Social Security and Medicare Projections: 2009 (America's Bankruptcy - $107 Trillion Debt)

National Center for Policy Analysis ^ | June 11, 2009 | Pamela Villarreal

[Conservative Coulter Fan]

The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars!  That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt.

The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums.  Last year alone, this debt rose by $5 trillion.  If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both.

Social Security versus Medicare.  Politi­cians and the media focus on Social Security's financial health, but Medicare's future liabilities are far more ominous, at more than $89 trillion. Medicare's total unfunded liability is more than five times larger than that of Social Security.   In fact, the new Medicare prescription drug benefit enacted in 2006 (Part D) alone adds some $17 trillion to the projected Medicare shortfall - an amount greater than all of Social Security's unfunded obligations. 

Future Payroll Tax Burdens.  Currently, a 12.4 percent payroll tax on wages funds Social Se­curity and a 2.9 percent payroll tax funds Medicare Part A (Hospital Insurance).  But if payroll tax rates rise to meet unfunded obligations:

• When today's college students reach retirement (about 2054), Social Security alone will require a 16.6 percent payroll tax, one-third greater than today's rate.
• When Medicare Part A is included, the payroll tax burden will rise to 25.7 percent - more than one of every four dollars workers will earn that year.
• If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37 percent of payroll by 2054 - one in three dollars of taxable payroll, and twice the size of today's payroll tax burden!

Thus, more than one-third of the wages workers earn in 2054 will need to be committed to pay benefits promised under current law.  That is before any bridges or highways are built and before any teachers' or police officers' salaries are paid.

Impact on the Federal Budget.  The combined deficits of both programs now require about 14 percent of general income tax revenues [see Figure I]. As baby boomers begin to retire, however, that number will soar, and it will be increasingly difficult for the government to continue spending on other activities.  In the absence of a tax increase, if the federal government keeps its promises to seniors and balances its budget:

• By 2020, in addition to payroll taxes and premiums, Social Security and Medicare will require more than one in four federal income tax dollars.
• By 2030, about the midpoint of the baby boomer retirement years, the programs will require nearly half of all income tax dollars.
• By 2060, they will require nearly three out of four income tax dollars.

Impact on Federal Revenues.  On average, every year since 1970, Medicare and Medicaid spending per beneficiary has grown 2.5 percentage points faster than per capita Gross Do­mestic Product (GDP).  In the future, Medicare spending may rise even faster than the Trustees estimate.  According to the Congressional Budget Office (CBO), if Medicare and Medicaid spending continues growing annually at 2.5 percentage points above GDP growth:

• By 2050, Social Security, Medicare and Medicaid (health care for the poor) will consume nearly the entire federal budget.
• By 2082, Medicare spending alone will consume nearly the entire federal budget.

Can Higher Taxes Solve the Prob­lem?  The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance its budget:

• The lowest marginal income tax rate of 10 percent would have to rise to 26 percent.
• The 25 percent marginal tax rate would increase to 66 percent.
• The current highest marginal tax rate (35 percent) would rise to 92 percent!

Additionally, the top corporate income tax rate of 35 percent would increase to 92 percent.

Pay-As-You-Go.  Social Security and Medicare are in trouble precisely because they are based on pay-as-you-go financing.  Every dollar of payroll taxes is spent.  Nothing is saved, and nothing is invested.  The payroll taxes contributed by today's workers pay the benefits of today's retirees.  However, when today's workers retire, their benefits will be paid only if the next generation of workers agrees to pay even higher taxes.

What about the Trust Funds?  The Social Security and Medicare Trust Funds exist purely for accounting purposes:  to keep track of surpluses and deficits in the inflow and outflow of money.  The accumulated Social Security surplus actually consists of paper certificates (non-negotiable bonds) kept in a filing cabinet in a government office in West Virginia.  These bonds cannot be sold on Wall Street or to foreign investors.  They can only be returned to the Treasury. In essence, they are little more than IOUs the government writes to itself.

Conclusion.  The Social Security and Medicare deficits are on a course to engulf the entire federal budget.  If our policymakers wait to address these growing debts until they are out of control, the solutions will be drastic and painful.

Pamela Villarreal is a senior policy analyst with the National Center for Policy Analysis.

[verity]

Some economists have suggested that only an increase in FICA taxes and a reduction of benefits can salvage the system. I can see Congress perhaps increasing taxes. Cutting benefits is highly doubtful.

Yep. We are screwed.

