Posted on 03/20/2010 4:03:03 PM PDT by 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:
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:
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:
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:
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.
This is why I have been hollering about New America for the last several months. No way taxes can cover this, and the current costs which aren’t even covered by collections. The gov’t will print money at some point. We will get a monthly check for necessities like food, shelter, utilities, meds. We can work for extra, which most of us will. (BIG = Basic Income Grant, the monthly check each American will get in hyper-inflated dollars.)
I will hit the road as a traveling poet and balladeer. I have already written my first song for New America. Working on my second every once in a while.
parsy, who I guess everybody thought was joking
Sorry about my reaction to your first reply. I read it too quickly.
But, what we really have is, SS is a ponzi scheme on a cash basis.
It is a fine retirement system for America’s seniors on an accrual basis, with a $2.5 trillion surplus which will last until 2037, plenty of time to make any needed adjustments.
It’s not the SS system itself that’s at fault, it’s the fact that our government has continued to run deficits that continue to grow larger, and that now the value, or safety of the government debt held by SS is in question.
Gross negligence and mismanagement by presidents and congresses createrd the problem, and they might well add the single biggest addition to the problem ever, tomorrow afternoon.
Okay, we’re not really connecting here. Social Security isn’t fine, people would be better off taking responsibility for their retirement rather than depending on the Federal Government...they’d be better off putting their money into savings and rely on compound interest...they’d be better letting money be invested or investing themselves. The unfunded liabilities of Social Security total $13 trillion....by law the “surplus” was spent...it is still a pyramid scheme relying on more and more workers to retirees when in fact it is just the opposite....75 million baby boomers are going to start drawing...the demographics will crush the system. I don’t understand why people talk about Social Security as if we cannot have a world without it.
Whatever, I know the SS surplus has been spent. In its place SS holds about $2.5 trillion in non-negotiable US government bonds. Of course it’s unfunded since they ready cash is not there. Not sure what period is being looked at to arrive at $13 trillion. - But it depends upon whether our government finally begins making tough decisions to put our finances on a sounder footing.
If there were no SS system, there would be many millions of elderly people with no income and no means of support. I think every advanced nation on earth has some sort of pension system. I agree with Paul Ryan’s reform (as opposed to W’s) which would allow personal accounts for part of it, but only in safe investments. Any real high flyers will have other investments to satisfy their desire for higher returns. - There are things to dislike about SS, but they are small when compared to millions of elderly with no income to live on.
They could raise the age limits to 75+? Wonder how much impact that would have.
Think of how much gold will be worth!
You aren’t sure what period is being looked at...over the next two decades, 10,000 baby boomers will retire each day. Maybe you can understand how paying an additional 80 million people can lead to an unfunded liability of $13 trillion, which is a figure comes from the Social Security Trustees. Your retort is the stuff of liberal propaganda...without having people depend on the government to provide for their retirement is going to led to millions of people dying in the streets...spare me the melodrama. Why does the Federal Government need to take my money...turn around and give my money away to others....all on the promise that if I live to age 65...they’ll take someone else’s money and give it to me...but wait...they currently are paying out more in benefits than they are collecting...you could retire with more money by simply opening up a savings account...but people like you still endorse this idea that we need the Nanny State.
They don’t need to raise the age limit to 75+. Seventy will do quite nicely, along with some other tinkering:
http://www.jeffjacoby.com/3421/how-to-fix-social-security
The trillions of unfunded liabilities in Figure II are calculated over some number of future years, but I haven't spotted where that information is given, if it is in the discussion. It be good to know how many years out they calculated. It might go out until all those currently in the system reach retirement age. - All your rambling does not answer that.
