Thread

10-year Treasury yield climbs above 5.3% to a level not seen in 24 years

122 points · 193 comments · kaycebasques

GenerWork · 1790821127 · focus · HN ↗
The primary issue is Social Security. It’s the biggest driver of spending, and nobody wants to do anything to cap its costs such as means testing or straight up lowering the amount it can pay out.
As for the people that will inevitably bleat about how this is just horrible and we need to lift the cap on taxable SS income, that wouldn’t solve the core problem either unless you pair it with spending caps or cuts.
1. klodolph · 1790822328 · focus · HN ↗
  Social Security is funded by the people paying in, plus the money in funds like OASI. Yes, OASI is treasuries, so it’s connected, but the reason OASI exists is to cover the changing demographics as baby boomers retire. It’s not designed to be, long-term, the way the Social Security system works. The idea is that you collect income on the boomers greater than payouts while their cohort is in the workforce, and the pay that money back out when they retire.
  Yes, there are reasons why this isn’t working out as planned. But the idea that “Social Security is the biggest driver of spending” is not a cogent argument.
  1. aftbit · 1790824514 · focus · HN ↗
    The OASI fund was at ~$ 2.4 trillion in around 2025. That's only about 1.5 years of payments given no contributions. The net interest from the fund is only around $ 60 billion. If you add in the DI fund, it only changes by about 10%. The $ 1.7 T cost of Social Security in 2026 will not be meaningfully affected by these funds. Mandatory spending payouts will thus have to come from contributions (which are fundamentally just another tax that could be redirected to other priorities) and from the general fund. The contributions brought in around $ 1.3 T in 2026, leaving somewhere around $300 B to be paid out of the funds.
    Thus, I think "Social Security is the biggest driver of spending" is a perfectly cogent argument. The mandatory social security contribution is just another kind of income tax.
    Obviously we can't just turn off Social Security, for many political, moral, and practical reasons, but any solution to the deficit or debt that ignores social security will be fighting with one hand tied behind its back.

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