Posted on 09/29/2008 7:15:06 PM PDT by kabar
Think $700 billion to bail out Wall Street is expensive? Just wait. The mortgage meltdown is cheap compared with the coming fiscal firestorm fanned by unfunded Social Security and Medicare costs.
Together, these programs hold unfunded obligations totaling $41 trillion - 60 times larger than the proposed Wall Street bailout. And even this understates the difference, because $41 trillion is the current net value of the unfunded obligations over 75 years. The actual cumulative yearly deficits these programs face over the next 75 years are several magnitudes larger than $41 trillion.
[Snip]
The entitlement problem is simple to understand. In the 1960s, five workers paid the taxes for each retiree's Social Security and Medicare benefits. Today that ratio is just 3-to-1. The coming retirement of 77 million Baby Boomers will drive that ratio down to 2-to-1 by 2030. That means every two children born this year and who marry in 2030 will have to support themselves, their children - and the Social Security and Medicare benefits of their very own retiree. The cost will be staggering.
(Excerpt) Read more at sfgate.com ...
That’s got to be the first story from the San Francisco Chronicle that I completely agree with.
Social security and medicare can be easily addressed, though no one has the guts to do it. Cancel the whole program now, and grandfather those people who’ve been led to believe in the lie (i.e., people within 15 years of retirement). There is no trust fund and no mandate to fund it. Social security is the biggest myth in American history—it’s just another tax that goes into the general fund. Originally conceived as an elaborate ponzi scheme, it was never thought that the originally minimal outlays would exceed the massive input. Changes in the 1950s and then the Great Society totally changed the system and have led to it being “unfunded”. But the law has always been clear—there is no legal obligation to fund Social Security and Congress can abolish it any time they want.
This is a global problem. Everyone seems to believe the $700 billion bailout will solve the problem. As you correctly point out, there is no guarantee that this will work. We may be shoveling sand against the tide.
Or living with his kids.
...but we’ll still have money for “free” healthcare right?
The political will doesn't exist to make such changes.
Changes in the 1950s and then the Great Society totally changed the system and have led to it being “unfunded”.
The SS system has never been sound actuarily. In 1950 there were 16 workers for every retiree. Today it is 3.3 and by 2030 it will be 2. Both SS and Medicare [except for Medicare B] are on automatic pilot with increases not being tied to revenue.
The SS Trust Fund represents an unfunded liability, which is why it is included in the $9 trillion national debt under "Intragovernmental Holdings." The last time SS went into the red, Congress passed in 1983 P.L. 98-21, (H.R. 1900) that decreased benefits including raising the retirement age for full benefits from 65 to 67 and raised taxes. It was supposed to be a 75 year fix, but just 34 years later we will be in even worse shape, i.e., by 2017.
But the law has always been clear—there is no legal obligation to fund Social Security and Congress can abolish it any time they want.
Essentially, you are correct. Congress can change the rules anytime it wants and has done so. The SS earnings cap goes up every year. In 2000 it was $76,000. It is currently $102,000. The cap goes up faster than the COLA.
Can’t we just borrow the money?
The "October Surprise" a few years from now will be Social Security's broken by folks using "disability" as "welfare without pesky social workers". Some will be on for 50 and 60 years.
Go down to your local Social Security Office - - a third of the people signing up are in their late twenties.
I believe the next big bailout class will be states or municipalities that are ‘too big to fail.’
I may be entering tin foil hat territory, but I think that’s why democrats were so ready to push this bailout for President Bush. If it passed, it would have been very tough to say no to a state or big city.
Picture a dimowit press conference, “You mean we bailed out Wall St but can’t help (insert indebted state here)? Oh, and it’s Bush’s fault.”
According to 2005 data, 48 million Americans receive Social Security benefits, including 33 million retirees, 7 million survivors, and 8 million disabled workers.
It is a slippery slope once you make the federal government the guarantor of all debt—coporate, individual, or governmental. Eventually, the USG collapses.
Eh, those are non-issues. Our taxes will just go up. That means tax rates (which will also become progressive) will increase as well as the caps on income will be removed altogether.
Sooner or later Dems will figure out that the federal payroll taxes are the most regressive taxes in the US and it will turn into a national crisis.
By that time I will be living on a boat, a man with no country, because my country is no more.
No, Chi/coms aren’t lending anymore $$$
Yup. I definitely heard the dems say that.
Nobody will be retiring. You know the vast majority of retirement plans are invested in the stock market. Makes for some not so pleasant changes.
Maybe now the adult children will take care of their parents the way they should rather than dumping them on the taxpayers to take care of.
Paulson sees the apocalypse coming and decided he needs a $700B trust fund to weather the storm. And he decided to cut Bernake in on the action too.
The stock market loss today ALONE cost investors (that’s pension funds, kids’ college funds, etc.) $850-billion—that’s greater than the $700-billion price tag of the bailout.
And what was it in 2007?
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