Some of America’s largest entitlement programs are in desperate need of reform, but we shouldn’t hold our breath on that.
As my colleague Mike Ciandella reports:
According a new report released Monday by the board of trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, which oversees Social Security, “Social Security’s total cost is projected to be less than its total income in 2019 and higher than its total income in 2020 and all later years.”
This report also said that beginning in 2020, “the dollar amount of the hypothetical combined trust fund reserves declines until reserves become depleted in 2035.” The Disability Insurance Trust Fund reserves would run out completely by 2052.
And it gets worse. Yes, Social Security is set to switch to partial payments in 16 years; however, Medicare Part A — the program that covers hospital and nursing costs for senior citizens — will see its trust fund depleted by the year 2026. That insolvency projection has been in place since last year.
If Medicare part A is already set for insolvency when it only covers costs for the elderly, how in the world does any rational person expect the program to fare if we open it up to over 300 million Americans, as has been so widely suggested by multiple candidates on the 2020 campaign trail?
These projections, naturally, are only if the current system remains unreformed. So Congress could head all this off by reforming the system, but I wouldn’t count on that happening. Sure, the programs were created when the country was much smaller in population, when our birth rates weren’t so pitifully low, and when life expectancies were shorter, but we dare not ever discuss the prospect of reforming these entitlement programs.
The discussion around these programs has run into the same problems that plague all temporary government programs: The political cost/benefit ratio skews against fiscal responsibility. Social Security is not a system that people pay into an individual trust fund for; current benefits are paid by current taxpayers. It’s a glorified Ponzi scheme. And that’s not a result of past presidents raiding the treasury to fund wars people didn’t like, contrary to a popular myth.
A Ponzi scheme is a form of fraud where older investors are suckered into believing in the success of an enterprise because they’re being being paid with quick returns taken from newer investors.
Yes, plenty of people pay into the system thinking that they’re funding their own retirement, but they’re not. It has always been a Ponzi scheme. It was designed as a Ponzi scheme.
The scheme can hold out as long as the huckster in question can keep pulling in new investors to pay off the older ones. Being able to take money out of people’s paychecks by force is one way to do that, but it doesn’t hold up too well when the tax income from working people can’t keep up. And good luck when your fertility rate takes a nose dive right when the number of people living well past retirement age explodes.
In the face of insolvency, the responsible answer would be to reform the program, but Congress has managed to kick this particular can down the road for years. And, given the state of our politics, the moment anyone so much as mentions the thought of reforming benefits, we can expect them to be immediately painted as a despicable, unfeeling enemy of the elderly and disabled by headline-hungry political opportunists the moment they open their mouths.
So if any form of rescue ever comes to the aid of Social Security or Medicare, it’ll come in some form of taxing the ever-loving everything out of working people and slowing the American economy. Well, either that or the tried and true method of irresponsibly burdening our children and grandchildren by tacking the eventual bailout cost onto our burgeoning national debt.