Why We Have To Fix the Federal Budget Now

http://cboblog.cbo.gov/wp-content/uploads/2010/07/07-27_Debt_FiscalCrisis_Brief.pdf

The alternatives are unspeakable.

Pretty good summary from current director of the CBO appointed by Democratic leadership in Washington

Comments

Yes, getting back to a 'fair rate' of tax on the billionaires ..

would certainly help. And a complete termination of the 'Bush' war in Iraq would get us back in a hurry. And I mean shut down all our military facilities over there, and let them pay for their own protection.

Defense Cuts Alone Won't Balance the Budget

pulling out of Iraq will save money but we still have to pay soldiers in uniform whether they are over there or back home.

We could zero out the entire defense budget and the domestic budget and still be in negative spending area by the year 2025 or so due to the explosive growth in Medicare costs/Medicaid/interest on the national debt/Social Security due to Baby Boomer retirements unless we income-adjust benefits in all of them and raise the retirement age, among other reforms.

Here is a pretty sobering visual of the makeup of the federal budget with the Bush Tax Cuts expired and other tax hikes passed and without.....both are bad.

http://cboblog.cbo.gov/wp-content/uploads/2010/05/MoneyFlow_05-17_BothVersons.png

CBO

that is the place where all these numbers are coming from....no spin

But you added this conclusion to the CBO thing.....

"We could zero out the entire defense budget and the domestic budget and still be in negative spending area by the year 2025 or so due to the explosive growth in Medicare costs/Medicaid/interest on the national debt/Social Security due to Baby Boomer retirements unless we income-adjust benefits in all of them and raise the retirement age, among other reforms."

I seem to recall how we had a budget surplus with all these factors at the end of the Clinton admin. What factors have changed? Bush 'richboy tax cuts, going to war for phony reasons, allowing the banks to steal from the people without prosecutions, etc. Yes, we have big budget problems, but they can be addressed like most civilized societies handle it, and that doesn't mean protect the oligarchy!

tell you the truth...

...the biggest problem, then and now, is the fact that inflation in "medical world" is about 6-7% a year over the past couple of decades, while annual inflation in the general economy is around 2% over the same period...which means that, over time, the amount of gdp going to healthcare must increase to the point that it's unsustainable.

when you hear talk about lowering the "cost curve", they're referring to lowering the inflation rate in medical world to a rate similar to that of the general economy...and that's what will get us out of this.

here's a numbers example: we'll spend about $3 trillion on healthcare this year.

if inflation were at 7%, that means another $210 billion gets added to our costs just for inflation, in one year. cut that rate in half, you save $105 billion in the first year.

however...in the second year, without correction, you save an additional $15 billion, on top of the original $105 billion, just on the inflation of that $105 billion savings...and those monies add up, over 30 years or so, until suddenly you're saving trillions, not billions.

now if you can reduce medical cost inflation to lower than general inflation, you actually begin to come back to a point where even is attainable, and surplus is possible--and the obama folks are hoping that at least the reduction in inflation will happen, and that's why they're projecting that their (mild, by my standards) reforms will reduce medicare/medicade unfunded liabilities by at least a trillion dollars over the next decade.

wellness will help reduce costs over time, and to give just one example, getting people to doctors for lipitor sooner, rather than having them show up at the er for a heart attack and bypass surgery or aorta transplant, later, is another big, big, way to get there.

canada, with a single-payer system, can control costs even better than we can, and the evidence is clearly available to demonstrate that fact, which is why an even more aggressive reform program could get even better results.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

Wellness, Eating Better, Exercise and Tort Reform...

are all components of 'reducing the cost curve' in medical inflation.

You hit the nose on the clown with your dart right here, Mr. Fake.

So is raising the retirement age to 70. Otto Von Bismarck had no idea when he established the age 65 for the German Republic's pension plan that anyone would ever live past the average life expectancy of 49....dead people don't take out pension payments.

FDR adopted 65 as 'the age' in 1935 when the life expectancy of Americans might have been 68 tops but now the average American male lives to be 73 and the female American makes it to 79...and we already have the highest number of octogenarians and centenarians ever in the good old U.S of A.

