Monday, February 23, 2009

How much trouble are Social Security and Medicare really in?

You won't believe it, but it's all here at
OASDI and HI Annual Income Excluding Interest, Cost, and Balance in Current Dollars

According to the Government, they look at three different scenarios based on cost trends. "OASDI" is Social Security, and "HI" in Medicare Part A. Medicare Part D, Prescription drugs, isn't even included here.

So here are some hard facts that you're not being told. You could call this the real crisis behind the crisis.

Under the estimates from the Social Security Administration done last year, Medicare is today already spending more than it is taking in. Social Security, under the "intermediate" estimate of costs, will be in the red in 2017, and the combined programs will be underfunded as early as 2015.

Under the worst-case scenario of high costs (and I have to wonder whether recession or depression will hasten us in this direction), these programs will be underfunded as soon as 2011. In fact, under this scenario, less than $50 billion in surpluses are left before SSI, that surplus-maker that has provided more than $2 trillion to the Treasury to fund other government programs and reduce deficits, will itself be in the red.

What happens when Social Security and Medicare require additional funds to make payments? Do we just fire up more printing presses? Does China continue to lend us the money to grow our debt?

But here is the real frightening point, if it can be scarier. The government appears to use the Low Cost scenario when they estimate our unfunded obligations out the next 75 years. As if $54 trillion doesn't sound bad enough out through 2085, how does $414 trillion sound in the Intermediate Cost scenario?

Oh, you're not worried enough yet? The high cost scenario shows a shortfall in unfunded obligations of.... wait for it.... $1.1 QUADRILLION (thousands of trillions) out to 2085.

Now every time reform of Social Security and Medicare have come up, which political party has absolutely refused to address it? But if reforming Social Security or Medicare is the 3rd rail of politics, then is it already too late to save ourselves from ourselves?

No comments: