUKEwizqsGN85L9AhWjxSkDHW36AT8QMygHegUIARDEAQReport
You and everyone else need to be clear on WHO is raising taxes and for WHAT. And remember if you want overall lower taxes across the federal, state, and county spaces you have to be clear on what you are willing to sacrifice.Report
The bulk of the problem is Medicare and Medicaid, and the bulk of that problem is our health care is far too expensive.
And the solution for that is HC reform, as opposed to HC insurance reform.Report
You need different terms then. Health care – to most people – means the actual doctors and nurses and pharmacists they receive care from. So to continue to rail about “Healthcare reform” is to attack the end of the system.
Health Insurance reform – up to and including single payer – is all about the business end – which is where you keep saying the problem is though you reject the solution most likely to actually change things.Report
I find it unrealistic to expect our politicians to fire millions of people. When you talk about how extremely few people will be fired that confirms my expectations.
Slapping on one more layer of bureaucracy will not increase the efficiency of the system.
Fair point.Report
Single payer takes away many currently exiting layers and consolidates them into one layer, one place that will need much if not most of the current existing workforce.
You can’t reform the profit out of health insurance – even forcing full price disclosure won’t solve the inefficiencies.
We have to do something different, not more of the same with better PR.Report
Actually having markets would be “different” in HC (if we exclude Liassic, Pets, and Plastic which are all high quality, widely available, and low cost).
Markets have a history of creating efficiency and firing millions of people.
Politicians don’t have a history of doing either of those things, witness Obamacare.
My strong expectation is if we go to single payer the politicians will shield millions of jobs.Report
I don’t know the current percentages (and am tired this afternoon, from dealing with my memory-failing wife), but prior to Obamacare, right at half of all Medicaid expenditures were for long-term care. Pick a state, and their nursing home industry is dependent on the Medicaid dollars.
As I have been known to say to people opposing Medicaid, “Good you bought the McMansion, because if you kill Medicaid Grandma is coming to live upstairs in the spare bedroom. Who’s going to change her diaper?”
Re my wife, she’ll be moving into a memory care unit as soon as it gets final approvals (three or four weeks). Our finances were set up to provide a comfortable retirement for two, without quality long term care. If she lives ten more years, I’ll have to revisit that. Based on tours when I was working for the state government, you don’t want to put your spouse or one of your parents in the kind of facility that gets by on just the Medicaid.Report
I am so sorry Michael, that is just awful. Dementia is savagely cruel.Report
Agreed,Report
Ugh. I’m sorry. This really sucks.
The Medicaid thing is going to get worse over the next decade as well.Report
First Michael, I am very sorry to hear about this.
But I also want to bounce off another point you’re raising which is the way Medicaid operates in this area. In addition to traditional Medicaid many states have something called Medicaid Waiver programs which cover homecare for older and chronically ill people, in large part to keep them out of inpatient settings where the costs are way higher. There are significant numbers of people in this country who are dependent on it, but who are basically invisible in how people think about this issue. Without it you’d have way more people living with middle aged children, and completely dependent on them for basic care, or in other cases perpetually taking up space in in patient facilities, which is space someone else with a more acute condition can’t occupy. It all goes to the points I was trying to raise yesterday, which is that people are benefiting from these systems well beyond just the beneficiaries themselves, and have stakes in it they often do not even realize.Report
Why would the cuts appear? The GOP won’t institute them when they’re in power because they’re hypocritical pets of the plutocrats who want to keep their jobs and an all cut program would promptly get them landslided out of power. The cuts won’t appear when Democratic politicians are in power because they will only agree to something like those cuts in a grand bargain with the GOP when they’re paired with tax increases and the GOP will not agree to raise taxes.
The GOP’s preferred solution of trying to blackmail the Dems into doing cuts (so the GOP can then campaign against them and put the blame for them on Dems) alone through various nonsensical schemes when the Dems are in power remains political fantasy.
So the cuts haven’t appeared yet, but the Dems remain willing to make such a bargain. It was done once with Bush H W and supported by Clinton. It was offered again several times by Obama (and rejected by the GOP) and Bidens indicated willingness. The intransigence has always rested with the right. We don’t have a Grover Norquist equivalent on the left for fish’s sake.Report
Amusement. Team Blue stands ready to cut Social Security? Really?
We had Bush try to fix the system, as in “fix, not cut”, and he couldn’t get support.
There is a huge temptation for each individual politician to grandstand and claim he alone is the one who opposes any cut. Neither of the parties are strong enough to go against that.Report
He didn’t try to fix it – he tried to start syphoning money from it into private investments. That fixes nothing.Report
We’re looking at the system being 20% short on funds. So if SS were going to give you a dollar then it would have to give you 80 cents.
He was trying to shift funds from something that pays a tiny percentage to something that pays 300%
That 300% would mean you don’t need to worry about getting 80 cents on the dollar.
The system would actually be making “investments” as the dictionary defines the term and not relying on future politicians to find the money.
So yes, this would have been an actual “fix”.Report
Those investments would require the giving of commissions to private sector managers, whose ever growing greed means ever smaller returns.
No thanks.Report
The difficulty for Republicans is they find themselves in the same political space as socialists, i.e., trying sell a radical hypothetical against a reality which has been working for longer than anyone can remember.
Burkean conservatism, Chesterton’s fence…these things are on the side of Democrats.Report
The 80 cents on the dollar waiting for us was easily predictable even then.
Our system has problems fixing problems which aren’t melting down right this minute.Report
Has anyone favoring privatization thought through the implications of, for example, the United States government being the biggest owner of stocks?Report
of course not.Report
If we’re talking about Bush’s plan then the gov wouldn’t have been owning stocks.
The gov forces you to invest in retirement fiscal products. They are then yours, even if you can’t actually spend them. Sort of like a 401k is now.Report
Similar to my question about low performing students, how does a liberal democracy handle people who invest unwisely and end up destitute?
The easy answer is “Let them suffer the consequences!” but that just brings to mind the adage that if you borrow a hundred dollars the bank owns you but if you borrow a million you own the bank.
That is, a large percentage of elderly impoverished people is a threat to the republic.
Which, come to think of it, was the the case in 1932, and was the impetus for some sort of mandatory failsafe old age pension plan.Report
In theory you’d be forced to invest in one of a few index funds.
Social Security, as it was first designed, was supposed to keep you from starving if your actual retirement plans fell through.
It being primary retirement savings came later.
If it’s supposed to be the primary retirement saving plan, then it shouldn’t be pay as you go and it should use best practices for retirement.
That’s index funds and individual ownership. The later of which prevents Congress from using that money to hide it’s fiscal adventures.Report
Ok so let’s have the government force people to set aside some percentage of their paycheck in safe funds, like maybe Treasury bills.
Oh and another idea is to allow people to have an individual retirement account which they themselves control as they wish, leaving the government plan as a backstop.
If this is the Republican plan, I’m on board!Report
You’re right. And once the risks are privatized there will be losers, and in the best case scenario the losers will have adult children for whom they can become an additional burden on top of everything else working families deal with, and in the worst case they become completely destitute and overburden state and local public services, until eventually the conditions are set for a critical mass of people to demand something that looks an awful like social security.Report
There’s also the not inconsequential issue that defined benefit pensions – which were the retirement vehicle that didn’t cover enough Americans when Social Security was created – are faring worse then SS is, when they are even preserved.
But hey, lets not learn any lessons from our own history or anything.Report
The big flaws I see with them are:
1) Over reliance on one company’s stock is very common.
2) They often aren’t preserved over a long enough time period.
3) Various negative incentives for the company trusted to administer them.
4) No upside exposure. If the fund does really well you don’t get a piece of it.
5) Very common to have long delays before full vetting.
Is this what you meant or is there something else?
Note all of these issues go away with individually owned index funds although you then have other issues.Report
Another part of the problem is that the whole business cycle thing.
I hope you didn’t look at your 401k last April. Feel free to look at it now, though.Report
There are easy and basic solutions for even that.
Don’t cash out your life savings during a crash, convert from one investment type to another gradually.
For that matter we’re talking about investing gradually as well.Report
Index Funds.
Close to no commissions, close to no fiscal adventuring, no churn.Report
Team Blue would, doubtlessly, embrace a plan to fix security that married tax increases to benefit cuts. The exact proportion of the one to the other is an open question but what is a historical fact is they’ve proposed such solutions to matters of entitlements and deficits for decades. Obama, at one point, offered 10 to 1 proportions of spending cuts to tax increases. The right and the GOP refused.Report
It is possible there are secret talks somewhere where everything is on the table.
It is more possible that we’re not in enough pain yet to fix this.Report
I never claimed that a comprehensive Social Security fix is currently in discussion, merely that we know from historical behavior where the primary sticking point to such a solution lies and that is that the GOP and the right won’t agree to accept that raising taxes has to be part of any such solution.Report
This is how I know you aren’t serious about seeing this as a problem, much less finding solutions. Those revenue streams can’t – by law – be comingled. Only payroll taxes can fund earned benefits at the federal level. Which means on the revenue side, only payroll taxes can be adjusted.
State and local taxes are really just a diversionary tactic here, as they pay directly for services people use, like roads, sewer systems, firefighting and public education. If states, counties and municipalities don’t tax for those things, how do you expect to have them provided?
Yes, it is. Trump cut income taxes enough to add $3 Trillion to the deficit over 10 years without cutting a single government program. And as I keep reminding you, you can’t actually cut federal discretionary spending to offset that without eliminating the whole of the executive branch – military included. SO yes, taxes have to be part of the solution.
You left out the part where Congresses of both parties have made huge IOU’s to the trust funds to use their principal to reduce deficits. And the part where payroll taxes aren’t really indexed to inflation. Or the part about how payouts are actually going to go down over the next decade as the Boomers (the largest generation currently in America) die off.
But sure, its ALL about the Democrats.Report
“Those revenue streams can’t – by law – be comingled. ”
I never said they were. I used it to illustrate how much the wealthy, who always seem to get accused of not “paying their fair share” pay a whole hell of a lot.
“State and local taxes are really just a diversionary tactic here, as they pay directly for services people use, like roads, sewer systems, firefighting and public education. If states, counties and municipalities don’t tax for those things, how do you expect to have them provided?”
You’re arguing a strawman. Again, the what I did was to illustrate the amount of taxes people in upper income tax brackets pay — and how the only solution offered by Democrats is to increase taxes.
“SO yes, taxes have to be part of the solution.”
That is flat out wrong. When SS debuted, the age to reach maximum benefits was 65. Know what the life expectancy was for a man in 1935? 60. The life expectancy for a man is now 73. Gradually raising the full benefit retirement age from 67 to 69 would fund the system for another 50-60 years without tax increases.Report
Not without fully repaying all the internal IOU’s to the trust funds that congress has taken over the last 40 years. You know the ones to cover all the tax cuts that didn’t spur enough growth to pay for themselves.
That aside, of the GOP were serious about that as a reform, they wouldn’t have rejected it when Democrats previously proposed it, and Rick Scott’s newest proposal wouldn’t start out by trying to kill off expanded funding for the IRS – which interestingly has zero to do with the state of Social Security, Medicare, or Medicaid.