One of the most prominent medical leaders in this country told me one day in the senate office that 50% of all costs in America are related to 4 diseases/conditions:

heart attack
Stroke
diabetes
cancer

And he went on to say, 'Therefore, anywhere between 35%-50% costs could be curtailed if Americans did the following 5 things:

1) Lost 25% of their body weight
2) Exercised, (even walking) 1 hour per day
3) Quit eating junk food and crap all the time
4) Stopped smoking
5) Drank in moderation and not a case of beer at one sitting watching a football game on tv.

So who's to really blame for spiraling health care costs? We are acting like it is the medical profession's responsibility to cure us when we are acting like a NASCAR driver who is careening all over the track and speeding in the wrong direction full well knowing that the people in the stands (taxpayers and insurance companies paid for by third parties)are going to pay for all their health care bills when they crash.

I have always wondered

I have always wondered why there is a cap on earnings with regard to paying into Social Security. I think much of it relates to the 7+ % that the businesses have to pay that is in addition to what their employees pay. I have to admit it is a 7% drain on the income of businesses and others that employ our citizens.

Saying that, I think that there should be NO cap on earnings when it comes to paying into the Social Security fund. Those that earn over the cap will necessarily get the max in social security payouts so they should in my view pay throughout their earnings each and every year. I don't think there would be much dissent from either the republicans or democrats if this was put into affect and it would be very simple to do by just adding it on to some popular bill as an addendum.

Agree?

There is No Cap on payroll taxes for Medicare.....

there used to be a 'cap' on Medicare payroll taxes as well but that was lifted long ago, maybe a decade?

The earnings limits on Social Security were put in there for a couple of reasons...one is the fact that politicians used to want to make sure the wealthy did not start opposing Social Security because their 'return' out of SS would be so disproportionately out of whack if there were no limits on contributions.

For example, a trillionaire like Bill Gates or Warren Buffett might one day look at his 7% payroll tax on $1 billion of income and say: 'Hey! Wait a minute! I am putting $70 million per year into this SS/Medicare system and only getting a measly $3000/month out of it when I turn age 66? That doesn't seem like such a good deal to me.

(The truly ridiculously wealthy would manage their current income better than that to avoid such a large payroll tax bite on earned income but that was the idea behind it)

but now that the Obama Administration has put a 'floating' 3.9% Medicare tax on any transaction above $250,000 going forward starting in 2014 to pay for ObamaCare and taken Medicare off of the earned income/payroll tax umbilical cord it has been one ever since conception, I guess anything is possible.

And I am supposed to care?

Are you saying I am supposed to care that the uber rich will get upset at having to continue to pay their 7% on Social Security taxes with no cap? Can I say GIVE ME A BREAK?

I don't think you know that this "reason" you are presenting can be backed up. Sounds good though headhill.

I would much rather see the wealthy that earn more than the vast majority in our country continuing to pay into social security than to see benefits cut for those that need it and to see those that have made a legitimate effort to save and include the social security payments into their retirement plans having to forgo that.

I really don't think the uber rich will be going bezonkers if the cap is lifted. I really don't.

How do you feel knowing Bill Gates and Warren Buffett...

are going to get, or are getting in the case of Buffett, a $12,000 annual subsidy from the working-class taxpayers of America in the form of 75% subsidized Medicare coverage?

It is time to admit the obvious which is that the wealthy of this nation can full-well take care of themselves and they don't need SS or Medicare benefits.

Why universal coverage for wealthy seniors has not been changed for the past 75 years is really confusing to me....

And 'universal coverage' has been the reason why people in the past have been afraid to lift the SS earnings cap....that was one of the major reasons cited for universal coverage back in the 30's for SS and in the '60's for Medicare and the wealthy's contributions to both programs back then were critical to their initial operations.

Medicare was originally set up as a 50/50 split between beneficiaries and the federal taxpayer, believe it or not.

headhill

Do you know that Buffett is getting Medicare? I mean, what is it you're saying? I hope you're not saying that Buffett is going to the doctor and whipping out his medicare card to get medical coverage. Tell me that's not what I'm understanding you to say. Maybe I'm totally missing what you are saying. People can sign a form to opt out of medicare if they are on social security if they want to. I am pretty sure Buffett is not on social security and you only are on Medicare if you are on social security from what I have been told.

