More “unexpected” news: Medicare and Social Security going broke sooner than expected
Everything with this administration seems to be “unexpected”…from higher unemployment, to higher gas prices, to higher food prices. We now have a new “unexpected”.
Friday the Trustees of the Social Security and Medicare Trust Funds issued their annual report. You can read a summary here, but it isn’t pretty.
Medicare will run out of money in 2024.
Last year’s report had extended the life of the Medicare fund by 12 years — to 2029 — to reflect the savings they say would be found in the massive overhaul of health care that President Obama got Congress to pass in 2010. [emphasis supplied]
Remember, that was the $500 billion taken from Medicare over the next ten years allegedly to “extend” Medicare’s life. Of course, that same $500 billion was targeted to cover the cost of the uninsured, but, who’s counting.
It now seems that Medicare needs that money back. Or, maybe it is still counted as “Medicare money”, in which case, the program is in worse shape than projected.
Last year, Medicare paid out $32.3 billion more than it collected in taxes. Based upon this report, if we leave things as they are, we will fail to meet our “promises” to seniors, whether they are currently on Medicare or not, in 2024.
On the Social Security front, the Social Security Disability Trust Fund will run out of money in 2018, and the Retirement Trust Fund will run out of money in 2038. One plan to extend the disability fund is to “divert” funds from the retirement fund and move them to the disability fund.
If nothing is done, under federal law, when all of the government IOU’s are exhausted (remember, the government spent your money as soon as it was received, and gave the trusts IOU’s), the trusts are required to pay out no more each year than they collect in taxes.
That means that without some change to the law, benefits would be slashed to roughly 75% to 80% of what is currently covered.
And yet, the Democrats will continue to pound any Republican who advocates Medicare or Social
Security reform as, “telling old people to die”.
Without some sort of reform, at least on the Medicare front, come 2024, they just might.
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Another “adjustment of the facts” by a government we have come to distrust completely.? When people loose faith in the concepts and institutions governing society, and the structures that carry out the directives of those concepts and institutions, nothing good will follow.
Polls repeatedly show trust in government and politicians (most of whom are lawyers) is at an all time low and deservedly so.? Educators, doctors, lawyers, bankers, even clergy are held in lower esteem than in any time past and are thus distrusted.? We live in dangerous times.
“It now seems that Medicare needs that money back.”
HAHAHAHAHA!
Somehow the lever got pulled and the?money “unexpectedly” got?flushed.
I am unexpectedly not surprised.
I think that? unemployment of? 9% or so may have had something to do with lower FICA and Medicare “revenues”. But, it may be just me.
Good point Sammy, but then again 9% unemployment is now Obama’s legacy. He can’t keep blamong GW. Besides facts are facts and unemployment figures do go up and down, so what is, is.
You are absolutely correct, Sammy.? But, last year with a 10+% unemployment rate, Medicare was projected to “last” until 2029.? This year, with a 9% unemployment rate, Medicare is projected to “last” until 2024.? So, there is much more to this “mess”, and that is what we need to identify and fix, or, come 2024 there will be no more Medicare.
Unexpected news, huh? ?Social Security and Medicare have been losing money for years… and we’ve just discovered it now? ?What a bunch of lightweights! What a bunch of lightweights…
The other thing that makes me crazy is that financial “planning” is virtually impossible out past three years or so. You can use trailing median averages, etc. but IMHO they?may not be good in this prolonged recession. Budget Office, Congressional numbers, WH numbers are always suspect, and usually cooked on the high end for % returned on assets invested. Having been on Wall Street I can say that we never took any federally generated numbers with anything but a big grain of salt. Medicare is run like most gov’t programs – at a loss. The problem is what loss?
I believe that a projection 10-12 years forward has so much uncertainty to be nearly meaningless. People keep doing it and they are invariable off the mark. If you look back 10-12 years you can readily see how much you can wrong by. And, if you are waiting for “certainty” to make business planning decisions, you are a “poor” planner.
How can you make projections on what is effectively a big, legalized Ponzi scheme, particularly one in which the pyramid is flipping over?
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Of course, if Congress hadn’t started raiding the program by congress and the president in 1969 to create the “unified fund”, we might not be asking this question.
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For those of you that say SS is not a Ponzi scheme, I submit the following from the SEC (http://www.sec.gov/answers/ponzi.htm)
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What is a Ponzi scheme?
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.
Why do Ponzi schemes collapse?
With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.
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I don’t think you can fail to see the analogies.
Dimsdale, As usual, Crystal clear. No doubt in my mind