The federal government owes $16.7 trillion to its creditors around the world, definitely including China. Each year, that number grows by $1 trillion, the amount President Obama has been borrowing to keep his bureaucracy expanding at a rapid pace. As troubling as these debt figures ought to be, an even scarier number looms on the near horizon.
The latest report from the trustees responsible for monitoring the financial health of Social Security and Medicare strongly suggests their patients are in critical condition. The government promises $30 trillion in benefits to retirees over and above the amount they can collect in payroll taxes and premiums.
Franklin D. Roosevelt’s Ponzi scheme has been in cash-flow deficit since 2010, and its trust fund balances continue to run down to meet immediate obligations. Under optimistic assumptions, Social Security cash drawers will be empty by 2035, and there’s reason to think the collapse will arrive earlier. The longer the economy remains stagnant, payroll-tax revenue can’t grow, and the day of reckoning grows nearer.
More than this, expanding disability rolls increase the pressure on the Social Security infrastructure. Fewer people have jobs to give them the wherewithal to contribute to the fund. Demographics do not favor the scheme. When Social Security began, there were 42 employees for every retiree. In 2010, there were barely three per retiree. As life expectancies grow and birthrates fall, the end approaches with growing speed.
On the surface, the picture for Medicare is improving slightly. The Medicare Hospital Insurance Fund, which has only about a year’s worth of assets, is currently expected to exhaust those assets in 2026 — two years later than previously expected. That prediction, however, is based on unrealistic assumptions of productivity growth in health care, restraints in health care costs and a nearly 25 percent cut in payments to physicians scheduled for 2014. That cut isn’t likely to happen. Congress always rides to the rescue of the doctors just in time.
Under Obamacare, health care costs are rising faster than most critics expected. Health insurance premiums for the young and healthy, the demographic group least likely to afford them, will, for example, double in California, according to a recent analysis in Forbes.
The politicians, who rarely think beyond the next election, have made these entitlement programs untouchable, but the programs won’t survive unless those politicians summon the courage to rein in the unsustainable. Business as usual has only one outcome, the collapse of Medicare and Social Security and the addition of $30 trillion to the nation’s debt. This is the message nobody wants to hear, but the solution can’t be avoided much longer.
The Washington Times