Elderly Entitlements are Sinking Us
The net cash cost of Medicare and Social Security – the amount by which benefit payments exceed dedicated tax collections – has nearly quadrupled since the last presidential election, rising from $108.7 billion to $402.7 billion. Since our total deficit is about three times that $402.7 billion figure, it is reasonable to say that our two largest government programs are directly responsible for about a third of government borrowing.
This gigantic shift has already happened. It is history, not projection. As recently as two presidential elections ago, the cash cost of Social Security and Medicare was practically nothing – a mere $41.1 billion.
Read entire Scott Burn’s article on government’s trust fund.
Scott Burns is an extremely bright and honest individual.
He and I have corresponded several times via E-mail.
The financial dynamics at trust fund exhaustion is the same when cash outgo exceeds cash income: new revenues from the Treasury’s General Fund must be tapped – the same way we pay all pay-as-you-go expenses, like Medicaid, whether in a trust fund or not.
Instead of keeping the trust fund intact, with special-issue Treasuries, dedicated exclusively for SS beneficiaries, the excess FICA taxes were loaned to the Treasury to pay for current expenses.
From a cash (budget) perspective, the trust fund is empty.
From the Trust Fund Perspective, it is loaded!
Which would you rather have: a cash surplus or an accounting surplus?
Don Levit
Elderly entitlements are politicians way of promising benefits to voters than their grandchildren (who cannot vote) must pay for.
Trust? What trust? IOUs in a file cabinet are not negotiable currency.
What economists predicted this is the 1930s/40s?
Hayek maybe.