Skip to comments.SOC SEC AND MEDICARE PROJECTIONS: 2009-unfunded liability has reached nearly $107 trillion
Posted on 06/11/2009 8:41:56 AM PDT by InvisibleChurch
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, says Pamela Villarreal, a senior policy analyst with the National Center for Policy Analysis.
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, says Villarreal.
Currently, a 12.4 percent payroll tax on wages funds Social Security and a 2.9 percent payroll tax funds Medicare Part A. 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.
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, says Villarreal.
Source: Pamela Villarreal, "Social Security and Medicare Projections: 2009," National Center for Policy Analysis, Brief Analysis No. 662, June 11, 2009.
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Crush grapes, not us.
And no one listened to John Kasich in 94’ when this was his main concern i.e. entitlements. Nothing has been done in 15 years and it is worse.
Thank LBJ for this when he supported and executed the raiding of the S.S. trust funds by mixing with the general funds.
Can’t they just issue some more bonds? Golly.
Thank FDR for this government run debacle in the first place.
SS is a pay as you go system. After all of the revenue is collected from the payroll taxes and benefits paid, the so-called "surplus" is deposited into the General Fund. In return, Treasury issues non-market, interest bearing T-bills into the SS Trust Fund. So technically, the SSTF has assets, but they represent an unfunded liability because the USG must come up with the money to redeem them from the General Fund. This is why the SSTF is included in the national debt under Intragovernmental Holdings as distinguished from the publicly held debt.
In the early 1980s, SS went into the red, i.e., it was paying out more than it was taking in. Reagan and Tip O'Neill agreed to a bill that raised taxes and decreased benefits, including changing the age for full benefits from 65 to 67 on a phased in basis.
SS is a Ponzi scheme. We need to privatize most of it leaving a small defined benefit program to take care of survivors and those with disabilities. And the USG no longer has a liabilty program and the individual accummulates personal wealth.
When Senator Moynihan, (a Dem with a PHD in Economics) proposed managed Social Security Savings accts to update the system and improve it's perfromance Xlinton demurred 'cause he wanted to keep using Social Security as a political club to beat up the GOP! It used to be called FICA, Federal Insurance Company of America where a person would pay in order to have an insurance annuity for old age. Now Obimbo calls it an entitlement which needs to be directed to the hand out croud.
and it is getting worse. I know a lot of workers between 55-65 yrs. of age who at this point do not think that they can get another job and instead are opting to take early retirement. Those who can take Social Security at 62 are doing so, and those numbers are exploding. I predict a very high-level, visible “crackdown” on age discrimination from the Obama Labor Department is on the way.
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
Don't forget that today's college students start their lives as the most financially indebted generation in our nation's history. The financial burdens being placed on my generation will have terrible consequences for the US.
Retirees pay for Part B and for Part D. Part D is mandatory unless you have prescription coverage in your supplemental policy, which you also pay for. I pay $225/month for all my medical insurance and have not used it once since becoming eligible 18 months ago. My husband, under 65 and self-employed, pays $250/month for his coverage with a very low deductible.
Medicaid is totally paid for by the government, but Medicare is not. Oh, and since I am still working, as well, I also still pay the self-employment tax for Medicare and SS. I really fail to see where including more people into a government funded insurance program is going to save money or the system.