Social Security and Medicare Finances Worsen!

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What is it that Congress cannot understand? We pay into both Social Security and Medicare through our SSI deductions from our taxes. The money should be there for those who have paid into it! Both are in trouble because they keep doling out money from these systems to people who have never paid into it.

Hello?

Cut foreign retirees off the US gravy train (SSI). Collect taxes from deadbeats. No totalization with anyone else.

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May 12, 4:25 PM EDT

Social Security and Medicare finances worsen

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) -- The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives.

Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year's report.

The trust funds - which exist in paper form in a filing cabinet in Parkersburg, W.Va. - are bonds that are backed by the government's "full faith and credit" but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.

Treasury Secretary Timothy Geithner, the head of the trustees group, said the new reports were a reminder 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."

Geithner said that President Barack Obama was committed to working with Congress to find ways to control runaway growth in both public and private health care expenditures, noting the promise Monday by major health care providers to trim costs by $2 trillion over the next decade.

However, Republicans pointed to the newly dire assessments as evidence the Obama administration has failed to come forward with actual entitlement reform to close the funding gaps.

"Instead of getting existing public programs in order right now, some are saying we should create a new government-run health insurance plan," Sen. Chuck Grassley, the top Republican on the Finance Committee, said in a reference to the administration's health care proposals. "When we can't afford the public health plan we have already, does it make sense to add more?"

House Republican leader John Boehner said the trustees report "confirms what we already knew: Our nation cannot afford to continue this reckless borrowing and spending spree."

The findings in the trustees report, the annual checkup given the two benefit programs, did not come as a surprise. Private economists had been predicting that the dates the programs would begin to pay out more than they take in and the dates the trust funds would be insolvent would occur sooner given the economic recession.

The deep recession, the worst the country has endured in decades, has resulted in a loss of 5.7 million jobs since it began in December 2007. The unemployment rate hit a 25-year high of 8.9 percent in April.

Fewer people working means less being paid into the trust funds for Social Security and Medicare.

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

The trustees report projected that Social Security's annual surpluses would "fall sharply this year," then remain at a reduced level in 2010 and be lower in the following years than last year's projections. The report said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased demands from the wave of 78 million baby boomers retiring.

That means Social Security will have to turn to its trust fund to make up the difference between Social Security taxes and the benefits being paid out beginning in 2016. The trustees projected the trust fund would be depleted in 2037, four years earlier than the 2041 date in last year's report.

At that point, the annual Social Security taxes collected would be enough to pay for three-fourths of current benefits through 2083. To tap the trust fund, the government would have to increase borrowing or raise taxes because Social Security bonds exist only as bookkeeping entries.

While the government is obligated to redeem those bonds, it has already spent the excess Social Security collections over the years to fund general government operations, providing the trust funds with IOUs.

While the smaller surpluses that will begin this year will not have any impact on Social Security benefit payments, the government will need to borrow more at a time when the federal deficit is already exploding because of the recession and the billions of dollars being spent to prop up a shaky banking system.

Medicare's condition is more precarious, reflecting the pressures from soaring health care costs as well as the drop in tax collections.

Obama on Monday praised the pledge by the health care industry to achieve $2 trillion in savings on health care costs over the next decade, but it was unclear how much help those pledges would be in achieving Obama's goal of extending coverage to some 50 million uninsured Americans. The administration is pushing Congress to pass legislation in this area this year, preferring to tackle health care before Social Security.

The trustees report is likely to set off renewed debate over Social Security and Medicare. Critics have charged that the Obama administration has failed to tackle the most serious problems in the budget - soaring entitlement spending.

The administration on Monday revised its federal deficit forecasts upward to project an imbalance this year of $1.84 trillion, four times last year's record, and said the deficits will remain above $500 billion every year over the next decade.

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Quote:

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The trust funds - which exist in paper form in a filing cabinet in Parkersburg, W.Va. - are bonds that are backed by the government's "full faith and credit" but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.