[luckybogey]

Its The End Of The World As We Know It - by R.E.M.

http://www.youtube.com/watch?v=thMm-7RFsm0

[Conservative Coulter Fan]

Well, Michelle Bachman is one of those republicans being blasted wanting to end Social Security and Medicaid. Just google her name with social security or medicare. The poblem I have with most republicans, like George W. Bush, is that we need to just end it...half measures aren’t going to do it.

[Lockbox]

The Social Security and Medicare Trust Funds

This is the great crime, if the money collected has been allow to accrue interest at say 3 - 4% a year over the decades since the programs were established, they may have been self sufficient. Instead the politicians stole not only the principle, but any interest which could have been earned.

[Lockbox]

The Social Security and Medicare Trust Funds

This is the great crime, if the money collected has been allow to accrue interest at say 3 - 4% a year over the decades since the programs were established, they may have been self sufficient. Instead the politicians stole not only the principle, but any interest which could have been earned.

[Lockbox]

The Social Security and Medicare Trust Funds

This is the great crime, if the money collected has been allow to accrue interest at say 3 - 4% a year over the decades since the programs were established, they may have been self sufficient. Instead the politicians stole not only the principle, but any interest which could have been earned.

[Lockbox]

sorry for the triple post, bad internet connection

[Jukeman]

Love me some Michelle Bachman. Half measures will not get rid of the problem. It would have to be an act which would totally remove the feds from the picture as far as having any control. I want to see the federal government doing only what the constitution allowed at the conception of our republic.

[Will88]

The real crime has been committed by our presidents and congresses since the 1960s (?) when they started stealing the excess SS tax revenues each year and using it in general fund spending. Another report I read recently said that SS is funded until 2037. Of course, that’s counting the billions in promissory notes the government gave the SS fund when it stole the excess tax revenues each year.

So, SS is technically in good shape until at least 2037.

There are many pols who’ve caused this, and if there were any justice all those still living would be in prison. But, things being as they are, many of them are still in DC trying to make a horrible situation several times worse.

[GailA]

Added him to the list

The African American doctor of 30 years I protested TURN COAT JOHN TANNER, bribed by a NATO job, said he’d retire..0 may get to the point of having to CONSCRIPT the retired doctors, or import Non-English speaking ones or both.

TURN COAT BRIBED BY NATO JOB JOHN TANNER rally 3/20/2010
http://www.freerepublic.com/focus/news/2475145/posts?page=16
AIN’T JUST GRANNY & GRAMPS GETTING WHACK, MILITARY IS TOO.

KEEP THE CALLS UP! DC OFFICE LOCAL OFFICE
Hold your own street protest in front of your reps local offices. Or busy street corners. Try and get the local media to cover it. Hammer the Medicare/SS issue, nothing like mad grannies and gramps.

This is from a 2007 contact list of congressional aides. Some might not be there any longer, but worth a try. The ones on the one post are senate aides, a few have bounced back, it’s worth the effort to clog up their email system along with the phones, and 1/3rd of these senators are up for re-election.

Mail must be inspected for anthrax takes 2 weeks, so if you snail mail send a post card
Contact congressional aides.
http://www.freerepublic.com/focus/f-news/1857768/posts
U.S. Senate switchboard: (202) 224-3121
U.S. House switchboard: (202) 225-3121
White House comments: (202) 456-1111
Find your House Rep.: http://www.house.gov/writerep
Find your US Senators: http://www.senate.gov/general/contact_information/senators_cfm.cfm
Toll free to the US Senate:
1-800-882-2005. (Spanish number)
1-800-417-7666. (English number)

Courtesy of a pro-amnesty group, no less!!
Defeat Obamacare call list: List now contains the new MAYBES culled from FR posts. Be sure to call KNOWN RINOS too.THEY ARE ANSWERING THEIR LOCAL NUMBERS
Here is one of the ones Rush gave out on the radio that I’m calling. So far it’s been busy but I’m going to burn it up till I get to tell my congress critter to vote NO!
Join me?..... 1-877-762-8762

CODE RED Contact list http://www.nrcc.org/CodeRed/targets/
Remember they are all being offered BRIBES for their votes. Ask them how much their bribe price is.

