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Social Security and Medicare: The Twin Disasters That Will "Break the Bank"
Here, you get an overview of the looming bankruptcy of the Social Security/Medicare system. Politically, they are one program, which Congress is unwilling to challenge.
The unfunded liability of the two programs is now about $222 trillion. This is the estimate of Prof. Lawrence Kotlikoff of Boston University. This deficit is present value, not future value. It is what the federal government needs today to invest in the private sector in order to generate enough revenue to pay off the obligations.
To pay for Social Security and Medicare, the government would have to raise income taxes by 81%.
By 2005, the year I started this website, the combined programs of Social Security, Medicare, and Medicaid consumed almost 50% of the U.S. government's budget. For a report on this, click here.
USA Today ran a front-page story on November 15, 2005 on the looming crisis. This was two years before the recession of 2008-9 hit, which created huge federal on-budget deficits of over $1 trillion a year, 2009-2012.
For evidence of how Congress siphons off the trust fund money, refuses to count this massive borrowing as part of the official budget deficit, and then spends the money, read this. It is posted on Social Security's website.
Since the assets in the Social Security trust funds consists [incorrect grammar -- consist] of Treasury securities, this means that the taxes collected under the Social Security payroll tax are in effect being lent to the federal government to be expended for whatever present purposes the government requires. In this indirect sense, one could say that the Social Security trust funds are being spent for non-Social Security purposes.
For a summary article on this accounting trick, go here: Empty Trust Fund
There is no statistical escape from bankruptcy or default, either open or through inflation, yet Congress pretends that this is not inevitable. Why? Because voters will remove from office any Congressman who tells the truth about what is statistically irreversible. The question today is the form that the bankruptcy will take: outright default, mass inflation, or a salami-slicing reduction of benefits.
Government bureaucracies use tax money to promote themselves, so as to get more tax money. keep reading
Only 49% to go. Be patient. keep reading
You need to read this article. Need to. Had better. Topic: Medicare. It discusses several looming problems. The red ink has bar keep reading
I received a letter from a "conservative" who says Social Security is an insurance program. He is wrong, according to the Supreme Court. keep reading
Here, he lays it out. keep reading
Age 62? Age 66? Age 70? Before you decide, ask another question. keep reading
Back in 2005, an author asked me to write an article for his next book. His editor rejected it. See what you think. keep reading
The voters can get rid of these two systems at any time. They don't. Why not? Because they like the systems. keep reading
Social Security's slickest defender is short on solutions and long on rhetoric. keep reading
How much money does the government spend each year on every Medicare member? Do you see why this statistic is important? keep reading
The Trustees say it's going bankrupt. Why are there defenders of the system who insist that it isn't> keep reading
Zero Hedge argues that the FED's low interest rate policy is destroying Social Security. Is this true? If so, what happens next? keep reading
In just over 6 minutes, a retired accountant lays it out, using the government's own figures. Voters do not see it coming. It's coming anyway. keep reading
Will you collect at all? Don't count on it. keep reading
There are no marketable assets in the Trust Fund. There is nothing except IOUs from the government. keep reading