Asymmetrical Information

Very good summary of the problem. Any recommended solutions -- besides not making the problem worse by granting still additional unfunded benefits?

As a CPA, I often marvel at our governments accounting practices. You say that, if the federal government were a business it would be in receivership. No, if a publicly traded corporation were to issue financial statements on the same basis as do the feds, people would go to jail for fraud.

How much have Boomers paid into Social Security? The Boomer generation would seem to be the biggest current contributor to SS.

Fred - What does it matter how much the boomers have "contributed" into social security? That money has already been spent. Part of the money went to current and former social security beneficiaries and part went into other goverment spending. Wherever it went, it's gone. The only way the boomers will receive the promised benefits is raises additional cash from taxes or additional debt.

Didn't anybody notice the picture? Quite alluring.

I would think the problems would start sooner--as soon as the SS & Medicare surplus starts shrinking significantly, since that puts an immediate strain in the rest of the budget, due precisely to the silly trust fund accounting.

Very cute picture.

Sam -- I thought the same thing before I began researching the article. Interestingly, however, the demographic structure is such that the overfunding doesn't significantly decline before it suddenly goes sharply negative in 2013 (Medicare - though some argue, for arcane reasons, for the earlier date of 2006) and 2017 (Social Security). It isn't a slippery slope; more like jumping off a cliff.

That photo! I'm in looooove. Well, except for the part where you can't stand couscous. That's just weird. ;-)

Oh, the article? Well, yeah. Can't be said often enough (and given our political duopoly, probably won't be). My bet is that congress will go on taxing and borrowing until that just won't work, then deciding that "the rich" don't need all of that social security anymore. One thing that is sure is that the "trust fund" talk is gonna die real soon now when the cash flow goes negative.

Gonna be ugly.

Funny thought: Wouldn't it be ironic if the president in 2015 has the last name of, wait for it, "Bush"?

More pictures!

And, just how beloved is this colleague, anyway?

Strange, an entire article about the horrendous long-run fiscal shape the government is in without a single mention of how the Bush tax cuts have made it much worse.....

bush could make it better... eliminating anyone with over 50k in income from collecting SS and medicare

and then increasing the retirement age to 75 for the rest (or go to the original bizmarck and make it 90)

its just cuz politicians are weak that they never cut programs... its easy... just a few departments here and there...

Forgot to mention: it's been ok to have Social Security running surpluses that are rolled over into the general budget for, what, 20 years now? But we need to start panicking in the 2017, the first year the process goes backwards?

Is subsidizing the general fund one of the central duties of the Social Security program?

Canada faced a similar problem with the Canada Pension Plan in the mid-1990s. It was fixed in 1997.

Well, Canada fixed ours with a 10% payroll tax. Not exactly a cheap fix, but at least the Liberals recognized there was a problem and did something about it. And ours apparently is in a separate fund, with no government poaching.

It is definately a scary picture. Scarier still is the federal pension program. Talk about your unfunded liabilities... I havent bothered to do much research on it myself, but I wouldnt be surprised if that particular ay as you go system hits the wall before the Social Security/medicare one. The plan is so expensive, and the government is growing so fast.

I imagine it would make a nice follow up column... and I would be interested to read some real numbers and projections.

I've read a lot of gloom and doom about budget deficits lately and not just from liberal sources. What I have not seen discussed is the good an average annual GDP growth rate of 3-4% on a 10 trillion dollar economy can do to tax revenue, without having to increase taxes at all. I can do the math and it is somewhat encouraging. Can some one who knows a little more about economics than I do comment?

That's a very high growth rate, Graham; we've averaged more like 2% real growth over the past twenty years (nominal growth doesn't help us, as benefits are indexed to inflation.) The projections do factor in 2+% growth; 3% won't pull our chestnuts out of the fire, and 4% is pretty unlikely.

Comments are Closed.