The National Republican Congressional Committee has published a target list on health care. In addition to continuing to contact the five Tennessee Democrat Congressmen, you can go http://www.votervoice.net/link/clickthrough/ext/94697.aspx to contact some of these targets. Much of the talk following Obama’s announcement has focused on how to defeat this second bill through reconciliation, but that is misleading because the first step to defeating Obamacare is not by concentrating on defeating the “fixer” bill but by defeating the Senate bill in the House when it goes to the floor for an up-or-down vote on Sunday March 21st.

Good idea from the bloggers at Hillbuzz:
http://hillbuzz.org/2010/03/17/action-items-march-17th-2010/
They offer specifics and links on how to put pressure on Dem DONORS, who have private numbers for legislators who may have taken their phones off the hook.
Congress may not want to hear from us, but they’ll listen to the money men.

Call them and fax them them instead of telling us you don’t trust them.

www.faxzero.com for two free faxes a day.
www.gotfreefax.com for another 2 free faxes per day.
Congressional Dems on Twitter
http://www.arrghpaine.com/congressional-dems-on-twitter

RUSH says to pressure these 2

Charles Wilson, Ohio Toll Free Number 888-706-1833 DC (202) 225-5705 fx: (202) 225-5907, Bridgeport, (740) 633-5705 fx: (740) 633-5727, Canfield, (330) 533-7250 fx: (330) 533-7136 Marietta, : (740) 376-0868 fx: (740) 376-0886 Ironton, (740) 533-9423 fx: (740) 533-9359 Wellsville, 330) 532-3740 Canfield, here is the zip code 44406.
Joe Cao DC (202) 225-6636 Fax: (202) 225-1988, NO (504) 483-2325 Fax: (504) 483-7944
NEW FLIPPERS
Rep. Bart Gordon TN (202) 225-4231 Fax: (202) 225-6887 Murfreesboro, TN 37130 GETS A NASA JOB for his vote
(615) 896-1986 Cookeville (931) 528-5907 Gallatin, (615) 451-5174
Mark Schauer D.C. (202) 225-6276 Fax: (202) 225-6281 Jackson, MI (517) 780-9075
Fax: (517) 780-9081 Toll-Free: (877) 737-6407
Christopher Carney (202) 225-3731 (570) 585-9988 PA 10th District
Dennis Kucinish, Lakewood 216)228-8850, Fax (216)228-6465,
Parma. 440)845-2707, Fax (440)845-2743, DC (202)225-5871
Dennis Cardoza DC (202) 225-6131, Fax: 225-0819, 800-356-6424, Merced, (209) 383-4455 Fax: 726-1065 Modesto 209) 527-1914 Fax: 527-5748 Modesto, (209) 527-1914
Fax: 527-5748
Jim Costa Fresno 559-495-1620, Fax:559-495-1027, Bakersfeld, 661-869-1620 Fax: 661-869-1027 DC Phone:202-225-3341 Fax: 202-225-9308 Fax (202)225-5745
James Oberstar (202) 225-6211, Duluth (218) 727-7474, Chisholm (218) 254-5761, Brainerd (218) 828-4400, North Branch, (651) 277-1234
Gabrielle Giffords (202) 225-2542 (520) 881-3588 AZ 8th District
John Boccieri (D), Ohio Voted Yes on Stupak, NO on Health Care.Contact info - DC office (202) 225-3876 - Fax - (202) 225-3059 (330) 489-4414, Local Fax - (330) 489-4448
Betsy Markey DC 202.225.4676, fx. 202.225.5870, Ft. Collins, 970.221.7110fx 970.221.7240, Greeley, 970.351.6007 fx 970.351.6068, Lamar, 719.931.4003
fx 719.931.4005, Sterling, 970.522.0203 fx 970.522.1783
Alan Boyd FL DC 202) 225-5235, (202) 225-5615 Fax Tallahassee (850) 561-3979
(850) 681-2902 Fax Panama City (850) 785-0812 (850) 763-3764 Fax
S. Kosmos FL DC (202) 225-2706 Fax: (202) 226-6299, Port Orange, FL 32129
Phone: (386) 756-9798 Fax: (386) 756-9903 Orlando, FL 32826
Phone: (407)-208-1106 Fax: (407)-208-1108
Brad Ellsworth IN Evansville (812) 465-6484 fx: (812) 422-4761 Terre Haute (812) 232-0523 fx: (812) 232-0526 DC ph: (202) 225-4636 Toll Free: (866) 567-0227
fx: (202) 225-3284
John Tanner (202) 225-4714, Union City, (731) 885-7070, Jackson Phone: (731) 423-4848, Millington (901) 873-5690 TN (RETIREING, His going away present to the USA, gets a NATO JOB for vote.
Thinks you are harassing him! Rep. John Garamendi’s (CA-10) (202) 225-1880
Fax: (202) 225-5914 Walnut Creek, (925) 932-8899 fax: (925) 932-8159 Antioch (925) 757-7187 Fax: (925) 757-7056 Fairfield, Phone: (707) 438-1822 Fax: (707) 438-0523
Bill Owens (202) 225-4611 (315) 782-3150 NY 23rd District
Tim Bishop (202) 225-3826 (631) 696-6500 NY 1st District
MOVED TO UNDECIDED
rec’d from NCTeaParty.com — Despite earlier assurances that he was a NO on health care reform and would not change his mind, Rep. Heath Shuler, NC 11, is now undecided.
Rep. Heath Shuler, North Carolina 11th http://shuler.house.gov/ DC Office Number: (202) 225-6401, DC Fax Number: (202) 226-6422 Local Office Number: (828) 252-1651, Local Fax Number: (828) 252-8734 Chief of Staff: Hayden Rogers email: hayden.rogers@mail.house.gov
Lincoln Davis 202.225.6831Fax: 202.226.5172 Columbia Office 931.490.8675
Jamestown 931.879.2361 Fax: 931.879.2389 McMinnville, 931.473.7251 Fax: 931.473.7259