Am I missing the whole point here? Also, I would like you to elaborate on this 'universal coverage' reason for being afraid to lift the SS earnings cap. Call me thick I can take it.

Medicare Part B is a mandatory enrollment program

for every senior...

do you know what many to most wealthy seniors do with their SS checks each month? They automatically use it to pay their $320/$360 per month Medicare Part B premiums which only covers 25% of the total cost of Medicare coverage....the rest is completely paid by the average taxpayer.

taxpayer-supported Social Security payments of $350/month used to pay for taxpayer supported Medicare Part B payments.....

Therefore, health care coverage for almost all wealthy senior Americans is 100% FREE! How do you feel about them apples?

it sorta makes me sick to my stomach.....

Wealthy senior citizens in America don't need the Canadian system when they already have free American health care, do they?

Congratulations! Big guvmint wins again....

From the Center for Medicare and Medicaid Services...

Hardly anyone ever opts out of the Medicare Part B program once enrolled....why should they? It is one of the best deals in America.

there's close to 44 million enrollees in Medicare Part B right now and perhaps 90%? of the super-wealthy seniors in America are signed up as well.

They can definitely and most certainly 'count' and can see where the coverage, while not 'perfect', is certainly better than what they can get in the private sector...they buy supplemental programs to cover what is lacking.

How do we know there is not a great, cheaper alternative to Medicare in the marketplace? Because if it were a better deal for the seniors, they would sign up for it in droves and pay lower premiums there.

Medicare Part A

To be eligible for premium-free Part A, an individual must first be "insured" based on their own earnings or those of a spouse, parent, or child. To be insured, the worker must have a specified number of quarters of coverage (QC's) the exact number required is dependent on whether the person is filing for Part A on the basis of age, disability, or ESRD. QC's are earned through payment of payroll taxes under the Federal Insurance Contributions Act (FICA) during the person's working years. Most individuals pay the full FICA tax so the QC's they earn are usable to insure them for both monthly social security benefits and Part A. However, certain Federal, State, and local government employees pay only the Part A portion of the FICA tax. The QC's they earn can be used only to insure them for Part A; they may not be used to insure them for monthly social security benefits.

Medicare Part B

Individuals residing in the United States (except residents of Puerto Rico) who become entitled to premium-free Part A are automatically enrolled in Part B. Since Part B is voluntary program which requires the payment of a monthly premium, those individuals who do not want coverage may refuse enrollment. (For a detailed explanation of the Monthly Premium, click on the the link beneath the headings entitled Medicare Monthly Premium and Medicare Part B Premium Information that are located in the Related Links Outside CMS section).

A person age 65 or over who is not entitled to premium-free Part A must meet the following requirements to be entitled to Part B: he or she must be a U.S. resident and either a citizen, or an alien who has been lawfully admitted for permanent residence with 5 years continuous residence in this country at the time of filing. Individuals who are not eligible for automatic enrollment, or who previously refused Part B, or who terminated their Part B enrollment, may enroll (or re-enroll) in Part B only during prescribed enrollment

You are working this hard

I am not on a quest to prove you wrong in this and I see that you are working extremely hard to find information to use to make your point in this. I applaud you in that effort. My approach was to just show that many rich people do not have to be involved in the Medicare system which is different than your statements about it being mandatory. Veterans in the Veteran's health care system also do not have to sign up for part "B" and can opt out of that. There is more to this than we know about I think.

Like I said earlier, I hope when I come to the point of applying for Medicare that it is less complicated.

We should probably just let this one rest. I am not interested in going to all the search engines to find information to both prove my points and then to disprove yours.

hunter

not trying to 'win' here...

i am just trying to get people to read some of the material they might not normally read such as the U.S. Federal Budget; Spending Options from CBO and the mighty 'Green Book' from the House Ways and Means Committee.

They are the authoritative sources for information on such matters and not Wikipedia or Yahoo Answers....

If more people would get their answers from reading these documents for themselves and not rely on 'Rachel/Chris/Ed/Bill/Sean/Rush' to give them snippets of the truth and the facts from cable talk (shout?) shows (and I am not putting you in that category), we might find we have a lot, lot more in common to agree on than focusing on the 10-20% of the things that we disagree on and which divide us.

