Entitlement shortfalls loom

[Xiahou]

This notion shouldn't surprise anyone in the US, but this (http://news.yahoo.com/s/ap/20080325/ap_on_go_ot/social_security) recent story again highlighted how pressing the issue is.

The trustees, issuing a once-a-year analysis of the government's two biggest benefit programs, said the resources in the Social Security trust fund will be depleted by 2041. The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

Both those dates were the same as in last year's report. But the trustees warned that financial pressures will begin much sooner when the programs begin paying out more in benefits each year than they collect in payroll taxes. For Medicare, that threshhold is projected to be reached this year and for Social Security it is projected to occur in 2017.The important dates are not when the trust funds will be depleted -since they're full of nothing more than government IOUs anyhow- it's the dates that they begin paying out more than they take it that really matter. At that point, it means that the government has to start paying back the money it looted from those trust funds. We were taxed to fund Medicare and Social Security and the government spent it. Now our money is going to have to be used to repay the money already taken from the funds. I, for one, think it's just great that we're paying twice for Social Security benefits we won't likely even receive and even if we do, are a horrible investment anyhow.

I don't really see a good way out of these programs. Privitization could help, but not solve, the Social Security problem but Medicare looms even larger on the horizon, becoming insolvent next year. I think these entitlements are the real threats to the stability and prosperity of the US. :sweatdrop:

[drone]

As you said, no big surprise, the shortfall in Social Security has been known about for years. Is the new prescription drug benefit calculated into the Medicare shortfall, or is that a separate fund? Either way, I never really expected to see a dime of it when I retire. Accounting classes should be mandatory for all incoming congressmen, with refreshers every 4 years. :rolleyes:

[Vladimir]

This is why I really don't care about the little pork barrel projects (earmarks?) because they don't amount to much in the big picture. We'll have to suffer a lot of pain if we want Socialist Security fixed.

[seireikhaan]

Well, perhaps if we limited the earmarks a bit more, than maybe we wouldn't be dipping as much into SS?

EDIT: obviously, there's other factors in play here, but earmarks do add up quite a bit in the long run.

[TinCow]

This is why I base my financial decisions on the assumption that I will never see a since cent from Social Security. I am relying 100% on my own savings and investments for retirement. If by some miracle I do get some payout from SS, it will just be a bonus, not something I need.

[drone]

This is why I base my financial decisions on the assumption that I will never see a since cent from Social Security. I am relying 100% on my own savings and investments for retirement. If by some miracle I do get some payout from SS, it will just be a bonus, not something I need.
If it covers my beer expenses in my old age, I'll be happy. :barrel:

[Tristuskhan]

I think these entitlements are the real threats to the stability and prosperity of the US. :sweatdrop:


May be you should consider the endless waste on military fundings a bigger threat to your countrie's stability and prosperity. Gah!

[Ice]

May be you should consider the endless waste on military fundings a bigger threat to your countrie's stability and prosperity. Gah!


Why?

Health Care spending and SS take a much larger of the budget than military spending.

Both are a matter of concern, but SS and Medicaid/Medicare/SCHIP is more so.

http://en.wikipedia.org/wiki/United_States_federal_budget%2C_2008

[Tristuskhan]

Gosh! You are right, nevermind the children and the elder, so... I should have kept my mouth shut.

[Ice]

Gosh! You are right, nevermind the children and the elder, so... I should have kept my mouth shut.

~:handball:

[Papewaio]

Department of Defense + Global War on Terror = $626 Billion which is greater then Social Security.

Also what are the costs of the Iraq war and the Afghan one?
Another $142 Billion is the appropriation for this year.

So a total of $768 Billion on defense/warfare. Not including homeland security who run at a modest $34 Billion.

So say a modest $800 Billion for defense of all levels.

Now SS + Medicare + Mediaid + Unemployment = $1.5 Trillion.

So it would seem that the lions share of the money is going to those who can't help themselves. Problem is it is fine to milk the cow as long as you have a herd... what happens when the herd is no longer there?

$9 Trillion in debt doesn't look so rosy when the opposite would mean no issues with welfare or warfare. Imagine getting a cool 5% off that to add to the budget... on $450 million... imagine investing that in trade schools and body armour...

[KukriKhan]

One word:

Babies.

We need more of them, and quickly.

Open the southern and northern borders. Instead of walls and guns, offer tea and crumpets, and free transportation to inland work centers.

