Here is an unsurprising tweet from the Associated Press for anyone who has studied basic economics or has been paying attention to the federal government’s books:
BREAKING: Government: Medicare will become insolvent in 2026, three years earlier than expected, Social Security to follow in 2034.
— The Associated Press (@AP) June 5, 2018
“BREAKING: Government: Medicare will become insolvent in 2026, three years earlier than expected, Social Security to follow in 2034.”
That’s right.
According to the U.S. government, Medicare and Social Security will be bankrupt in a few years, stemming from negative cash flows, enormous debt levels, and treating SS like a slush fund (we’re looking at you former President Bill Clinton).
After years of inaction by Republicans and Democrats, unfunded liabilities from Medicare and Social Security are adding about $50 trillion of debt to the national debt. Officially, the national debt is $21 trillion, but it’s more likey $123 trillion.
It is true that there have been some politicians who have attempted to introduce reasonable reforms, like raising the eligibility age and conducting means tests. But anytime someone makes these recommendations, they are accused of being racist, homophobic, transphobic, Islamophobic, hateful, and sexist.
It’s going to get real ugly out there, especially as politicians, like President Donald Trump, just kick the can down the road. Look, most people expect something for nothing, but this is only wishful thinking.
Someone is going to foot the bill, either in the form of taxation or inflation.
JRATT says
FAKE NEWS -treating SS like a slush fund (we’re looking at you former President Bill Clinton).
No one has taken money from the SS trust fund. There is 2.9 Trillion dollars in special government bonds earning interest every year, helping to pay SS benefits.
The problem is 10,000 baby boomers retiring every day and starting to collect benefits that were not paid for by the taxes collected when they were working. Current worker’s payroll taxes, interest on the trust fund bonds and income taxes on SS benefits is what pays benefits.
The payroll tax of 6.2 percent has not been raised since 1990, but benefits keep going up.
Raise the payroll tax the same percentage as the COLA each year and the problem is solved, over the next 15 years. If the tax was raised in 2018 it would go up to 6.324 percent and you would pay a tax of $63.24 per $1000 in income instead of the current $62.
A person making $30,000 would pay an additional $37.20 per year and the employer would pay it also. Once the tax gets to 10 percent you could stop increasing it and the SS trust fund would always have a surplus earning interest and paying the promised benefits.