The U.S. government is running massive deficits in its general fund, which includes interest on the debt, the military and its many wars and weapons programs, government infrastructure and some social welfare programs. This deficit could be alleviated by increases taxes in those areas where taxes have been cut, and economic upturn. To allow it to bleed is irresponsible in the extreme, but the leadership of the two political parties are controlled by the sectors whose taxes need to be increased, and so are incapable of action.
So we get distraction instead. According the latest Trustees’ Report on Medicare and Social Security, those two programs have surpluses that might run out in thirteen years (Medicare) or twenty-five years (Social Security). (By the way, when the Social Security Trust Fund expires, as it was designed to do, Social Security will still be able to pay pensions. It will simply not have a surplus to draw on.) New forecasts say that slower than expected economic growth shortens the projected life span of these programs.
Forecasts are a planning tool, but should never be thought of as reliable beyond one year, and so should be revisited often and used only for near-term planning. Those who predict crises beyond five years should be treated as we do Christianity – publicly observed but otherwise not taken seriously. No one knows what our state of affairs will be next year, much less in 2036. The law requires the Trustees to keep an eye out for future trends regarding the two programs, but doomsday predictions are mere political rhetoric used to advance political agendas.
Rep. Paul Ryan has put forward a plan to move senior citizens from Medicare to private insurers, supplying them with vouchers. This is lunacy, as the private insurance system is hardly affordable for healthy people, much less seniors who consume most of our health care dollars. (If private insurers were a positive social value, the government would not have had to step in the 1960’s to form Medicare.) We spend our working years fighting with these leaches, and they refuse to deal with any of us who are aged, possibly having a medical condition that might threaten profitability, or too poor to afford their premiums. The private insurance system simply does not work, as it is in conflict with itself: It cannot both feed investors and perform the social function of providing reasonably priced health care to all citizens. It needs to be scrapped. It is hugely inefficient.
Medicare is indeed a looming problem, however. It is not its structure, but rather its reliance on the private sector, that creates that problem. Private health insurance has created a bureaucratic nightmare, with 31% of our medical expenditures required merely to decide who pays (more properly, who doesn’t) the bill. Single payer would fix the problem, of course, or at least heavy regulation of private insurers, outlawing their ability to profit off of basic medical care. But because free market economics is a religious, rather than rational belief system, those who preach it know no other answer and are bound to keep trotting it out to solve every problem.
Likewise, private pensions are weak sisters of government cousins. The notion of a “defined benefit,” which is the basis of Social Security, was discarded decades ago. The system was gradually converted to defined contribution – the 401K,s IRA’s and SIMPLE’s which are subject to annual fees that drain at least a quarter of their reserves over the long haul (Social Security: 3%.) Once a worker relies on his 401K for retirement, he is daily confronted with the possibility that it will be drained before he dies. “Security” does not exist in private pensions, whose funding is rarely secure for twenty-five years. Libertarians and Randians decry inter-generational transfer, but they have not a leg to stand on in offering secure alternatives. It may offend their senses, but they ought to do as most religious people do – worship on Sunday and live in the real world the rest of the week.
Ayn Rand died reliant on Social Security for income and Medicare to treat her lung cancer, both courtesy of her husband, Frank O’Connor, whom she openly disrespected. She ought to be buried in an unmarked grave somewhere in Somalia, aka, Randistan. In the meantime, we should undertake a concerted effort to find the body of Tom Paine, and restore it to its proper place of honor.
Piece of Mindful 
No need to worry ’bout the debts, there’s tons of money out there to be had. Just an accounting maneuver.
Oh, and those federal pensions? We accounted for that also. WaPo article.
“The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.”
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It’s Kabuki theater, Swede. They’ve already decided to go after social spending, both parties have, and are now putting on a three act play to see how much they can ram through on us. If you had even a moment of lucidity about this, you’d be more interesting.
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““Security” does not exist in private pensions,”
Apparently doesn’t exist in govt. pensions either.
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Social Security is funded for the next 25 years. The only thing threatening it are the private powers that want to privatize it. You know – the same ones who drained the airline pensions. More or less.
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Spam filter ate my response.
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MoveOn.org, a group allied with the “Strengthen Social Security” coalition, calls for the halt of future reforms to the Social Security program. It states that these proposed reforms are unnecessary as it deems the program to be fully-funded in Treasury bonds, although it also released a statement quoting that after 2037, the retirement system will only be able to pay out an estimated 75% in benefits as opposed to full payment of expected benefits. The faulty logic rests with the fact that the organization believes that since the system is funded with Treasury bonds, it will earn enough money to make up for the shortfall. But this isn’t exactly the case.
