Bad news for social security and medicare

[celeb_2006]

Cheers!

Social Security and Medicare finances worsen - Yahoo! Finance

Social Security and Medicare both facing depletion of trust funds sooner because of recession

• Martin Crutsinger, AP Economics Writer
• On Tuesday May 12, 2009, 9:54 pm EDT

WASHINGTON (AP) -- Social Security and Medicare are fading even faster under the weight of the recession, heading for insolvency years sooner than previously expected, the government warned Tuesday. Social Security will start paying out more in benefits than it collects in taxes in 2016, a year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner, trustees reported.
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, just as it did for the first time in 2008. The trustees project that the Medicare fund will be depleted 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 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.
The options available to deal with the Social Security shortfall include raising the payroll tax that funds Social Security, such as removing the cap on income subject to the tax, or cutting benefits in some fashion such as raising the retirement age.
The administration is pushing Congress to pass legislation this year to extend health care coverage to some 50 million uninsured Americans, 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.

[DeadDwarf]

The government has basically been stealing from the fund to pay for whatever the fuck they want. It's a financial scandal!!!

I wish more people knew that pretty much all the wars for the past ~ 20 years have been funded from our SS and Medicare funds. This is because a President can "borrow" money from these funds without having congress or the American public vote on it (AKA our permission).

OUR SOCIAL SECURITY HELPED TO FUND THE IRAQ WAR.

We should have over a trillion dollar surplus and enough money to pay for several generations (including the baby boomers). But no, it was taken from us to fund fucking wars and because our government is fully of greedy assholes that can't manage shit.

[RevellingInSane]

When my professor in college brought this up as a topic, he was told he was nuts and to stop trying to turn his students into people who distrusted the government. This was almost a decade ago.

I guess my retirement age will be 675?

[McJag]

Who the heck ever counted on it anyway? Like we couldn't see this coming.

[kingcap72]

Guess we're going to have to hit up the Bank of China for another loan.

[visitor42]

Right now, Social Security is still taking in more money than it gives out. Relatively small changes could stave off the coming shortfall. For instance, SS tax stops at 105,000 or so. Raise the cap to 200 K. Increase the point at which full benefits are paid out by a year or two. Stop indexing benefits to inflation for a couple years. Changes like that would fix it.

There's a problem, but it's not like the sky is falling.

[travelbug]

^^I've never understood the cap on SS tax. All earned income should be subject to SS tax. It's a flat tax so let's hear those rich assholes complain.

[Sweetie]

Well, I expect to be paid back all that I paid in. Although, I won't hold my breath.

[RevellingInSane]

Even if SS is taking in more than it is paying out, it means nothing to the very people who are paying in. We are paying more into a program than those who are receiving the benefits ever did, yet when it is our turn to get what we put it, it will be gone.

Sorry, but SS and Medicare taxes are bullshit and those of us who are members of generations after the baby boomers should be allowed to take income and invest in private retirement funds.

[Fluffy]

The Truth Behind the Social Security and Medicare Alarm Bells

May 13, 2009, 8:01AM

Robert Reich

What are we to make of yesterday's report from the trustees of the Social Security and Medicare trust funds that Social Security will run out of assets in 2037, four years sooner than previously forecast, and Medicare’s hospital fund will be exhausted by 2017, two years earlier than predicted a year ago?

Reports of these two funds' demise are not new. Fifteen years ago, when I was a trustee of the Social Security and the Medicare trust funds (which meant, essentially, that I and a few others met periodically with the official actuary of the funds, received his report, asked a few questions, and signed some papers) both funds were supposedly in trouble. But as I learned, the timing and magnitude of the trouble depended a great deal on what assumptions the actuary used in his models. As I recall, he then assumed that the economy would grow by about 2.6 percent a year over the next seventy-five years. But go back into American history all the way to the Civil War -- including the Great Depression and the severe depressions of the late 19th century -- and the economy's average annual growth is closer to 3 percent. Use a 3 percent assumption and Social Security is flush for the next seventy-five years.

