If you have looked at a news site in the past two days, you know that Social Security and Medicare are set to go broke in the next two decades, which is earlier than previously expected.
The unsurprising revelation comes from the Social Security Trustees’ annual report on the state of the government retirement and Medicare trust funds. Social Security is expected to exhaust its trust funds by the year 2033, three years earlier than last year’s projection. Medicare, while stable at the moment, will see its hospital insurance fund go broke by 2024. Social Security disability insurance, according to the report, is in the most trouble; its trust fund will be exhausted by 2016.
From the report:
Social Security and Medicare are the two largest federal programs, accounting for 36 percent of federal expenditures in fiscal year 2011. Both programs will experience cost growth substantially in excess of GDP growth in the coming decades due to aging of the population and, in the case of Medicare, growth in expenditures per beneficiary exceeding growth in per capita GDP. Through the mid-2030s, population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment will be the largest single factor causing costs to grow more rapidly than GDP. Thereafter, the primary factors will be population aging caused by increasing longevity and health care cost growth somewhat more rapid than GDP growth.
This is not breaking news. The social welfare program has long been in trouble. The increased number of retirees and decreasing number of working Americans are rendering the “pay-as-you-go” social welfare mammoth unsustainable. However, even when the fund runs dry, about three-quarters of currently scheduled benefits could be carried by the taxpayer for about 50 years, according to analysis.
Some people have called the Social Security program a Ponzi scheme for workers who will be nowhere near retirement age by 2033 and call for an “opt out” option that would allow working individuals to invest elsewhere the money taken from their checks for Social Security.
But, how then would the government fund the program?
The Federal government can print fiat money to infinity; it will always be able to pay Social Security no matter what the balance sheets say. By keeping the presses rolling, Federal officials could take the advice of one Forbes contributor who says he can fix the program for $49.99:
We’ll buy a really nice pen (that’s what costs $49.99), have one of those federal workers write “44 quadrillion dollars” on it [the Trust Fund balance], and put it in the drawer. By my calculations, this will keep Social Security solvent through 3575, plus granny will get a free lifetime supply of Werther’s Original. Entitlement crisis solved!
Or, we could just admit that the Trust Fund balance is arbitrary and bears no meaningful relationship to the government’s ability to pay Social Security benefits.
The Forbes writer’s plan essentially removes any initiative for Americans to work and save in an attempt to retire with more than just monthly government bread, because in the end they will have had their savings taxed through inflation.
Social Security is not going to go broke, despite the mainstream media’s effort to make the Nation believe it will; and whatever the “plans” to repair the social welfare system, they will quit working, saving Americans in the same place: the pocketbook.