Well sure – they pay more taxes in absolute dollars because they make more money. Except they don’t since they can take advantage of more loop holes, often get their compensation in the form of capitol gains, and “live” off short term loans against their portfolios. the Average Taxpayer pays 13%; the wealthy pay between 3.4% and 8.2%. nd no one pays into the earned benefits system above $160K in compensation. None one.
https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-taxReport
What I always find interesting about these articles and the language that writers of this persuasion use is that it’s largely the same since I began reading them in the early aughts. What has changed, at least for me, is a certain kind of knowingness that I thought I could perceive. In the early versions of these articles I always felt like I could discern a kind of winking knowingness to them; of course an all cuts policy was ludicrous, of course the ultimate solution would be a combination of tax increases paired with spending cuts; of course this article is pretending that only an all cuts policy is thinkable- it’s just messaging to try and influence the final outcome a little further to the right.
I don’t pick up on that vibe any more. I think it vanished after W. The right seems to have drunk its own messaging and taken it to heart. It just feels like they honestly delusionally believe it now. You see the same think with twitter/left excesses. Right wingers seem to honestly believe their own press that identarian rubes actually run the show in the Democratic Party. Then, when the Dems don’t behave the way that the rights delusional belief says they have to there’s this incomprehension and fury.
It is a conundrum for me because, honestly, how do you cut a deal with a party/ideology like that?Report
Dingdingding winner winner chicken dinner..
What’s missing, what’s ALWAYS missing from these jeremiads is any coherent alternative.
Since I first started following politics in the mid seventies it’s always been furious armwaving about WastenFraud without ever a single real world idea.
Budgets are almost always political tautologies: Budget priorities are things that are popular because things that are popular become budget priorities.Report
Again, in case you missed it earlier, here is an alternative (and there have been proposed alternatives going back to 2005):
https://banks.house.gov/uploadedfiles/rsc_2023_budget_final_version.pdfReport
This is nothing but warmed over Reagan era trickle down nonsense. It didn’t work then, and it’s not going to work ever.Report
You cut a deal the same as you would with anyone else. What do you care about their framework? Does your perception of their winkingness affect anything at all?Report
You can’t cut a deal with anyone who doesn’t actually want to cut deals. The current GOP had control of both Houses and the WH under Trump and did nothing about any of this. They don’t want to cut deals – they want to eliminate earned benefits. full stop.Report
Every obstinate person uses the same excuse.Report
For most of the last two decades, Democrats have tried to cut deals with the GOP. And either had that rejected outright from the beginning, or spent countless days and weeks negotiating only to have the GOP pull the rug at the last minute.
Remember the ACA negotiations? Obama took a Heritage foundation framework, spent 13 months meeting with the GOP to refine it into legislation, helped the GOP get 72 Amendments passed to add to the ACA, and then watched every GOP Senator vote against it.
Nancy Peolsi and Chuck Schumer went to the Trump White House to negotiate on a transportation and infrastructure bill. not only did they get humiliated by Trump on TV while sitting there – the GOP never introduced an infrastructure bill for them to negotiate on, and then blamed Democrats for not negotiating on a bill they had never been given.
Likewise Trump and the GOP rammed through a tax cut in 2017 without any outreach to the Democrats, and have been consistently blaming Democrats for the subsequent ballooning deficit because – surprise surprise – the economy never grew at the rate the GOP claimed it would before the pandemic.
And that’s just what I can think of as examples off the top of my head.
The GOP has no interest in negotiating anything. If they can’t run it unilaterally they want to burn it all down.Report
Kennedy died in a ultra safe Blue seat and was replaced by a Red promising to vote against the ACA. The plan was that unpopular and controversial. It also being unreadable was an added problem.
If the plan had been popular and understandable then Blue would have been able to force some Reds to vote for it.Report
It was perfectly understandable. And the GOP got 72 amendments attached to it. Which is almost unheard of for major policy legislation.
They didn’t want to give a Democrat a political win using their ideas. They didn’t want to negotiate.Report
Nancy had her wonderful statement about needing to pass it in order to find out what was inside it. She wasn’t kidding.
The ACA was 2700 pages itself with another 11 thousand pages of regulations.
Saying the ACA was perfectly understandable at the time is like saying the entire Tax Code is perfectly understandable.
The US tax code (which is also not humanly understandable) is only 2,652 pages.Report
so, is the GOP in the House saying they want forward looking cuts to appropriations in exchange for support to raising the backward looking debt ceiling an actual offer? Because it sure reads as obstinate from here.Report
” they want to eliminate earned benefits. full stop.”
Saying “full stop” doesn’t make this any more true. It’s entirely nonsense.Report
Rick Scott created a plan that said EVERY FEDERAL STATUTES would be sunsetted EVERY 5 years. ALL EARNED BENEFITS ARE STATUTORILY CREATED.
What conclusion do you draw from that?Report
And here is one autographed video of Senator Mike Lee, “Killing Social Security And Me, It Is My Bag Baby”.Report
if you meant to include a link it got lost.Report
Well sure, but if the only deals they offer is “Give us some of what we want and we’ll give you nothing. We are, however, willing to bargain how much of what we want you’ll give us in exchange for nothing” which is the current GOP/right wing posture, there’s no deal to cut. It’s merely a question of if you capitulate or refuse.Report
Much like the current Debt Ceiling “proposal” wouldn’t you say?Report
It would be exactly like the current Debt Ceiling “proposal”.Report
I could be wrong on this, but the most recent Democratic plan I’ve heard is raising taxes and increasing the COLA and the most recent Republican plan I’ve heard is raising the age, means testing, and reducing the COLA. Am I missing something? It doesn’t look like either party is offering something the other side would agree to (with the exception of means testing). Now, neither you nor I are on strong footing here because it’s not like a lot of either party are making these proposals. But I don’t see any obvious reason to think that your side is looking to bargain.Report
The latest plan from the GOP was issued 3 days ago by Rick Scott, and he concluded that defunding the IRS was the solution to this problem. He also proposed forcing the Congress to approve any changes by 2/3rd votes – essentially binding the House to Senate Rules.Report
So, very similar to what I wrote. Is Biden’s plan also similar to what I wrote? And does either one meet North’s ideal of negotiation?Report
SO how is “raising the age, means testing, and reducing the COLA” similar to forcing a rule change on the House and defunding the IRS?Report
Sorry, I only half-read what you wrote. He calls for basically nothing. Does Biden’s plan offer anything?Report
Well if we’re talking about Social Security specifically then neither side is seriously bargaining at the moment because it is not an immediate crisis that has to be addressed. The immediate crisis is the debt ceiling and the side saying “give us what we want and get nothing in return” is the GOP. Likewise for my entire adult life the only substantive spending cutting has been under Democratic Administrations. So yeah, both sides don’t do it.Report
We are talking about Social Security. That’s what the article is about, anyway. If you want to include something we weren’t talking about just so you can say “both sides don’t doe it”, that’s cheating.Report
My original comment, to which you replied, was discussing the general “tax increases are never on the table” posture of the right, and I shall stick to that thanks. The Dems and the left have repeatedly demonstrated willingness to consider spending cuts over the past 30 or so years. The GOP and the right have failed to demonstrate the same regarding tax increases. I have no reason to think the GOP or the right would behave differently in the specific case of social security and the original authors article bears that same thing out.Report
The Dems typically redefine “the program growing less fast than desired” as a “cut”.
The only exception to that I can think of is welfare reform which is why you need to reach back 30 years.
You said “repeatedly”, do you have any examples other than Welfare?Report
For goodness sakes Dark, there’re so many. The ACA involved cuts to medicare reimbursements along with a variety of other cuts (some, I grant, were put off or not enacted but others very much went through) along with its tax increases which is why it had so little effect on the deficit.
The sequester, in case you forgot, was enacted under Obama. In fact I can’t think of any time major spending cuts occurred that the Dems didn’t sign off on them.
Can you find me any examples of the GOP, unilaterally and by themselves cutting spending, because I’m not thinking of any.Report
Reagan did.
Bush 1 but he was thrown out of office for that.
Bush 2 and Trump are the only ones we’ve had since then. Bush 1 got burned pretty hard on the issue so there hasn’t been any “read my lips” since then.Report
Reagan, it bears noting, merely slowed the growth of total government spending from 4% under Carter to 2.5% under his administration in inflation adjusted real dollars (he cut some domestic spending but splurged madly on tax cuts and defense spending) and ran very large deficits. So he’s not exactly a paragon of fiscal fortitude and also ends up being guilty of what you accused the Dems of being (slowing spending growth rather than cutting spending in total). Reagan also, I’ll note, had Democratic party members in control of congress for his entire term so none of his spending cuts count as unilateral.
So I’d say my assertion that the Dems and the left have repeatedly demonstrated willingness to consider and enact spending cuts over the past 30 or so years whereas the GOP and the right hasn’t countenanced raising taxes (HW Bush, the last adult Republican, lies outside 30 years ago) stands.Report
I would go even further. My read on the Democratic party of today is that there are still a whole bunch of them that not only would make a deal involving cuts they can paint as a tough, pragmagic, bipartisan deal for the good of the country, but that there are plenty that may well be dying to do so. The shame, and really clarifying reality of our political moment, is that they have no one to work on the other side.Report
On this you and I are in total agreement. Yes, there’re Democratic Party members in considerable numbers who’re opposed to any form of cuts a-la Saul, but there’re also a lot of constituencies who wants cuts and an even larger number who’re willing to accept cuts in exchange for tax increases. The Democratic Party shifts and flexes around those facts because it is a living, functioning, (albeit elderly and somewhat weakened compared to its past) political party from top to bottom.
The GOP simply isn’t. It is non-functioning right now. Its operative and moneyed elites despise its voting masses and the antipathy is richly returned. It can’t do what parties do which is, in order of importance (to the party) figuring out/mediating between what its voting masses and interest groups desire, translating that into policy, selecting candidates that support those policies and getting those candidates elected.
Maybe the GOP will revive from its current zombie state. I hope it does. A country this big can’t run indefinitely with only one functional party.Report
To be fair, if you never clean off barnacles they do nothing but grow. If your only way to deal with them is to prevent them from appearing in the first place, then your only option is to prevent them in the first place.
Create an entitlement and it becomes impossible to remove, regardless of whether it’s doing a competent job for it’s purpose.Report
If it’s doing a competent job for its purpose – as Social Security, Medicare and Medicaid are, why would you consider removing it?Report
Any definition of “competent” needs to include “value for money”.
All of these programs could be done for way less money. That suggests they need serious reform and/or restructuring.
That’s not “removing”.Report
That is a very libertarian but also a somewhat non-sequitur observation.Report
If we have no way to remove, reform, evaluate, or lower the cost for these programs then any “compromise” on taxes can only mean “taxes go up”.
And at some long past point, tax payers stop listening to happy talk on what a good deal the politicians got for raising their taxes.Report
That is a classically libertarian perspective and a somewhat irrelevant once since the pure libertarian perspective represents enough voters to fill a few school busses but not much beyond that. Maybe add a couple cruise ships of plutocrat voters if you add in the republitarian perspective of the GOP but I don’t like to lump those two crowds together.
In any event, we have many ways to remove, reform, evaluate and lower the cost for those programs. Many cuts or growth reduction proposals exist for adjusting the cost of social security and, if married to increased funding levels, a compromise is not particularily complicated to envision nor to enact by a pair of sane parties.
But as I’ve already demonstrated in this thread, there is one party that will not (maybe can not) compromise on their sacred cow policies, and it ain’t the Democratic Party.Report
But the math and the problem remain the same.
We’re not in enough pain to actually do any of that.
Do you have any Blue politicians suggesting these entitlements should be cut?
I’m not sure we can get any Red politicians to actually vote for that.Report
There’s no reason for Blue politicians to be proposing cuts- they have no counterparty to bargain with so such proposals would merely hurt them for no perceptible gain.
