Debt Commissioners: Baby Boomers Will Crush Social Security, Medicare

Fox News ^ | Nov. 14, 2010 | Staff

[La Enchiladita]

Baby boomers withdrawing funds from Social Security, Medicare and Medicaid are going to "crush the system" in a matter of years, a member of President Obama's blue-ribbon commission on the debt warned Sunday.

David Cote, CEO of Honeywell and one of a handful of private-sector chiefs appointed to the 18-member fiscal reform commission issuing its final recommendations on Dec. 1, said he didn't realize -- even perched at the top of his field -- that the next decade will be disastrous to the nation's accounts ledger unless something drastic is done.

"It scares me that as a financially conversant CEO, I didn't know how bad this was going to get in the next 10 years," Cote said on ABC's "This Week." "The thing that everybody misses is it's my generation, the baby boomers, who are going to flow through Social Security, Medicare, Medicaid. It's going to crush the system."

"Social Security is going to go cash negative in five years. It's going to go broke in 2037," added Sen. Kent Conrad, D-N.D., another member of the commission who appeared with Cote.

Medicare is "prepared to go permanently cash negative in just 10 years. So, obviously, those things have to be reformed; there have to be some changes," Conrad said.

[Quix]

THX THX

[eleni121]

Death panels are coming (Latest to tout them is Krugman) - P D James wrote about them in her novel Children of Men She could see it coming when Hospice became the norm in the UK.

[justlurking]

Then, David Cote is a dumbass. We were told, repeatedly, what the situation was and the man saying it was called a liar at best,a fear monger and much, much worse.

Nobody, you've nailed it.

The National Taxpayer's Union was pointing out the structural problems with Social Security back in the 80's, when it was supposedly "fixed" forever. Anyone with a high school degree could see what was going to happen.

I tried to tell a number of people about it. I wrote to my Congressman. I donated to PAC's. And I was universally told to STFU.

Now, the reality is finally setting in. Back in the 80's, we could have done something about this with relatively little financial pain (but a lot of political pain). Now, we are past the point of no return -- nothing can be done without screwing a lot of people. And I expect to be at the top of that list.

I anticipated this, and sacrificed my entire working career to invest everything I could afford, and then some more. Meanwhile, most of my neighbors and co-workers making the same salary as me spent it all on cars, boats, big houses, lavish vacations, etc.

Setting aside the source of the assets in the "trust fund" (future income tax revenues), Social Security is expected to only get enough payroll tax to meet 75% of the promised benefits. I can live with a 25% reduction in benefits. In fact, I've planned for it.

But, I fear that Social Security will be "means-tested". If you have any significant income from another source, you won't get anything -- so that everyone else can get their full benefit. And if that happens, I'm screwed.

[justlurking]

Have you checked your records from Social Security to see how much you and your employers paid in over the years? I checked mine and it turns out that I am promised to be paid much more than what paid in, if I live out my full life expectancy.

Have someone recalculate that for you, accounting for the interest you would have earned while contributing, and until you exhaust the value of your contributions.

Money has time value. The Social Security "trust fund" is effectively special Treasury Bonds, so you can just use the average Treasury bond yield for each year you made contributions (and drew benefits).

Compound interest adds a great deal to your "balance". If your contributions are anything close to mine, you'll have to live to about age 120 before you exhaust the value of your contributions.

[justlurking]

Kind of interesting to see how easy it was to do.

Yeah, I was able to balance the budget without any tax increases, and even have a surplus.

Of course, most of the proposed cuts in spending have no chance of happening. That's the problem.

[justlurking]

Instead, the Social Security trust fund is now mostly full of I.O.U’s.....because of ridiculously stupid use of that money for “other” things.

If your (and my) Social Security contributions had instead been invested in Treasury bonds, they would have still been IOUs. But, the difference would be is that you and I would own those IOUs, instead of just a vague promise that they might cash them in for us later.

[upcountryhorseman]

What the Commission never considered was the elimination of
unnecessary government agencies such as Dept. of Education,
EPA, Dept. of Energy, etc. Something they never considered
was to eliminate agricultural subsidies.

[Java4Jay]

bttt

[April Lexington]

Ok. Here's the solution. Create an elderly medical program run by the federal government. Force all folks over 65 onto the program. Allow all private insurance plans to drop people over 65 to be sure they are ALL on the federal program. Then, cut back on the medical services provided by the federal program to kill off as many of them as you can. Thus... reducing the costs of the program. Oh! Wait! They did this in 1964. Its called Medicare...

