We aren't going to do something between now and 2041???

Jason Pye posted on the social security/medicare crisis stating:

These two programs are cause for serious concern and it is irresponsible of our leaders, Republicans and Democrats, to keep avoiding the issue. But like Sullum says, there is no political will to take it up and we'll pay the price in the long run.

I hate the corruption, red tape, and slowness of a Republic. Our founding fathers consciously put slow reform as a top priority... but I don't seriously believe we won't do something about the health care crisis within the next 10 years or address social security funding between now and 2041. I may be cynical about government but I'm not that cynical.


There is so much here... I don't know where to begin. Both in the description of the problem and then from a political theory perspective...

The 2008 trustee's report:

Social Security's current annual surpluses of tax income over expenditures will begin to decline in 2011 and then turn into rapidly growing deficits as the baby boom generation retires.

First we knew that, its not a shocker. In fact we've been taking in more taxes--building the surplus--for that very reason. So its not going bankrupt in 2011... its turning towards the surplus we built up for this very reason:

Growing annual deficits are projected to exhaust HI reserves in 2019 and Social Security reserves in 2041.

Not exactly top priority in the way of "major drains on the budget" (i.e. the Iraq war boon-doggle)

On the "crisis" itself. You'll often see Medicare and Social Security lopped together... to talk about the "crisis." One reason is that the trustee's are mandated (I think it's a mandate) by law to address them together as if they are one program, but this plays right into those who want to drum up business for their fiancial industry buddies. Medicare's crisis is one built on the house of cards we call our health care industry. We pay 2 to 3 times as much as other industrialized nations for health care and get worse quality care for it--we rank 37th in the world for health care according to the world health organization.

Back to the trustee's report:

Medicare's financial status is even worse. This year Medicare's Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures than it receives in taxes and other dedicated revenues. The difference will be made up from general revenues which pay for interest credits to the Trust Fund.

Two things... If we brought competition into the health care market--by way of a government plan that people could choose to buy into if they wanted--we would bring down costs and remove the excessive bureaucracy that runs up your doctors bill and gives you and your doctor headaches dealing with the insurance companies who make money by denying coverage. But there are a lot of people making money off our status quo so the obvious fix, universal health care is off the table of discussion for the "crisis" crew.

So problem one is not only a medicare problem... its a huge private sector problem that has put health care reform on the table for discussion (finally). Meaning we will get some kind of reform soon--many in the business community who opposed the Clinton effort in the 90's are now on board... See here.

If you care about Medicare check out is The Impact of the Medicare Drug Benefit on Health Care Spending by Older Households
December 2008, Dean Baker and Ben Zipperer

So the health care crisis is part of the drag on the long term "crisis" we face with Medicare. Keep in mind its 2008 not 2018... lets fix the health care system now! It'll save the lives of people who are falling through the cracks, save you time and money personally, and help with our fiscal woes. Joining the rest of the industriziled world on this issue is going to be a dynamic long term fix to many problems we face.

Secondly if we aren't taking in enough revenue and needing to dig into the general budget thats a revenue problem (i.e. we are paying enough taxes towards it... gasp!!!) At least the increasing revenue to deal with this problem should be on the table as one solution--but its not even on the agenda of the "crisis" folks.
Further from the report:

The Medicare Report shows that the program could be brought into actuarial balance over the next 75 years by an immediate 122 percent increase in the payroll tax (from 2.9 percent to 6.44 percent),

There is also a demographic issue in the form of the baby boomers getting old (which means I'm getting old... sigh...).

But there's a very simple solution to that. Increase the workforce. Increasing immigration--for those who are concerned about the demographic aspect of the "crisis", has got to be a top priority--there is no way around that one (that or heavey subsidies to promote technological innovations that will make our workforce more productive which we used to create this new fangeled thing here i'm typing on, not to mention the internet these words are crossing through).

The majority of these folks do not support free markets, therefore they do not believe in open borders to allow for the free flow of labor--one of the fundamental aspects of "free market theory". In polite society the immigration reform required-- in regards to the demographic crisis--though necessary, is also not on the agenda and therefore is not to be discussed.

Also... and this seems absurd but maybe i'm just not educated enough on such things--how many government programs are projected 75 years!!!

Its hard for economist to project into next year let alone 75 years. It is the dismal science! Thats why the trustee's do three predictions... from bad to rosy. If I remember correctly, the historical long term economic growth we've seen in this country--which we have no reason to believe will change--leans towards a more optimistic forecast. I can't source it off the top of my head--trust me on that one!

There is another fact we often forget. In 2041 its not like there will be zero benefits. Its like 75% of promised benefits--which is adjusted for inflation better benefits than currently received by people on social security.

Bottom line 2041 is a long ways a way and you'll still be getting more bang for your buck. Social security has been in far worse buget situations in the past which we addressed. Don't lose any sleep over it.