But you can be sure that when/if the math and markets dictate that the problem of Social Security be addressed that both benefit cuts and funding increases will happen.
It’d be nice if we collectively addressed it sooner rather than later since the cuts and tax increases would be smaller now but we’re not in enough pain to do any of that as you so cogently put it.Report
That’s what Bush thought. The system prevents that sort of thing.Report
The idea that Bush minors proposal to toss SS accounts into the slavering maws of Wall Street would have done anything but exacerbated the programs problems is quite amusing. Especially considering how, in hindsight, we know that the Wall Street maroons couldn’t tell their posterior from their anterior.
Bush and the GOP should thank God(ess?) that the system didn’t let him. All those elderly folks in Texas would have shot him in the street after 2008.
But sometimes the system works it seems- sure did when it came to Bush Minors’ SS reform proposals.Report
Index Funds.
If you don’t know what they are, you should if you’re doing any sort of investing.Report
What Bush was proposing was a pretty radical restructure of how social security works, which, yes the system makes very difficult for an extremely popular policy. But the kinds of mundane things that would cover most of the shortfall like increasing (or maybe even removing) the cap on payroll taxes combined with raising and/or messing with the age full benefits are phased in to account for longer lifespans and/or some form of means testing (an idea I don’t like but whatever) don’t require anything remotely like that.Report
Let me just repeat what you said with different spin.
Serious reform which would have shifted the system from redistribution of income to actual retirement investments, i.e. what I do for myself, is effectively impossible.
However removing the cap, i.e. a breathtakingly large tax increase on the people who are the most productive, the mobile, and have the most fluid income, is “mundane” and proposed by key members of Team Blue. It’s also one of the more likely outcomes.
I agree with this reality. I also think it’s a serious structural problem.Report
It isn’t impossible, it’s that we live in a democracy and that even a significant number of voters in the party that like this idea don’t support it.Report
“but there’re also a lot of constituencies who wants cuts and an even larger number who’re willing to accept cuts in exchange for tax increases.”
Name them and Thomas Friedman and Joe Manchin don’t count. Name honest to goodness normal Democratic Party members who want cuts. Prove this.Report
I’m pretty sure that the cuts are for people who have a certain number of assets. “Means testing” or whatever.
“Why should we be sending Social Security to Billionaires?” would probably be the opening question.
Yes, I know that the answer is “this is something that everybody pays into and therefore everybody who pays into it is entitled to! That’s in the name! Entitlements!” but there are a non-zero number of people out there (including Democrats) who think that the answer is something like “Hey, yeah… maybe we shouldn’t be sending checks to Donald Trump!!!!! He can sell Trump Steaks if he wants beer money!”Report
The problem is that dumb people simply don’t buy the GOP only wants to cut Social Security for rich people an slightly smarter people find it very interesting that the same party that wants to give very rich people as much as they possibly can, whether it’s loose labor regulations, low taxes on both personal and corporate income, etc. suddenly is very worried about those same billionaires getting some for their income, fairly meager Social Security checks.
It’s almost like they want to make Social Security & Medicare another welfare program they can attack in the normal ways.Report
I wasn’t trying to imply that it was solely a GOP position.Report
Universal welfare should be universal. It starts off as means testing and then gets to everyone. I don’t buy the BS on means testing. It is a failed 1990s neoliberal policy that should go the way of the dustbin.Report
For the record it is not an idea I favor, but it is an idea that is more realistic. It’s also not crazy in some circumstances. For example my parents don’t get social security because my mother got in under the old federal civil service retirement system and has an actual pension. I don’t lose sleep over people in that situation and don’t think it undermines the idea of a universal benefit.Report
Chiming in here to echo Saul that I’m not seeing any support on the Democratic side for cuts.
I think the “Era of Big Government is over” is over, with just a few holdouts in Outer Beltway Punditania.Report
The Democratic side isn’t dealing with SS right now nor do I think they should be trying to do so- it’s something they’d need either a supermajority for (and a willingness to promptly lose that supermajority in a blowout like they did after they enacted the ACA) or a bipartisan deal for and the current GOP is incapable of making such a deal.
But if the GOP suddenly assembled a miraculous genuine “fix Social Security” contingent and offered a scheduled vote with 50 GOP aye votes in the house and 15 GOP aye Senate votes and said “Here’s our offer, lets’ fix SS’s shortfall with 50% revenue increases through various measures and 50% spending cuts through changes in benefit growth and other broad based measures that’ll secure SS for the foreseeable future without dramatically changing the structure of the program.”
Do you honestly honestly think Joe fishin Biden would turn such an offer down? To pass up such a historic accomplishment? Do you think Schumer would refuse to schedule it for a vote? Do you think it’d fail via an uprising or revolt among the Dems? Really?
I don’t think it would.Report
Joe Biden is opposed to cuts. The President!Report
Joe Biden doesn’t have to deal with Social Security right now. He has plenty else on his plate, especially the debt ceiling. Since he has no counterparty to negotiate with on SS he’s focused on politics and playing the game (well I’d add). I also agree with Biden’s decision on that matter.Report
You don’t. Plus I don’t think Democrats are as willing to cut benefits like you think they are. Negative partisanship is increasing. In a parliamentary system, this would not be an issue but we don’t have a parliamentary systemReport
I’d agree they’re less willing to cut benefits now than they were then. The GOP’s behavior under Obama obliterated a lot of good will and made centrism into a bit of a joke. Biden would never offer the incredibly lopsided deals that Obama offered, for instance. I do think, though, that he’d take a deal that would include some benefit cuts.Report
There should be no deal which includes benefit cuts.Report
That statement sums up why we should be very reluctant to create new benefit programs while we’re struggling to pay for the ones we have.Report
I disagree. We certainly can’t beat the GOP by becoming them, especially with the numbers and locations of actual leftist voters of your persuasion.Report
There is no evidence that it is only cranky leftists that support benefit cuts. It is basically only grand bargain corporate masters that imagine there is a vast public outcry for them. Saying no to benefit cuts is very different than calling for open borders and a repeal of the second amendment.Report
No one wants benefits cuts. Similarly no one wants tax hikes. Barring an incredible and a-historic electoral sweep some deal will have to be cut on Social Security that’ll include Republican votes (and thus require spending cuts) and Democratic votes (and thus requires tax hikes).Report
Part of getting a good bargain is to leverage Republicans’ antipathy towards SS to gain a few more seats, and imperil the rest so as to bring them to the table.
Another is to make it clear to the average low info voter that their retirement is being cut to give Elon Musk a break on his next yacht.Report
You’ll find no objection from me to that Chip.Report
Someone from the Fox News Cinematic Universe just asked Biden’s press secretary if Biden was woke. As you can see from my article posted below, the House GOP is fighting amongst themselves.
Biden has a real chance of doing a Harry Truman in 1948 but better and the best way to get more WWC types back into the Democratic fold is to make the Republicans look as plutocratic as possible.
I don’t get why the very serious people always equate being a very serious adult person with being willing to discuss entitlement reform perpetually and always. I often think it is because they are usually rich enough that they do not have to depend on social security and medicare in old age.
Why not have being an adult in the room mean that you think people deserve lives of dignity and decency and not the never ending crush of winner take all?
You already admitted that Democrats do not win by being Republican-lite but you still want Democrats to be Republican-lite and have entitlement cuts be an option. This is mug’s game and losing strategy. All it does is prove the left-wing smear.Report
Maybe the GOP should implode from infighting and lose a few electoral cycles in a landslide before you start making plans for how to divide the spoils between the various factions of the left and to heck with electability Saul. Not before.
The math isn’t that complicated. The rich should pay a large share of taxes, for sure, but even if you took every dime they had (and that’d be utterly impossible constitutionally, in principle and practically) you still wouldn’t have enough money to pay for all the things the further left can imagine spending money on. It is not even close. I mean, for fish’s sake, do you want to see another fishin Reagan reincarnation to come grinning along to whup us all like a pinata for a couple generations? Do you want ants? Because that’s how we get ants.
And, in case you forgot, Biden managed to get elected by the skin of his teeth by promising, among other things, to not be a deranged lefty spender. Those lefty candidates who promised to spend wildly on everything? They did poorly.Report
Because if the gov crashs the economy via it’s budget, it will be because of entitlements. That’s where the money is at, that’s where the growth of the budget is at, that’s where the hostility to reform is at.
There are other ways to crash the economy, but that’s the one we can see coming and in theory could avoid.Report
Entitlements AND defense spending.Report
Not really.
Defense spending is about 3.74% of GDP.
Entitlements are 17.5%Report
Money’s money. If it comes to a fiscal crisis or heading off the same, defense spending is as entitled to cuts as safety net programs are. Perhaps more so since it’s much more wasteful.Report
When I look at Defense Spending over the decades as a percent of GDP, I see a linear line down with some blip ups representing some wars.
That’s not something that threatens to break the budget or destroy the economy. I expect that we’ll have to cut it but “uncontrolled spending” isn’t even close to a good description.
The opposite is true for entitlements. It’s a line up that threatens to grow until something breaks. It’s where the money is at and it’s where the problem is at.
We could cut Defense Spending in half and it would just save some time before entitlements break the budget.Report
We’ll see, but you can be sure defense will be well and thoroughly shaved down and taxes will be significantly increased before there’s political will to mess with entitlements (though all three may happen simultaneously if it comes to an actual crisis).Report
Europe and how they handle the aftermath of the war will be interesting. We’re not going to invade Russia.
So either Putin will still be in charge, or he’ll be replaced. However, Putin is a moderate by the standards of the likely replacements.
Europe has been cutting defense spending for decades in favor of social spending. They’re chained to a madman.Report
Indeed, though everyone’s fear of Putin or his successor is declining precipitously. The Russian army’s humiliating performance against an under staffed and under equipped army right on its border is illustrative. The idea that the Russians have the ability to project power further than that, even against only lightly funded modern European armies, is rather laughable on its face at this stage. Likewise the threat of energy cutoffs has proven to be the dog that didn’t bark. No one had a great time but mobs of starving, freezing civilians didn’t overthrow western governments- turns out capitalism is more resilient and adaptable than that.Report
We’re looking at a serious attempt at genocide by a large modern army. Them being corrupt and incompetent don’t need to be part of the “evil fascist empire” package.
We need to assume there is no bottom here.
State sponsored terrorism/assassination and other asymmetric warfare is a possibility. Them licking their wounds for a decade and rebuilding their army into something threatening is a possibility. Them falling apart into a dozen civil wars is a possibility.Report
Were cutting spending. They are all spending big bux now on defense. And separating themselves from russia and joining Nato where applicable.
Putin is a moderate?? Meh, doesn’t matter. Does the new guy want to get all invadey or do business with western Europe is the issue. Every possible putin replacement is going to an authoritarian oligarch with many open windows.Report
The USA’s near-future defense decisions (and inevitably, those of its NATO allies to a significant degree also) will be based less by a need to contain (not invade or regime-change) Russia than it will be by a need to contain (not invade or regime-change) China and the need to have rapidly-deployable regionally-stationed areas to respond to mobile, irregular non-state actors (to wit, groups like Daesh and al Qaeda).
I hope that’s enough parentheticals for you.Report
I get a small bump to my take-home pay late in the year because of the SS tax ceiling. It’s handy around the holidays, but I’d be happy to forego the bump in exchange for lifting the cap, which should keep SS solvent.Report
Amazing how this one simple trick is never talked about.Report
It’s north of a $150 Billion dollars per year.
