Growing-Gap-Between-Contributions-and-Benefits-for-Social-Security-and-Medicare-August-2011.jpg (809×452)

Despite the facts shown on the chart below, our Vermont Senator Bernie ('Outrageous') Sanders makes outlandish statements like this: "...The truth is that the Social Security Trust Fund has run surpluses for the last quarter century. Today’s $2.5 trillion cushion is projected to grow to $4 trillion in 2023. The nonpartisan Congressional Budget Office, experts in this area, say Social Security will be able to pay every nickel owed to every eligible beneficiary until 2039...."

He implies that the 'Trust Fund' is in good shape neglecting to say that the assets have been loaned to the Government and used for other purposes. The assets are mostly IOUs from the Government. Unless spending is controlled in all areas of Government, the risk increases that these IOUs may not be paid in full because the country may not be able to meet all its obligations. The 'full faith and credit' of the U.S. is not as rock-solid as it was.

Much more here. Sen. Sanders' rhetoric does a disservice to reality.

Here's a link to a great chart on SS prospects in the years ahead from the Washington Post.

Recession Drains Social Security and Medicare - NYTimes.com

Recession Drains Social Security and Medicare - NYTimes.com:

When will this pending train wreck classify as a crisis? The bad news isn't new, but the problem has been put off for years because no federal politician, George Bush excluded, would even touch this third rail of politics. Years of warnings by the former Comptroller General of the U.S., David Walker, went unheeded.

Many Congresses have fiddled while Rome is burning. The siren's call of universal coverage, much more appealing to the voters they were courting has masked the real problem...the run up in costs. Medicare and health care costs have long been out of control. No wonder yesterday's announcement by the health care industry of their 'intent' to reduce the growth in costs by 1.5% annually.

I have here said previously that the only real way to control costs is to ration care. No one wants to hear it, but that's the truth of the matter. Health care, like the State of Vermont's Legislature has a spending problem, not a revenue problem.

In Vermont for example, health care is now the third largest contributor to the gross state product, exceeded only by government (#1) and manufacturing (#2)

"...As a result, the administration said, the Medicare fund that pays hospital bills for older Americans is expected to run out of money in 2017, two years sooner than projected last year. The Social Security trust fund will be exhausted in 2037, four years earlier than predicted, it said.

Spending on Social Security and Medicare totaled more than $1 trillion last year, accounting for more than one-third of the federal budget...."

The bigger economic disaster: 78 million baby-boom retirees - Oct. 30, 2008

The bigger economic disaster: 78 million baby-boom retirees - Oct. 30, 2008

David Walker has been one of my heroes for a couple of years. He is absolutely right :

"The U.S. Government Accountability Office (GAO), noting that the federal balance sheet does not reflect the government's huge unfunded promises in our nation's social-insurance programs, estimated last year that the unfunded obligations for Medicare and Social Security alone totaled almost $41 trillion. That sum, equivalent to $352,000 per U.S. household, is the present-value shortfall between the growing cost of entitlements and the dedicated revenues intended to pay for them over the next 75 years."

"...Third, in the same way that private sector "risk management" executives failed to prevent the subprime mortgage crisis, overseers in Congress and the executive branch have turned a blind eye to costs associated with entitlement programs and tax cuts. While lax regulation of banks fed the current subprime crisis, a lack of statutory budget controls has led to a widening gap between the government's revenues and costs.

At the heart of these problems is our leaders' collective failure to act in the face of known challenges. Our country has veered from its founding principles, which held to individual responsibility and accountability today in order to create more opportunity tomorrow. When our constitution was written, the concepts of thrift and prudence were no less at the center of the American spirit than liberty and justice."

The fundamental problem is Congress, IMHO. It's also true that the Executive Branch under Clinton and Bush, in particular, failed to deal with the BIG fiscal problems, but Congress ultimately controls the purse strings of the country.

U.S. Financial Condition and Fiscal Future

http://www.gao.gov/cghome/d08417cg.pdf

David Walker, The Comptroller General of the United States, has developed this briefing (click the link above) about the the status of government expenditures, focusing on Social Security and health care. I suggest browsing through this 35 page .pdf for a full assessment of where we're headed if we do nothing.

He chooses not to address defense spending, probably because that's a fundamental and basic responsibility of government and does not have the built-in demographic time bomb as do the 'entitlements.'

Medicaid and Medicare are in deeper trouble than SS.

Why don't we hear about this dilemma on the campaign trail? Is it because the problem surfaces beyond the next 4-tear term?

Some excerpts below:

Current Fiscal Policy Is Unsustainable

•The “Status Quo” Is Not an Option
•We face large and growing structural deficits largely due to known demographic trends and rising health care costs
•GAO’s simulations show that balancing the budget in 2040 could require actions as large as

•Cutting total federal spending by 60 percent or

•Raising federal taxes to two times today's level

•Faster Economic Growth Can Help, but It Cannot Solve the Problem

•Closing the current long-term fiscal gap based on reasonable assumptions would require real average annual economic growth in the double-digit range every year for the next 75 years

•During the 1990s, the economy grew at an average 3.2 percent per year

•As a result, we cannot simply grow our way out of this problem. Tough choices will be required
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Key Dates Highlight Long Term
Challenges of the Social Security System

2009 - Cash surplus begins to decline

2017 - Annual benefit costs exceed cash revenue from taxes

2027 - Trust fund ceases to grow because even taxes plus interest fall short of benefits

2041 - Trust fund exhausted

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Key Dates Highlight Long Term
Challenges of the Medicare Program

2007 - Medicare Part A outlays exceed cash income
2007 -“Medicare funding warning” triggered
2013 - Projected date that annual “general revenue funding” for Part B will exceed 45 percent of total Medicare outlays
2019 - Part A trust fund exhausted, annual income sufficient to pay about 80% of promised Part A benefits

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Three Key Illnesses
•Myopia
•Tunnel Vision
•Self-Centeredness
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Four National Deficits
•Budget
•Balance of Payments
•Savings
•Leadership
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Key Leadership Attributes Needed for
These Challenging and Changing Times
•Courage
•Integrity
•Creativity
•Partnership
•Stewardship