Simply great article from Fortune:
In Washington these days, the only topics of discussion seem to be how many trillions to throw at health care and the recession, and whom on Wall Street to pillory next. But watch out. Lurking just below the surface is a bailout candidate that may soon emerge like the great white shark in Jaws: Social Security.
Perhaps as early as this year, Social Security, at $680 billion the nation's biggest social program, will be transformed from an operation that's helped finance the rest of the government for 25 years into a cash drain that will need money from the Treasury. In other words, a bailout.
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Unlike the pigs feeding at Uncle Sam's trough, the people who qualify for Social Security old-age benefits -- the ones who'll benefit from the bailout -- have played by the rules and paid Social Security taxes for decades. It would be immoral to tell them, "Sorry, we have to trim your cost-of-living adjustment because we can't afford it," while expecting them to continue footing the bill for bailing out imprudent people and institutions.
Why am I talking about Social Security when health care is sucking up virtually all the oxygen in Our Nation's Capital? Because Social Security is a really big deal, providing a majority of the income for more than half the people 65 and up, and also supporting millions of disabled people and survivors of deceased workers; because the collapse of stock prices and home values makes Social Security retirement benefits far more important even to upscale baby boomers than they were during the stock market and home-price highs of a few years ago; and because the problems aren't that hard to solve if we look at Social Security realistically instead of treating it as a sacred, untouchable program (liberals) or a demonic plot to make people dependent on government (conservatives).
I would like to take a moment to rant a a little bit about the fact that the Ponzi scheme nature that is our current Social Security plan was engineered in 1983 by none other than Alan Greenspan, who is the biggest failure in the history of economic policy makers.
The Forbes Article continues:
The cash that Social Security has collected from my wife and me and our employers isn't sitting at Social Security. It's gone. Some went to pay benefits, some to fund the rest of the government. Since 1983, when it suffered a cash crisis, Social Security has been collecting more in taxes each year than it has paid out in benefits. It has used the excess to buy the Treasury securities that go into the trust fund, reducing the Treasury's need to raise money from investors.
So bascially the government spent it. In the 1980's when we were running a deficit, it wasn't as bad as it should have been because the government was siphoning off social security payments to pay other bills. Its the same as paying for everyone's dinner with a credit card, collecting the money and then spending the money thinking you'll just have another dinner next month and collect the money to pay for your previous dinner. It has to end eventually.
The Author makes the point that Social Security is merely monetary child's play compared to Medicare:
when it comes to problems, Medicare makes Social Security look like a walk in the park, even though at about $510 billion this year, it's far smaller. Not only are Medicare's financial woes much larger than Social Security's, but they're also much more complicated. . . . Medicare is more convoluted, because the healthcare system is much more complex than Social Security. Which, when you think about it, involves only money.
Please click the link and read the article. It is very sobering.
Social Security may not make it onto the agenda until next year. But it's going to show up sooner or later, and probably sooner, because the numbers are so bad that something's got to be done.
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