Like many on the left and right, you live in your own little fantasy world. Gripe all you care to, but nothing will change the fact that some form is safety net is needed for those of working age, and some form of assured retirement income is needed for the retirement age citizens. And a fair number who thought they were just as savvy as you think you are saw their comfortable retirement nest eggs cut in half or worse during 2007 - 2009. Like it or not, there needs to be some amount of assured retirement income. Otherwise, we'd have varying degrees of anarchy and all sorts of social ills few Americans would care to have as part of the daily scenery.
Your ideal society where everyone provides for their own retirement voluntarily will come about at the same time as peace and love exists among all mankind and the lion will lie down with the lamb.
“Under the creed of modern liberalism, the individual citizen is not called to maturity but is instead invited to begin a second childhood. Like the child at play, he is given, or at least promised, ultimate economic, social and political security without having to assume responsibility for himself. The liberal agenda requires him to remain in an artificial environment—the daycare program of the grandiose state—where he need not become an adult, take responsibility for his own welfare, nor cooperate with others to achieve what the state will give him for nothing.”-—Lyle H. Rossiter, Jr., M.D.
“Under the creed of modern liberalism, the individual citizen is not called to maturity but is instead invited to begin a second childhood. Like the child at play, he is given, or at least promised, ultimate economic, social and political security without having to assume responsibility for himself. The liberal agenda requires him to remain in an artificial environment—the daycare program of the grandiose state—where he need not become an adult, take responsibility for his own welfare, nor cooperate with others to achieve what the state will give him for nothing.”-—Lyle H. Rossiter, Jr., M.D.
I certainly do not know the economics of your suggestion. However, I imagine that such an action would require Congress to muster up some courage.....which, IMO, is a long shot. ;-)
The Communist Party has made key contributions to the working class struggle of the United States, building industrial unions, organizing for rights on the job and for a social safety net, opposing racism and bigotry and pointing the way toward full political, social and economic equality, upholding democratic rights against the threat of fascism and the far right-wing, and supporting international working class solidarity against imperialist globalization and for peace.
Firmly basing ourselves on Marxism-Leninism, we strive to apply theory to practice, with practice as the test of theory, by being the most consistent fighters for broad-based unity and against all unnecessary divisionsracism, sexism, nationalism, chauvinism, homophobia, and anti-communism. Marxism-Leninism is an ideology that not only explains how society works, it is a guide for how to change the world for the better.-CPUSA
Lol, if your ideas were adopted by the Republican party, that could turn the voters back toward Obama and the Dims faster than Obama has turned them back toward conservatives and Republicans.
So every aspect of any safety net or government mandated retirement program is firmly based on communism?
Thats what the commies say in their own words
Sorry if you can't handle the truth
Lol, as I've said, you live in a fantasy world that will never be. I don't agree with all the social programs we have, and certainly oppose Obamacare and further expansions of those programs. But anyone with a modicum of common sense should try to envision what sort of nation we'd have with no social safety net, and no system that provided an assured, but modest retirement for all people who've worked and contributed to a system.
Your fantasy world would be one of chaos and anarchy, with millions of elderly with no means of support, and millions of others who'd become financially destitute for various reasons. Every affluent family would need 17' walls around their houses as they have in San Salvador and other societies where the rule of law is touch and go.
And, believe me, I don't consider you anyone capable of deciding whether anyone else's ideals are corrupt or uncorrupted. The fantasy worlds of the left and the right can be equally dangerous if too many people reside in either one.
And much of your post is a bunch of straw man arguments which have nothing to do with what I have said, or what I believe. "Socialism is popular, Ward Churchill, a leftist news media." That's just your throw-ins and has nothing to do with me or anything I believe, and little to do with whether we should have a safety net or mandatory retirement income system.
Socialism is the government ownership of the means of production, and there is no private property. That is at the core of socialism, and that the actual definition of socialism. I think our government programs have already gone too far, but I also don't pretend that we are on the verge of full blown socialism.
Sorry if you can't handle the truth
Hell no, I sure can't handle that 'truth'. Maybe the communists define the truth for you, but they don't define it for me. You're the one presenting communist ideas as truth.
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