$1.5 Trillion if we’re going to use Washington’s normal 10 year accounting.
Heritage called it the “largest tax increase in the history of the United States”
It maybe simple, but it’s not small. It’s about two thirds of a point of GDP.Report
I would expect nothing less from Heritage.Report
That’s why I sourced that one. I’m not sure how much I trust it.
Having said that, taking an extra quarter or so of someone’s take home pay hits the radar as a big tax increase.Report
It’s 6.2% of the gross. Let’s not play numbers games. I get it’s a big number, but, at least according to the R side of the aisle, we have a big problem.Report
It’s 6.2% doubled since it’s paid twice.
And it’s not a 12.4% increase, it’s +12.4% on the existing rate.
So if they’re already paying roughly 50% because of city,state,etc, that means going from 50 to 62.4
So that +12.4% is a quarter of what their take home was before.
Federal Max income tax rate is: 37%
NY state is 10.9%
NY city is 3.876%
That’s 51.767%
OK, so it’s more than a quarter of their take home.
I’m not going to bother searching for other places to see if they’re more extractive.Report
If you’re paying yourself, you get to deduct the employer share on your return. If you’re not, then the employer is picking it up for you. Either way, for the individual it’s still 6.2%.
The 2022 cap on wages taxed for SS was $147K.
I will say that a fair deal in eliminating the cap would be a reduction in the percentage over a certain amount. Or even better, a graduated rate. There’s no good reason why more income grants you a pass on the tax.
(If NY state is dinging you 10.9% you brought home $25 million dollars last year. That state has some wild tax brackets.)Report
I think you meant that you pay both. Thus 12.4% if you’re self employed.
This is confusing who collects the tax with who pays it.
In practice it means your employer lowers your income by 6.2%.
And yet your wallet still ends up missing 12.4%
Big picture 6.2% is a lie that Congress has told us.Report
150 Billion dollars per year
Wow, that’s 500 days worth of the Afghanistan war.
No way America could afford that.Report
Kill FICA and just add it to the Tax-rolls per usual. End the ’employer’ portion and add it back to the employee payroll. Tax all income. That’s how it operates anyway.
Kill Healthcare deduction for companies – add it back to the payroll – pay for healthcare.
End the hidden costs and hidden benefits… see what happens next.Report
No, its not. Adding FICA back to regular income taxes would be the death knell of earned benefits, because those dollars would then be able to be comingled which they aren’t now. You’d have MORE discretionary tax cuts, and a bigger deficit.
No such thing. Its all there – just most folks don’t care to look.Report
“those dollars would then be able to be comingled which they aren’t now”
Well Jake, that right there is what we call a semantic difference of opinion.Report
The IOU’s taken to lower the deficit aren’t the same thing a actually moving the funds to general revenue. Moving them to general revenue eliminates the requirements for their use. Which means they don’t have to support anything particular with them.Report
“Trust Funds” reducing the deficit is an accounting fiction that just enables us to spend them on the deficit that the people who are paying in to the “trust fund” get to use as part of the Federal Government outlays in real time.
But really, I think you’re focusing on the wrong thing. There’s no ‘protection’ of those funds (they were spent) and there’s no protection of the SS from Future Congresses. Benefits will be cut and/or taxes increased.
I also think there’s a bad faith argument in the ‘Trust Fund’ that Baby Boomers did in fact spend the trust fund on things they (collectively) wanted and got over the past 50-years. They are double dipping.
That’s why owning the reality of the cost and benefit of SS/Medicare needs to be moved to the general funds — precisely to eliminate the fiction of ‘set-aside’ funds.Report
This heartwarming video shows up periodically on the timeline.
That kid was experiencing merely the lightly obfuscated costs. There’s more stuff out there that is like that Hitchhiker’s scene:
“You mean my boss is paying even more taxes on my behalf?!?”
“Yes. This is obvious to anyone willing to do basic research.”
“So we should end the hidden costs and hidden benefits.”
“BUT THEY’RE NOT HIDDEN!!! YOU JUST HAVE TO LOOK TO FIND THEM!”Report
If the schools were any good, he’d know this stuff already.Report
Sounds like a good reason to raise his taxes.Report
Sure the Dow is up over time but what would have happened at each one of the giant dips??? What happens to retirees when the market crashes? Panic and some more panic and then a whole lotta panic. That is what. How do they survive a crash of X long with no knowledge when it will end. Retirees would freak about being screwed over. If people go homeless is a giant crash then what?
SS is meant to be safe so it’s not going to get huge returns. Safety has a real vital purpose here.Report
Investment strategy balances risk and return. There’s no guarantee that a corner solution is the best balance.Report
The problem isn’t “safety”; Pick any 40 year gap in the stock market and you’re pretty much guaranteed of doing well, certainly MUCH better than SS. The Stock Market is basically a stand in for the entire US economy when we’re using it at this kind of time frame and scale.
The real problem is “inequality”. Give people actual investments and some will do better than others based on when they retire. Now they will all still be better off than if they’d taken SS as it currently is used so there’s that.
The real disconnect for SS is between “it doesn’t get huge returns” and “it’s going to be the primary retirement fiscal vehicle for people”.Report
Actually, the real problem is the utter gibberish of the very concept.
Guess how big the market cap of the entire Dow is?
$42 billion
Guess how much social security is budgeted for each year?
$18 billion.
Um…I’m pretty certain that if you put enough money to get _yearly returns_ of $18 billion (Which has to be like a hundred billion minimum, right?) into something that is only $42 billion, um…it won’t work anymore.
But maybe we’re not talking about putting it into the Dow, but the…entire market? Well, the first problem there is that the market itself is _astonishingly unstable_. Here: https://siblisresearch.com/data/us-stock-market-value/
So…which is it, folks? Are we putting everyone’s money into the _stable_ companies that everyone always seems to talk about how rapidly they grow,…where it cannot possible fit. Or are we putting everyone’s money into the market as a whole, which is…a complete roller coaster, bouncing up and down by 20% just in the last three years alone?
And…before anyone starts talking about ‘The entire market is stable over 40 years’…all this has been happening without dumping massive amount of money into it.
There is a stable way to make money offt the economy constantly growing It’s called TAXING THE PROFITS OF BUSINESS. The nice side effect there is we don’t end up losing massive amounts of money when rich people screw with the market.
Which, incidentally, is exactly why the people promoting this gibberish want us to do it.Report
The Dow(*) is 30 stocks.
The market cap of the NYSE is $23 Trillion and it has thousands of stocks. It trades roughly $19 Billion per DAY.
That doesn’t include the other exchanges (nasdaq, CBOE, etc) which I couldn’t find stats for in a one minute search. Back when I was trading professionally, we considered the NYSE a dying dinosaur being nibbled to death by the other exchanges.
Considering $23 Trillion is down a lot since when I was doing it, my expectation is the other exchanges really should be included.
(*) The Dow has lots of other flaws. Serious people don’t use it.Report
Right. The Dow is a specifically chosen very small group of well-run ‘important’ companies. Anyone who uses it as a reflection of the stock market as a whole is either somewhat ignorant or deliberately lying.
Which the article here did. The Dow is where this very article article gets its nonsense of ‘300% increase’ in the stock market.Report
Using the Dow is foolish but for the reverse reason. The Dow tends to under perform the market.
If I take today’s Dow and go back in time until we’d get 300% increase, I’m at 2009.
If I take the SPY(*) and do the same thing I’m at 2010.
While I’m doing that, if I take the SPY and go back 30 years, it’s about +1000%. That’s not “picked the right stock” luck, that’s “invested in a safe and sane way”.
(*) Much better index fund and a good tracker of the market as a whole.Report
We’ll take your link, I’ll let you cherry pick. Which two points that are at least 15 years apart do you want to use?
And 15 years is a very low number for this conversation. I’ve been in the market since I started working 30+ years ago and I’m not thinking about retirement.
If we use numbers 30 years apart (much more reasonable), then the math behind the entire discussion gets crazy one sided.
The market is a stand in for the US economy as a whole, and if the economy as a whole is down over a 30 year period then we have so many problems that SS won’t be close to the top of the list and we wouldn’t be able to pay for it then either.
Edit: Oh, I forgot. Letting you cherry pick is still a massive absurd advantage to you. I’m adding money to the market every year. Ergo over that 15 year period we really shouldn’t be thinking of an all in on the first year and an all out on the back end.
Getting rid of that makes the math a lot harder, so we won’t do it, but it would tilt the board even more towards me.Report
No, the market as a whole is a stand-in for the US economy, but you cannot invest in the market as a whole.
Ever proposal I’ve ever seen has individual investment, not any sort of ‘investing in the market as a whole’. It’s really fun double-talk, how what we should look at is something they absolutely cannot invest in.
But they could invest in mutual funds I guess. Maybe index funds!
…but wait, all index funds and a good chunk of all mutual funds are _the same small amount of companies we just talked about how their investments cannot fit in_. Or at least, mutual funds have them in there. For stability.
Everyone who talks about how to ‘reduce risk’, which is exactly what we need to do here especially for people near retirement, are talking about the same small set of companies that we just determine cannot fit anywhere near the entire US retirement pool. You cannot use those to stabilize anything.
Please, right now: List the actual places that people, under this plan, should be putting their money. Where should we put hundreds of trillions of dollars? Where can that be put into the market? Without risking it all, and without destabilizing the market.
And you’re frowning at ‘hundreds of trillions’, but…that’s $250,000 a person. Which is nearly double what people currently get out of social security in total, but OTOH, investment starts decades before retirement so outpaces the actual number of people.Report
In fact, my entire post could just be summarized as ‘hundreds of trillions’…or, if you want to argue with the exact amount, I’ll lower that to, I dunno, 50 trillion dollars. So everyone gets lifetime $125,000, which is actually near what social security pays on lifetime average.
That’s, um…the size of the entire market. So I guess I was wrong, I guess we are investing in the stock market as a whole! In fact, it seem like we’re buying THE ENTIRE THING.
Also: Note this is actual nonsense, because I just suggested we should have people buy $X amount of stock, and then decades later take $X amount of stock out of the market. Whereas the entire point of investment is to take _more_ out, which means their money must have increased, which means even more of their money in the market.
But the stock market couldn’t even fit their money even if we treat it literally as a bank, but less if we actually have the growth that people seem to think we’d have.Report
The Trust Fund at it’s peak was $6T, it’s currently more like $2T. The 75-year unfunded obligation for the OASDI program is shown as $5.3 trillion.
That implies we’re several zeros short of hundreds of trillions. Hmm…
250 million people employed.
A thousand dollars each would be $250B
A hundred thousand each would be $25T
A million each would be $250T
The flaw in this line of reasoning is it assumes everyone in the entire nation has already earned their full retirement and needs to be paid at the same time. You can use the same line of logic to break all sorts of things.Report
The Trust Fund at its peak was a bit under $3T and that occurred recently. It’s down slightly from the peak, not cut in half.Report
I can’t? 😉
Market Cap of S&P 500: $32T-$34T (sources differ)
The S&P market cap is 70 to 80% of the total US stock market capitalization. It is a commonly used benchmark for stock portfolio performance in America and abroad. Beating the performance of the S&P with less risk is the goal of nearly every portfolio manager, hedge fund and private investor.
S&P 500’s associated Index Fund: “SPY”
So lazy man’s way to invest in the market as a whole is to buy “SPY”.
Which is exactly what I’ve done. You can buy SPY, just exactly as you would any other normal index stock, on any trading platform.
