Posted on 03/17/2008 10:56:14 AM PDT by InvisibleChurch
Ask Alan Greenspan what he considers the greatest threat to the U.S. economy, and he will answer immediately with a single word: Medicare. Sometime in the next President's first term, Medicare Part A will go cash-flow-negative, and it's all downhill from there, says Fortune magazine.
Medicare provides a wide range of services and subsidies to more than 40 million old and disabled Americans. As the country ages, Medicare and Medicaid (for those of any age with low incomes) will devour growing chunks of U.S. economic output. So will Social Security, but its cut of gross domestic product (GDP) should stop increasing around 2030, says Fortune:
The federal budget has averaged about 18 percent of gross domestic product (GDP) over the past several decades. If that average holds and if the rules of our social insurance programs don't change, then by 2070, when today's kids are retiring, Medicare, Medicaid, and Social Security will consume the entire federal budget, with Medicare taking by far the largest share. But wait -- the situation is actually much worse, says Fortune:
Those estimates, reported in the latest Financial Report of the U.S. Government, assume that Medicare payments to doctors will be slashed drastically, by some 41 percent over the next nine years, as required by current law. It won't happen, says Colvin. Every year for the past five years, Congress has overridden the mandatory cuts. As for future cuts, the Financial Report says, reductions of this magnitude are not feasible and are very unlikely to occur fully in practice. So in reality, Medicare will go into the hole even faster than official projections reflect. If Medicare had to be accounted for like a company pension fund, it would be underfunded by $34 trillion. Obviously those long-term scenarios won't happen, because they can't happen -- we won't be shutting down the Army, Navy and so on. But it's easy to see why the candidates don't want to discuss it, says Fortune.
Source: Geoff Colvin, "The $34 Trillion Problem," Fortune, March 4, 2008.
For text:
http://money.cnn.com/2008/03/03/news/economy/104239768.fortune/index.htm?postversion=2008030405
For more on Federal Spending & Budget Issues:
http://www.ncpa.org/sub/dpd/index.php?Article_Category=25
Very simple...index the death taxes to the use of Medicare....
I believe your right to some degree, but DonaldC had the most likely solution and that is national health care. In a way it has to happen just to provide the life-saving heart, diabetes and other other drugs to your generation. I doubt you’ll have the same care you had as an employee, not even close. More like whisked in and out the door with a generic script and an a semi-annual checkup. Of course outrage will occur, but my generation will be outraged as well for exorbident taxation which will make us feel like serfs and resent your generation for at least having a taste of the American dream while your generation’s politicians kept the scam going.
It is going to be a lesser of two evils for all of us and net result is quality of life has just declined and will decline further. Others have points that the government itself will be massively downsized. Agreed with that point also. I’ll also say we will draw down the majority of our overseas military deployments. This will have it’s own negative side effects. We’ll have to help each other American friend and become Patriots willing to die for one another instead of serving oneself. Some say our economy and way of life will be much like that of Russia. Perhaps, perhaps not but for several years we all will have some shocks to absorb and become accustomed to.
“Medicare is a scam and the only one getting wealthy are hospitals, doctors and pharmaceuticals.”
Medicare is a scam, but you’re wrong about who is getting rich because of it. In fact, the three parties you mention don’t even compare to the taxpayer wealth that is injected into insurance companies and government.
I don’t need to prove it to you in words, as it will become evident in 6-18 months; you won’t find a doctor taking “new” Medicare, there will be huge layoffs in pharmaceuticals (while R & D, which we have been footing for the world, will be cut), and if GWB sticks to his word on vetoing any cut in Medicare Advantage plans, hospitals will start closing/consolidating.
Good conservatives should rely upon their instincts, if they don’t have the time to get involved in the nuances of a FUBAR system like health care: Government (and its’ concubines) is the source, present, and future of the problem.
...And, the most important part, we have nobody to blame but ourselves. Gubmint spoon-fed us the lies, and we asked for more. People vote themselves largess from the treasury. That is the coldest truth of all.
