Biggest deficit drivers are social security and medicare

[ksen]

I read about this a lot. For example some of the top google hits for this are:

http://www.politifact.com/florida/s...re-and-social-security-not-defense-are-drivi/
http://www.politifact.com/truth-o-m...says-medicare-and-medicaid-are-largest-defic/
http://www.nationalreview.com/corne...d-medicare-social-security-spending-are-cause

I did some looking into the Trustee reports for social security and medicare. I posted this about it on another forum:

For example, one of the comments says that Medicare and Social Security are two of the biggest deficit drivers.* Well, genius, Medicare, according to the Trustees report, only contributed $3.2 billion to the deficit with total income for 2015 of $644.4 billion and total expenses for 2015 of $647.6 billion.

Meanwhile over in the Social Security Trustee's report the OASDI funds (Social Security and Disability) are still in the black by $25 billion with income of $884.3 billion and expenses of $859.2 billion.

Taken together OASDI and Medicare actually reduce the deficit by around $21 billion.

I probably should never have looked at those reports because the Trustees report what tax rate would be needed to correct any long term imbalances.* To make Medicare stable for the next 75 years would mean increasing Medicare payroll taxes by 0.73 percentage points.* Currently Medicare payroll taxes are 2.90% (1.45% paid by the employee and 1.45% paid by the employer).* To "fix" Medicare would require that percentage to to to 3.63% (1.815% for the employee and 1.815% for the employer).

To "fix" Social Security fro the next 75 years would mean upping the current OASDI tax from 12.40% (6.2% for employee and 6.2% for employer) to 15.02% (7.51% for employee and 7.51% for employer).* I think that's also assuming the current $127,200 salary base limit.

So all this arguing and wringing of hands and complaining and fearing the destruction of the United States is over a measly 3.35% increase in payroll taxes split 50/50 between the employee and employer (1.675% each).

SAD!

The fact is that while medicare has contributed about $3.2 billion to the 2015 deficit, taken together social security and medicare are net reducers of the deficit.

So all you deficit hawks keep your hands off of medicare and social security and go after the real drivers of the debt and deficit which I would guess would be military spending since it is by far the largest area of discretionary spending.

 

[Cheerful Charlie]

When Bush gave us his big tax cuts to the wealthy, CBO reported 30% of our deficits came from that. Under Obama, he was able to get Congress to cut only 6% off of them, and the GOP congress wanted to make these tax cuts permanent. What small deficits OASDI could give us could be dealt with easily if we had a competent GOP House and Senate.

These same assholes have been ranting how bad the economy was and how big the deficits were while these massive tax cuts to the rich were dragging us down. "$19 trillion in deficits! Wgga! Wugga! Wugga, Droooool!"

 

[funinspace]

ksen, first I'm not trying to claim the SSA sky is falling. However, there are real issues, albeit modest. Social Security is not reducing the deficit in any normative sense. Oh, and the taxable income cap for 2016 is $118,500. I'd be fine with removing the cap all together. I'd also be fine with kicking the early retirement minimum up 2 years to 64. After that, then I'd look at what FICA tax increases would be necessary.

Per the SSA PDF you cited: " For 2015, the deficit of tax income (and non-interest income) is projected to be approximately $84 billion". What this means is that SSA is only in a surplus if one counts the SSA Trust fund (~$2.6 trillion of non-marketable Treasury notes) interest as real income/revenue. The Federal Government is the one that has to pay that interest, for it to be SSA revenue. So as of 2015, SSA is consuming 100% of their tax revenue, plus roughly $60 billion of that interest. The Federal Government can only pay that interest in one of 2 ways, out of current federal tax revenue, or by issuing new regular Treasury notes (aka debt).

 

[Jimmy Higgins]

I read about this a lot. For example some of the top google hits for this are:

http://www.politifact.com/florida/s...re-and-social-security-not-defense-are-drivi/
http://www.politifact.com/truth-o-m...says-medicare-and-medicaid-are-largest-defic/
http://www.nationalreview.com/corne...d-medicare-social-security-spending-are-cause

I did some looking into the Trustee reports for social security and medicare. I posted this about it on another forum:

For example, one of the comments says that Medicare and Social Security are two of the biggest deficit drivers.* Well, genius, Medicare, according to the Trustees report, only contributed $3.2 billion to the deficit with total income for 2015 of $644.4 billion and total expenses for 2015 of $647.6 billion.

