The government is promising $45 trillion more than it can deliver on Social Security, Medicare and other benefit programs. That is the gap between the promises the government has made in benefits and the projected revenue stream for these programs over the next 75 years, the Bush administration estimated Monday. The $45.1 trillion shortfall has increased by nearly $1 trillion in just one year, according to the administration’s “Financial Report of the United States Government” for 2006. And, it’s up 67.8 percent in just the past four years. In 2003, the shortfall between promised benefits and revenue sources over a 75-year period was put at $26.9 trillion.”Our government has made a whole lot of promises in the long-term that it cannot possibly keep,” Comptroller General David M. Walker, the head of the Government Accountability Office, said Monday.Members of Congress said the increase in the unfunded liability for Social Security and Medicare underscored the critical urgency to do something in light of the looming retirement in coming years of 78 million baby boomers.
Better Start saving now.
You should have started saving for retirement when you got your first job. I always max out my 401(k). That might not help if the stock market crashes to nothing before I retire.
hyperinflation… here we come.
The only way to pay XXXtrillions of dollars would be to debase the dollar and make it next to worthless. Once a dollar is 1 euro to $1000 us dollars, it becomes alot easier to pay back.
Remember, old Ben B. has repeatedly stated that the FED can print money at will. And before it is over, that is exactly what they will have to do..run the presses at full speed.
Unless I’m mistaken, employees and employers each pay in a 6.2% tax towards social security. In effect the employee is saving 12.4% of their income towards retirement. If that same person was putting the same amount into a 401k wouldn’t they be guaranteed a pretty decent retirement? Why is it when the government is watching our money it becomes worthless? Do they use Enron execs to manage the funds?
Most people don’t know , don’t care and our elected officials know this. It’s all funny money.
By the time it all falls apart, those in power will be gone.
#3: You cannot use the words guarantee and 401k in the same sentence. Just because you have seen nice gains over the last few years, there’s no reason that cannot change. With SS, 6% is guaranteed. Your 401k could go through the roof, or it could go down the toilet. Even the best stocks tanked Q4 2001, big time. ’87 was pretty bad, too.
So, Bush is worried about stuff 75 years out? Or did some idiot from AP get bought by a Repub Party hack? How in the world can anybody predict financials out 75 years? This is pure BS. They had to make dozens of assumptions to come up with that number. Tweak one by a fraction and watch that $45T drop to $45B. 😉
Privatizing SS is nothing but a Republican scheme to throw $billions at the Wall Street brokers who contribute to the politicians. IOW, tweak one of those assumptions towards a middle-of-the-road position and the problem is far smaller. Tweak to the optimistic side and we have a surplus.
I thought this SS BS was fully exposed a few years ago???
And the effing idiot Romney wants to add additional expenditures for guaranteed health care.
If you heard WBUR radio today, you would know that some people in Mass are pissed about being forced to buy health care that provides little return for their dollars.
#6
How is 6% return guaranteed with SS? The amount of return you will receive is absolutely dependent on your ability to live long enough to actually receive it, along with the Congress’s prerogative in altering it.
The social security problem has been discussed many times, and people who have been saying there is a problem are made to sound like a bunch of weirdo’s.
SS should be considered part of the National Debt. It isn’t. Social Security goes into the General Fund, and payments actually come out of the General Fund.
Nothing is really guaranteed about SS. Congress can vote to cut it off at any time.
There is a lot bad about the Social Security program, and it’s not fixable because of the partisan politics and crooks. This is not a Democrat or Republican problem.
#6 You are right, the guaranteed should have been “past performance indicates”. If the feds had invested the money like Bush would have us do, instead of using it as a free bank account, one could reasonably expect it to remain solvent. My point is, why should the USofA be a worse investment than other forms of investing?
The money isn’t owed yet. Unlike some of the debts all they have to do is reduce the benefit or adjust the age when you can start receiving it.
I’m 45. I knew in high school that SocSec wouldn’t be there for me when I was at retirement age. This is not new information.
Unfortunately, anytime either side of the aisle tries to do anything about it they are screwed. They don’t call SocSec the 3rd rail of politics for nothing.
SocSec was designed to be a safety net not a hammock.