But it is not a good idea to get any slant from anyone without going to the original documents first to get the facts straight. In any debate about the federal budget and how to get out of this fiscal mess we are now in and have been digging deeper into for the past decade.

You're probably right

You're probably right on reading these documents and you probably run on a little higher plane than I do in that regard and thank you for not including me in that bunch that uses Rush and those people. Actually though even though I didn't get my information in this particular social security mandatory enrollment conversation from actual government documents I think everything I have put here from the lower forms of sources I used versus government documents has been correct.

No I don't see you as trying to "winning one". What you say about the few percentage of things we disagree on is probably right. Thanks.

Peace and love....

thanks...have a good weekend

i agree with you 100% on this...

...but there's another view of the same facts that appears if you're on the other side of the mirror.

because we don't eat so well, or exercise enough, we create illnesses that have to be fixed, and many of the companies that are in the business of fixing them are also stockholder owned, and there's a huge pressure on those companies from their investors to show earnings and stock price appreciation that rise, consistently and faster than inflation, over long periods of time.

and those companies have been delivering, which is why investing in pharmaceutical, medical device, and health insurers has been such a good strategy (gsk is just one example, johnson & johnson another; cigna is a bit more roller-coastery, but still awfully good if your timing's right).

so it goes both ways: we create the need for the expensive fixes, and companies that are doing the fixing are under pressure to deliver earnings and stock price appreciation for their investors...and ultimately, that's why i agree with your observation that wellness yields huge returns--in fact, i've sometimes wondered if we should consider public gyms (not unlike public parks) as a smart investment in cutting the future cost of medicare and medicade.

a quick comment on tort reform, however: it's a myth to think that tort reform will help anything. even republicans admit the potential savings is only about $5 billion a year...which is less than 2/1000ths of the annual us healthcare budget.

i don't really want to give bad doctors legal immunity for not much in return...and if you really want to cut lawsuits, consider the fact that most liability awards are concentrated on a rather small number of doctors, and that medical errors and poor sanitation practices (think mrsa here) lead to lots of legal action every year.

specifically, we can do things like impose more "probationary" supervision of doctors who lose a lot of these suits, or expand the use of standardized "checklists" that assist with diagnosis and treatment, or get aggressive about stopping mrsa in medical facilities, or expand the merging of electronic medical record and drug inventory systems to prevent medication errors.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

Defensive medical practices are the off-shoot of the tort system

any doctor who came into the congressional or senate office routinely told us that he/she was willfully ordering extra medical procedures 'just to make sure' they don't get sued for not doing everything under the sun to make someone healthy or prevent their death.

Maybe it is 'only' 5%, maybe it is 10%...it could be 20%. But even a 1% savings in a $1.8 trillion annual health care national bill represents a savings of $17 billion...why not get those savings?

there's a two part answer:

on the one hand, defensive medicine is used as a defense against claims that a provider is not following "best clinical practices" in a particular situation--and that's exactly why you want to promote "checklisting", especially in software form.

checklist providers can, in fact, remove unneeded testing and other defensive practices that have no provable value from their checklists by citing research that proves their point...which is where "best clinical practices" come from.

a provider can come to court with evidence that they did "follow the checklist" for a particular patient, and they're going to have a powerful rebuttal to litigants, especially as software installations can be automatically updated, immediately, as new clinical data becomes available (such as today's change in the status of avandia)...and in fact, where litigation defenses fail, i would expect to see most liability assigned to checklist providers instead of the doctors who use those checklists.

and on the other hand, there's no evidence to suggest tort reform improves clinical outcomes (there is, however, evidence to suggest checklisting does, and does it dramatically)...and if you want to shut down 14th amendment due process protections for potential litigants, you have to provide a "rational basis" for that action, which would presumably require some kind of connection between the action and a definable benefit derived from the action.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

you are making a lotta sense here...

Are you sure you are a 'fake' consultant, perhaps in the medical field?

anything that drives down the number of procedures ordered will help reduce the cost curve of health care down.