Meanwhile over in the Social Security Trustee's report the OASDI funds (Social Security and Disability) are still in the black by $25 billion with income of $884.3 billion and expenses of $859.2 billion.

Taken together OASDI and Medicare actually reduce the deficit by around $21 billion.

I probably should never have looked at those reports because the Trustees report what tax rate would be needed to correct any long term imbalances.* To make Medicare stable for the next 75 years would mean increasing Medicare payroll taxes by 0.73 percentage points.* Currently Medicare payroll taxes are 2.90% (1.45% paid by the employee and 1.45% paid by the employer).* To "fix" Medicare would require that percentage to to to 3.63% (1.815% for the employee and 1.815% for the employer).

To "fix" Social Security fro the next 75 years would mean upping the current OASDI tax from 12.40% (6.2% for employee and 6.2% for employer) to 15.02% (7.51% for employee and 7.51% for employer).* I think that's also assuming the current $127,200 salary base limit.

So all this arguing and wringing of hands and complaining and fearing the destruction of the United States is over a measly 3.35% increase in payroll taxes split 50/50 between the employee and employer (1.675% each).

SAD!

The fact is that while medicare has contributed about $3.2 billion to the 2015 deficit, taken together social security and medicare are net reducers of the deficit.

So all you deficit hawks keep your hands off of medicare and social security and go after the real drivers of the debt and deficit which I would guess would be military spending since it is by far the largest area of discretionary spending.

The trouble with SS and Medicare is their spending will continue to increase as the Baby Bombers (fuck them, I'm not calling their boomers, many of them are bombing our nation into hell) keep getting older. These programs get the money first. So in the next 10+ years, the percent of budget spending on these programs continues to rise.

That said, there are ways to deal with the funding. And calling them entitlements pisses me off. Right-wing "reform" of these programs is unacceptable.

 

[Horatio Parker]

The deficit is an issue made up to sell austerity.

Govt deficits = private savings.

 

[Jimmy Higgins]

The deficit is an issue made up to sell austerity.

Govt deficits = private savings.

The trouble is, discretionary spending was nearly level during the Obama Administration, yet 30 to 40% of America are pretty darn certain that he increased spending there by 500%. When half of the people are the table have no bloody clue what is actually happening, forget about understanding any sort of nuance, it is very hard to hash out a reasonable plan.

 

[Horatio Parker]

The deficit is an issue made up to sell austerity.

Govt deficits = private savings.

The trouble is, discretionary spending was nearly level during the Obama Administration, yet 30 to 40% of America are pretty darn certain that he increased spending there by 500%. When half of the people are the table have no bloody clue what is actually happening, forget about understanding any sort of nuance, it is very hard to hash out a reasonable plan.

The Fed increased its balance sheet by some $4.5T. That's probably the "spending" alluded to. Govt spending that directly benefitted working people OTOH did not grow as it should've. Hence Trump.

It's not even clear that quantitative easing was stimulative. When the govt swaps assets via qe, the govt is the recipient of interest income that otherwise would've gone to the private sector. That's contractionary, not expansionary.

 

[Jimmy Higgins]

Spending did increase, but the vast majority was Social Security, Medicare, Medicaid, and issues resulting from the Great Recession.

The right-wing points to the deficit but ignores that most of that was revenue losses, not increases in spending.

 

[untermensche]

How is this more a deficit driver than the constant wars we engage in and do not fund?

 

[Horatio Parker]

Spending did increase, but the vast majority was Social Security, Medicare, Medicaid, and issues resulting from the Great Recession.

The right-wing points to the deficit but ignores that most of that was revenue losses, not increases in spending.

First you say nearly level, then you say increase. Which is it?

 

[funinspace]

Spending did increase, but the vast majority was Social Security, Medicare, Medicaid, and issues resulting from the Great Recession.

The right-wing points to the deficit but ignores that most of that was revenue losses, not increases in spending.

First you say nearly level, then you say increase. Which is it?

Yes

 

[Jimmy Higgins]

Spending did increase, but the vast majority was Social Security, Medicare, Medicaid, and issues resulting from the Great Recession.

The right-wing points to the deficit but ignores that most of that was revenue losses, not increases in spending.

First you say nearly level, then you say increase. Which is it?

I said discretionary spending. Medicare, SS, Medicaid are non-discretionary.

 

[Bronzeage]

It's difficult to take talk about the SS system's effect on the deficit, when this morning, an F-16, which originally cost $19 million dollars, didn't quite make it back to the runway. A replacement for this jet will cost somewhere between $150 million to $200 million, depending on the option package.

 

[Horatio Parker]

First you say nearly level, then you say increase. Which is it?

I said discretionary spending. Medicare, SS, Medicaid are non-discretionary.

Ok, so all the more reason to cut them, no?

Anyway, SS is pay as you go, so it shouldn't be included at all. They started including SS, I think during Carter, to make deficits appear smaller.

But the central point remains - if anything the deficit is too small.

 

[Alcoholic Actuary]

I read about this a lot. For example some of the top google hits for this are:

http://www.politifact.com/florida/s...re-and-social-security-not-defense-are-drivi/
http://www.politifact.com/truth-o-m...says-medicare-and-medicaid-are-largest-defic/
http://www.nationalreview.com/corne...d-medicare-social-security-spending-are-cause

I did some looking into the Trustee reports for social security and medicare. I posted this about it on another forum:

For example, one of the comments says that Medicare and Social Security are two of the biggest deficit drivers.* Well, genius, Medicare, according to the Trustees report, only contributed $3.2 billion to the deficit with total income for 2015 of $644.4 billion and total expenses for 2015 of $647.6 billion.

Meanwhile over in the Social Security Trustee's report the OASDI funds (Social Security and Disability) are still in the black by $25 billion with income of $884.3 billion and expenses of $859.2 billion.

Taken together OASDI and Medicare actually reduce the deficit by around $21 billion.

I probably should never have looked at those reports because the Trustees report what tax rate would be needed to correct any long term imbalances.* To make Medicare stable for the next 75 years would mean increasing Medicare payroll taxes by 0.73 percentage points.* Currently Medicare payroll taxes are 2.90% (1.45% paid by the employee and 1.45% paid by the employer).* To "fix" Medicare would require that percentage to to to 3.63% (1.815% for the employee and 1.815% for the employer).

To "fix" Social Security fro the next 75 years would mean upping the current OASDI tax from 12.40% (6.2% for employee and 6.2% for employer) to 15.02% (7.51% for employee and 7.51% for employer).* I think that's also assuming the current $127,200 salary base limit.

So all this arguing and wringing of hands and complaining and fearing the destruction of the United States is over a measly 3.35% increase in payroll taxes split 50/50 between the employee and employer (1.675% each).

SAD!

The fact is that while medicare has contributed about $3.2 billion to the 2015 deficit, taken together social security and medicare are net reducers of the deficit.

So all you deficit hawks keep your hands off of medicare and social security and go after the real drivers of the debt and deficit which I would guess would be military spending since it is by far the largest area of discretionary spending.

Someone should be along shortly to point out that it is neither a deficit nor a savings because that is just money that the government pays to itself.

aa

 

[Nice Squirrel]

Bad tax policy is the biggest debt driver.

 

[ksen]

Bad tax policy is the biggest debt driver.

goddamn it, i should have posted that in the op

 

[James Brown]

 

[Loren Pechtel]

View attachment 10534

1) Why are you using facts in a political argument?!?!

2) Pretty damning, got more recent data?

 

[Horatio Parker]

It isn't even necessary for the govt to issue debt. That they continue to do so is a holdover from the days of commodity backed money. Now it only serves to give investors a safe asset(corporate welfare - you can't buy a T-bill for less than $1k), and a mechanism to control the overnight rate.

Further, even if the bond markets shirk govt debt, the govt can direct the central bank to buy as much of the issue as required. Japan has been effectively controlling its yields this way. And their bid to cover ratios are over 4-1, meaning that for every bond sale, there are four willing customers losing out. Plenty of demand for Japanese govt debt, even with the govt clearly in the drivers seat.

All of this is just a way for the finance sector to influence policy. The whole govt debt/national debt/deficit issue is a canard.