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Exactly......IOU's for money they took and never put back, and they claim "we're" the burden. :twisted: :twisted: :twisted:

Hmm....borrowing money, form a fund that is supposed to be for something else.

Right now, our rent check has not gone through our account...so if I went in to the store and made a large, much needed, grocery purchase with that, and then the rent check tried to clear tonight, I would be in trouble, and have to answer to the landlord why I did not have it available for the check I made out to him. So..the responsible thing is to not touch it and make due.

Guess it is time for our government to learn how to do what we all have to do, make due without touching funds meant for something else. But then again, that would mean they would actually have to be responsible, which is something the rest of us have had to do all along.

They have been robbing SS for years if not decades. And SS was never suppose to be taxed either. We paid for it all our lives and now we have to worry if it will be there for us. We should be able to collect at least enough for basic needs...that is what SS was suppose to be for...to provide shelter, food, utilities to the elderly so they would not become destitute.

And dont get me started on Medicare. An elderly person who has worked in this country all their life should at least be able to get basic medical care and necessary medicine.

Lately I hear them saying that one of the reasons these programs are in trouble is because boomers will live so much longer. I think that is propaganda. They are hyping us up for a rip off. Saying how so many of us will live to be 100...blah, blah, blah. But life expectancy is 78 for the average person, so they are lying.

I am sure there is a person here and there that lives to be 100 but it is still rare. Of course there are more boomers so the actual number of people who live that long is more, but by percentage it is not more. Dont forget that because there were so many boomers that they actually collected more in SS tax from us than any other generation too. So the money should be there and there should be no excuses.

Quote:

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Lately I hear them saying that one of the reasons these programs are in trouble is because boomers will live so much longer. I think that is propaganda. They are hyping us up for a rip off. Saying how so many of us will live to be 100...blah, blah, blah. But life expectancy is 78 for the average person, so they are lying.

---

Heck they're gonna make sure we don't with their health care rationing. It's a lie, and it's just another thing they're doing to divide people even more....hate the old people because they're draining us.....and forget they've paid in their whole life as they keep cutting and cutting and limiting and raising prices and taxes on the very necessities of life.

http://www.salon.com/opinion/feature/20 ... print.html

Let's cut Social Security to pay for banker bailouts!

You are about to be hit by another wave of disinformation about how Social Security is going broke and needs reforming (meaning, your benefits must be cut). It's not true.

By Michael Lind

May. 12, 2009 |

On Tuesday, May 12, the trustees who oversee Social Security and Medicare will issue their annual report. I don't know what will be in the report. But I do know what the response will be. Conservatives, libertarians and center-right Democrats will take whatever the report says as evidence that there is an "entitlement crisis," which should require us not only to address spiraling healthcare costs (a genuine issue, affecting the private sector as well as Medicare and Medicaid) but also the alleged "crisis" of Social Security (an imaginary problem).

The coalition of libertarian zealots, Jeffersonian conservatives, center-right Democrats and bankers and brokers who would like to earn fees or commissions from the diversion of Social Security payroll taxes into IRAs recycles the same arguments against Social Security, rain or shine, boom or bust. They've been doing it for more than a quarter-century, ever since a couple of libertarians wrote up a guide for small-government conservatives on how to spread doubts about a popular, solvent and effective entitlement. These tried-and-true arguments will be dusted off and dragged through the media once again, after the latest Social Security Trustees' report is published. Among the bogus arguments you can expect:

The date at which Social Security will become bankrupt has advanced! From annual report to annual report, the two key dates -- the date at which Social Security payouts from the Trust Fund exceed payroll tax intake, and the date at which the Trust Fund is exhausted -- advance or retreat, depending on the contemporary economy and changes in calculations. For example, in 1997 payouts were supposed to exceed revenues in 2012 and the Trust Fund was supposed to be exhausted in 2029. By 2004, the trustees were more optimistic: The two dates were 2018 and 2042, respectively. If as a result of today's bad economic conditions future growth rates are revised and the two dates are slightly closer to the present in the latest report, should you be concerned? No. Relax. When estimates vary so much, it would be crazy to try to make public policy for the United States of nearly half a century from now.

