Quote:
Originally Posted by WarrenC12
I'm not too familiar with the SS system, other than I've heard what you're saying before. Is it paying big money to people who already have big incomes (like OAS) or is it a lifeline for those who'd be homeless otherwise?
Overall I think the US has more of a revenue problem than a spending problem. Although I'm sure the military could take a few cuts.
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SS from my understanding is "self funded", but it's not funded in the same way CPP is.
CPP operates like a pension plan, a dedicated fund which has to be set up to make payments for a minimum period (right now it's funded into the 2070's or something). There is no risk to taxpayers to have to make up the difference.
SS is direct funded - payments made to beneficiaries are directly funded from payments made that same year by contributors. If there is a gap between the two (i.e. beneficiaries need more money than there are contributions), the federal government has to make up the difference. SS does have a fund to make up differences from previous years of surpluses of collections - but it has begun to draw on these funds and will likely drain them over the coming years, leaving the federal government liable to make up the difference.
This is closer to how OAS operates - a direct liability to the government. Most of SS is funded through payroll deductions sort of like CPP, a sort of indirect tax, but the general tax fund is liable for it as well.
As of today, SS accounts for nearly 1/4 of all US federal government spending.
SS also is actually far worse than OAS in that its income cut offs are much higher and its payouts much larger. The average SS payment is almost triple that of CPP., and max contributions top out at over $170,000 USD - nearly $250,000 CAD.
OAS is worse in that it's actually costing the Canadian federal government a ton of money *today*. SS is more of a future liability for the US fed, but one which will be a much more expensive, larger problem, if changes aren't made.
If PP does one thing federally to fix the budget, it will be to fix OAS. Reduce the income cutoff, eliminate the 10% bonus for those over 75, and roll back eligibility to 67 again like Harper did. That will fill an absolutely massive hole in the federal budget.
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