Social Security and Medicare Cuts Are Coming, Whether Politicians Do It or Not

[Kamaji]

Social Security and Medicare Cuts Are Coming, Whether Politicians Do It or Not

As legislators refuse to act, benefits will be cut without any possibility of sheltering those seniors who are poor.

VERONIQUE DE RUGY
2.16.2023

President Joe Biden tweeted last week that he will be a "nightmare" for Republicans who dream of cutting Social Security and Medicare. With this statement, Biden showed that he's either shockingly ignorant about these two programs and any Republican reform efforts—or lack thereof—or just another politician who washes his hands of what happens when he's out of office and the programs hit upcoming obstacles.

I have an idea which one it is. However, before revealing my guess, it's worth revisiting the issue more fully. Each time I write about Social Security and Medicare, newspapers receive letters to the editors revealing how little the general public understands about entitlement spending and where it's headed. This misunderstanding is particularly acute and ominous when it comes to Social Security.

It's important for people to grasp reality because no single issue will affect our fiscal future more than Social Security and Medicare. Spending on these two programs alone consumes 45 percent of the federal budget. Along with Medicaid, these programs are the drivers of our current and future debt. And to drive home the seriousness of our predicament, note that Medicare and Social Security together face a shortfall of $116 trillion over the next 30 years.

How Congress decides to address this shortfall will have serious consequences on the government's ability to pay for everything else or on Americans' tax burdens, whether they be rich or poor.

This is why it's worth trying to get through to those who, for instance, believe that Congress shouldn't reform entitlements because they have paid for every dollar and are entitled to them. This assertion is incorrect. Americans have indeed been paying for some benefits, but not for their own and not for all of what they will receive.

Consider Social Security. The program is funded by a payroll tax of 12.4 percent. The revenues collected don't belong to the workers except in the sense that paying taxes makes us eligible to receive Social Security when we retire. But these revenues don't go into accounts with our names on them. Instead, they are used to fund payments made to current retirees. It's a pay-as-you-go system, not an investment account. In the former, adjustments are sometimes necessary.

Second, beneficiaries receive more than they paid in taxes. The average Social Security retiree will get $698,000 and will only have paid $625,000. That explains the program's insolvency. It's even worse for Medicare since the average beneficiary receives three times more than he or she pays in taxes for that program.

So, while no serious reformer seeks to cut a dime more than is necessary to make both programs safe and sustainable, workers and retirees upset about the changes won't have any legal rebuttal no matter how many payroll taxes they paid in. The Supreme Court said that much in a ruling in 1960.

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Source:  https://reason.com/2023/02/16/social-security-and-medicare-cuts-are-coming-whether-politicians-do-it-or-not/

[LMAO]

It’s going to be a challenge but it’s coming. Most of the obstacle is people’s misconceptions regarding both programs

[roamer_1]

It’s going to be a challenge but it’s coming. Most of the obstacle is people’s misconceptions regarding both programs

One could probably cut it in half just cutting down the bureaucracy.

[Hoodat]

You can easily cut 30% from Social Security by disqualifying people below retirement age from receiving Social Security benefits.

[Hoodat]

It’s going to be a challenge but it’s coming.

The only challenge here is the same challenge anyone running a ponzi scheme faces.  The only way to fix it is to get rid of the ponzi scheme and replace it with genuine individual investment accounts. But that would require government giving up economic control over our largest voting bloc.

[The_Reader_David]

The way to fix the problem is to move the age benefits under both programs to have same relationship to life expectancy as they had with the program was instituted.  I don't know about Medicare, but when Social Security was instituted, the average life expectancy in the U.S. was 64, the age for benefits was 65. 

Unfortunately to keep faith with those already receiving benefits or about to qualify, this has to be done gradually, but youngsters entering the work force should be looking at getting SS at age 77.

[Hoodat]

youngsters entering the work force should be looking at getting SS at age 77.

Youngsters entering the work force shouldn't be forced at the point of a gun to pay into a ponzi scheme that will be gone by the time they reach retirement age.  They should be allowed to invest in their own personal retirement fund instead - one that actually invests money in something other than government.

[roamer_1]

Youngsters entering the work force shouldn't be forced at the point of a gun to pay into a ponzi scheme that will be gone by the time they reach retirement age.  They should be allowed to invest in their own personal retirement fund instead - one that actually invests money in something other than government.

That's probably right - Put the thing on the right course (under various state supervision BTW) And pay through the nose for the old system until attrition takes it out. 

[Smokin Joe]

The way to fix the problem is to move the age benefits under both programs to have same relationship to life expectancy as they had with the program was instituted.  I don't know about Medicare, but when Social Security was instituted, the average life expectancy in the U.S. was 64, the age for benefits was 65. 

Unfortunately to keep faith with those already receiving benefits or about to qualify, this has to be done gradually, but youngsters entering the work force should be looking at getting SS at age 77.

The age differs depending on birth year now, for those born in my birth year, it is 66 and four months. A lot of people younger than me have already passed. I have been paying in for 53 years and am still not eligible for 'full' benefits. I will work as long as I am able: some investments did not fare well, and a run of bad fortune have destroyed what was a comfortable nest egg.
Yes, there is an option to draw as young as 62, but I'm holding out for the difference between those reduced benefits and the full benefit.
The sad part is that I know people who are worse off than me.

Now, Medicare is another story. Not only was tax withheld for that, but we pay for it. If you want anything but barebones coverage, you have a supplemental insurance policy, and a drug plan, all of which have limitations. I need to find something that pays hearing, vision, and dental, too, but am paying out about $330/month for that, so that isn't a freebie. 

I have paid taxes for over half a century so other people could have far better medical care through Medicaid than I have ever been able to fit in my budget. I have paid taxes to feed a multitude of people who were able to work, and funded their progeny as well.

But if Government were to just stop giving money to nations who don't like us, passing out grants to enviro organizations who turn around and sue the government for more, and a host of other boondoggles that generally piss away ridiculous sums, it would be able to afford its obligations.

[Fishrrman]

"youngsters entering the work force should be looking at getting SS at age 77"

A Fishrrman Absolutely Fearless Prediction™:
That is NEVER going to happen.