It’s important to note that this isn’t just Bush’s fault, or Clinton’s. It’s the combined fault of over 75 years of Presidents, Senators, Representative, and Government officials more willing to spend money than to balance the national checkbook. We’ll either find a way to pay, or be forced to default on foreign debt, lose all credibility to the rest of the world, and become an isolationist country.
The question you need to ask is, if we’re having this problem, why aren’t other world powers, particularly the European union?
# 11 – If SS was designed as a safety net, then why does everyone receive it at retirement?
If I have more than I need at retirement, the money should go to someone else, according to you.
THERE IS NO SOCIAL SECURITY SHORTFALL. Social Security is self funding and is currently running a big surplus. That “surplus” is what put the federal budget in the black and is what Bush GAVE AWAY to the richest of the rich in the form of tax loans (they weren’t cuts) that working class suckers will need to pay back. The surplus paid into Social Security since Greenspan and Reagan started this scam is invested in US Treasury instruments which are considered (or at least were considered before Bush) to be the absolute safest investment in the world.
The shortfalls (which all got lumped in together) come from Medicare and Medicaid. Social Security pays its own way and then some. The Bush admin has been ROBBING the SS Trust Fund of YOUR HARD EARNED CONTRIBUTIONS to pay for tax loans for millionaires and billionaires. Them’s the facts boYz and GuRLz.
The most significant part of the so-called shortfall is that when incomes get up close to six-figures, you’re exempted from paying social security taxes.
The sort of solution that corporation lappers adore.
I assume the report factors in the cost of the roughly 50,000 troops who will still be “winning against the terrorists in Iraq” 25 years from now.
RBrooks, you have it wrong. While the government ‘raided’ the surplus, all that money is accounted for. The shortfall comes from the fact that you have money promised, that is more than the money collected. You are paying out people for maybe 20 years, based on their maximum salary earned, and paying it from a source of 12% of income from existing workers. By my count, you would need about an 8-1 ratio to be self sustaining, and maybe 5-1 after accounting for previous surpluses, which of course are no longer accumulating. Instead we have about 2-1 or 3-1 workers to retirees.
#15
That is a red herring, as their benefit (the corresponding liability to SS) is also only based on the taxes they’ve paid up to that ceiling.
#3 – Yes, I agree. If someone saved 12.5% of their gross income over their working lifetime they should have more than enough to retire on when they hit 65.
But SS is not a retirement investment. It a “Pay As You Go” system. FICA taxes collected today pay for benefits today, not tomorrow.
In addition to retirement pension benefits, which is what most people think of when they hear SS, it is also a huge disability insurance program. That is where most of the money goes, to people who are of working age but disabled. They get a lot more money than the pension benefit most people think of.
#13 – What you are referring to is called an “Asset Test”. Most SS systems in other countries have these. The US SS system does not. The reason for this is because most people would be very upset to have 12.5% of their pay taken from them over their life only to be told they can’t have squat because they also managed to save some money themselves.
However, the US has a pretty cool solution, that I think is much better than an asset test. We have (1) a regressive tax while other countries have either a flat or progressive tax. And (2) we have progressive pension benefits.
A progressive tax means that the more you earn, a higher percentage of taxes you pay. A regressive tax is the opposite… the more you earn, a smaller percentage of your earnings is taxed.
The US caps the FICA tax to the first $85k or so of income. That means that if you earn a lot, you don’t pay as much when measured as a percentage of earnings.
The US also varies pension benefits depending on how much you contribute. The more you contribute, the more you get back.
Lastly, the system allows you to crank up the pension benefit by deferring distributions. That is, the longer you wait to claim pension benefits, the more the benefits will be.
Between the tax cap and the progressive pension benefits, it neatly bypasses the need for an asset test at retirement.
However, SS does have some insane “earnings test” for a benefits eligibility window between 59.5 and 69 years of age. If you collect pension benefits during that time, they can take some of it back if you also happen to earn too much money working. Asking any working adult in that age rage about it and they will have horror stories galore about what a pain-in-the-neck these rules are.
The reason you get pension benefits, even if you if you don’t need them, is because you have paid for it. Wouldn’t you rather make the decision of where to spend your pension dollars than the government?
#6 – I agree that private SS accounts is a mistake. That product already exists. They are called IRA’s and there is a huge and mature IRA industry already in place. We don’t need another one.
Right now SS has a surplus of money. That is they have collected more in FICA taxes than they have spent. Current projections have that surplus being depleted by 2017. After that, they will be spending more than they take in, running a deficit.
The problem is that that surplus is invested in US treasury bonds. So the surplus money is no longer there. Instead it was replaced by a big pile of IOU’s from Congress who spent the money on other things today. And to make matters worse, the IOU’s pay lousy interest, which is great if you are the borrower (Congress), or bad if you are the lender (SS).
If you look at the surplus as big liability, which it really is at the macro level, then things look really, really bad.
Let me mention one last thing. Even though SS looks like a real mess. When compared to the SS systems of most countries around the world, ours is actually one of the healthiest and most generous. The SS liabilities of western European nations is astronomical.
#17, MikeN, I’m not going to post an entire treatise here about how utterly wrong you are in your response to me but suffice to say that your “required ratios” are…not. I know it all makes “sense” to you when you “think” about it, but you’re just wrong. The actuaries at the SSA worked the math 99 way to Sunday and the fact is that as long as GDP continues to grow by around at least 2.75%, the SS Trust NEVER goes broke. Your “required ratios” mean less than nothing.
I’m trying to figure out why I should pay ANY taxes at all. I’m not getting shit for it apparently.
Oh, it pays for roads! So I can go to work and to shop to make rich bastards richer? Hmm, sounds not so good. For defense against terrorists? You mean to defend the interests of corporations from people who are generally getting screwed by them, don’t you? Health care? Ah, that would be no. Maybe to protect our borders. STFU, you’re too funny. I’m sure I could go on and on in this vein. Like for fucking ever.
The problem is that that surplus is invested in US treasury bonds. So the surplus money is no longer there.
US Treasury instruments (of all kinds) are the bedrock standard of safety against which ALL other securities are measured (and found wanting.) They are backed by the full faith and credit of the United States which had never in its history defaulted on a debt obligation. Banks and foreign nations buy these instruments for safety. If they are safe enough for them, why aren’t they safe enough for the SS Trust Fund?
So much ignorance on this board on this issue. Astounding…
#21 – Congratulations, you are smarter than Nancy Pelosi appears. Now that you understand how the system works, your homework is to figure out how to exploit it to make a living (and perhaps contribute something to the greater good).
Anyone interested in Romney should go here to understand how his “successful” health care plan is working out.
Let’s face it. We’re totally screwed. What makes you think anyone will afford to retire. Your health care cost of your retirement will put you in the whole.
make that a big dark ‘hole’
#22
Seriously, does putting your fingers in your ears and yelling “la la la la” really prevent bad things from happening?
Okay, so the United States government has never defaulted on its debt. That says nothing about what will happen tomorrow or the next day when conditions might change.
#22 the problem is three fold (1) The entire surplus is invested in one investment. (2) The invest is lowest yield. (3) When viewed at the macro level (federal government), it is a liability. It was just shifted from one pocket of the government to another. It is us taxpayers who will have to pay it back.
I don’t mind if some of the surplus was invested in US treasury bonds. Some of it should be. But not ALL of it.
Is it me, or did that number increase since this morning?
I don’t mind if some of the surplus was invested in US treasury bonds. Some of it should be. But not ALL of it.
Why WOULDN’T you want to invest your BEDROCK retirement foundation in the safest investment vehicle in the history of the world?
the United States government has never defaulted on its debt. That says nothing about what will happen tomorrow or the next day when conditions might change.
If the US defaults on its debts, Social Security will be the least of our problems.
Fact: The Bush Tax Loans for the Rich far outdistance any short term (less than 25 years) that Social Security may run. I’d say it’s time for those who reaped the windfall of those Bush tax loans to step up to the plate and pay some of it back.
Seriously, does putting your fingers in your ears and yelling “la la la la” really prevent bad things from happening?
No. Does playing Chicken Little really make the sky fall? SS is in fine shape. Medicare and Medicaid…not so much.
And now you people regret not legalizing all those illegal immigrants? Here’s a clue: THEY’RE THE ONES REPOPULATING THE AGING NATION AND THOSE KIDS WILL PAY FOR YOUR SOCIAL SECURITY.
#28, considering the games being played, the real total is probably twice whatever is the highest number being tossed around.