SS and Medicare depleted sooner than expected

Discussion in 'Politics' started by jreeves, May 12, 2009.

  1. jreeves
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    jreeves Senior Member

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    Social Security, Medicare Finances Worsen - CBS News
    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.


    Meanwhile we are running trillion dollar budget deficits, this is a disastrous combination.
     
  2. DiamondDave
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    DiamondDave Army Vet

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    Maybe now government will not try and use SS and other Federal trust funds as their own 'petty cash' fund... it has been absolutely ridiculous...

    And every Prez has gone along with it, including Clinton with his inclusion of monies taken from SS and other funds as 'income' in his bullshit attempt at claiming surplus

    It seems simple to the average person with any common sense at all.. you don't touch the nest egg set aside for others... You don't spend like Paris Hilton.. and you cut your spending in unnecessary/frivolous stuff (I.E. entitlement programs, govt grants, arts/entertainment spending, stimulus, etc) to live well with your means so you can actually start paying off debts you owe
     
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  3. RetiredGySgt
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    RetiredGySgt Platinum Member

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    Bush and the Republicans tried in His first administration to address the problem of SS and medicare and the response from the Dems was it wasn't broken don't need to fix it. A PERFECT Example of their "oppose" anything Bush says tactic. Since they had been claiming during Clinton's time in Office it needed to be fixed.
     
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  4. Skull Pilot
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    Skull Pilot Platinum Member

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    what?

    I thought my social Security money was mine. You know put aside especially for me and my retirement.
    Are you telling me the government lied to me? That the money i paid into social Security was not put in an account especially for me?

    Are you saying that the government has been running a ponzi scheme all these years?
    That the amount of money that this illegal (for anyone but the government that is) scam has collected put the recent Madoff scam in the chump change category?

    You must be lying because I know the government and my esteemed and trusted politicians would never never never lie to me and that all they do is look out for my best interests.

    So i believe my government and if they need to take more money from my pay and your pay to look out for us all and make sure we have a secure retirement then I'm all for it.

    After all if we can't trust our government, who can we trust?***


















































    ***SARCASM
     
  5. Seraega
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    Seraega Member

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    Bush's fix was to invest it in the market. That sure would've been great for people retiring in the last 6 months. We have IRAs and 401ks in the market, diversity is what keeps us stable through the market ups and downs. There's nothing wrong with SS that can't be fixed by eliminating the $106,000 contribution cap.
     
  6. Xenophon
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    Xenophon Gone and forgotten

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    2016 is only 7 years from now.

    Let's not forget that BO may also decide to do a lil tapping for more of his planned giveaways.
     
  7. midcan5
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    midcan5 liberal / progressive

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    Social security is fine, it is medicare that is the problem and the last administration added to this as it turned over the reigns of control to corporations to rob and steal. Has anyone seen the fiasco that is medicare? It is funny because it enters an area in which greed has accomplices. Doctors love it because it is a bill that no one can check.
     
    Last edited: May 13, 2009
  8. Skull Pilot
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    Skull Pilot Platinum Member

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    excuse me, but any idiot knows that in the 5-7 years before retirement, that equities should only be about 10-15% of one's retirement portfolio. If one does not bother to learn these things then one deserves what one gets or what one loses as the case may be.
     
  9. Skull Pilot
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    Skull Pilot Platinum Member

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    That's funny, SS is fine. Say that when the number of people collecting outnumber the number of people contributing. Collapse is inevitable, it's what happens with every Ponzi scam.
     
  10. Iriemon
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    Iriemon VIP Member

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    I personally think that is way to low a ratio for most folks, because that gives a portfolio too little growth potential. But that is OT.
     

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