POLITICAL observations & opinions

* There is no question that issues related to Social Security and Medicare are highly emotional. But that doesn’t mean there are not facts which should underlie any policy discussion. Politicians and voters need to understand the facts before drawing conclusions.

Posted by Lew Weinstein on August 14, 2011

 LMW COMMENT …

  • I received a comment recently which asserts in part …

“Social Security is solidly financed.”

  • Below is an article which concludes otherwise.
  • If any readers of this blog believe the conclusions of the Business Week article are not supported by the facts they cite, I welcome corrections.

******

Drew Armstrong and Brian Faler report in Business Week (8/13/11) …

  • Medicare, the U.S. health insurance program for the elderly and disabled, and the Social Security trust for the disabled and retirees are running out of money sooner than the government had projected.
  • While Medicare won’t have sufficient funds to pay full benefits starting in 2024, five years earlier than last year’s estimate, Social Security’s cash to pay full benefits runs short in 2036, a year sooner than the 2010 projection, the U.S. government said today in an annual report.

“Projected long-run program costs for both Medicare and Social Security

are not sustainable under currently scheduled financing,

and will require legislative corrections

if disruptive consequences for beneficiaries and taxpayers

are to be avoided.” 

  • The 2010 health-care overhaul backed by Democrats extended the life of Medicare, though a greater effort is needed to shore up the program’s long-term funding, Treasury Secretary Timothy Geithner said in a statement distributed with the report.
  • “If we do not do more to contain health-care costs, our commitments will become unsustainable,” said Geithner, managing trustee of Medicare and Social Security, in the statement.
  • Democrats, who have resisted changes to Social Security, said the trustees’ analysis shows there’s time to respond.
  • “The current situation does not necessitate rushed or severe action,” said Senate Finance Committee Chairman Max Baucus, Democrat of Montana. “We must continue to protect the Social Security benefits our seniors count on.”
  • Social Security law requires program spending to match revenue, so a lack of action by lawmakers by that time will mean benefits will have to be cut 23 percent — or the Social Security payroll tax increased to 16 percent, or a combination, the report said.
  • Medicare, to stay solvent for the next 75 years, would have to immediately raise payroll taxes by 24 percent, or cut current benefit payments by 17 percent, Cori Uccello, a senior health fellow with the American Academy of Actuaries in Washington, said in a phone interview.

read the entire article at … http://www.businessweek.com/news/2011-05-13/medicare-social-security-funds-expiring-sooner-u-s-says.html

 ******

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One Response to “* There is no question that issues related to Social Security and Medicare are highly emotional. But that doesn’t mean there are not facts which should underlie any policy discussion. Politicians and voters need to understand the facts before drawing conclusions.”

  1. Jonathan said

    The basic math on Social Security and Medicare hasn’t changed since the programs were started. People contribute to the fund while they are working and they draw from them when they retire. If they live long enough as retirees, they will use up ALL of what they themselves contributed to the funds. They then become a burden on others. This problem has only grown as life expectancies have increased and the retirement age has stayed the same.

    Once current retirees become dependent on current workers to fund their Social Security and Medicare expenses – as has been the case for decades – this system becomes a Ponzi/pyramid scheme, where the only way anyone receives funds from the system is by having more new people pay in.

    The problem is exacerbated when the number of people receiving payouts exceeds the number paying into the system. The largest generation of retirees in US history (I believe), the Baby Boomers, are just now hitting retirement age. The generation behind them (Generation X) is not as large and the generations behind that are also not a large.

    THIS IS A PROBLEM, BASED ON JUST THESE FACTS, THAT MUST BE ADDRESSED.

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