It isn't 80%, and won't be. Quit playing with DennyMath. SS + Medicare reaches 12% in 2045. This current economic crisis will be long over by then, so revenue won't be 15% of GDP anymore. Let's say it is 20% of GDP, which is more realistic historically. Then SS+Medicare would be 60%, not 80%, of the budget. Still large, no doubt. But not so large that Blah blah blah. So yes, as I've been saying, we'll either have to cut benefits or raise taxes, or both. So what? Either way, the world will keep on spinning. If we want to spend 60% of the budget on SSI and Medicare, we can do that. If we don't want to, we don't have to. Eventually, we'll make a decision on that. barfo
If you cut benefits, it's no longer social security. How is the GDP going to grow to the point it's sustainable with 40% of the population retiring? Look again - it's 35% of GDP, not 12%. http://cboblog.cbo.gov/?p=2724 What does the bolded part mean? To increase federal spending (excluding debt interest) by 6% over the 18% 40-year average means a 33% tax hike on everyone and everything. Tack on another ~3% of GDP for debt service, and the govt. needs a 50% tax hike on everyone and every thing. This is by 2021, before SS (just OASDI part) eats up another 1.5% of GDP. Look at the graph you posted. Now we're talking a 60% tax hike on everyone and everything. Don't like my math? How about Bruce Bartlett's. http://economix.blogs.nytimes.com/2...rity-and-medicare-problemand-a-doable-fix/?hp Thus we see that Social Security and Medicare are underfunded relative to promised benefits by $56.4 trillion or 3.8 percent of G.D.P. per year forever. To put these programs on a sound footing, federal income taxes would have to rise from 6.2 percent of G.D.P. to 10 percent, an increase of 61 percent. In other words, whatever amount you paid on your federal income tax return this year would need to be 61 percent more, now and forever, to pay all the Social Security and Medicare benefits that have been promised over and above the payroll tax. What’s worse, these numbers may be conservative.
http://www.ncpa.org/pub/ba616 The 2008 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached $101.7 trillion in today's dollars! That is more than seven times the size of the U.S. economy and 10 times the size of the outstanding national debt. The unfunded liability is the difference between the benefits that have been promised to retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, the size of the debt rose by $11.5 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. Future Payroll Tax Burdens. Currently, Social Security and Medicare Part A (Hospital Insurance) benefits are funded by a 15.3 percent payroll tax on wages — 12.4 percent for Social Security and 2.9 percent for Medicare. But if payroll tax rates rise to meet unfunded obligations: When today's college students reach retirement, Social Security alone will require a payroll tax of 16.55 percent, one-third greater than today's rate. When Medicare Part A (hospital insurance) is included, the payroll tax burden will rise to 25.25 percent — more than one of every four dollars workers will earn that year. If Medicare Parts B and D are included, the burden of Social Security and all of Medicare will climb to 33.6 percent of payroll by 2054 — one in three dollars of taxable payroll, and twice the size of today's payroll tax burden! Impact on the Federal Budget. Until recently, the combined effect of Social Security and Medicare on the rest of the federal government was relatively small. The combined deficits of both programs now require about 8 percent of general income tax revenues [see the figure]. As the baby boomers begin to retire, however, that number will soar, and, as a result, it will be increasingly difficult for the federal government to continue spending on other activities. In the absence of a tax increase, if the federal government keeps its promises to seniors and balances its budget: By 2012, the federal government will stop doing 1 in 10 other things it has been doing. By 2020, the federal government will stop doing 1 in 4 things. By 2030, about the midpoint of the baby boomer retirement years, the federal government will stop doing about 1 in 2 things. (My note: govt. isn't stopping doing anything, it's just increased the deficit to $1.5T and has printed $2.5T more money) Impact on Federal Revenues. Total health care spending in the United States has historically grown 2.5 percentage points faster than per capita Gross Domestic Product (GDP). In particular, Medicare spending may rise even faster than the Trustees report estimates. According to the Congressional Budget Office (CBO), if Medicare spending continues to grow at the historical growth rate of total health care spending: Social Security, Medicare and Medicaid (the health care program for the poor) will consume nearly the entire federal budget by 2050. By 2082 Medicare spending alone will consume nearly the entire federal budget. Can Higher Taxes Solve the Problem? The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance the budget: The lowest marginal tax bracket of 10 percent would have to rise to 26 percent. The 25 percent marginal tax bracket would increase to 66 percent. The current highest marginal tax bracket (35 percent) would have to rise to 92 percent! Additionally, the top corporate income tax rate of 35 percent would have to increase to 92 percent.