INCLINED
Tim Walz MN 202-225-2472 Rochester 507-206-0643 Mankato 507-388-2149 MAYO CLINIC DEAL
.............................................

Steve Cohen TN, DC (202) 225-3265 Fax: (202) 225-5663, Memphis, TN, 901) 544-4131 Fax: (901) 544-4329
Harry Mitchell (202) 225-2190 (480) 946-2411 AZ 5th District
Ann Kirkpatrick (202) 225-2315 (928) 226-6914 AZ 1st District
Jerry McNerney (202) 225-1947 925-833-0643 CA 11th District
John Salazar 202-225-4761 970-245-7107 CO 3rd District
Jim Himes (202) 225-5541 (866) 453-0028 CT 4th District
Alan Grayson (202) 225-2176 (407) 841-1757 FL 8th District
Bill Foster (202) 225-2976 630-406-1114 IL 14th District
Baron Hill 202 225 5315 812 288 3999 IN 9th District
Gary Peters (202) 225-5802 (248) 273-4227 MI 9th District
Dina Titus (202) 225-3252 702-256-DINA (3462) NV 3rd District
Carol Shea-Porter (202) 225-5456 (603) 743-4813 NH 1st District
John Hall (202) 225-5441 (845) 225-3641 x49371 NY 19th District
Dan Maffei (202) 225-3701 (315) 423-5657 NY 25th District
Earl Pomeroy (202) 225-2611 (701) 224-0355 ND At-Large District
Steven Driehaus (202) 225-2216 (513) 684-2723 OH 1st District
Mary Jo Kilroy (202) 225-2015 (614) 294-2196 OH 15th District
Kathy Dahlkemper (202) 225-5406 (814) 456-2038 PA 3rd District
Patrick Murphy (202) 225-4276 (215) 826-1963 PA 8th District
Paul Kanjorski (202) 225-6511 (570) 825-2200 PA 11th District
John Spratt (202) 225-5501 (803)327-1114 SC 5th District
Tom Perriello (202) 225-4711 (276) 656-2291 VA 5th District
Alan Mollohan (202) 225-4172 (304) 623-4422 WVA 1st District
Nick Rahall (202) 225-3452 (304) 252-5000 WVA 3rd District
Steve Kagen (202) 225-5665 (920) 437-1954 WI 8th District
Bart Stupak (202) 225 4735 MI (MAYBE)
Brian Baird (202) 225-3536, Vancouver, (360) 695-6292. Olympia, (360) 352-9768, (MAYBE)
senator mark begich (202) 224-3004 toll free. (877) 501 - 6275 just became a MAYBE
Alan Mollohan (202) 225-4172 (304) 623-4422 WVA 1st District
Nick Rahall (202) 225-3452 (304) 252-5000 WVA 3rd District
Steve Kagen (202) 225-5665 (920) 437-1954 WI 8th District
Bart Stupak (202) 225 4735 MI (MAYBE)
Brian Baird (202) 225-3536, Vancouver, (360) 695-6292. Olympia, (360) 352-9768, (MAYBE)
senator mark begich (202) 224-3004 toll free. (877) 501 - 6275 just became a MAYBE

NEW NO’s
Zach Space (202) 225-6265 (330) 364-4300 OH 18th District
Jason Altmire 202-225-2565, Aliquippa, 724-378-0928, Natrona Heights, 724-226-1304 (NO)
Michael A. Arcuri (NY-24) NO
Harry Teague NM NO
James Matheson Toll-Free Number 1 (877) 677-9743 (202) 225-3011Mike Arcuri (202)225-3665 (315)793-8146 NY 24th District

And here are toll-free numbers we can use to call any Senators or Reps.

