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My favorite, beautiful word is “consequences,” and how it seems to be ignored.
We tend to forget that no matter what we do, there will be a result, a reaction. There will be consequences, some intended, others not. We tend to address one problem but fail to think through possible consequences.
The best examples are at the national level. Apply a surcharge such as IRMAA and people will attempt to keep income lower.
Roth accounts were intended to increase retirement savings, but mostly help the income levels that need it the least. Only about 11% of taxpayers have a Roth IRA and those folks anticipate being in higher tax brackets in the future.
When tariff news points them higher, the market declines and vice-versa. Somebody is anticipating consequences.
Tax-free income such as from Social Security will have adverse consequences for the SS and Medicare trust funds, but seniors like the idea and don’t think about the consequences.
I fear for my children and grandchildren as they will be dealing with the massive federal debt and deficits we seem not to worry about.
No property taxes for those of us over 65 means higher taxes for younger people or reduced services and funding of schools or both. But the mistaken attitude seems to be seniors already paid their share.
States like NJ seek more tax income from high earners and then have to react when those citizens leave the state.
On the personal level, making minimum payments on a credit card has dire consequences. Taking those two year olds to DisneyWorld may make you feel good – the kids won’t remember, but paying off that experience may last longer than the lines you endured.
Should a health insurance deductible apply to use of an emergency room? They are applied because the ER is frequently used inappropriately. The goal is to discourage that use, but the consequence may be a financial hardship for appropriate use.
I read people complaining that their health insurance denied a valid claim, but it turns about the claim was applied to their deductible so no claim was denied. Lower deductibles lead to higher premiums. More use of insurance means higher premiums, but few people make that connection. Frequently you can tie those consequences to lifestyle, but do so at your own risk. Many people are sure health insurance is a scam and premiums are driven by profits and CEO pay. Not true.
When policymakers seek to save money on Medicare by cutting physician and other payments and limiting drug prices, shouldn’t we consider the impact? Squeeze a balloon and it expands in a different place. Do we expect lower payments simply to be absorbed with no consequence on the under age 65 population? Not likely.
My father was a chronic smoker. Several packs a day. Heart disease and emphysema to the extent he couldn’t walk across a room were his consequences. So far I have managed to escape effects from years of second hand smoke growing up, but I grew up with asthma.
Living above ones means may feel good in the near term, but the longer term consequences not so much.
On the other hand, a bit of frugality during working years may lead to a more enjoyable retirement.
I maintain that virtually everything is connected in some way, our society, our world for that matter. I think as a society and individuals we need to think things through, be more aware, more attuned to possible consequences before we act – or not.
Okay, we have a couple interesting things going on here in Ohio.
It all sounds great to me. What could possibly go wrong?
And at a time when federal funding to states is dropping because “states should handle things themselves.” I agree, sounds like solid planning out there…
I will address only one aspect of your “Rant,” as I understand the overall point you are making.
On this one point however, I would suggest there is a way to accomplish one of the primary goals of Seniors, and the fix is simple…
You said, “Tax-free income such as from Social Security will have adverse consequences for the SS and Medicare trust funds, but seniors like the idea and don’t think about the consequences.”
I disagree that Seniors don’t think about the consequences.
Instead, Seniors expect, and should demand, that the brackets established in 1983 for taxation of Social Security Benefits, using Provisional Income, which was NEVER THE INTENT OF CONGRESS WHEN SOCIAL SECURITY WAS CREATED, be updated to reflect reality, and not the shortsightedness of Congress, who, as usual, waited until the last minute to solve a known problem.
Having the $25K, $32K and $44K limitations are ridiculous, as usual, punishing achievers and favor lower income people. These Brackets need to be adjusted to reflect inflation, at a minimum, and have automatic increases tied to inflation, going forward.
The consequences of Congress not providing inflation protection has resulted in those who paid in the most getting taxed the most as well. That was not a mistake…it was done on purpose again, to punish success.
I, for one, get tired of hearing that, “Seniors don’t care about those coming behind them. They only care about themselves.” Those coming behind them are their own children, and in many cases grandchildren. That simply makes no sense to me.
I disagree, no indexing on the incomes was intentional to gradually increase the income to the trust.
I cannot think of any reason why SS benefits in excess of worker contribution should not be taxable income for everyone. Actually, given contributions are just a tax, logically the entire benefit should be taxable, just like any employer funded pension..
The benefit being taxable does not mean significant or any taxes are actually paid by lower to modest income recipients in any case.
In addition, there is no logical reason to exempt Roth income from the MAGI calculation for IRMAA- income is income.
You are right, it makes no sense to not care about the next generation, but that is how seniors as a group seem to act. They support not only tax free SS, but the new cause is no property taxes as well with more adverse consequences for the younger people.