[Fred]

Uh oh, expect death panels anytime... gen Y will have no problem with this...and lots of twitting about it while they are at it.....OMG OMG OMG OMG

[GailA]

I know, especially if they have health issues, like I do. Mine are age related, body is starting to wear out. People who do more than push pencils for a living, have a lot more wear and tear on their bodies...and the low end 62 is often about all they can take especially if they do heavy labor. And if you happen to be black your life span is less than other ethnic groups.

My pastor died of a massive heart attack 1 month after he retired at 65. Never drew 1st SS check. My late husband was 57 when he died of a massive heart attack. I remarried 4 years later.

What often gets forgotten is that Medicare tax is taken from our checks...then we get to pay monthly premiums after that. Medicare is not free health care, it is RATIONED health care though.

[Condor51]

David Cote, CEO of Honeywell said he didn't realize ... that the next decade will be disastrous to the nation's accounts ledger unless something drastic is done.

Yeah okay Dave.
This from a guy whose company is still selling that crappy, energy wasting, and obsolete T87 thermostat that first hit the market in ...what was it again? ... oh yeah... 1903. (/s)

btw Dave, they have these new fangled gizmos out called 'programmable thermostats'. Have one of your engineers run to Home Depot to see what these new thingys look like.

(Hopefully he can read a wiring diagram has more than three wires on it)

[La Enchiladita]

Did anyone today catch the fact that the drunk-as-a-skunk politicians have "borrowed," to the tune of several trillion$, from social security?

I caught it and it's also apparent to me why it doesn't get much mention. I did point this out to another poster on thread and the post was removed. I would like that poster and Freedom Not Safety to ponder the difference between the GOVERNMENT raiding Social Security to the tune of trillions and me trying my best to survive on the payout based on MY contributions, and then decide whom to resent.

[La Enchiladita]

Before we change SS, let’s defund the pensions of every politician who fed us BS for the last forty years.

Thank you. That needs to be NUMBER ONE on the Debt Commission Agenda. But, of course, it is nowhere on the list of "proposals." AND, I do not see or hear any of the newly elected "small government" Tea Party Republicans proposing any such thing....

Just sayin'....

[La Enchiladita]

I wasn’t asking for your sympathy.

[FreedomNotSafety]

It must be awful to be a freeper and be dependent on SS for your survival. I do not resent you or any other freeper who collects SS. I see you as Bernie Madoff like victims. No one should be dependent of their government for survival. That's what I hate about SS and why the socialist love it.

My goal is to gain recognition of a few facts. You believe you are owed based on what you contributed. Please see my first post. It reveals clearly the true nature of SS. It is quite simply a wealth transfer from current tax payers to current recipients.

There are no lock boxes, there is no trust fund, there are no assets (owning a government bond does not count since it can only be redeemed through funds raised by further taxation), there are no legal obligations, and there is no intergenerational pact (how can you have an agreement with the unborn?).

Our government has not raided anything for there is nothing to raid. To make that claim only reinforces the myth that SS is like a private pension. In this theory we have paid in plenty (so we are owed) but the government misspent it. So we just need to somehow get back our stolen money.

I want to be clear on this. What you receive today depends strictly on what can be taken away from others. It is collected and distributed based on political power. It was intended that way from the beginning. Politicians have lied from day 1 about this and continue to lie today.

It is just another part of our emerging socialist country. I don't view SS any differently than I view ethanol subsidies, food stamps, housing subsidies, free housing, school lunches, unemployment insurance, cash for clunkers, etc. EXCEPT that SS is surrounded by a massive sense of entitlement and hysteria. People believed they have earned it, they were promised it, they need it, they paid in, it was taken from them, the government stole it, and etc..

I pay SS taxes and expect nothing more than I expect from any other tax I pay. Why should I?

[FreedomNotSafety]

I started reading conservative literature such as NR, American Spectator, Imprimis, WSJ, US News and WR (it was very conservative back then), even the Reader's Digest as a teenager and I am now middle aged. I never thought about that until I just read your post. I guess that's why I have such a hard line attitude towards SS. I feel like I have always known it was an immoral Ponzi scheme.

I suppose I should not assume that all freepers have done the same and that some freepers were genuinely uninformed. I believe many freepers are now undergoing what a counselor would call cognitive dissonance.

[Ditto]

I really hate politicians today, the way they play with people's lives, with our money.

It's not just today. The political hacks started raiding SS over 40 years ago and Medicare was a fiscal disaster waiting to happen from the minute it was created. This only comes as a 'surprise' to those who haven't been paying attention. We were warned way back then that this was inevitable.

Demographics is a cruel master.