When the talking heads talk about “how the market as a whole did”, what they mean is ‘how did the SPY” do. When you look at graphs of the entire market, you’re looking at graphs of “SPY”.
On a side note “SPY” is pronounced “spiders” which is awkward but whatever.Report
Still not big enough.
Somewhere around 400 million people need to fit enough money in that to withdraw $150,000 each to beat social security.
Now, you’re expecting me to talk about returns, but that actually doesn’t matter. 8% over 20 years, sure, I’ll concede the idea that it will make enough.
The problem is just having the money in the market. Because the total amount of investment required is larger than the market cap of the S&P 500.
Now, all this investment isn’t at once, but over decades, so maybe it could hypothetically be absorbed, maybe the market would get that much bigger by then, except here’s the problem: The stock market was _already_ disconnected from the actual economy due to the amount of money in it, and you’ve just poured a _huge_ amount of money into it.
At this point it turns into what is basically a ponzi scheme, where all the gains in it are due to new people constantly buying in. There _has to_ be enough stock for them to buy, the demand will always chase supply, so…what is going to happen here?
—
It really is amazing how many conservative solutions to problems are ‘everyone should do the thing that individuals are doing really well at’, without noticing the reason that individuals are doing well at something is because they are doing _better_ than everyone else, and it is not possible for _everyone_ to do better than everyone else.
Like, so many people seem to think the solution to young people not having job is ‘Young people should learn these tips to find employment and make themselves look better’, which is fine advice for one person, but is incoherent for everyone. We can’t all beat out everyone else for a job and get a job.
The stock market is exactly that way…you can’t have everyone put their money in it, because the stock market is basically a way to extract money (or at least what should be income) from _workers_ and give it to _owners_. If you put all the workers in it, if you put the entire population in it, then you don’t have anywhere you’re getting the money from!
I mean, let’s pretend this is something else. Rental houses, for example. Would it be a logical way to plan for retirement for the government to help _everyone_ buy rental houses they can rent to people, so can live off the rent in their old age? You sorta see the issue there, right? Well, the stock market is the same way.Report
Or to put it a better way: If corporations would just pay workers what they were worth, the stock market would have a lot less growth. The majority of growth has been at the expense of wages.
If you give that money to workers in some other way, if you spread it across the entire population, the same thing’s going to happen. The stock market has a high rate of return because it is a _focus_, a magnifying glass…it takes general increased productivity and hits stock owners with a tight beam of money while putting everyone else in the shade.
People saying ‘Everyone’s money should be in the stock market’ fundamentally don’t understand how lens works, they think we can just…add mirrors to reflect the light on everyone. And maybe we can, but it would be the same amount of light we started with..minus a lot of incidental waste.
You want to give workers more money, get rid of the magnifying glass to start with, have employee-owned corporations who actually distribute all their profits to the employees. And if we want to force some retirement saving, have them put some of that in a pension plan. Perhaps even a national pension plan that everyone pays into. We could call it social security.Report
What are you defining as “what workers are worth”?Report
Oh, no, we’re not doing this. I’m not going to argue any abstract ‘worth’.
I’m just pointing out that this an _absurdly_ roundabout way to get money from corporations to workers, and what they could do instead is literally just _pay them_ that money, instead of paying their shareholder. Every dime that goes to a shareholder is a dime that doesn’t go to employees.
Stock exists to take value that workers created, and hand it to someone else. Giving the stock to everyone, to all the workers, not only undermines the actual purpose, but _cannot possible result in more money_ per person…it will obviously result in less.
And…this is literally communism 101, saying that the workers should own the means of production. But the way to do that is to have them actually own the means of production they are operating, not weirdly indirectly all own _each other’s_ means of production!
So why is this even a _concept_? Why not simply make a political push for employee-owned corporations, perhaps give them some tax breaks if they give employee stock? And also why are conservatives pushing for ownership of the means of production?
Because the wealthy behind that want the money in the stock market not so it actually pays out for the new investors, but because the stock market is a game they have rigged and they’re sure they can win the money off the new dupes pouring in.Report
“Oh, no, we’re not doing this. I’m not going to argue any abstract ‘worth’.”
buddy
you clearly have an idea that there is a specific definition of “worth” and that business owners are not meeting it
you cannot throw that on the table and then try to walk away when you’re called on it
also,
“Every dime that goes to a shareholder is a dime that doesn’t go to employees.”
i’m not sure what you mean by this because the typical salary expenditure is 30% and the typical dividend expenditure is 5%
“well it’s not ZERO” yeah but it’s not like there’s some huge imbalance in payouts that favors shareholders over employees, not some immense difference in employee compensation that would be obtained from not paying stock dividends
“Why not simply make a political push for employee-owned corporations, perhaps give them some tax breaks if they give employee stock? ”
congratulations you invented ESOPReport
I can indeed walk away from that if it’s not relevant to the discussion, and it’s actually Dark Matter that was arguing workers should make more for their retirement, he just wanted to do it via a convoluted stock ownership.
I agree they should make more, in fact I will agree that they should make _at least_ whatever amount he thinks more they should make, but that is a ridiculous way to do it.
Just f***ing pay them the money that is enough to retire on. It’s really not difficult.
Dividends are not the only way that companies distribute money to shareholders. Stock buybacks do the same thing.
Which may sound like a trivial correction, but in actuality stock buybacks are much much larger than dividend issued, to the point of absorbing a huge amount of corporate profits, so it’s weird you didn’t mention them.
Doing the math, it looks like employees are paid a *does some scribbles* finite amount per hour they work, whereas stockholders are paid *does more scribbles* an… Infinite amount per hour they work because they don’t actually work any. Actually, I think I got a divide by zero error in there.
I’m going to use the same argument that conservatives make against taxes and welfare here… Would it be fair if I came and lived in 5% of your house while you occupied 30%? Why not? You’re using more of the house, clearly it’s not unfair for me to use merely 5%!
Well, guess whose labor is earning those profits? Guess who deserves those profits? Guess who doesn’t? Especially since we’ve seen the main argument for that, that putting up capital is risky, completely undermined by the government bailing all of them out.
Yes, it’s almost as if I was sarcastically describing a program that already existed, and wasn’t particularly useful.Report
SS takes 12.4% of your income. By retirement account standards it offers an extremely low rate of return. If you were forced to invest that in a real retirement account (more or less what Bush wanted), you’d be much better off.
Only a third of the US work for large companies.
If you’re self employed, telling the boss you should be paid more is way more “ridiculous” than buying stocks.
Employee wages+benefits+costs absorb a huge amount of the gross. It is fairly typical for these costs to be multiple times the entire profit much less what is done with that profit.
If memory serves, countries which have tried these ideas haven’t done well.Report
“Dividends are not the only way that companies distribute money to shareholders. Stock buybacks do the same thing.”
That’s not why companies do stock buybacks, any more than you paying off your car loan is “enriching yourself at the benefit of the community” or “greedily holding onto money instead of spreading it to local businesses that deserve it more”.
“it’s weird you didn’t mention them.”
I didn’t mention stock buybacks because that’s the company investing in itself, raising its own market valuation and allowing it to raise capital by taking on debt, and the fact that it benefits shareholders is not the intended effect.
(This getting back to the thing where you think that companies shouldn’t have value, like when you angrily ranted about leasing companies holding empty office space instead of reducing rental rates to zero, and I explained why they did that, and you angrily ranted that you didn’t like the answer so you’d pretend it wasn’t true.)
“whereas stockholders are paid *does more scribbles* an… Infinite amount per hour they work because they don’t actually work any. ”
lol
“bongo no understand market. story-money make bongo head hurt. bongo understand stick, rock, touchfeel thing.”
congratulations you invented ESOP
“Yes, it’s almost as if I was sarcastically describing a program that already existed, and wasn’t particularly useful.”
um, wut
you: “it really says a lot that things aren’t set up to let companies get tax breaks for giving employees stock!”
me: “that exists, lots of places do it”
you: “yeah but it sucks!”Report
You are a deeply unserious person.
The purpose of stock buybacks is to enrich stockholders. We know that’s the purpose. That’s why they were literally illegal until 1982, because they were considered market manipulation to enrich existing stockholders.
But, please, find an article about stock buybacks that doesn’t take the standard understanding that such buybacks are a way to return cash to shareholder. Literally any article that doesn’t talk about that.
…allowing it to raise capital by taking on debt?
Does anyone have _any_ idea what DD is talking about?
Stock buybacks are the _opposite_ of raising capital. Selling stock is raising capital.
And companies can, and I know this sounds weird, take on debt _without_ stock buybacks. It is actually incredibly odd to phrase things as ‘This thing that cost moneys allows a corporation to take on debt!’, like ‘taking on debt’ is the actual goal a corporation might aim for instead of something it does _in order to get_ something else.
Hey, you’re the person who demanded I tell you what workers are worth. I can’t possibly say how much any individual worker is work, but workers as a class, as in, the people who generate the goods and services that corporations sell, are worth infinitely more to corporations than stockholders as a class who *carefully checks notes again* do not do that in any manner.
Or, heck, you know what? They did pay for that stock. So I’ll amend that: Stockholders are worth whatever the company originally sold their specific stock for…or, since it’s fungible, let’s say the average amount they’ve sold stock for. Which is probably less than the current stock price, but even if it’s not, it’s a one time price, whereas workers make new things continually.
Lots of places do not, in fact, do that. Only about15% of employed people in the US even work at an eligible place, and just because they work there doesn’t mean the program is accessible to them.Report
My two cents on stock buybacks…
1) It’s always a statement of “We have cash and can’t think of anything productive to do with it in the company.”
2) With tongue only partially in cheek, the timing on many make them look like goosing the stock price just enough and just in time for the C-suite people to “earn” multi-million dollar bonuses based purely on share price.Report
Eh, I resent the heck out of buybacks following a “bailout” of some sort.
When the covid money hit and the airlines did a buyback at the same time as layoffs?
That made me think “we would have been better off splitting the check up however many ways and just sending them to the individuals”.Report
It’s pretty sad how most corporations have no employees, you know, the people who actually earned the extra money to start with, that they could give the money to. *checks notes again* Wait.
And, hey, Dark Matter, you want to bar a behavior that exists almost solely to get around non-payment of taxes on stock investment?
Bar _this_, where billionaires have set it up where all the corporations do stock buybacks to bump up the value of their owned stock (Which we’ve already decided they pay no taxes on until they sell, and they don’t sell.), instead of just handing out_dividends_ like the actual intent and design of corporations, which was ‘profit sharing’…but if we did that in the modern era they’d have to pay taxes on the dividends.
We operated until 982 with stock buybacks being flatly illegal, and they serve basically no useful purpose.
They are people who will claim there are a few possible uses they serve beside tax manipulation…but they’re lying.
Indeed, basically everything that can be done by stock buybacks can be done by simple a) paying out a bunch of dividends (Or, ya know, doing that normally so you aren’t swimming in cash.), and then b) doing a reverse stock split. Which does exactly the same thing, turning stock ownership in a company into cold hard cash and reducing outstanding shares…it just turns it into cash distributed across _all_ the stockholders. Including billionaires. Who have to pay taxes on those dividends. (And then, if they want, buy more stock.)
Edit: In fact, to clarify that, we really should think of stock buybacks as what they functionally are: The corporation issuing dividends _in the form of additional stock_ to shareholders…but no one pays taxes on that because instead of technically being handed new stock, the shareholder’s existing stock just controls more of the corporation, proportionally.
