Quote:
Originally Posted by dman72
This is exactly what the problem is with this whole process. Every sensible person knows that we need some measure of entitlement reform so that the systems will remain solvent for the foreseeable future.
|
Reforms will
never result in Social Security or Medicare becoming solvent, because reforms fail to address the underlying problems that plague both programs.
Both programs are Ponzi-Schemes. Like the Europeans and their UHC and other Social Welfare programs, the issue is not enough workers paying enough money into the systems to keep them solvent.
The only difference between the US and, well, let's call it the OECD countries, is that the rest of the OECD countries are falling apart at a slower pace due to differences in demographics.
When Social Security first came to life, there were 42 workers for each beneficiary.
With a decade, that number had been reduced to 16 workers for each beneficiary.
By the time Medicare was introduced, you were down to 8 workers paying benefits for person on Social Security or Medicare.
From the 1970s to the first part of this century, the ratio of workers to beneficiaries was stable at 3 to 1.
At present, you have 2.1 workers for each beneficiary on Social Security or Medicare --
but you are supposed to have 2.8 to 3.0 workers ---- and that is not sustainable over the long term, unless taxes are increased for both FICA/SECA and HI.
The majority of the Silent Generation suffered a 520% FICA tax increase to make sure Social Security would be solvent when they retired.
Boomers and Tweeners got hit with a 71% FICA tax increase to make sure Social Security would be there for them.
What has Generation X-Box and Generation Y-Work suffered?
Absolutely nothing.
The last time the FICA/SECA tax rate was increased was 1990.
You are going to have to raise FICA/SECA taxes if you want Social Security, because the only reform that will make Social Security viable is eliminating the whole freaking program.
I'm actually working on that right now. The problem is that I've been telling people they'll need to raise the FICA rate to 12% and I was wrong -- you will need to raise it more than that, and you'll need to do it sooner.
Based on the financial data I had, raising the FICA rate to 7.5% before December 2013 and then a step increase of 0.5% annually starting in 2015 and continuing year to reach 12% by 2024 would make Social Security solvent through the Infinite Horizon....
...provided you also eliminated the cap on Social Security.
That plan is not going to work. You're going to need to be in the 14%-16% range or you'll never fund it.
There are three components to funding Ponzi-Schemes like Social Security and Medicare (and UHCs)....
1] the ratio of workers to beneficiaries
2] employment levels --- not the rates --- you need to be at 66.7% to 67.5% range for labor participation to fund these programs successfully
3] the tax rates
10% unemployment with a 67.1% labor participation rate would be better than 5% unemployment with a 64.3% labor participation rate.
You either raise taxes and suffer the negative impacts (and you will be negative affected economically) or do nothing --- in which case you are still negatively impacted, and then you'll still be forced to either raise taxes or implement austerity programs.
Financially....
Mircea
Quote:
Originally Posted by Ringo1
SS and Medicare are incredibly expensive ~ surely there are ways they can be improved upon so that they can be around for my son's generation.
|
There are no ways to improve them.
Best case scenario is moderate to severe economic harm to bring Generation X-Box to the end of Social Security, then transferring Generation Y-Work into a private retirement insurance plan.
The alternative would be moderate economic damage and transferring Generation X-Box and Y-Work to private retirement insurance plans.
Realistically...
Mircea
Quote:
Originally Posted by gvsteve
SS will go bankrupt in a few decades if nothing is done. If the system is not financially viable, we absolutely need to "mess with it."
|
A little over 11 years. At present, the OASI/OADI Trust Fund will be exhausted in late 2023, perhaps early 2024. At that point, all Social Security recipients will take a 28%-32% automatic cut in benefits.....unless $500 Billion starts falling out of the sky every year.
And then even that won't work, because by 2028, you'll need to find $1 TRILLION each year to cover the short-fall.
Note that according to the 2012 Annual Report, under the high cost assumptions, the OASDI Trust Fund is exhausted in 2027....
....but then that assumes your economy grows at an average rate 5% for every single year from now through 2027.....and no, your GDP will not grow 5% per year for 15 consecutive years....sorry about your luck.
Accurately....
Mircea
Quote:
Originally Posted by C. Maurio
Of course there are ways they can be IMPROVED. I am not opposed to IMPROVING them. For example, why cannot our Medicare NEGOTIATE drug prices like the VA does and the health Canada does?
|
(Sigh) do you understand those are for generics?
I guess not.
All of my medication is from the VA hospital pharmacy, and 100% of it are generics. European countries also rely heavily on generics.
I just thought I'd inject a little truth here, because you all make it sound like people are getting name-brand drugs at bargain basement prices. That is not how it works. Those are generics.
Quote:
Originally Posted by C. Maurio
That alone would save Medicare BILLIONS of dollars but because the Republicans want to protect the huge profits of the big drug companies, that is "off the table" here.
|
But that isn't really true, is it? Nope. I already destroyed that myth in another thread. Read things like the
Heilsmittel.
Quote:
Originally Posted by C. Maurio
That is why you can buy prescriptions in Canada for 1/2 of what they cost here. But it is easier to pick on little old ladies than it is big drug companies.
|
Again, those are generics, not name brand drugs.
In Canada, in Europe and at the VA hospitals, you don't get Robaxin.
What you get is generic methacarbomol.
You don't get Neurontin, you get the generic gabapentin.
You don't get Elavil, you get the generic amitriptyline.
Just thought I'd clear that up so people don't get any misconceptions.
Quote:
Originally Posted by C. Maurio
Social Security is fine
|
And you're basing that on what, exactly?
Your extensive knowledge?
Are you aware that the Social Security trustees recommended an immediate FICA tax increase to 7.5% in their 2012 report?
You need a tax increase because "
Social Security is fine" right?
That's amusing...
Mircea
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