Here's excerpts from a speech by Richard W. Fisher, president of the Federal Reserve Bank of Dallas: http://dallasfed.org/news/speeches/fisher/2008/fs080528.cfm Let’s say you and I and Bruce Ericson and every U.S. citizen who is alive today decided to fully address this unfunded liability through lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would receive promised benefits in perpetuity. How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household’s income. Clearly, once-and-for-all contributions would be an unbearable burden. Alternatively, we could address the entitlement shortfall through policy changes that would affect ourselves and future generations. For example, a permanent 68 percent increase in federal income tax revenue—from individual and corporate taxpayers—would suffice to fully fund our entitlement programs. Or we could instead divert 68 percent of current income-tax revenues from their intended uses to the entitlement system, which would accomplish the same thing. Suppose we decided to tackle the issue solely on the spending side. It turns out that total discretionary spending in the federal budget, if maintained at its current share of GDP in perpetuity, is 3 percent larger than the entitlement shortfall. So all we would have to do to fully fund our nation’s entitlement programs would be to cut discretionary spending by 97 percent. But hold on. That discretionary spending includes defense and national security, education, the environment and many other areas, not just those controversial earmarks that make the evening news. All of them would have to be cut—almost eliminated, really—to tackle this problem through discretionary spending. I hope that gives you some idea of just how large the problem is. And just to drive an important point home, these spending cuts or tax increases would need to be made immediately and maintained in perpetuity to solve the entitlement deficit problem. Discretionary spending would have to be reduced by 97 percent not only for our generation, but for our children and their children and every generation of children to come. And similarly on the taxation side, income tax revenue would have to rise 68 percent and remain that high forever. Remember, though, I said tax revenue, not tax rates. Who knows how much individual and corporate tax rates would have to change to increase revenue by 68 percent?
Some serious topic inflation here Denny. This thread was about Social Security. Not Medicare. Then to defend your point you made it into Social Security + Medicare. Then when that wasn't enough, you changed it to Social Security + Medicare + Medicaid + ... So yes, if you keep adding stuff in, the cost keeps growing. But let's get back to the topic at hand: Social Security. None of the graphs you've shown show Social Security blowing up, because it isn't. Social Security can be fixed relatively easily. Medicare and Medicaid, I agree - they have problems. But the fact that they have problems doesn't mean Social Security does (and no, you don't need to point out again that Medicare is in the same agency as Social Security - if you look at the first few posts in this thread, it's quite clear what we were talking about, and it wasn't Medicare). barfo
I was wondering why very few Obama clones were posting OT these days (chrisinpdx being the most hilarious example). Then I decided to click on a barfo post to find out why. Wow. Are things really that bad for Obama? His 'defense' is an embarrasment, isn't it? No wonder others are calling for a sub-forum.
I have to say, Richard W. Fisher is full of shit. Why would anyone consider that? The concept is moronic. Should we also fund all future defense department expenses with a one-time tax? How big is the 'unfunded liability' for all future defense spending? How about highways? A one-time tax to fund all future highway construction? This is the sort of calculation one does when one is more interested in scaring Denny than in the truth. barfo
Which is pretty much what I've been saying all along - an increase by 1/3rd (4.5% to 6% of GDP). That isn't pretty, but obviously if we choose to, we can afford to pay 16% instead of 12% for SS. Or if we don't choose to, we can reduce benefit payments accordingly. barfo
Here's a little hint for you PapaG, Social Security wasn't invented by Obama. If I'm defending someone here, I'm defending FDR. Despite the fact that FDR raped me with advanced metrics. barfo
Now since Denny was so kind as to bring up Medicare and Medicaid, let's explore why the cost of those programs is projected to blow up. It's been suggested that the aging of the boomers is the issue. But if that were true SSI would blow up too. SSI isn't going to blow up (it hits 6% of GDP and stays there). What's the difference between SSI and Medicare/Medicaid? The obvious answer is the latter two start with Medica... Here's the graph. See, us damn boomers aren't actually the problem. The problem is that healthcare costs are rising much faster than inflation, and are projected to continue to do so ad infinitum. While I imagine that the graph is accurate if healthcare costs do continue to rise at the same rate they have been, I don't actually believe they will continue to rise at the same rate for the next 70 years. The idea that they would is actually pretty ludicrous. One way or another, we'll either reform healthcare, or we'll develop alternatives to the current system. I don't know what the solution will look like, but I'm sure there will be a solution. Show me another service whose cost steadily rose much faster than inflation over a period of 70 years. But what this graph shows is, we don't need to reform the entitlement programs. That's just what those who oppose those programs for other reasons want us to believe. What we need to reform is healthcare. Fix the healthcare problem, and the entitlement problem goes away. barfo
http://www.ssa.gov/oact/progdata/fundFAQ.html There is no automatic spending authority to pay for defense. The size of the defense budget is also subject to a vote every year. There is the reality, not the "barfo might be" scenario.