And this, unlike trying to regulate the collateral of custom loans, is incredibly easy to fix.Report
I can think of a couple of legit uses for stock buy backs; if you’re going to give stock to employees as part of their compensation (mostly a C-suite thing), if you’re taking the company private, but those are mostly corner cases and presumably could have carve outs.
I’m not opposed, but this does nothing to fix the original issue, i.e. shares being used as cash without being cashed.Report
You mean buying stock to give to employees as compensation?
Well, my position on that is it’s kinda stupid anyway and that sort of thing causes rather large incentives to manipulate the stock prices for a bump instead of doing what is actually best for the companyas evidenced *waves hand at a society where, for a random example, you functionally can no longer buy fast food at certain hours because the lines are too long because they can’t raise wages because the market reacts poorly to that, or they think it does*…
…but anyway, if those executives _really are_ such Gods Among Men that they deserve what they’re getting paid, surely the company can afford to just issue more stock. I’m sure the executives are bringing more enough long-term value to the company that it will than counter the slight dip in stock price that issuing more stock will result in. Surely. These executives are Very Good at their job, worth _hundreds of millions of dollars_ in added value, I have been assured very loudly and repeatedly that this is true.
Normally companies aren’t the one buying their own stock there. It’s some third party that has come in and they are purchasing the stock. I’m not even sure if a company can take _itself_ private, although I can’t really think of a reason it couldn’t. It would have to buy back the stock of everyone _except_ the new owner…and I think it would even have to buy that back also, and the company then issue non-public stock in exchange? (If there’s some way to convert publicly traded stock into private stock without paying capital gains taxes, we should fix that also, but at worst that only is a loophole for the remaining owner.)
But…I don’t even know if things can work that way at all, taking a company private usually works via ‘I have created a new corporation, and then gotten a majority of shareholders to vote to force all shareholders to sell to it’, so taxes do, in fact, get paid there…I hope?
Yeah. I think there were a few carve-outs before 1982, but honestly I can’t be bothered to look them up.
But, technically, we don’t need to have carve-out at all. Because a company can replicate the exact results of a stock buyback without doing it. Let’s say a company wanted to buyback half of its stock. All it has to do is issue dividends of half of its market cap, cutting its valuation in half, and then do a reverse stock split, aka, if you had two shares of stock you now have one. And then, if the company wants, it can _issue new stock_ to give to executives.
That _functionally_ is a stock buyback of half the stock. You have the same results on the corporate side. But…all stockholders got a huge chunk of dividends and will be paying taxes on it. (And also the market is irrational and priced on complete nonsense logic by dumbasses who don’t know anything, so I have no idea what the market would actually do.)
In fact, and this is hard to explain, most of the justification for stock buybacks are actually, hilariously, the fault of the company for _not issuing dividends_ to start with, hording cash and causing stock prices to go to too much, and then issuing more stock to try to keep the prices down, and eventually that extra money is gone and the company simply has too much stock chasing too little company and needs to buy some back.
Just issue dividends, you morons! Take the money you are making, and give it to your owners, the actual literal entire purpose of stock. (And stop rewarding executives for skyrocketing stock price instead of actual profit.) The stock price should not be compete randomness, or as high as possible, it should ‘Here is what the company owns, plus roughly what profits we expect from it in the near future’.Report
Thinking that workers should have index funds in their retirement accounts is “communism”?Report
I don’t see a reason why everyone can’t own cars, or cell phones, or stocks.
These are things we can make more of if we need to.Report
…what?
You realize that making more stock in a company devalues existing stock, right?
And also…forcing companies to create and issue stock…hell, I’m as anti-corporate as they come, and even _I_ think that’s perhaps a step too far.Report
The single largest aggregate use of the corporate portions of the 2017 tax cut was stock buy backs. Which make stock more scarse and thus more valuable.Report
Can you imagine how the Great recession would have gone if, in addition to everything on fire at that time, Bush the lesser had managed to privatise Social Security and all those retirees were looking at their retirements vaporized into ashes in the stock market route that occurred? There would have been blood on the streets.Report
Maybe I am misremembering but my recollection of the Bush proposal is that there would have been a phase in, with the private accounts being available at first only to younger people and I’m not sure how harsh it would have been when the theoretical program would have only been in place for a couple of years at that point. But the general principle applies. Like by the time of the covid crash you’d probably have had people wiped out and it isn’t like any remotely credible person could argue that there will never be a financial crisis of any kind ever again.Report
Yes Bush had a phase in because he know if he touched the money of anyone who had serious focus on the plan they’d string him and his party from a lamp post but his preference was to dump everyone into private plans.Report
You can’t be “wiped out” unless you’re investing on the margin, which is a really bad idea for normal investors with retirement accounts.
How much did the market go down? 20%? 30%?
You eat that and you are still massively better off than you would be if you got SS’s “safe” return. And that’s if you totally cash out at the bottom of the crash which is a breathtakingly bad idea.
Just like you are investing a little bit at a time, you should be getting out of the market a bit at a time.Report
I think this is naive. Any system that relies on individuals always doing the responsible thing is never going to work. Now I think the real answer supporters of that approach would like to give that they just don’t care or think it will have any impact on them. IMO that is also naive.Report
Your argument is that you think the people who propose it are secretly bad?Report
It’s not “bad” vs. “good”.
It’s self-interested vs. family/tribe-interested vs. greater society-interested vs. universe/God-interested.
And you can do very well for yourself professing publicly to be greater society-interested or universe/God-interested while being self-interested.
Seriously, people eat that crap up.Report
I actually think there are plenty of reasonable and even self interested reasons for my stance, though I also operate under the assumption that most people aren’t monsters in how they understand their self interest.
The irony is that what conserva-tarians are advocating for in practice is exactly the kinds of things I’d assume conservatives would profess to be against. That being a cold, selfish, atomized society where people throw their own mothers out on their asses because they didn’t manage their investments well enough. Now, as I said, I don’t believe that’s the real intention, just that they’re being sold a bag of goods, but maybe it’s me who is naive.Report
You are absolutely right.
Self-interest + long time horizon presents pretty identically to universe/God-interested.
Something something marshmallow test (untrustworthy researchers caveat).Report
You can do even better by adopting a self righteousness stance of professing to be a disinterested observer unswayed by family/tribe interest.Report
Really?Report
No, I specifically used the word naive. I think people are generally bad at judging these kinds of risks but also pretty Pollyanna-ish and tunnel visioned about how they might personally be impacted.
I mentioned above my belief that even if you did something like what’s been proposed you’d eventually create enough losers to have a big constituency for social security close to how it currently exists or something very much like it. The most important part of that constituency wouldn’t be the bleeding hearts, it would be the working middle class people who now have parents or in-laws asking for (in many cases even more of) their support, spread thin as it already is.Report
You said you think Dark Matter’s approach was naive, but then you said that “the real answer supporters of that approach would like to give that they just don’t care or think it will have any impact on them”. Not that the supporters are naive, but that they (a) don’t care, or (b) let’s be honest, don’t care. I don’t see a difference between “putting your interests over others in matters of public policy” and “bad”.
And on a tangent, maybe that’s the source of my difficulty with so many comments on this site. We lack consistency. The average comment may not explicitly accuse someone of supporting immoral policies, in fact may profess that morality has nothing to do with the conversation, but then goes on to continue the discussion as if there’s been a moral pronouncement.Report
Well to clarify, I don’t think Dark is bad. My last sentence in that comment also said that I think the don’t care/don’t think it will impact them position is naive, not bad.
On the contrary I think for most people it will eventually impact them and they absolutely will care when it does, whatever they say or think about it in a theoretical discussion. It’s a very human way to look at things.Report
In what respect is favoring your interests over others’ in public policy not bad? That’s my main question. The question of naivete is simply whether putting yourself first will get you bitten in the long run.Report
In what respect is favoring your interests over others’ in public policy not bad?
Bad for whom? Bad for what?Report
Just assume I’m thinking deontologically. My point here is that people don’t throw haymakers (which is our current method of political dispute) over disagreements over timeframes of self-interest.Report
Maybe this is the disconnect. I’m not saying people who disagree with me are favoring their interests over the interests of others. I mean, certainly some are, but per my comment to Jaybird above, I don’t think that’s true of the vast majority of people. What I’m saying is that I think they are misunderstanding their interests, and that their understanding of their interests in the hypothetical at hand is unlikely to match up with what they would actually be in the real world.
To put a finer point on it, re: what I said to Jaybird, I don’t believe most of them want to live in a cold, selfish, atomized society where people throw their own mothers out because they failed to manage their investments well. The opposite actually. And it’s much more in their interest not to live in that society than it is to maybe be able to put a few extra bucks in their retirement if they’re lucky enough with their investments.Report
But if we’re saying that someone’s policy judgment is affected by his misunderstanding his interests, doesn’t that presuppose that he’s giving his interests higher priority?Report
Maybe in a really abstract (or conversely radically reductive) way but not in one where I’m willing to call it a matter of morality. I mean, none of us is completely selfless but that doesn’t mean that no one can ever be right about anything on the merits or more perceptive about the interaction of human nature and public policy.
Maybe there’s a larger conversation there but when it comes to the matter of interacting on this site I try to operate in good faith and under the presumption that everyone else is too, even the people that disagree with me.Report
Let me give you an example that maybe will help on an issue where you and I are more in alignment on policy. Take the various controversies around (whether) wokeness (has) run amok in public schools. I think most of the people who disagree with me about it believe they are doing right. To me it is obvious that you’ve also got a lot of super self interested grift involved at the extreme end, but the regular people who favor it generally favor it because they think it is good on the merits, even if there is also some self interest in the sense that the ideas and policies in question also just so happen to advance their world views. It’s all just kind of baked in.
One of my biggest, and I think strongest, arguments against it is that the same rules that would keep the woke stuff out is also the rule that prevents religious instruction and keeps junk pseudoscience out of the classrooms. Those rules are also the same that say that actual objective quality should be a priority.
I think that upon examination even people who disagree with me about the policy could and can be convinced that they share those interests, and they are even more important.
Hopefully that makes sense.Report
OK, you’re talking more about reconciling interests at a higher-order level. There’s a subtle distinction here that I could write three boring paragraphs about, but since I’m the only one who read it this way, and I’ve got other things to do, I’ll nod and move on. A pleasure as always, sir.Report
The morality shifts.
Sometimes it’s Deontology (really only a problem when the Deontology in question is different from yesterday’s Deontology).
Sometimes it’s Enlightened Utilitarianism (defined as understanding that 2nd order effects exist).
Sometimes it’s Vulgar Utilitarianism (defined as not caring that 2nd order effects exist).
Every now and again, someone who is into Virtue Ethics shows up but they wander away again when faced with shape-shifting Deontology that doesn’t even know that it was different yesterday.Report
Heh, Shape-Shifting Deontology can’t be argued with. Only loved.Report
a sweet Valentine’s Day messageReport
My company 401k doesn’t let me do the very stupid things you suggest. I’m limited to sane options. That I also do the same thing with my other retirement accounts is a different issue.
Further, you’re assuming the current system works better than it does. That 20% haircut it’s going to give everyone is the system working as it’s supposed to. We just normally don’t see it that starkly. It’s supposed to provide extremely low rates of return so it’s damaging everyone’s retirement.
Further, if we had a better program and we wanted to have an extra program to help the extremely rare corner cases you point out, we’d have the money to do so if we weren’t so determined to take large amounts and insist on extremely low rates of return.Report
I mean this in a complimentary way, but using yourself as the benchmark is the wrong way to look at this. I don’t doubt you’ve been smart and responsible and would end up just fine. But that’s just not the case for large numbers of people in an aging society without much household savings and for whom that haircut may well be the difference allowing all or at least some level of independence.
