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

122 points · 193 comments · kaycebasques

  1. GenerWork · · 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. consumer451 · · focus · HN ↗
      There is an easy solution to make Social Security solvent. Uncap the contribution. Problem solved.
      1. missedthecue · · focus · HN ↗
        This would add some more years of runway but does not solve the problem. Eventually, the fund would reach insolvency again. The SSA actuaries estimate that removing the cap would add 21 years before insolvency. 21 years may sound like a lot compared to the handful remaining now, but is well before the retirement age of the average person reading this comment.

        Also an underdiscussed issue with such a policy is that while it increases social security fund revenue, it decreases the amount of federal revenue collected. The CBO estimates that about 15% of revenues gained by an uncapped SSA tax are offset (lost) by a reduction in federal revenues. Worsening the deficit problem.

        <a href="https:&#x2F;&#x2F;www.cbo.gov&#x2F;budget-options&#x2F;60955" rel="nofollow">https:&#x2F;&#x2F;www.cbo.gov&#x2F;budget-options&#x2F;60955

        1. seanmcdirmid · · focus · HN ↗
          Uncapping income it is applied to and throwing in capital gains would totally solve the problem if you sever the link between contributions and payout (which is a form of means testing).
          1. sharts · · focus · HN ↗
            And dividends
            1. seanmcdirmid · · focus · HN ↗
              Dividends are already taxed as income.

              Edit: I didn&#x27;t realize dividend income was not subject to payroll taxes.

              1. bovinejoni · · focus · HN ↗
                The vast majority of US dividends are qualified and subsequently taxed at much lower rates than regular income tax rates
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