During the past week, the American public might be forgiven for having their attention drawn to the many crises at hand. From the Afghanistan calamity, to hurricane Ida’s landfall to the hospital crisis from Delta-COVID, it was easy to miss this other looming disaster that Democrats seem always too willing to make worse.
Earlier this week, on Tuesday, the financial reports from the trustees of both Medicare and Social Security both arrived. The reports are 5 months late as it happens, since by law the reports are supposed to be due on April 1 but those deadlines haven’t been met in years under the past sets of presidents, although none has been this late so far in history. But a delayed report still cannot obscure the ugly reality of our entitlement programs and where they place the nation.
Social Security is the magical public “trust fund” where a significant amount of your wages are garnered and placed in safekeeping for you in your old age. But the program is bust and currently operating more like a pyramid scheme, where whatever current workforce is in place subsidizes the benefits received by current retirees. The Social Security Administration does not actually have a bank account full of anyone’s percentage of lifetime earnings, instead those funds have been used by greedy politicians to spend on other government projects…. just like normal taxes. The situation has created one big federal internal IOU, which doesn’t mean much when it all comes from the same bank account.
Social Security is actually running bankrupt with every passing year. The program has issued more in benefits than it collected from payroll taxes every year since 2010, and so it’s balance is quickly diminishing. The remaining value of the public trust fund is expected to run dry by 2033, one year earlier than was shown in the report from 2020. The program says that it can still pay out 76% of the benefits promised after that point, leaving retirees with only three-quarters of their benefits.
In current dollar terms, the debt held by the Social Security Administration is a whopping $19.5 trillion hole. The problem of Social Securities failures has been kicked down the road for far too long, and the only solution that Democrats see is, as always, tax increases. They calculate that the current 12.4% payroll tax, already a heavy burden, must be increased to almost 16% in order to keep the Social Security program solvent.
But Medicare’s issues may be even worse and more urgent. It’s trust fund is due to run dry in 2026, a much closer date, partly blamed on sharp rises in health-care costs. The only solutions offered to rescue the program are, again, always, higher taxes, but there are also proposals on the table to slash Medicare benefits by 16%, which might be necessary even with the tax hike.
Current American laborers have 15.3% of their earnings stolen away for these programs already, and now overpromising and inflation threaten to increase that figure to 20%.
Rather than recognizing the looming financial cliff that’s in front of us, Democrats are rushing headlong into another $4.1 trillion in government spending. What’s more? Part of these expensive changes are to add niceties such as dental, hearing, and vision benefits to the already disintegrating Medicare system.
The Left may not have time to tank America with their radical social politics, they might beat themselves to the punch by bankrupting us first.
Author: Greg Henderson