You’re also confusing what’s going on with the rate of return, which is a feature not a bug. It operates that way precisely because it’s supposed to serve as a hedge against not just uncertainty but out and out stupidity. No one is going to maximize return on something like that, by design, but it should keep them fed, housed, and only a minimal burden on others in old age, which is the point.Report
Bingo. And that’s the part tat infuriates Dark and most conservatives the most. SS isn’t designed to maximize anything, and as firm market capitalists they have no use for anything that isn’t maximizing return. Preferably to their pockets.Report
“SS isn’t designed to maximize anything…”
um.
you have this thing you like to do, where you proudly assign yourself the role of Noble Defender Of The Whatever, and then you say the things people criticizing the Whatever say, except you mean them as defenses…Report
Yes and?Report
I don’t recall people suggesting that the purpose of Social Security was to enable market manipulation by the Federal Government.Report
I think that’s what the plutocrats think, and also that they understand that the reality would be a giant but relatively short term grab bag for them until the inevitable popular backlash, so long as we remain a democracy anyway.
But for regular albeit successful people who navigate the existing system fine, and would probably navigate most systems fine absent something really crazy, at least as an individual, I think it’s just normal projection of one’s own experience. We all do it.Report
Is SS a backstop or is it a retirement vehicle?
If it’s the former then you are assuming people mostly do their own retirement planning. Ergo this program should be in food stamps plus rent territory. Make everyone invest in T-Bills and we’re there.
Phil is right and there’s no need for any optimization. Sanders is wrong to even attempt to increase benefits because that’s not what the program is for.
If that’s not what we’re trying to do, if SS is supposed to actually let people retire in some level of comfort, then more optimization means more comfort. It also means less gov funds needed.
When we start talking about the difference between X% and X+5% returns over this amount of time we’re talking about huge differences.Report
The backstop isn’t the return, it’s the federal government’s guarantee of the benefit. I’m agnostic on the Sanders pitch, but what we’re debating is cuts and/or sending it into Wall Street roulette.Report
Oh sure but if my company’s 401K would have let me get in on the ground floor of FTX crypto it would have beat Social Security all to hell!Report
Because the firm managing that 401K has figured out which “sane” options maximize its fees for the long term. When that changes, your options will change.Report
Do you apply that kind of “they are acting in their own best interest and screwing everyone” reasoning to the government or are they assumed to be on the side of angels?Report
I think this is a fair point in the sense that no entity is completely trustworthy. My counter though is that high finance blows itself up every decade or two, with the government acting as an ultimate insurer of the entire system, some times less aggressively, sometimes more, but it’s always there. So when those same private interests eventually screw up the situation for enough old people, which it inevitably will, the state will ultimately be asked to step in as an insurer of last resort, which it will. I don’t see a reason to go through that cycle, and the only real winners of it would be the banks and brokers that get a bonanza before the music stops and the federal government ends up having to step back in and clean it up.Report
Right this minute, SS is in trouble and the State is being asked to step in.
The numbers are very large because we’ve been taking out large amounts of money and investing them in extremely low interest amounts.
Or maybe it’s, because for all the talk about SS being a retirement program, it’s not. It doesn’t make real world investments that carry real world payments.
And the taxes for funding this at some level crowd out actual investment in retirement programs. If the Gov were to force me to invest another 12.5% of my income in some serious retirement account, I’d be stupidly better off.
And not just me, most of the situations were we try to envision losers are easily avoidable by sane regulation or are really situations where they’re STILL much better off than they would be if they’d done SS.
The absolute dead bottom of the market in 2009 was still almost twice the market in 1993 (as far back as I can easily graph). Over this kind of time frame, the market is a measurement of the US economy in general.Report
I’m not sure I understand what you mean about government being asked to step in on what is already a government program.
But that aside, I’m not against considering concepts that would protect the funding of the program. The open question is whether any of these things would actually do that without risking the program itself, which is incredibly high stakes. Color me skeptical.Report
I’ve taken a LONG time to respond to this, since it’s a thinly, poorly veiled insult to me and my colleagues.
I’ll say this – the managers of the 401K have a profit motive to find a product and thus fee structure that both maximizes their compensation long term, and maximizes the rate of return short term. That will always drive the menu they present you to choose from, not the best possible options for your personal returns. That doesn’t make them morally or ethically “bad.” But it does make them actors less interested in you.
Government employees have no such motive. Not the Weather Service, not the CIA, not the DMV in your state or the county permit clerk or any of the host of government employees you sweep up in your generalization. Most of them are good decent people who do take their public service seriously, and thus are closer to angelic. Yes, some parts of government does bad things, and yes, there are bad actors in government whom, frankly, we do a piss poor job of disciplining.
Motivations, incentives and outcomes are thus different. As they should be.Report
I didn’t realize/remember you worked for the gov.
What I was pointing out is you’re assuming bad intentions and then blaming them for having bad intentions and making your evaluation based on that. We can do that against the gov as well.
If we take bad intentions off the table and only look at results, then SS seriously sucks compared to what I’m doing for myself.
Worse, what I’m doing for myself could be scaled to everyone. They’d have to be forced to do so, too many people wouldn’t prepare for their retirement at all if they’re not forced to do so.Report
What I assume is people in the private sector respond to the profit motive, and that in doing so they make choices that are always good for the business, but may be bad for individuals. That’s how capitalism works, or so I keep being told. You are a person who likes to look at outcomes, and in many many cases, decisions taken under a profit motive end up being bad decisions for downstream persons.
Talk about making value judgements . . . SS can’t be judged by your individual decisions or the aggregate decisions of the 401K market because it isn’t designed or expected to replicate that market. It had a different impetus, it has a different design , and so far seems to be working as intended. Its clear you don’t like that design, but your dislike doesn’t make the design “wrong” for its purpose.
Yes and? If you want a market absed economy – and in many other discussions you lament the lack of market forces shaping significant portions of the economy – then you have to accept this outcome (which occurs now FWIW). If you are going to accept that governemtn can and should force these folks to do something they aren’t currently willing to do, then maybe government forcing other changes needs to get less pushback from you.Report
And how does this matter? Almost no one has 401k anymore.Report
This was in the context of the gov turning SS into a mandatory 401k program.
Someone pointed out lots of people aren’t especially fiscally literate, I pointed out responsible companies already put guide rails on their programs.Report
There are systems that work well so long as the green line keeps going up.
If the green line does not keep going up, there’s going to be calls for the government to step in and replace the stuff that wasn’t invested in during the period where the green line kept going up.
Like support systems.
Maybe we should have maintained some of those.Report
As InMD points out above, the government stepping in to save a wildly popular government program isn’t the wild-eyed idea some here seem to think it is.Report
Shots fired:
NEWS: Amid Republican Threats to Social Security, Sanders, Warren, Schakowsky, Hoyle, and Colleagues Introduce Legislation to Increase Benefits and Extend Solvency Through 2096
https://www.sanders.senate.gov/press-releases/news-amid-republican-threats-to-social-security-sanders-warren-schakowsky-hoyle-and-colleagues-introduce-legislation-toincrease-benefits-and-extend-solvency-through-2096/
WASHINGTON, Feb. 13 – As Republicans threaten cuts to Social Security and other essential federal programs, Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), along with Reps. Jan Schakowsky (D-Ill.) and Val Hoyle (D-Ore.) in the U.S. House of Representatives, introduced legislation that would expand Social Security benefits by $2,400 a year and ensure Social Security is fully funded for the next 75 years – all without raising taxes by one penny on over 93 percent of American households that make $250,000 or less.
Report
What are those people’s current marginal tax rates?
If it’s 50% then an extra 12.5% takes them to 62.5% so that’s 25% of what they currently make. If it’s 60% then taking them to 72.5% then that’s a third of what they currently make.
If Sanders is correct and the rich’s current marginal tax rate is less than 1% then it won’t change anyone’s behavior.Report
I’m not sure whose behavior we’re trying to change here.Report
Republicans in disarray: https://www.nytimes.com/2023/02/13/us/politics/republican-house-majority-divisions.htmlReport
There are realistic proposals to fix Social Security, without needing to involve politicians at all.
The Swedish solution, I’m told, works pretty well.Report
Yeah, we should tax those gains and use them to pay for social security.Report
We already do tax income. Or do you mean wealth should be taxed?
And you had another post about the Market not being big enough and then talked about the Dow. The NYSE, by itself and it’s hardly the only exchange, is $23 Trillion.Report
I didn’t say we should tax income, I said we should tax stock market gains.
Stock market gains are not ‘income’ until the stock is sold, which means all the extremely wealthy have to do is never sell them…they instead get low-interest (As in, below inflation) loans off of that stock.
And that money is actually loaned, interest-free, from the government to the banks, to ‘juice’ the economy. It’s a fun system, isn’t it? “You’re extremely wealthy? Take some free money from us, the taxpayers! Don’t worry, eventually all this will be paid back.”
Which they will, when they die and their estate liquidates…and the estates don’t have to pay capital gains tax on the stock sales. Whoopsie.
(This is in addition to the dozens of ways the wealthy can sell their stock and avoid the taxes. I’m just pointing out they don’t even have to sell it.)
Certain sorts of easily locatable wealth like stocks and real estate, yes. We shouldn’t bother tracking down and trying to add up a lot of it, but add up the stuff that is literally already registered with the government, and tax it.Report
The easier and less disruptive fix is to ban using stocks as collateral.Report
So to be clear – in order not to raise taxes on people who can probably afford to pay, you as a free market libertarian want the GOVNERMENT to ban what and how people can use their stocks for and the FORCE people to invest for retirement in a narrow set of ways?
FascinatingReport
This is banking regulation and not stock regulation.
People could still sell stocks to maintain their lifestyle, they’d just have to accept the cap gains tax. Taking loans out to avoid paying cap gains seems like a problem.
Yes. I think people should be saving for their retirement.
I think engaging in raw redistribution of money comes with enough negative incentives to voters/politicians/tax payers that it should be avoided if possible.
Given how easy it is to save for retirement and how bad it is if we don’t, forcing people to make fiscally sane choices seems like a solution.Report
I’m still laughing heartily at a free market libertarian wanting to FORCE people through GOVERNMENT action to do what he thinks is fiscally sane . . . . .Report
If we’re going to take a high level view of this, then what are our alternatives?
Live with serious elder poverty among the large minority who won’t save.
Use the gov to do something about that.
I don’t think it’s realistic to avoid creating a safety net as long as we’re going to let seniors vote. But imho it’s very fair to ask them to pay for their own retirement; And no, despite what SS advocates like to claim, they haven’t.Report
This is kind of where these sorts of discussions always end up, where the proposed replacement for the modern regulatory or social welfare apparatus grows ever more complex with caveats and exceptions and provisos to where it just replicates the original.
There are probably a dozen different ways to ensure financial security for seniors, but essentially all of them put the government in the role of coercive manager preventing people from being irresponsible, and being the guarantor of last resort if they do.
This goes for banks, for businesses, and individuals.Report
If you’re going to take a very high level evaluation, then sure, “we’re using the gov to fix this”.
However all solutions are not equally viable long term, moral, corrosive, or efficient.
Currently we’re taxing the young (who as a class are poor) to help the old (who as a class are rich). We’ve created a massive entitlement which, combined with it’s fellows, threatens the budget. We’ve had politicians spending the trust fund. And economic efficiency of this system is horrible compared to what it pretends to be, i.e. retirement funds.Report
Since the time when humans first started burying their dead, the young have supported the old because, well, they as a class are rich with skill and labor while the old are not.
