Social Security insolvency gets four years closer
The Social Security trustees’ latest report moves up the system’s insolvency date by four years, to 2037. Medicare’s hospital fund runs out of money in 2017, two years sooner than expected. What’s more, the hospital fund is already paying out more cash than it’s taking in, and the main Social Security fund will be in that position by 2016.
The reason for the adverse results is simple: Fewer people are working, so fewer people are paying taxes to support Social Security and Medicare.
Fortunately, the Obama administration has at least noticed that we have a problem. The Associated Press quotes Treasury Secretary Tim Geithner as saying that
the longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be.
The options are already unpopular, however. We need to raise taxes, cut benefits, make people wait longer to retire, or some combination of the above. And Social Security is the easier of the two problems. Medicare’s liabilities can’t be cut unless we address rising health-care costs. Recent optimism notwithstanding, nobody has found a politically palatable way to do that.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
Government efficiency in it’s finest. Hey let’s let government control our healthcare as well!!!
In the 1980s under our beloved Ronald McReagan, the government said we were over funded in our Social Security account so the govenment started taking out money to cover short falls in the budget.
CEOs had Wall St. drum up this cute little idea to help with the takeover of corporations in the 1980 frenzy of buyouts. The US goverment decided it was a good idea to use the same formula. Everyone was overfund in pensions and Social Security. Some 20 years later, gee, no money.
The government flat out steals $1.5 tillion dollars every year our of Social Security, and scream it is under funded which justifies raising social security taxes yet again. None of the money will ever be put away for our retirement. NONE. They will raise Social Security tax and take the money before it ever gets attributed to the Social Security account.
It is one of our greatest rip offs by the people who constantly remind us they are in office to protect our interests.
Like they are going to protect us when they send our son’s and daughter’s off to war against dictators we create and lies we create to justify having our children die meaninglessly protect the interest of corporate executives and thier profits.
Social Security is really a government run “Ponzi Scheme”. It takes money from one group and pays another will promising a “return” to the first. The number of workers putting money into the system has been decreasing over time per SS recipient of funds.
In my view, we have several choices: increase the percentage of payroll taxes to increase the reserve, increase the age of retirement, and/or decrease the payouts to the recipients.
I don’t see Congress doing any of these above since that would require intelligence, leadership and the willingness to be voted out of office.
And Obama is talking about adding another Trillion dollar entitlement program with universal health care or Medicare from cradel to grave. I would like to hear how people can defend this new program before we correct the one’s we have now.
As soon as I heard yesterday that the government would be coming out with its latest yearly report on Social Security and Medicare, I knew that Rex Sinquefield’s(the super-rich Republican financier and sugar daddy to the Cato Institute’s junior partner, the notoriously right wing Show-Me Institute)BFF David Nicklaus would be doing an item on his blog about the looming crisis in entitlements. This is a well-worn right wing canard, easily refuted by just a little research. It is well-documented that a few tweaks(such as raising the Social Security tax cap so that folks making over one hundred thousand dollars a year pay into the system)makes the system solvent for years to come. Medicare is another story; its financial perils are part and parcel of our beloved country’s inability to join the rest of the civilized world in providing healthcare as a right and not just a privilege for the privileged in our society. That is why, despite the feverish opposition of the fatcat insurance industry, we must move ahead on addressing our entire healthcare situation. That would take care of Medicare in the process.
Oh and for my right wing, Fox “News” kool-aid drinking friends on this blog, I guess we should have listened to Cato and Show-Me Institutes and just put all of our money into the stock market. Oh, oh! Not such a good idea, was it? Thank the Lord we didn’t follow Cheney-Bush’s lead and privatize Social Security.
Big business, and the ideology of Milton Friedman, Ayn Rand, Reagan and Thatcher got us into the mess we are in. We the people(which is the government, by the way)didn’t regulate big business and look what happened! Regulation is on the way and it is about time. Deal with it!
I’m getting a bit tired of repeating the financial/economic realities of Social Security and Medicare, but here goes again:
A fact of economics is that Social Security and Medicare are a real-time transfer of money (purchasing power) from people who are working and earning money, to retirees who are mostly no longer working and making earned income. The economic problem is that the ratio of retirees to workers is increasing, thereby increasing the real economic burden on workers to support retirees.
The amount of money in the Social Security and Medicare accounts is an accounting number with no real economic significance. When either of these funds “runs out,” all that will be necessary to continue financing benefits, from a financial/accounting standpoint, is to continue financing any “deficit” out of general revenues. All that is required to insure full funding of Social Security and Medicare benefits — from a financial/accounting standpoint — is a stroke of the pen by Congress that will aloow those “trust funds” to go negative.
From a fundamental economic standpoint, the fairest and most practical way to relieve the burden on workers will be for people to work longer and start drawing retirement benefits later. And both government and the private sector need to find ways to enable workers to reduce their working hours and pay — while continuing to contribute their talents to the economy — as they “ease” into retirement.
Hey whiterosesociety, what herb do you smoke? “We the people, which is the government”…Hitler and Stalin said that too.