Your Fiscal Fright of the Month
Now that the Super Committee has done its little song and dance, it’s time for the grown-ups to get a nice, clear view of our problems. One of those problems is our entitlement system, especially Medicare and Social Security. The Democrats steadfastly refuse to admit either of them are any cause for concern but, as Jim Pethokoukis found, they’re full of hooey. Here is the conclusion of a Citigroup analysis of the situation.
Quite simply, if Medicare as we know it and social security are to remain, the taxes collected to finance these programs are woefully short. Social Security already runs an operating deficit. Its assets are U.S. Treasury securities that have not been issued to the public, but will be matched with marketed securities when payments come due, as the public was subtly reminded as the debt ceiling was hit in August.
As figures 1 illustrates, the 6.2% payroll tax, prior to its “one year” cut in 2011, covers roughly one fourth of the present value of total future Medicare and Social Security obligations as extrapolated by Federal actuaries. The unfunded portion of these programs is now valued at $78 trillion through the future. Fully funding these entitlements will require huge program reforms or sharply higher taxes.
Would you like that in a frightening graphic? Here you go.
That graphic doesn’t include the parts of Medicare and Social Security that we do have funded right now. Toss those in, and the big orange circles get even bigger, by quite a lot.
So, can we get serious about our country’s financial problems now, or shall we wait until those big orange circles consume every dime we produce?
Other Posts of Interest:
- Sooper Genius Anthony Weiner’s Path to Electoral Victory: Sell Republican Books!
- You Could Have Owned Your Own Retirement Account
- Medicare is AOK Says the “Republican” Senate Candidate from Florida
Category: The Economy and Your Money