At the first number below you must wait through a tape recording urging you to tell your Rep or Senator to vote “yes” for the health care bill. Just hang on and when the recording is over, you will get the Capitol operator. Just ask for your Rep or Senator’s office. Then you will either talk to an aid or have the chance to leave a message for him/her to vote NO on the health care bill.

When you use the second number and the Capitol operator comes on, just ask for your Rep or Senator’s office. Every time I use this number I get the Rep or Senator’s answer machine, so it may be set up that way all the time...to go to their answer machine. Either way you can leave a message to vote NO on the health care bill!

We need to use these toll free numbers that have been set up for the health care/ BO supporters and illegals to use! After all they are FREE!

1-866-220-0044, 1-866-338-1015, 877-851-6437, 877-210-5351

[Deo volente]

Anything the government says will cost x amount I simply take that figure and multiply it by a minimum of three to a max of six.

Why not multiply by ten? The original Congressional estimates in 1965 for Medicare were short by at least a factor of ten. I think we'll be looking at an ultimate Medicare debt of $500 Trillion or more.

[DuncanWaring]

How do you go from Super Power status with a surplus to on the verge of collapse in less than 14 years ?

What is this "surplus" less than 14 years ago of which you speak?

The last time there was a fiscal year in which the National Debt went down was about 1956.

[Conservative Coulter Fan]

Social Security is a pyramid scheme. Social Security is not a savings-and-investment program. Social Security taxes (premiums?) create no wealth. The payroll taxes are not invested, but are used to pay current retirees and survivors under the program. It's called a pay-as-you-go system. Some call it an intergenerational income-transfer program. By law, if Social Security brought in more revenue than it paid out...this money was spent and if the government had not done this....there would have never been a surplus in the late 90s.

You need to also check the latest news on Social Security. For the first time, Social Security paid out $29 billion more than it collected from payroll taxes...it has an unfunded liability of $13 trillion.

[Will88]

You haven’t told me a thing I didn’t know, and my original post is correct, also.

[Will88]

“PARKERSBURG (AP) - The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It’s time to start cashing them in.”

http://www.newsandsentinel.com/page/content.detail/id/527752.html

[Conservative Coulter Fan]

Social Security is a pay-as-you-go system. You seem to believe in Al Gore’s ridiculous “lock box” notion...the reason news outlets are reporting that Social Security should cash in those IOUs is due to the fact Social Security paid out $29 Billion more than it collected, but you maintain the program is doing well. Over the next 25 years, more than 75 million boomers will begin collecting Social Security checks, drawing down Medicare benefits, and relying on long-term care under Medicaid. I’m regret to inform you that this pyramid scheme is going to be crushed by the democraphics...

[kittykat77]

What am I in denial about? I said that Social Security and Medicare are not AAA-rated, ie, they’re not secure. Personally, I just don’t put much faith into NCPA studies.

As I said, a few years back, they were touting all things Chilean: the Chilean retirement system, the Chilean disability system, etc, most of which involved buying stocks and most of which crapped out. Funny thing is, most of the people on the NCPA board are people who have a lot of stock to sell.

Pardon my skepticism....

[Jack Hydrazine]

Yes, multiplying by 10 is appropriate because I have seen certain government spending numbers that much higher than original estimates. This is why I am going with one quadrillion dollars before this is all over. Think about that for a second. That’s $1x10^15!

Will we make it to that number before we crash and burn? More than likely.

[Conservative Coulter Fan]

Well, why don’t you just check the numbers from the sources...like the Social Security trustees...or Medicare trustees...saying these programs are “not AAA-rated” is like saying a convicted serial murderer is “not a good guy.” It just a huge understatement.

[OldPossum]

This shows how much I harken back to the sixties. When I saw your post (#17) about the end of the world as we know it, I immediately remembered “The End of the World” by Skeeter Davis. But it was a love song.