I have had 2 members of my family die where the doctor, whom the family had known for years, decades even, took us into a room and said this: "I can keep her alive for several days longer if you want. I can hook her up to all sorts of machines and extend her life if you want me to...but she won't regain normal life activities ever again'

When we looked dumb-founded at the doctor and asked him why he was even asking such nonsense, both of them independently said 10 years apart: "Because I don't want you to sue me for not doing absolutely everything I could to keep your family member alive'

That is the 'defensive medicine' mentality talking....and it is detrimental to the whole cause of medical practice, all of whom have been trained to 'do good and not bad'.

They are not Gods and we can't expect all of them to be perfect any more than we can expect perfection in every other line of work. To sue them for 'less than perfection' needs to be returned to the original premise of liability lawsuits for willful negligence or plain incompetence.

I've been involved in care around four deaths recently

and none of these kinds of questions came up. Families were clear that they didn't want extraordinary measures to be taken from the outset, and the system worked pretty well.

That said, I did sense a significant bias in favor of doctors recommending more office visits and more tests. Maybe I'm naive, but the motive seemed to be colored more by revenue potential than by risk aversion.

When I recently asked a pharmacist why I couldn't get six months worth of my statin prescription all at once, she said, "This way we get you in the store every month, sweetie!" She said it with a smile, but it seemed like no joke to me.

Same with return visits to doctors after a problem has been resolved. They typically want to see you back in "six weeks" or whatever. I don't have any sense at all that the callback is for risk mitigation ... it seems way more likely to be about revenue potential.

Concerns about litigation may be real for some physicians in some practice areas, I don't know. And maybe some reform is in order.

Of course, these would be the same physicians - anesthesiologists for example - who are fighting like hell to keep nurses anesthesiologists from being able to operate independently.

PS

Fake knows everything about everything, not just healthcare

That is odd

Fake and my first wife should hook up.

i wish that was true...

...but i'll tel you a quick story about ignorance that's affecting me right now:

i am trying to write a story that involves the history of nascar--and as it turns out, i know zippo about nascar, which mneans i'm having to figure this stuff out as i go...and when i say zippo, i mean i don't exactly know who drives number 24.

nonbetheless, i'm getting there--but i actually had a story fall into my lap that will come to the table first.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

All you need to know about NASCAR...

is to keep turning left and it all started with good old boy North Carolinians like Junior Johnson, and I suppose by deductive reasoning, his pop...'Senior' Johnson trying to run moonshine during Prohibition while out-running the local sheriffs of the NC foothills.

other than that, you are on your own.

all true

no disagreement here

there's also one other factor i forgot to address:

the obama folks, for the first time, put medicare/medicade and social security "on the budget", which is not how we reported those costs in prior administrations.

during the clinton administration, those programs were "off budget" and as a result they did not count toward surplus or deficit calculations.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

It is impossible...

to solve the budget deficits going forward without directly reforming and reducing the expenditure levels in Medicare/Social Security and Medicaid.

Interest is a mandatory item and it is about to go up precipitously as well....it could more than double from $400 billion per year to over $1 trillion annually if and when interest rates return to even 'normal' levels.

here's what the budget will look like in 2020 based on current law....http://cboblog.cbo.gov/wp-content/uploads/2010/05/Budget_2020_forBlog.png

we need some form of defense and can't eliminate it totally....

Reforming and reducing expenditure levels

... reforming and reducing the expenditure levels in Medicare/Social Security and Medicaid.

Doublespeak for slashing benefits.

I don't have a problem with that, really, starting with means testing for social security retirement benefits.

I hear the refrain now: "But these people have paid into the system for years..."

I know people who have paid car insurance premiums for years, but have never collected a dime from their insurance company.

we need some form of defense and can't eliminate it totally...

Back when I was wearing a uniform, ADM Hyman Rickover (head of Naval Reactors) was quoted as saying that the DoD bureaucracy could be reduced by 2/3rds. He said 1/3 of the civilian DoD workforce were doing nothing but asking questions and requesting reports, another third were answering questions and writing reports, and the final third were actually doing useful work. SECDEF Gates has recently proposed a significant reduction in the number of general and flag officers. There needs to be substantial reform of military hardware acquisition programs. I think the defense budget could be cut by 20%, with proper efficiencies put in place, and we wouldn't skip a beat or take away from our troops in harm's way.

______________________________________________________________________

The measure of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR

just to help with perspective...

