Plan Ahead

Social Security and Medicare Trustees released their annual reports on the solvency of the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) and Medicare's Hospital Insurance (HI) trust funds earlier this month.

Social Security funds will be exhausted in 2034.

Medicare's trust fund has just eight more years of solvency until 2026.

[Of course the monies supposedly in the funds were actually spent as general revenue years ago; the lockbox comprises IOU's.  But the "accounting" for the programs after the cited years will no longer be a simple movement of figures in a ledger, but actual expenditures of tax moneies.]

As a senior member of these fora poor old DonDiego is little concerned,* . . . but those counting on these "benefits" in old age had best keep track of the ramifications as these "insurance programs" become pay-as-you-go for the Government.

*In fact DonDiego's ever-advancing decrepitude is likely the reason he doesn't get so worked up over political/economic/social policies.  "Keep Calm and Carry On" was a WWII poster found all over England, to encourage the populace.  It ain't a bad policy today.

[Trump Supporter]Hey, why don't we cut taxes for rich guys again to raise government revenue to make up for the shortfall?[/Trump Supporter]

(Liberal idiot/ illegal alien) -Hey, Why should I work and pay taxes when the government will give me money to sit on my ass?- (liberal idiot/ illegal alien) 

Any "tax cuts for the rich" or general revenue tax cuts for anybody else have no effect on OASI and HI accounting.  The only taxes that matter are the OASI and HI contributions (i.e. Social Security "taxes".)

Funding of OASI and HI is solely through the Federal Insurance Contributions Act (FICA) that requires employers to withhold three separate taxes from the wages paid to employees: a 6.2 percent Social Sscurity tax and a 1.45 percent Medicare tax and a 0.9 percent Medicare surtax on high-earners.

n.b. These taxes have not been cut; in fact the surtax was added in 2013, and explicitly on high earners.

So any "tax cuts for rich guys" or general revenue tax cuts for anybody else have no effect on OASI and HI accounting.  The only taxes that matter are the OASI and HI contributions (i.e. Social Security "taxes".)

These taxes are insufficient to meet current expenditures.  They will be even more insufficient to meet future expenditures.

By 2034 the Social Security Ponzi Scheme will have cracked. 

The wonderful politicians who gave the American citizenry this wonderful benefit and neglected to provide a sufficient revenue stream were lauded for their generosity and rewarded with the benefits of re-election.  i.e. the Ponzi Scheme was a success for them.

n.b. Poor old DonDiego does not expect the Social Security and Medicare programs to really go bankrupt.  As a general rule once politicians have begun any sort of income transfer program whether from rich-to-poor or young-to-old or otherwise they will find a way to keep it going; note the surtax of 2013.  The poor and old vote.  

DonDiego writes:  "Any "tax cuts for the rich" or general revenue tax cuts for anybody else have no effect on OASI and HI accounting. " 

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And maybe thats a big part of the problem

Social security is largely funded by the working population's income -  which has been stagnant since our country decided they were second class citizens to investors (1980's).    All of that supply side economics that was suppossed to trickle down to the common folk has stayed at the top....and thats largely been a good thing as far as most Republicans are concerned (strangely enough even the poor working ones).

But thats starting to change now.   Trump was a false prophet that promised to address this issue.   He's not.   The true prophets are the ones DonDIego is frightened by - like the new Congress Woman candidate from the Bronx.   

One thing we know for sure is even the most hardened libertarian in this country loves their entitlement checks.   There's goping to be some serious shit going down in the next 30 years.   Plan ahead indeed.

i.  "The Social Security Act was  enacted on August 14, 1935. The Act was drafted during President Franklin D. Roosevelt's first term by the President's Committee on Economic Security, under Frances Perkins, and passed by Congress as part of the New Deal."

PJ Stroh's beef is with the FDR Administration, not poor old DonDiego.

ii.  DonDiego is not frightened by "the new Congresswoman candidate".  He disagrees with pretty much everything she proposes, but he doubts most of them will become law.  He also notes the excitement over the young lady began to wither as soon as she tried to explain her policies.

Poor old DonDieho is known to exaggerate his fright on occasion.

iii. Poor old DonDiego agrees "some serious shit (is likely) going down in the next 30 years".  He trusts the effects may be somewhat mitigated by the time they reach him here on his ridge in Appalachia.  For those concerned about DonDiego's safety, the ridge is quite defensible, . . . and besides 30 years is a long time for an old man like DonDiego. 

The minimum wage would be $15/hour today if adjusted for inflation from the 70's.  Show me a single Republican that would implement that figure.

If workers were given the same amount of priority as investors we would not have any issue with entitlements.   But they aren't.  Thats not opinion, by the way.   Thats why President Trump's effective tax rate is far less than that of his limo driver.

I dont know how it plays out.   Either we'll continue to borrow until we have a currency crisis or we will have to make the fundamental decision on how to balance the budget.   If we do the tough work of the latter how many of DonDiego's Republican friends will choose to have their entitlement check slashed in favor of a skewed tax system that does not benefit them?  Good luck finding one.

i think we should follow cortez's suggestion that we cut the $700 billion increase the military just received..

Ahh, . . . DonDiego expects some Antifa supporters would agree.

Just a reminder for those who don't get it:

___In fact, the $700 billion figure was the total 2018 military budget.  Ms. Alexandria Ocasio-Cortez  claimed the $700 billion figure was an add-on to the budget which the Pentagon "did not even want".

___Oh, and actually the $700 billion was more than President Trump had requested.

Ref: Politifact

DonDiego fears Ms. Alexandria Ocasio-Cortez is being counseled on making inaccurate statements;  but extoling the wonders of socialism without considering the negative effects of human nature on supposedly-benevolent distributive governments* will be permitted.

*See Venezuela (circa 2018)