We have only two choices, or a combination -- cutting benefits or raising the payroll tax. False. There are at least two other choices that the deficit hawks never mention. One is more rapid economic growth, which would make it easier to pay Social Security taxes in the future without either benefit cuts or tax increases. The other option that the doomsayers never discuss is an infusion of money from other revenues, to supplement the payroll tax. Medicare is already paid for partly by a payroll tax and partly by general revenues. Why not cut the payroll tax and make up the difference out of general federal taxes? If you want to be revenue-neutral, the Social Security shortfall of about 2 percent of GDP between now and mid-century could be patched with general revenue funds diverted from defense, if without endangering our safety we could gradually lower defense spending from its present wartime level of about 4 percent of GDP to 2 percent, which is more than most other advanced industrial countries spend on defense.

Social Security and other entitlements are responsible for unfunded liabilities of more than $100 trillion -- and as the baby boomers begin to retire, the bill is coming due! Total nonsense.

About a decade ago, conservative and libertarian economists who oppose Social Security, Medicare and other entitlements came up with a clever rhetorical strategy. They would calculate the gap between the payroll taxes that pay for these programs and estimated costs over time. But there was one problem: The gap isn't all that scary, at least in the near future. So in order to frighten the American people and their elected leaders, deficit hawks cite the sum total of Social Security's "unfunded liabilities" over 75 years. But even this -- a paltry $4.3 trillion over three-quarters of a century, according to the 2008 report -- isn't sufficiently terrifying.

In order to frighten gullible Americans, anti-Social Security crusaders conflate Social Security with Medicare and talk about the "entitlement crisis" in general. This masks the fact that Social Security's projected shortfalls are minor, compared to those of Medicare. Better yet, it produces a suitably spooky 75-year shortfall of $42.9 trillion. And if this is not alarming enough, deficit hawks can cite the truly apocalyptic figure of $101.7 trillion in combined "entitlement" spending over an infinite time horizon.

The anti-Social Security lobby always presents the "unfunded liabilities" of "entitlements" in scary dollar terms, rather than as percentage points of GDP. Here's why: Over the next 75 years, the Social Security shortfall at most hovers around 1 percent of total U.S. GDP over that same period. Yes, that's right -- around a whopping 1 percent of U.S. GDP. And that is only in the unlikely event that some combination of growth, taxes and benefit cuts do not eliminate the shortfall in the future.

Dishonest deficit hawks also won't tell you that the Social Security shortfall, at its worst, is only a minor cause of the total budget deficit, which mainly has other origins. Among those are the off-the-budget wars and the Bush tax cuts, which, if they had been made permanent, would have created a 75-year shortfall between three and six times greater than the Social Security shortfall (Furman and Greenstein). By allowing tax rates for the rich to return to pre-Bush levels, Obama has already averted huge potential revenue shortfalls that would have made the gradual reduction of today's emergency-driven deficits much harder.

By the way, the huge expansion of the deficit and debt in the last year has had nothing to do with Social Security (without which not only retirees but the economy as a whole would have been much worse off). Indeed, thanks to the modest stimulus and the much larger bailouts, the contribution of Social Security to long-term deficits -- always pretty small -- has just gotten a lot smaller in relative terms. Anyone who says that the costs of the bailout mean we must now cut Social Security is literally saying that in order to bail out the bankers who created this crisis we need to slash benefits for American retirees.

Who is behind this disinformation campaign? The deficit hawks include billionaires like Ross Perot and Pete Peterson, Republican conservatives, libertarians and "fiscally conservative" Blue Dog Democrats. This coalition has campaigned against Social Security for more than a quarter of a century.

In 1983, in the Cato Journal published by the libertarian Cato Institute, Stuart Butler, a transplanted British Thatcherite, and Peter Germanis published their manifesto "Achieving a 'Leninist' Strategy." Small-government conservatives, they argued, should learn from Lenin, who sought to shape history rather than wait patiently for the inevitable evolution of socialism: "Unlike many other socialists at the time, Lenin recognized that fundamental change is contingent both upon a movement's ability to create a focused political coalition and upon its success in isolating and weakening its opponents."

