This week, Americans learned that the $2.7 trillion Social Security Trust Fund will run out of money in 2033 – some four years earlier than forecast just a year ago. Medicare is slated to run out of money in 2024 despite a two percent cut in Medicare last year.
But the pace of Medicare spending continued to increase sufficiently to make that cut a moot point. How utterly convenient that Americans learn after the health care reform package is approved in Congress that Social Security is worse off than we were told just 12 months ago.
Those numbers resound as retirees and the 78 million Baby Boomers who aspire to be retirees find out that their retirement nest egg has been compromised by years of congressional mismanagement. There are currently some 56 million Americans drawing Social Security with average benefits of $1,232 per month
Over the next decade, the Obama administration proposes some $45.8 trillion of spending with some $20 trillion of that to be spent on Social Security (retirement pensions), Medicaid (health care for the poor, the blind, disabled and children), and Medicare (health care for senior citizens).
Not only is Social Security upside down in terms of benefits paid versus payroll deductions received , but the Social Security trust fund has been reduced by $2.5 trillion worth of congressional borrowing. What retirees and Baby Boomers really have in terms of that “nest egg” they thought they had when FICA was being deducted from their payroll checks is in reality a pile of IOUs in a filing cabinet in Parkersburg, W. Va.
The 2.5 trillion owed to Social Security is part of the $15.56 trillion national debt. And, oh, by the way, Social Security has a total unfunded liability of well over $8 trillion.
There are no more relevant issues for the future of this country than how to deal with the implications of the slide toward insolvency of Social Security and Medicare. Over the next 75 years, the projected unfunded liabilities of the programs are estimated at $35.5 trillion.
Yes as the President Obama and likely Republican challenger Mitt Romney prepare to square off in earnest, the topic of the day in politics has been whether Romney once transported his dog on the roof of the car during a vacation trip or whether Obama’s childhood diet once included dog meat.
The good news from the recent forecasts involving Social Security and Medicare – the good news – was that the ongoing collection of payroll taxes would allow Social Security to pay 75 percent of full benefits and Medicare to pay about 87 percent of medical costs.
Perhaps a dog might be a useful prop in explaining this mess. When retirees look to Congress for an explanation of what happened to Social Security and Medicare, Congress can simply tell them the dog ate their benefits.
Sid Salter is a syndicated columnist. Contact him at (601) 507-8004 or firstname.lastname@example.org.