You seem to have it all figured out Dick, but every other tax brkt is subjected to inflation adjustments to be fair. Social Security taxation brkts should also be subjected to the same fairness. You are welcome to pay more as they will accept over payments. I may
not be like the rest here, but I find your constant rants to be a little self-serving.
It’s actually more important for this program to be solvent than it is for it to be fair. It should be both, ideally, but if we update the tax brackets, will that leave a big hole in revenues for SS? If it will you’re not only accelerating the depletion of the trust fund, but you’re also reducing payouts after that, if nothing is done to make up revenues. Also, we all should be paying a little more, it’s not just Dick’s responsibility to keep our social security funded 🙎
Yup any changes that reduce revenue to the Trust are not good.
Sooner or later, one way or another, by one generation or another everything has to be paid for. I don’t think many Americans grasp that or they choose to ignore it.
My position is simple. Your and my SS is funded by a tax, we are not paying for our benefits or ultimately even half of them. Logically, everyone at all income levels should have at least 50% of their benefit as taxable income.
The fairness among income levels is sorted out by the tax code tax brackets. Ten million Americans have SS provide 90% of their income. If taxable, they would pay very little, if anything in taxes.
Our tax laws have many provisions one could consider unfair and others not. Take ROTH accounts. They are excluded from MAGI calculations for IRMAA Medicare premiums.
Even untaxed SS benefits are excluded from MAGI for IRMAA purposes.
Where is the logic? One person could have lower income from investments and pay IRMAA and another unlimited income and avoid IRMAA entirely only because the income comes from a ROTH account. Income should be income as far as affording insurance premiums, should it not?
IRMAA may not be called a tax, but it works like one; therefore Roth income should not trigger it because Roth income is and should remain tax free. Your Roth envy is showing again. And since Roth is a name and not an acronym, it just seems like you’re shouting.
Honestly, Roth accounts are pretty much the definition of sacrificing future revenue for immediate benefits, on the government side at least. That’s kind of why they’re so great for investors, because you take a relatively small tax hit now, and get massive rewards later, assuming your account grows over that time. Luckily they’re mostly used by savvy investors and rich people, so it’s a relatively small portion of total retirement wealth 👍
IRMAA premiums are intended to reflect a sharing of costs based on the ability to pay. Without IRMAA either the Part B premium for everyone would be higher or general revenue spending would be higher.
If income of $40,000 from say a pension puts a person in IRMAA, but withdraws of $80,000 from a ROTH account don’t, where is the logic or fairness? It’s just bad legislation.
Nothing I have written meets the definition of a rant. It’s just a label, one actually assigned by Jonathan to an article a few years ago and usually gains attention. Not sure how self-serving comes into it at all.
I have to agree with “I find your constant rants to be a little self-serving.” It is hard to have a civil conversation and sharing of ideas when one person thinks it has to be his way or the highway.
I think I should be somewhat flattered by your comment. My writing could be more impactful than imagined or intended.
I write my opinion, I then defend my opinion or point of view. I spend time researching a subject looking for facts to use or counter views to consider. If I disagree with a comment, I say so and try to express why.
How it is perceived that it is my way or the highway amazes me.
I think I am right and others may disagree and say why. That’s the purpose of discussion. In the process readers on the sideline have different points of view to consider, accept or reject.
Updating those would basically be the same thing as cutting taxes though, wouldn’t it? You’re just giving a more favorable argument, but it’s functionally the same thing.
Also getting tired of the “hard-working earners” vs. the “freeloading poor” narrative I see around this site occasionally. The idea that because you make less than like 40k means you don’t work hard is pretty ignorant. And again, social security was invented entirely for the purpose of providing an income floor for the older population of Americans, many of whom cannot just work harder or longer. It’s not meant to be based purely on meritocratic fiction.
A lot has been written about the fact that individuals act in their own best interest. A lot has also been written about the role of tribalism in modern society and how it can be detrimental to the whole.
Greed can be a problem and when groups begin operating out of perceived scarcity, this can contribute to the tribalism which in turn can stoke animosities and lead to some societal breakdowns.
Politicians are beholden to their tribe. These include themselves, the party and the donors.
There is an old saying “No good deed goes unpunished” and so, even the most altruistic can and do create problems. I won’t even go into the well-known issues with some charitable organizations and NGOs. Current events aside these are not recent problems; there has simply been increased scrutiny and with it, awareness.
There is an attempt underway to reduce drug prices. Altering the drug landscape will likely be detrimental for the pharmacy chains and media. A lot is spent on those drug ads, the smart jingles and the marketing. In 2024 it was estimated to be $30 billion. Someone was paid to produce and show those ads. It is estimated that national politicians raked in more than $16 million in “donations” from big pharma in 2024.
Owners of certain stocks may be concerned; health care comprises about 15% of the S&P 500. Has that selloff begun?