Reset the minimum wage to $6 an hour. Maximum number of hours worked per day: 16. Time-and-a-half over 10 hours. Minimum fulltime work age: 16. Everybody always on a payroll. Any business paying "under the table" cash: loses the business.

Free dual citizenship to anyone who asks for it, from the arctic circle to the equator (in the western Hemisphere). Automatic citizenship for enrollment in the US military, and completion of 6 months honorable service.

Mandatory english-language testing (to grade 2 (7-year old) understanding) after in-country 2 years. Mandatory conversational Spanish courses in all schools, grades 1-6.

Problem(s) solved in about 10 years.

-or-

ditch ss & medicare next January. Let 75% of americans live impoverished, chronically ill, and hopeless of ever recouping from the Ponzi scheme they mandatorily paid into all their working lives.

O'course... then comes the revolution. Ever seen a mass of dis-enfranchised, dis-entitled, dis-respected, armed seniors get together to accomplish something? I submit: Reagan.

[Crazed Rabbit]

And when all those babies grow old?

CR

[Banquo's Ghost]

And when all those babies grow old?

Soylent Green. Obviously.

[Big_John]

Soylent Green. Obviously.so we're just ruling out sleepshops then? so much for my plans to become a palm flower tycoon. :shame:

[HoreTore]

And when all those babies grow old?

CR

Dr. Kevorkian on line 2.

[Xiahou]

Here's (http://money.cnn.com/2008/03/18/news/economy/sloan_socialsecurity.fortune/index.htm?postversion=2008031904)another cheery article that explains why there is no Social Security trust fund. Any politician that talks about it being solvent until 2040 or whenever is lying- there's no money in it.

You see that the system's cash flow is projected at about positive $92 billion this year. Nice. But by 2020 it's negative $96 billion, rising to about negative $280 billion in 2025, half a trillion in 2030. That is unsupportable, unless we plan to devote the federal budget to baby-boomers' retirement. Which I hope we don't.
I really can't imagine the type of sea change that would force our politicians to seriously address this issue. :shame:

What we really need is a plan that makes SS flat out go away in the most graceful way possible. We can't grow our way out of it and we can't tax our way out of it because it's a pyramid scheme that's going to go bust eventually no matter what we do.

[Papewaio]

The article looks spot on.

Although I do query this statement:


How can I say that, given Social Security's $2.3 trillion (and growing) trust fund? It's because the fund owns nothing but Treasury securities. Normally, of course, Treasury securities are the safest thing you can hold in a retirement account. But Social Security's Treasuries won't help cover the program's cash shortfall, because Social Security is part of the federal government. Having one arm of the government (Social Security) own IOUs from another arm (the Treasury) doesn't help the government as a whole cover its bills.

Does the Treasury not have any investments particularly non-government ones?

If so then it can be drawn against by Social Security.

All this does show that proper fiscal management of assets should be in place. One cannot indefinitely rely on foreign investment to balance the budget.

I wonder if there is any studies to compare the loss of life/style with regards to the governments investment? Say compare how many people would have a worse life/shorter one from not investing in SS vs Iraq?

[Ice]

Here's (http://money.cnn.com/2008/03/18/news/economy/sloan_socialsecurity.fortune/index.htm?postversion=2008031904)another cheery article that explains why there is no Social Security trust fund. Any politician that talks about it being solvent until 2040 or whenever is lying- there's no money in it.

I really can't imagine the type of sea change that would force our politicians to seriously address this issue. :shame:

What we really need is a plan that makes SS flat out go away in the most graceful way possible. We can't grow our way out of it and we can't tax our way out of it because it's a pyramid scheme that's going to go bust eventually no matter what we do.

Isn't your assumption based on the fact that the US population will never stop growing?

If even this isn't correct, I still do find the idea of taxing our way out of this simply retarded.

One last thing: At my current job, since I'm working for a university, i pay no FICA (SS) taxes in on my wages. :2thumbsup:

[Big_John]

Department of Defense + Global War on Terror = $626 Billion which is greater then Social Security.

Also what are the costs of the Iraq war and the Afghan one?
Another $142 Billion is the appropriation for this year.

So a total of $768 Billion on defense/warfare. Not including homeland security who run at a modest $34 Billion.

So say a modest $800 Billion for defense of all levels.does that include veterans' benefits?