...you could 100% eliminate all federal spending that isn't defense, social security, medicare/medicade, and interest on debt...and you'd only be cutting about $500 billion from the budget...which is less than 50% of the 2011 projected deficit of $1.3 trillion...which means "special program cutting" is a good idea, but there's no way you get even close to even unless you go after medicare/medicade...which is why i like single-payer so darn well.

by the way, if you cut 100% of defense, you still don't get to balanced budget.

to steal from shakespeare...the medicare's the thing.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

This Guy Is No 'Fake'...

He knows what he is talking about when it comes to the federal budget.

He musta read it somewhere along the line and not let the chattering heads on the cable shows (from either side....they are all entertainers/infotainers and not policy experts so do your own reading and research)tell him what is in the budget and what is not.

we might disagree on some of the solutions but he has his facts straight...

well i appreciate that...

...and just to offer an explanation, i like single payer because the numbers do really work.

an example is canada, where they provide better care to 100% of their citizens, and they spend 1/3 less, as a percentage of gdp, than we do--and we only provide coverage for about 80% of americans.

the uk's nhs offers their citizens even more dramatic savings: they spend about 50% of what we do as a percentage of gdp to cover 100% of their citizens...but i will quickly acknowledge that i do not like the nhs system, and i would not be enthusiastic about adopting it here.

(by better care, start with the basic numbers: life expectancy and infant mortality rate. canada performs far better on both than we do.)

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

Don't expect Frank

to be swayed by these fiscal facts. It's been my experience that his preoccupation with all things financial is a surrogate for his preoccupation for shrinking government. A plan that would radically improve the fundamentals of our economy (like single payer would) while expanding the role of government would be a non-starter.

I grant that I may be misoverestimating the strength of his anti-government agenda, but I don't think I am. Would love to be proven wrong.

J

PS You know I love ya' Mr. Hill ... even though I can't bring myself to agree with two-thirds of what you think about public policy.

Gosh! I didn't know you agreed with 30% of what I say...

I'll take it!

My main problem is that people just seem to 'assume' that every single dollar that is spent on a federal government program is spent in an optimal, efficient fashion that is actually helping every single person the program was designed to help.

If that were the case, then we would have solved all our problems long ago.

I just don't place as much faith in the ability of federal bureaucrats and the 'system' to solve problems as you do.

That is a choice we both have to make.

actually...

...both social security and medicare/medicare are amazingly efficient, compared to private sector providers.

social security administrative costs are below 1% of total program costs (try to get goldman sachs to manage a few trillion for you for under 1%...), and the medicare/medicade system also has administrative costs way below anything any private insurer can match...and that's roughly 2/3 of all dollars the federal government spends, which is why you could make the argument that government--at least on the federal level--is more efficient than most folks would assume.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

actually...

...you can make the math work for social security (meaning no reductions in benefits after 2041), if you tax all income for social security purposes (we only tax the first $100,000 or so of income today), means test at about $250,000 annual income...and move the retirement age back to 70.

(and tell me the truth...if you're retired and jacking in $250,000 a year...are you sure you couldn't live without that social security check?)

if you keep the retirement age at 65, make the other two reforms, and do nothing else, my estimate is that you'd need to cut planned 2041 benefits by about 8% (or supplement the social security trust fund by the same amount from general revenue).

if we make no changes at all, in 2041 we would need to reduce planned benefits by 25% to make up for the revenue shortfall.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

"Insurance" versus "trasfer"

...and neither SS or the Medicare program is an insurance program. Both are pure transfer programs where payroll taxes come in one day and go out the door 10 seconds later to pay someone's benefits.

Car insurance, health insurance and term life insurance are "pure transfer" programs where premiums come in one day and out the door 10 seconds later to pay claims. Sure, the insurance companies also take revenue and invest it, pay expenses, etc. But I don't have an account full of money at State Farm that is set aside for the day when I wreck my car.

______________________________________________________________________

The measure of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR

Private insurance companies have reserve requirements...

there is no comparison between insurance companies that are required by law to have certain reserve requirements to meet current and future claims and the federal government...that has absolutely NONE!

that dog don't hunt and the comparison is specious at best.