Our two Leninist libertarians went on to argue: "First, we must recognize that there is a firm coalition behind the present Social Security system, and that this coalition has been very effective in winning political concessions for many years. Before Social Security can be reformed [destroyed], we must begin to divide this coalition and cast doubt on the picture of reality it presents to the general public." Because the "political power of the elderly will only increase in the future," Butler and Germanis argued that any plan to phase out Social Security should assure the elderly and near-elderly that they would get their benefits: "By accepting this principle, we may succeed in neutralizing the most powerful element of the coalition that opposes structural reform."

While pursuing a divide-and-rule policy to "neutralize" the elderly and other supporters of Social Security, the authors of the Leninist strategy called for libertarians to build up a counter-alliance consisting of institutions that could profit from the privatization of Social Security: "That coalition should consist of not only those who will reap benefit from the IRA-based private system ... but also the banks, insurance companies, and other institutions that will gain from providing such plans to the public [emphasis added]." They continue: "The business community, and financial institutions in particular, would be an obvious element in this constituency. Not only does business have a great deal to gain from a reform effort designed to stimulate private savings, but it also has the power to be politically influential and to be instrumental in mounting a public education campaign."

In true cunning Leninist fashion, the opponents of Social Security would disguise their revolutionary goal by pretending to be interested only in modest, piecemeal reforms: "The first element consists of a campaign to achieve small legislative changes that embellish the private IRA system, making it in practice a small-scale Social Security system that can supplement the federal system." Only when all of the pieces were in place -- when the concerns of the elderly had been "neutralized" by reassuring words, when banks and other businesses seeking to cash in on Social Security privatization were part of the libertarian alliance, and when business-funded campaigns of "education" [that is, propaganda] had convinced most Americans that Social Security was untrustworthy, would the Leninist right reveal its true colors: "If these objectives are achieved, we will meet the next financial crisis in Social Security with a private alternative ready in the wings -- an alternative with which the public is familiar and comfortable, and one that has the backing of a powerful political force."

I mean, really. Is this the ultimate smoking gun, or what? Twenty-six years ago, Butler and Germanis, in a journal they must have expected few if any non-libertarians to read, laid out the elements of the dishonest and cynical campaign against Social Security that the right has pursued ever since, right up to George W. Bush's support in his second term for the partial privatization of Social Security. Stuart Butler is still at it; only last year he called, again, for abolishing Social Security as an entitlement and turning it into a program for the poor that would be funded or not from year to year at the whim of Congress.

Even a Republican Congress was unwilling to touch the proverbial "third rail," and in the aftermath of two stock market crashes in less than a decade the idea of funneling Social Security funds into Wall Street is going nowhere. But that doesn't mean the threat to Social Security isn't over. Even if they can't directly privatize it, the Leninists of the right will keep trying to "educate" Americans into believing falsely that they personally are unlikely to receive their full benefits and that Social Security somehow will bankrupt the country -- even while they remind America's battered bankers and brokers just how much money they could make on commissions by flipping stocks if Social Security were gradually replaced by IRAs. Meanwhile, they will keep trying to whittle away at America's most successful social insurance program. They will call for converting it into a means-tested welfare program, or rejiggering benefits formulas so that inflation will render Social Security negligible as part of the retirement income of most Americans. And all the while these radicals of the right will disguise their true radicalism, pretending to be centrist "fiscal conservatives" concerned about "fiscal responsibility" and about "our children and grandchildren." (Interestingly, children and grandchildren are not mentioned in the Butler/Germanis manifesto, which contains several references to "the business community, and financial institutions in particular.")

So be prepared, America. As soon as the latest trustees' report is out, the media will be full of doomsayers and hand-wringers telling us again, as they have told us year after year, decade after decade, that we can't afford Social Security anymore. When they call on us to take action now, we should indeed respond. With a yawn.

-- By Michael Lind

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