Medicare has a trust fund, too. http://www.ssa.gov/oact/trsum/index.html What Are the Trust Funds? Congress established trust funds in the U.S. Treasury to account for Social Security and Medicare income and disbursements. Social Security and Medicare taxes, premiums, and other income are credited to the funds. There are four separate trust funds. For Social Security, the Old-Age and Survivors Insurance (OASI) Trust Fund pays retirement and survivors benefits and the Disability Insurance (DI) Trust Fund pays disability benefits. (The two trust funds are often considered on a combined basis designated OASDI.) For Medicare, the Hospital Insurance (HI) Trust Fund pays for inpatient hospital and related care. The Supplementary Medical Insurance (SMI) Trust Fund comprises two separate accounts: Part B, which pays for physician and outpatient services, and Part D, which covers the prescription drug benefit. Disbursements from the funds can be made only to pay program benefits and administrative costs. All excess funds must be invested in interest-bearing securities backed by the full faith and credit of the United States.
While your point is reasonable barfo, I don't think that it's in tune with the reality of the situation. For the most part, I'm with you on SS. It's untenable as currently constructed, but it's not that far away IF people really want to continue it and pay for it. Like you proposed...maybe some cuts and reduction of fraud, maybe an increase in availability age, maybe a higher tax %, but it's not off the reservation. Now, it may be too large a thing to compromise on for THIS Congress (or the next one), but that's more an indictment of the skills and intelligence of the people involved rather than the magnitude and complexity of the problem. Medicare/Caid IS off the reservation, though. I've posted a couple times that the overruns this year are in the realm of being as large as another entire DoD and DHS put together. The small payroll taxes that are supposed to pay for it don't, while the projections are that costs are going to go up exponentially. ObamaCare had very little health reform (or cost of health reform), and a bunch of attempted health insurance reform and fancy hand-waving for cost numbers in the future. I also disagree with you about the following: I fully admit that I don't know the projections for SS as well as you and Denny, so I'll just stay mute on that subject. But SS at least has increased the tax % and availability age and reduced the promised benefits (my last statement said I'm projected to get 72% of my entitlement when I retire) as the ratio of workers-to-recipients has gone down. There has been no such increase in M/M (even a reduction in payroll tax, which can be construed as some reduction in the M/M portion of the payroll tax) since it was created in the 60's, and lobbyists (like the AARP?) have ensured that M/M cuts aren't brought up for debate. M/M's costs have been rising faster than inflation for at least 46 years with no speed bumps.
Reduce benefits accordingly. That would be a 25% cut. http://ssa-custhelp.ssa.gov/app/ans...-social-security-benefit-for-a-retired-worker I suppose the elderly can learn to live on $882.75/month.
Well, if you believe there is no solution, that we are doomed to simply pay more and more for healthcare forever, even as it consumes more than all of our money and more than all of the money we can borrow, then I guess there's no reason to worry about it further. The human race will just health-care itself to death. In the end, we'll have to stop buying food in order to buy healthcare, and we'll all starve. Bummer. barfo
I didn't say there's no solution. The solution is to make people pay for their healthcare, or to get private insurance to gamble on that for them. Yes, you might get people dying of cancer before they spend a quarter-million of taxpayer money. You might get someone who dies after his 2nd, instead of 3rd heart attack. You may get pressure to reduce medication costs (or reduce medications altogether). Heck if you want to take that almost-trillion dollars annually and set up a Department of Doctors and Nurses, and have people go see them at reduced costs, that would even be a solution. You're better than the "you said my solution won't work, so there isn't one and I'll just barfofy right now" tack in that post.
Wait, people don't pay for their healthcare/insurance now? There is a suspicious amount of money withheld from my paycheck by my employer. They always said it was for private health insurance. Am I the only one? And the odd thing is, it doesn't seem to help the situation. Costs of private insurance have been going up and more or less the same rate as medicare costs. But you are saying, if old people had to buy private health insurance, the costs would suddenly go down? What's special about old people? Are they cheap to insure? But that's not what you said. You said: What did you mean by that if not 'I disagree that there will be a solution'? Did you bold the wrong part of my quote? barfo
My point with the bolded is that you seemed very laissez-faire that there will be a solution. I highly disagree. Not because there isn't a solution, but that there are multiple options that haven't been vetted and/or chosen and implemented. And no, old people are not paying their health care costs if the government is paying and overrun of $700B a year for it. Much like in your insurance plan, you don't suddenly stop getting care when your costs go over how much you've paid in in premiums. The company is using premiums from me (who hasn't been to the doctor in years, but has a plan that costs 8-12k a year) to pay for people who use more than their 8-12k a year. Which is fine, if a plan staggers its clientele and premium structure to afford that. The US government has not. 49M people are paying income tax (or the government is taking out debt that those people will have to pay back) to cover the overruns of the "premiums" (payroll tax for M/M). This year it's ~$700B. There's not a lot of hope that that will go down anytime soon.