Now onto the theoretical questions which I think are very concerning for those of us who believe in democratic principles and living in a civilized world where we are our brothers keeper. If you don't believe we are all in this together--which is an incoherent concept to begin with. Or don't believe in a basic quality of life for your fellow man nothing I have to say will be of any relevance to you. We just disagree. But for those of you concerned about living in a civilized world, where we combat and reject the dog eat dog pathology of our popular culture, I think there are some unstated premises that pop up in regards to this question.

I'll point to two that come to mind from the comments on Jason's post

Again it is all about personal responsibility ....BUT the government with its arrogance and stupidity on the economy have made it all but impossible for the average citizen and I am talking about those who hold legal citizenship to plan,save and execute a workable plan to save for their own future.

incoherent conception of government and market systems. Also I disagree on the question of representation of the population. Social security and medicare are very popular programs. If you believe in democracy in some form or fashion it is an obvious truism that you support fixing not gutting these plans. From the tone of the comments i'll infer this person does not. Difference of opinion. Also note that they state "legal citizenship" therefore this person obviously is not a proponent of free market theory so some of the easy fixes will not be on the table for him. Free flow of labor, as noted above, is an important step in the demographic crisis involved in this issue.

I agree that individuals need to plan for their retirement--these programs are saftey nets. But market systems by definition will cause some people to not thrive. These programs keep millions above the poverty line and provide a basic standard of living for all of our citizens. Freedom means responsibility... and those of us who have benifited from the economy--it is a collective effort mind you--should from an ethical standpoint in my mind provide basic subsitance for others. Take John Rawl's veil of ignorance that sets out to show that

principles of justice would be manifest in a society premised on free and fair cooperation between citizens, including respect for liberty, and an interest in reciprocity.

In the state of nature, it might be argued that certain persons (the strong and talented) would be able to coerce others (the weak and disabled) by virtue of the fact that the stronger and more talented would fare better in the state of nature. This coercion is sometimes thought to invalidate any contractual arrangement occurring in the state of nature. In the original position, however, representatives of citizens are placed behind a "veil of ignorance", depriving the representatives of information about the individuating characteristics of the citizens they represent. Thus, the representative parties would be unaware of the talents and abilities, ethnicity and gender, religion or belief system of the citizens they represent. As a result, they lack the information with which to threaten their fellows and thus invalidate the social contract they are attempting to agree to.

back to the commentor...

We have a government that is out of control and will not change its ways of stupidity and waste until the citizens see the food from their table going to feed the do nothings in Washington.

I'm not really sure what this means.

When are we going to demand Washington,Atlanta and in my case McDonough stop the wasteful,non essential spending habits they are so fond of?

once again these are popular programs. Therefore the bums in DC actually are--this in situation--representing the people. So it can't possibly be nonessential spending. Again if you don't accept my two theoretical premises this will not logically follow.

So in both the actual facts on the ground... and from a theoretical standpoint--which is quite common and has been for a long time--see moreal teachings of christianity, judaism, Islam, buddhism... for examples--just ask someone on the streets at random. 9 times out of 10 they like democracy and believe humans should have food, shelter, and opportunities to thrive beyond abject poverty.

Also most of the "crisis" folks don't mention they are often just pushing privitization for theoretical reasons and are just looking for any reason to attack these programs. These programs are founded on the belief that we owe citizens of this country a safety net. No one gets left behind.

Some people bleive in an abstration that states its every man for themselves and that a privitized world where your neigher is a consumer and an object of labor who sells themselves on the market for the highest bidder.

Though i'm not necessarily opposed to privitization plans as an add-on to create incentives for further savings beyond the safety net the unmentionable by these types is that the transition costs are huge. If they want to talk about some kind of add on to create incentives for individuals to actually save for their future (which is think is not done enough these days) then you ought to start talking about the way we bring in the revenue to pay for this program. Once again this question is not on the table for discussion.

Anyways that was my two cents for now. I'm sure I left something out...

Just don't worry social security and medicare will be okay if we join the rest of the industrizlied world and fix our health care system. And social security won't be gone tomorrow--at least if we are smart enough to do something about between now and 2041...

by the by if you want to see a cool tool that helps put our health insurance crisis into perspective and helps us look at the buget issues more objectively, check out CEPR's Health Care Cost-Adjusted IOUSA Deficit Calculator which

allows you to see what the projected U.S. budget deficit would be, as a percentage of GDP, if the United States had the same per person health care costs as any of the countries in the list below, all of which enjoy longer life expectancies than the United States. All of the other budget assumptions are the ones used by the Congressional Budget Office (CBO), which form the basis for the scary deficit numbers in IOUSA. Each country is listed with its life expectancy in parentheses.

Or on the question of privitization: Accurate Benifits Calculaor which

compares current-law Social Security benefits to the Bush Plan based on "Progressive Indexing" and the 2005 State of the Union proposal, which includes private accounts paid for by 4 percentage points of the employee's payroll tax

And if your worried about the economy. Call your Representative and demand a fiscal stimulus plan (see the open letter from over 375 economist calling on a quick, effictive bill which "should be in the range of $300 to $400 billion per year and should be geared toward targets that inject capital into the nation's economic system immediately" )

update: Jason responds with a good chess move...

update part deux: ah the en passant