Actually with the announcement there was no impact on pharmaceutical stocks which tells you something. This is like Medicare and private insurance payments. The system can’t work if everyone paid Medicare level fees and Medicare can’t work if it paid private sector fees. Likewise other countries aren’t going to accept higher Rx costs to lower U.S. costs so how do we expect US to simply lower prices without negative consequences somewhere.
The recent Executive Order related to drug costs includes this.
Should this ever be implemented think of the consequences for employers, prescription benefit managers, Medicare beneficiaries, retail pharmacies and patients who could lose coordination of their medications and protection from possible interactions.
Choices in any aspect of health care have cost and care consequences.
That’s a little part of the order and it in no way excludes those other providers from also selling at most favored nation pricing (in fact the entirety of the order makes this clear). Weird cherry picking of a detail where the order is looking to do the opposite of what you’re implying.
What other providers?
The ones you list? I’m thinking you didn’t actually look at the EO, just someone else’s summary.
The entire EO is meant to address a decades old imbalance where American consumers have been forced to eat R&D costs because big pharma found it the easiest way to profits. Other nations have engaged in this type of group bargaining since the end of WW2.
Why do you think it is that Americans often pay 10x as much as other western nations (lets exclude charitable pricing to poor nations) for their Rxs.
I read what the White House distributed. Other countries have universal systems which so far the U.S. has rejected and to some extent the prices they achieve are subsidized by Americans.
There is also a great deal of misunderstanding about drug prices like the difference between retail and AWP and what the net cost is. Few people pay near the retail often quoted price. If we want lasting savings we need to look at basic research costs, patent application, generics and more. Who is the pay for drugs treating relatively few people where cost would be prohibitive.
You just can’t dictate prices in one area and think the problem is solved.
It doesn’t dictate prices, companies can choose to charge everyone American prices. Or charge Americans their other favored prices.
You could also see the EO as a consequence of decades of abusive practices.
Presumably you would still need a prescription.
No doubt.
If you look at our system as each bloc of voters trying to make someone else pay, it all makes sense. The number of over-65 voters is huge and they all have time to go out and vote. They probably figure by the time the system collapses, they’ll be gone and it won’t be their problem.
I am almost 78. I regard taxation as necessary for civil society (although the system in the US is ridiculously complicated). My Social Security taxes paid for other people’s benefits. I see no reason why I should not expect my promised benefits to also be paid.
And so you should. There is no excuse for SS to ever not pay full benefits. It should not even be a topic of discussion and should have been made sustainable 20 years ago. The current talk of lower or no taxes on several things is ludicrous and irresponsible.
But it will be their children’s and grandchildren’s
Several years ago I wrote about my view of how our actions interact with, and impact, the world. I would also recommend Danny Kahneman’s Thinking Fast and Slow if you want a better insight into how and why humans make decisions. It seems that evolution has conditioned us to think short-term, focusing on today’s meal, shelter, clothing, … Often our incentives, whether business, politics, or personal finances, are geared to reward short-term thinking. Training yourself to think longer-term and analytically is hard work, and we all fall back into short-term thinking at times. It starts with honest self-evaluation, and lots of humility.
I wish decisions on policies were made without emotions or politics interfering.
Unpossible.
Politics is people and emotions and manipulation. Policies are just the consequence of politics. It’s about selling people on a view and feeding prejudices and negative emotions to “other” the “other”. And at the moment it feels like the more destructive and outrageous the politics and policies are the more they succeed with enough of the populace. This is on a global basis too.
More broadly, people have limited capacity to deal with all consequences. No individual can “fix” multi generational “problems” like national debt. And politically it’s always easier to give away and kick the can down the road (or adopt policies that look like action but achieve nothing materially positive) then grasp all the thorniness of the brambles.
Lots of consequences aren’t really in the scope of an individual to control. I can exercise my vote towards someone I don’t think will cozy up to Putin and continue to empower him. But I can do nothing to influence the realpolitik that could change my continent in my lifetime.
Don’t forget the opposite is also true. When we make the right decision, good things happen. We all make both kinds and either reap the benefits or suffer the consequences of those decisions. Sort of seems like the scales of justice; we hope the good outweighs the bad.
As for the bigger picture, I fear the consequences of our choices are leaving a mess for future generations to deal with. Not just financially, but environmental and geopolitical as well.
When my children were growing up I was constantly reminding them that the life you lead is the net result of the consequences, good or bad, of the choices you make.
And weren’t the choices made by our parents and politicians of their time causing the consequences that we are dealing with now? Are those any better or worse than those we will leave the next generation? At least we seem to be acknowledging the mess these choices are/ will be causing and trying to address them. 🤷🏻♂️
Yet we have had flashes of progress in the past. For example in the 90s, the relationship between the legislators and executive branch were contentious but they still managed to reduce the federal workforce, make meaningful changes to welfare, balance the budget, and begin to reduce the debt.
I agree that today we have acknowledged some important issues, but I am not sure we are taking meaningful steps to fix anything.