Yes, I know, the post-war Baby Boom is moving through the population like a pig through a python. The number of retirees eligible for benefits will almost double to 79.5 million in 2045 from 40.5 million this year. But we knew that the Boomers were coming then, too. What we didn't know then was the surge in immigration. Yet immigrants are mostly young. Rather than being a drain on Social Security when the Boomers need it, most immigrants will be contributing to the system during these years, which should take more of the pressure off.

Even if you assume Social Security is a problem, it's not a big problem. Raise the ceiling slightly on yearly wages subject to Social Security payroll taxes (now a bit over $100,000), and the problem vanishes under harsher assumptions than I'd use about the future. President Obama suggested this in the campaign and stirred up a hornet's nest because this solution apparently dips too deeply into the middle class, which made him backtrack and begin talking about raising additional Social Security payroll taxes on people earning over $250,000. Social Security would also be in safe shape if it were slightly more means tested, or if the retirement age were raised just a bit. The main point is that Social Security is a tiny problem, as these things go.

Medicare is entirely different. It's a monster. But fixing it has everything to do with slowing the rate of growth of medical costs -- including, let's not forget, having a public option when it comes to choosing insurance plans under the emerging universal health insurance bill. With a public option, the government can use its bargaining power with drug companies and suppliers of medical services to reduce prices. And, as I've noted, keep pressure on private insurers to trim costs yet provide effective medical outcomes.

Don't be confused by these alarms from the Social Security and Medicare trustees. Social Security is a tiny problem. Medicare is a terrible one, but the problem is not really Medicare; it's quickly rising health-care costs. Look more closely and the real problem isn't even health-care costs; it's a system that pushes up costs by rewarding inefficiency, causing unbelievable waste, pushing over-medication, providing inadequate prevention, over-using emergency rooms because many uninsured people can't afford regular doctor checkups, and spending billions on advertising and marketing seeking to enroll healthy people and avoid sick ones.

The Truth Behind the Social Security and Medicare Alarm Bells | Robert Reich's Blog

[Charmed Hour]

Even if SS is taking in more than it is paying out, it means nothing to the very people who are paying in. We are paying more into a program than those who are receiving the benefits ever did, yet when it is our turn to get what we put it, it will be gone.

Sorry, but SS and Medicare taxes are bullshit and those of us who are members of generations after the baby boomers should be allowed to take income and invest in private retirement funds.

Not only are we paying more than they did, but they're living far longer as well. They're receiving far, far more then they ever paid out.

However, I don't necessarily take offense to them collecting. Taking care of your elderly (decently) is a sign of a caring society, imo.

I just wonder how helpful it would be if they did revise the collection age. (Plenty of people are working will past 62 and collecting SS.) The systems needs a massive overhaul.

I also would like the SSDI & SSD systems checked while they're at it. Many disabled children collect SS and will probably do so into their adulthood.

If they were so-called "normal", their parents would have to provide food, clothing and shelter. Why should they receive cash to do so? I can see giving all the services they need but why the cash.

[RevellingInSane]

Not only are we paying more than they did, but they're living far longer as well. They're receiving far, far more then they ever paid out.

However, I don't necessarily take offense to them collecting. Taking care of your elderly (decently) is a sign of a caring society, imo.

I just wonder how helpful it would be if they did revise the collection age. (Plenty of people are working will past 62 and collecting SS.) The systems needs a massive overhaul.

I also would like the SSDI & SSD systems checked while they're at it. Many disabled children collect SS and will probably do so into their adulthood.

If they were so-called "normal", their parents would have to provide food, clothing and shelter. Why should they receive cash to do so? I can see giving all the services they need but why the cash.

I agree it needs a massive overhaul. I know relatively comfortable to wealthy older people collecting checks who don't need them. There are some who claim disability when the only disability anyone can see is complete laziness.

I have no problem supporting the elderly or truly disabled, but the greedy or lazy have to go.

[sparkly]

^Tell me about it. My father has diabetes, one leg, is going blind, and has had a heart attack and stroke and he STILL has a fucking job. People that milk the government for handouts piss me off.