Wednesday, May 03, 2006

How to fix Social Security and Medicare

For many years, during both Republican and Democratic administrations, the Federal government has regularly tapped the Social Security trust fund to pay for government operations far removed from the purpose for which the fund was created.

Now the official word is out again about a crisis in both Social Security and Medicare. The trustees for the Federal retirement and health programs are now projecting that Social Security will be unable to fully pay benefits starting in 2040. That's a year earlier than the projection made in 2005. Payroll taxes would cover only 74% of anticipated costs at that time, according to new estimates.

Benefits from Medicare's hospital insurance trust fund will be unable to be fully paid by 2018, two years earlier than previously predicted. In that year, taxes are expected to cover only 80% of projected costs.

And so the Social Security/Medicare mavens are returning to the drawing board to come up with "reforms" that Congress might buy. The first proposals that will come to mind, of course, are increased payroll taxes, reduced benefits, and an older eligibility age.

Perhaps I suffer from geriatric naivete, but how about reversing the trust-tapping routine? Why not start tapping the Federal budget directly for retirement and health entitlements uncovered by the trust funds?

It makes you want to cry when you examine how Federal expenditures are abused. Imagine how the wasted money could have been allocated for social benefits. Unfortunately, the quaint Reaganesque philosophy that "the government is the problem and not the solution," to which the Bush Administration adheres, deters serious consideration of such progressive measures.

From the billion-dollar boondoggles like the ballistic missile defense program to the Taj Mahal-like U.S. embassy being built in Baghdad's "protected" zone, and from the Congressional pork-barrel budget "earmarks" to corporate and agricultural subsidies, enough cash has been squandered in recent years to finance Social Security and Medicare far beyond the latest target years.

That's all in the past, of course. However, considering Washington's traditional mindset, regardless of the political party in command, it's hard to believe that this kind of financial squandering will be easily halted. Our only hope is the appearance of a dramatically different kind of leader in the White House and a more responsible and responsive Congress to shake things up. Unfortunately, a potential political savior is not in sight. But I haven't given up hope.


Blogger Chancy said...

It is my simple minded understanding that the shortfall they are talking about regarding SS and Medicare, or at least SS, is the interest and principal (pitiful rate) that the government owes the SS trust fund for the portion of the SS surplus that the government has borrowed and used for other expenses and which will come due when the incoming payroll taxes (lack of workers) are not enough to cover the out lays by SS. But with the huge deficit facing the US now, there may not be enough money left in the future for the US Government to pay it's debt to SS.

Don't forget the boondoggle of wild spending the Iraq war where billions have been spent recently. And what do we have to show for it. Saddam in jail and that is all.

Wednesday, May 03, 2006 6:51:00 PM  

Post a Comment

Links to this post:

Create a Link

<< Home

Blog Flux Suggest - Find and Search Blogs
Web Traffic Statistics Coupon