The only reason that nowadays the old are rich is, wait for it this will shock you, due to a government mandated social security program.Report
Laughably wrong.
Basic wealth by age group:
https://www.cnbc.com/select/average-net-worth-by-age-45-to-54/
As you age your income and wealth go up and your children are launched.
According to the SS admin,
we have about a third of the population who get 50% of their income from SS. Of that, for about 12%-15% SS is 90% of their income.
1) The old, as a class, would be rich even without SS.
2) Without SS significant numbers of the old would be deeply in poverty.
Those two statements don’t conflict.Report
What does the word ‘easier’ mean to you?
“All we have to do is change how literally every billionaire functions in the global economy, in a way they don’t want it to happen, I’m sure we can just do this thing.”
… Also, wow, that’s not very free market of you. Just, gonna forbid banks from making loans that they know will be paid off? What exactly is the justification there? Banking regulations are supposed to step in when things are dangerous or people might be harmed, but here everyone’s getting exactly what they want out of it.
And, again, this is literally how billionaires operate. They don’t pay for things, they promise to pay for things in the future, and they do. They pay for it when it’s most beneficial to them… And not just when they die, maybe a few years from now some other companies will have a bad year, so they sell that stock and the stuff that increased in value, netting them a big fat zero in taxes.
You’re talking about trying to remove literally the underpinning of billionaire-hood. Yeah, let’s just do that, should be easy.Report
We’ve had lots of experience with other fiscal messes being caused by using economically fluid “assets” as collateral, most recently FTX.
Tax avoidance is not something the gov is supposed to encourage, is a problem on the face of it, and unless I’m missing something, seems to be the primary use of this.
What, other than tax avoidance, is the purpose in doing this?Report
Are you suggesting that stock is too volatile to use as collateral, while being perfectly fine to use it as the investment vehicle of every single American? What?
Someone with 10 billion of stock is going to be able to pay a billion dollar loan. Unless the entire market completely crashes, but no collateral is going to be worth anything if that happens. That isn’t anything like the crypto nonsense.
Banking regulations are supposed to be things that keep the financial market safe, not boring things cuz we’d rather people do other things with that money and thus pay taxes on it.
If you want people to pay taxes, tax what they’re doing.
Tax avoidance not only is legal, it’s actually often encouraged by The government, Who taxes things we don’t want people to do, thus does we set up structures where they don’t pay taxes because they don’t do those things.
Because that’s what tax avoidance is, not doing the things you will be taxed on. That’s why it’s different from tax evasion, where you do the thing you are taxed on, and don’t pay taxes anyway.Report
Trevor Noah explained it a little bit here:
That’s as strong as I’ve seen the position argued.Report
There is a world of difference between a single company and SPY (75% of all publicly trading trading stocks and a stand in for the US economy).
Enron. FTX.
So you’re admitting the main purpose of letting stock be used as loan collateral is tax avoidance and can’t think of any other purpose.
So why are you opposed to outlawing it?Report
And if there is a difference, one assumes the _banks_ will worry about that risk?
Um…and also the person who borrowed the money still exists? And owes the money.
You realize we’re talking about collateral to a loan no longer being worth what it was when promised? It would basically just be the same as an upside-down mortgage.
Now, admittedly, an upside-down loan of a few hundred million dollars is a bit more worrying to the bank than an upside-down mortgage on a $450,000 house, but…most people actually pay their loans off, including the super-wealthy.
And the banks generally loan it out to the super-wealthy at about 2%. (Aka, less than inflation.) This presumably covers the rare combination of someone defaulting on the loan _while_ their collateral is crashing.
I can think of other purposes. Elon Musk, for example, couldn’t have sold his stock in Telsa to buy Twitter without it causing a crash in price, but could get a loan against the stock without causing that.
But, yes, it’s usually tax avoidance. Again, tax avoidance is, by definition, legal. It’s avoiding doing things that would cause you to have to pay tax.
Because banking regulations are supposed to defending against banks overextending themselves or taking advantage of people, and this isn’t either. This has never been a problem for banks, it has never caused any problems. One or two banks have probably lost some money over it, but that’s literally how all loans work. We’ve never had a bank crash over it, and because of how FDIC works, it’s not like any taxpayers would be on the hook for _those_ sort of loans.
But I’m mostly opposed to it because you have taken a completely absurd, incredibly over-regulatory, and misuse-of-regulations position, instead of just going after the actual problem: We only tax capital gains, in fact ‘capital gains’ only exist, when billionaires turn capital into cash, which allows them to manipulate pretty much everything to do with taxes by doing that when and how they want.
And the problem isn’t _just_ stock.Report
Their ability to hand their failures’ bills back to the tax payers is why they’re regulated.
:Blink: Yes, Ken Lay and SBF still exist and owe money. Somehow I doubt that turns a negative into a positive.
Musk is over extended and if Telsa crashes Twitter won’t ever generate enough cash to make good on the loans.
Sure. And if you can explain why it’s good public policy to let this happen for some reason other than tax avoidance then I’d be fine with it.
Taxing people on theoretical gains for economic activities they could do but haven’t seems like a bad idea.
We’re in wealth tax territory. Other countries experiments with wealth taxes have shown that they’re extremely destructive and cost more to administer than they generate in tax.
The level of overhead here imposed on everyone would be non-trivial. You own a stock, it goes up to X, you pay tax on that, it goes down to Y, you get a refund?
We’d now need to track what we did with a stock every year, even if what we did was nothing, and the tax affects, and all of the previous tax effects can affect the current situation.
Calling the outlawing of purely tax avoiding activities “heavy handed” compared to this seems absurd.Report
Uh, no. These loans are not insured. I hate the banks privatizing profit and socializing losses as much as anyone, and if this was actually relevant I certain would be complaining about it, but that is not how banks are structured. In fact, normal banks don’t even make these kind of loans, or at least not the same _part_ of banks, as banks are deliberately structured into parts.
You keep talking about Enron and SBF, so let’s go check how many banks that Enron’s collapse took down. I mean, Enron was _huge_, it was one of the most respected companies in the world. The collapse took down fricking Arthur Andersen, just because they did the books! But that’s due to the actual scandal, what we are looking at is just the stock price, which went from ‘a stock price’ to ‘no stock price’.
And the banks that collapsed, or even needing bailing out, in the wake of that are…no one. There were no personal loans that failed badly enough that anyone even _knows_ about them.
Seriously, you have somehow locked onto the idea that banks often go under due to this, and…as far as I can tell, it’s literally never happened. Trump has made an _entire career_ getting loans (Which are, incidentally, _not_ backed up with stock, but merely real estate and ‘reputation’, see below.) and not paying them back, and no bank appears to have gone under from his nonsense.
90% of what rich people do is for tax avoidance.
If you can explain _how you think such a ban would work_, then maybe you’d have some sort of logic.
Banks shovel buckets of money at rich people. (Especially since the Fed keeps loaning them money for basically free.) For a lot of reasons, with a lot of different collateral. Often no collateral. Often real estate as collateral. Or partial ownership in a company that isn’t publicly traded.
And, yes, sometime publicly traded stock.
This is how the wealthy function. They get people to pay for things for them, with the promise they will pay them back, and…they’re pretty good at paying it back, con-artists like Trump aside. Banks certainly aren’t losing money on this, and they can afford to have some loans not paid back, that’s why they set different interest rates.
And while it’s pretty funny watching someone learn this and freak out, it’s not something that you can stop from happening. Barring stock as collateral. You’d just have banks doing _even less_ secured loans. At least publicly traded stock is objectively worth something (Which allows them to make triggers based on valuation and depend repayment or more collateral if the value dips.) and fairly liquid.
And, again, I point out, _this doesn’t happen within the normal banking system_, so you literally couldn’t regulate it anyway. This isn’t some banking regulation you want, it’s an actual law.
Then you don’t want to tax the wealthy, because everything they do is focused on making sure those ‘actual gains’ only happen in exactly the circumstances they want.
Gee, it’s almost as I said immediately at the start of this discussion we should only tax wealth that has _existing_, already _government-registered_ appraised value, like real estate and stock, and not try to track down anything else. People have to already pay taxes on real estate, and they already know, exactly, how much stock they own.
Nope, no refund.
I don’t get a refund for a year I’m doing well just because the next year I was not. I don’t have to pay taxes on the year I’m not doing good, but if I make $50,000 one year and spend $30,000, and then I don’t make anything the next year and spend $20,000, I don’t get my _previous years taxes_ back.
And, hell, I have to pay money on the _entire_ $50,000 the first year, not the $20,000 profit. Weird, huh.
Meanwhile, if someone owns some amount of stock that goes up $50,000,000 and then down $30,000,000 in that year, _at most_ has to pay taxes on the $20,000,000 profit and only then if they actually pull all the money out that year, because, again, they can usually just write OIUs with the understanding that at some point it will be the most economically feasible to pull the money out of investments.
Now, I’m not suggesting that minute variations in stock prices _should_ be taxable, if a stock price vibrates up and down within a dollar 300 times in an hour, that not 300 dollars worth of profit, I’m just pointing out how weird and disjointed it is, because if I actually earned 300 in an hour, even if I immediately spend it as I earn it, I’d have to pay taxes, unless I did some pretty complicated restructuring as a business. But we let stockholders just…not.
Having that system, of only taxing ‘profit’, and even then only when they ‘make it real’, exist for _capital_, only for capital, only for things that are basically the definition of rent-seeking and accrue value _with no effort from the owner_, is…why this entire economy is utter s***.
But you can’t fix it by saying ‘No, you cannot take give a loan to rich people.’ You fix it by _not letting rich people not pay taxes on 99% of what they do_. You fix it by taxing the money that is in their hands, under their control, not their ‘income’.
I have literally never had to ‘track’ what I did with stock and figure out tax liability. Why? Because I, like…literally everyone…has a brokerage who has all the books on that, and even sends me the information I need to calculate taxes, every year. They’re actually required by law to do that. I have no idea how I would even conceivably trade stock without a brokerage, I think I’d have to somehow get a seat on the floor of the stock market?Report
Social security tax revenue last year was just shy of a trillion dollars. If we divert 10% of that into the public stock market what result would we expect.
Republicans routinely say they want to privatize Social Security, I just don’t understand how it’s “fearmongering” to say they want to privatize Social Security. This guy got the Veep nod *because he was talking about privatizing Social Security* (https://www.cbpp.org/research/ryan-plan-makes-deep-cuts-in-social-security)
Also just fwiw the U.S. is towards the bottom of the OECD ranking for government revenue as a portion of GDP for post-industrial nations and we could easily keep Social Security by just moving a couple of percentage points towards the mean. If we actually got to the top ten we would have a much more robust social safety net.Report
I dislike comparing safety nets by GDP percentage, imho raw numbers is a much better evaluation considering what we expect a safety net to actually do. The US’s net is easily comparable to whomever in terms of the money we’re spending.
If your net doesn’t give someone enough money to avoid hunger, then you shouldn’t be able to claim that your net is better than the USA which gives way more than that.Report
This is bananas.
Government spending conparisons, to have any meaning, have to be relative to buying power. You can argue that spending-to-gdp is suboptimal to some other measure but raw numbers is completely meaningless across nations.Report
Sorry if I was unclear. Not “raw amount spent by the countries”.
Raw amount per person. Presumably it’s appropriate to adjust for PPP.Report