Blaming the recession in part, the administration announced earlier this month that the financial condition of the two largest federal benefit programs, Medicare and Social Security, had deteriorated faster than anticipated.
To put it succinctly, Medicare and Social Security are running out of money sooner than projected. Medicare, the government trust fund that pays hospital bills for older Americans, is expected to run out of money in 2017. The Social Security trust fund will be exhausted in 2037.
To put that in perspective, one third of the total federal budget or just over $1 trillion was comprised of Social Security and Medicare expenses.
And with the recession killing jobs that allow workers to pay into the system through payroll taxes while the government runs up mounting new debt bailing out Wall Street, the auto industry and other industries, some hard cold facts confront current and future Medicare and Social Security recipients:
n For the first time in more than 30 years, Social Security recipients won’t receive any cost-of-living increase in their benefits in 2010 or in 2011. In 2012, the COLA increase is projected to be 1.4 percent.
n New Medicare recipients and those in higher income brackets (over $85,000 a year for individuals and $170,000 for couples) will face sharply higher Medicare premiums.
n With Baby Boomers aging, a 30 percent increase in the number of Medicare beneficiaries is projected over the next decade up to 59 million by 2018.
But none of those ominous facts are the scary part – particularly for rising geezers-in-training like me who have been working 30-plus years and paying into the Medicare and Social Security systems.
Here’s the scary part.
The Associated Press reports that Medicare and Social Security are trust funds that exist as bonds in a filing cabinet in Parkersburg, W. Va. The bonds aren’t backed by the cash we gave the government from our payroll deductions.
They are backed by the “full faith and credit” of the federal government. But Congress long ago spent the actual assets to fund other government functions and to redeem the bonds, the government would now have to borrow money or raise taxes.
“Full faith and credit?” Ha!
What faith? What credit?
Contact syndicated columnist Sid Salter at (601) 961-7084 or e-mail email@example.com.