The arguments of the group and other like-minded factions are further weakened by explanations from the Clinton administration in 2000. The administration places the assumption of adequate funds in its place by saying that the funds aren’t backed by actual assets, but rather Treasury claims that will get financing from higher taxes or the reduction of benefits when redeemed. Any excess Social Security funds were already spent on other expenditures, and no extra money is left to buffer against future budget cuts, the administration elaborated.
The repayment system as stated by the Clinton administration bolsters the fallacy of MoveOn.org’s contentions that the funds in Social Security are wholly separate from the federal budget, necessitating that it cover its own expenses and work towards eliminating deficits without any aid from the government. While it may be safe to say that the retirement program has funds for itself for the meantime, the funding depends on the bond repayments made by the government to the Social Security trust fund; deposits that will amount to billion-dollar loans or extra taxes per year. Bond repayments through loans will cause a growing deficit that’s expected to reach over $40 billion this year and permanent yearly deficits after 2014.
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It bothers me that I have repeat things not once, but seven times with you, and still it does not sink in. Bonds are promises – the whole of our economy is based on promises – mortgages, private pensions, loans to build factories or store fronts, are all promises. There is no “money” there – it’s all been spent. The promise has to do with a commitment of future cash flow.
Only with Social Security to your legions drag out this lame argument. The Trust Fund is a commitment by the whole of the taxpaying body, including corporations, investors, high earners, to repay loans taken from a subset – the wages of workers who in good faith prepaid n their Social Security benefits.
Now, I know how to type and don’t have to cut and paste, and this comes straight from the heart: Open up your goddammed brain and let one or two things sink in instead of having your mind made up about everything and looking around the freaking Internet for things that make you feel like you know something.
It is goddammed f**** annoying. And no, I am not having a bad day. I was having a great day till you stopped by here.
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Yeah, I lost it there. Please understand one thing: All bonds are promises to pay future money. All bonds, public and private. Social Security is just like Microsoft in that regard – so long as it is viewed as a going concern, it stays healthy.
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Bonds and their controllers (trustees) who cannot be trusted.
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Please, once in a while, think of what you are saying. The only ones who can renege on the Social Security Trust fund are elected representatives. It is a legal obligation backed by the full faith and credit of the American taxpayer.
Reneging has to be a conscious and willful act. It appears to be what you want. SO tell me: Are you a man of integrity? If so, you will urge your elected representatives not to waver on this, and urge them to do what was promised by us to Ronald Reagan in 1984.
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You’d be surprised Mark, I don’t want any changes. As a “Randian” and former Eagle Scout I’m prepared.
Render unto Caesar, that which is Caesar’s. Remember?
Will you come for my cows, chicken’s and pigs-maybe. Will they divert my springs, trample my garden, rob the contents of my safe?
Not without a fight.
Money is merely a medium of exchange-you can come get it all if we continue on this course. People survived hyper-inflationary Germany in ’23. In fact I’m thinking some even thrived.
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Randian paranoia. Everyone pays taxes, and no one is coming for your cows. Good grief.
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So is the declining dollar and the rise of precious metal prices just Randian paranoia?
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No – it’s not Randian. It’s Howard Ruffian paranoia. The two are closely related.
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Status quo then, Mark? No need to change anything, we’re in good hands?
Bullshit. Name one accredited economist, liberal or otherwise, who says it self sustaining. Even you admit its only good for 25 years. F the 40 year olds.
All you got is MoveOn and Soros. Soros, by the way who benefits from nations ‘s currency devaluation.
Irony is when a collectivist like yourself, bemoans the decisions of the chosen ones.
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Next thing on their agenda. Raiding private pensions-ya know the ones you call “weak sisters”. Maybe they’re weak because you know they’re vulnerable.
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Pretty damned lame. Do you not know your math? Here’s an equation for you:
Bush – Paulson + Geithner = Obama.
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Economists who says that Social Security is self-sustaining? You want me to do this research for you? F you – you do it. There’s plenty of them. If you had teh ability to do one thing – search to find a reason why you might be wrong about something, you’d find them. Not holding breath here.
The Trust Fund, by design is there to take care of Baby Boomers. 25 years form now, we’ll mostly be dead, and so it will have served its purpose.
At that time, SS will have enough ongoing revenue to pay 75% of its obligations. All of this talk about its demise, we gotta do soemtin’! we gotta do soemtin’! we gotta do soemtin’! is pure politics.
Regarding your last line, I suggest you don’t have a clue wtf you;re talking about.
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