Payroll taxes are 'taxes', plain and simple. They are paid in the system just like income or corporate taxes are paid in and they are not any more 'special' than any other taxes paid or paid in different colored denominations.

If they were 'insurance premiums', they would be treated entirely differently and managed appropriately like the private sector does.

They are not.

Social security IS an insurance program

headhill said: "and neither SS or the Medicare program is an insurance program."

FDR compared Social Security to an insurance plan. In actuality it is much like a whole life insurance policy where premiums are paid and then at maturity it has a cash value. That was the intent. The problem with Social Security now is that it has been robbed and raped so much that it is not solvent anymore. Both political parties are to blame for this but in any case, this should not mean that people that paid into this should not realize their cash value. I have read about the baby boomers causing the drain but that really is not the true source of the drain on this account.

SS is not even close to being solvent....

If you are suggesting we just pay everyone their imputed or 'implied' cash value and start over with something that is more actuarially sound and defensible, you may be onto something there.

Think about it and see what you come up with....

I will try to find a link to a great resource called "The Green Book' which is the Ways and Means Committee/Joint Tax publication that explains every entitlement program in excruciating detail and analyzes them as if they were 'true' financial investments replete with ROIs and 'payback' time periods, et.al.

My Dad started paying into SS in 1939 and paid the max that year of $40. The next year, the max was $41 and when he came back from WWII, he paid like $50/year for many years.

When he was 65 years old and started drawing SS benefits, he probably got all that he paid in, with imputed accrued interest, in about 18 months.

No one alive today will get that sort of return.

(are you related to Mr. John Forlines who recently passed away?)

No

"(are you related to Mr. John Forlines who recently passed away?)". No

I hear all of what you are saying and some of it is true. I have one question for you. If none of the money paid into the Social Security system had been taken, what shape would it be in today?

Also, I get your scenario with your dad turning 65 and then drawing more than he paid in but that is not true with just so many folks that die just after they begin drawing or die before they are eligible to draw. Your dad paid $51/year and people today are paying over 7% of what they earn and their employer is also adding an additional 7% of what they earn. It is different much different.

The problem with social security today is in large part because much of that money went to things other than to fund social security. Argue it all you want and cite any and all sources you want. It is just a fact.

There are two different things you are talking about....

1 is the basic SS system

the other is the so-called 'SS Surplus Trust Fund' that was created in the 1983 SS Act. That moniker was established to account for the surplus of SS payroll taxes paid in to Washington over the amounts paid out in benefits.

It was actually a deliberate act by Sen. Daniel Patrick Moynihan and Bob Dole among others to pay off the national debt that existed at the time. It would have worked....had the surplus actually been used to pay down the debt...which it was not (except for the period from 1998-2000)

Just to prove I am not making this up out of thin air, here's Senator Moynihan's op-ed piece in the NY Times announcing this intent:

http://www.nytimes.com/1988/05/23/opinion/conspirators-trillions-limos-in-the-night.html?scp=1&sq=ma...

so it was not used to pay off the debt and now we have this monstrous debt AND a weakened SS system to boot (SS is in severe deficit this year and last and probably next year as well due to the recession so technically, the so-called SS Trust Fund is already being 'redeemed' on a monthly basis and 'reduced')

at the basic organic level, Social Security would not be any different today than if the so-called SS 'Surplus' had never been initiated in 1983. Payroll taxes taken in would have been sufficient to cover ALL of the SS payments going out for the past 26 years. The surplus on the order of over $200 billion per year has been completely for naught and has been washed down the drain of excessive defense and domestic spending since 1984

Please stop feeding this concern troll

Now he's talking about comparisons between "private" insurance companies (that go bankrupt and have the government bail them or their former clients out), and Social Security which is fully backed by bonds -- full faith and credit...you know, the same thing.

Stop buying into his framing. It's disingenious and not productive.

 

There are no 'Social Security Bonds'....

or 'Trust Funds'or 'interest paid into the SS fund' at all anywhere.

the only thing on paper is some sheets of paper in a safety deposit box in Parkersburg, WVA that says something like "Your children owe $5 trillion to the SS system that they will have to pay in higher taxes when the current generation retires'

seriously, that is where the actual documentation of the SS Trust Fund actually resides...Parkersburg, West Virginia.