You’re right about the serfs and intergenerational resentment; I tell my young colleagues that it is their generation (those under 25 today) that will have the next real fiscal revolt when they find that it takes two of them to support my social security payment. I am realistic enough to see that quality of life will decline considerably as these massive entitlements become impossible to sustain. I wonder, however, if government will indeed become smaller; the Great Depression led to the massive growth in government we see today. Of course, it still is impossible to tax at a rate greater than 100%. (although I think it was tried in Sweden.)
The only ‘free’ care I got was when I was inducted in 1968.
I was walkin down that line, the man had a new fangled injection gun that sped up immunizations real fast. He side swiped my arm like a punk keying a Mercedes. I still got the scar.
So the ratio of payers into the system vs consumers will continue to decline. Hence payroll taxes will need to go up to pay for the needy. I for one will not vote to tax my children into poverty to pay for my SS and doctor bills. I think (hope?) there are enough who will agree.
The bottom line is no matter how you slice it the $$ are just not there. Taxing wage earners into oblivion is not workable and will not happen.
Only radical and fundamental restructuring of the social contract between government and citizens including free market solutions to health delivery/insurance and retirement savings can save the day. Who among our politicians is even talking about this? So keep yourself healthy and learn to survive on a lower standard of living.
schu
Ping.
The rats have targeted the rich. They want to raise marginal rates, dividend rates, capital gain rates, and lift the cap on social security taxes. These tax increases will be counter productive for several reasons: actions to avoid taxation through less work, new entitlement programs to use the additional taxation, capital outflows to avoid taxation, and less investment for economic growth.
There is no social contract, only an entitlement mentality. The rats want a huge expansion of entitlements. Republicans will barely issue any protests. The public thinks entitlements are a free lunch: take from the rich and distribute to the masses.
The eventual impact of the entitlement time bomb is diffiuclt to predict. I see the current economic situation as a precursor to much worse times later. I would prefer optimism but realistically I see hard times.
uyilgig
The question is what will the mass of people dependent on the government do when the freebies are no longer there?
schu
You won't have to wait long. This summer when O'Bama doesn't get the nomination you're going to see some big disruption.
I’d like an estimate on the abuses of the Medicaid program.
schu
“Yep. I will start increasing soon, possibly to 20% by 2020!”
If we’re lucky!
And you think it’s going to be better for Gen X, Y or the others? Think again. At least I (a Boomer) SAVE. The youth of today are probably in the worst debt of any group I’ve ever seen (yes, there are absolutely large numbers of Boomers there as well - some people just can’t save).
As far back as 1975 or 1976, my dad told me absolutely NOT to count on SS. He said it would not be here. I have made some investments that I hope will assist me in my older years and my husband and I both do not believe in large debt. The only reason we will keep our mortgage open for as long as possible is for the tax breaks.
The only thing I worry about is health care since I’m not sure how things will play out in the U.S. with so many dummies who think it’s “free.”
I remember several years back, just for kicks, I called the Social Security Administration and told them that I did not want to participate. Boy was that a fun conversation. I had all my good reasons of why I did not want to pay into SS nor did I want to draw from it. I kept getting the thing about how I have no choice.
The only way the “younger” gens will not have to pay in is if the govt. decides to disband it or vastly overhaul it. Too many people don’t want to lose this little (emphasis on “little”) security blanket of theirs since they never saved a DIME.
You got it. The things people trade for security, eh?
Yeah. I remember back in the days before they broke out all the charges. Years ago if you got an IV for instance, or even an injection, you’d be charged one charge for, say, “IV” or “Immunization.”
Now it’s broken down “venipuncture” etc. etc. They charge you for the needle stick, for the tube, for the stuff they’re dripping into you. It’s crazy but the $ sure add up this way.
The fiscal & possibly physical revolt will end your SS payments. But before that occurs, other revolt is more likely, considering most Americans don’t know that their private savings are being rapidly eroded through dollar depreciation while the cost of necessities is skyrocketing. The Fed are a bunch of *ssclowns. If a dollar is worth 50%, it is only being seen if you travel overseas. Soon, Americans will see that the dollar is now worth .50 including your savings and 401k plan. Not going to be pretty...
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