To save Medicare, Social Security, admit they are failures

If you want to save entitlements in the long-term, we have to stop calling them entitlements. We have to admit that Medicare and Social Security are failures — fiscal failures. Once our leaders can admit these programs are now welfare for persons who do not put in nearly enough money to cover what they will take out, maybe we can fix the fiscal failure.

The long-ahead future obligations of Medicare and Social Security are so high as to seem like a fantasy. Long-term, we’ll be short almost $90 trillion in Medicare expenses, and about $18 trillion in Social Security. We can barely afford to pay the currents recipients of both programs. Despite cynical talk of Social Security and Medicare trust funds, there isn’t any money. The trust funds are just the feds writing IOUs to itself.

To meet these obligations, they have to be reduced. The only way to do that is to completely eliminate any older, upper middle class/wealthy American who does not need these services. Also, wealthier Americans need to pay considerably higher taxes into the programs, even though these people will receive nothing. We also need to implement a “Social Security, Medicare” value-added tax or straight sales tax of a few percent that would be dedicated to those programs. The first law of that tax should be that no one in Congress or the administration can touch it.

I don’t particularly enjoy advocating these positions, but who can suggest othewise when: 1) We have scores of trillions of dollars in obligations due in the next generations that we can’t meet, and 2) Americans have made it perfectly clear that they are opposed to reforms — such as private accounts — to the Social Security and Medicare welfare programs.

When we started Social Security, Americans lived on average 58 years. When Medicare was hatched, Congress promised that it would cost ridiculously low sums compared to what it costs today. Both are messes, but we’re stuck with them.

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38 Responses to To save Medicare, Social Security, admit they are failures

  1. Jennifer says:

    You make it sound as if there are no criteria involved in receiving assistance. I would encourage you to go to a low-income, supervised housing, and a disabled housing place and talk to the residents, THEN write an article like this.

    • Erick says:

      Medicare and Social Security are formerly referred to as the Old Aged and Survivor Insurance, because it is a federal benefit offered to retired persons (65 and older, with early draw options enabled at 62) regardless of income or net worth. It is a distinct program from poverty based forms of federal assistance.

  2. Midwinter says:

    “The only way to do that is to completely eliminate any older, upper middle class/wealthy American who does not need these services.”

    My understanding is that, while that sounds good (and I’m generally for means testing), there just aren’t enough of those people to make a huge difference.

  3. Owain says:

    “…wealthier Americans need to pay considerably higher taxes into the programs, even though these people will receive nothing.”

    I disagree. More than 50% of Americans do not pay any income taxes. If a person is truly poor, that is one thing. But what does it mean to be ‘poor’ in America in the 21st Century?

    “In 2005, the typical household defined as poor by the government had a car and air conditioning. For entertainment, the household had two color televisions, cable or satellite TV, a DVD player, and a VCR. If there were children, especially boys, in the home, the family had a game system, such as an Xbox or a PlayStation.[4] In the kitchen, the household had a refrigerator, an oven and stove, and a microwave. Other household conveniences included a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.”
    http://www.heritage.org/research/reports/2011/07/what-is-poverty

    If that is the definition of ‘poor’, I submit that taxes need to pushed down before they need to be increased at the top.

    “The Tax Policy Center estimates that for 2009, 43% of tax units (most of which are lower income households that may or may not file a return) will have no income tax liability or will have a negative income tax liability, meaning the government will actually pay them.”
    http://money.cnn.com/2009/04/15/pf/taxes/who_pays_most_least/

    Taxes are necessary, but they should be fair. To be fair, EVERYONE should pay SOME level of taxes, otherwise, there is no incentive for those who pay NO taxes to hold politician’s feet to the fire to keep government spending under control

    Why do we have such out of control spending? I think that the fact that 43% of Americans pay no taxes explains that rather simply.

    • Owain says:

      Yes, I said more than 50% of Americans pay no income taxes, then later said it was 43%. I recognize that 50% > 43%. That’s what I get for writing the first sentence based upon faulty memory before I supported it with a link. Don’t get your knickers in a twist. My point remains, regardless.

  4. Dovie says:

    I don’t think you can group SS & Medicare together. Or make such totalitarian comments in general. The private insurance system in America is a failure, too.

    I agree people need kicking off SS. No one should get more than they put in. My neice had a daughter by a kid in Lehi who OD’d on heroin & died. They were never married. Her daughter gets SS. I agree that is idiotic. (she’s also now married to someone else).

    Healthcare is another story. We have Medicare, Medicaid, CHIP, etc., etc. etc. Why does that exist? Because private insurers do not want the old and sick and they drop them. They skim money off the healthy and then push them onto a govt program when they turn 65 or get sick. The health care insurance “free market” does not exist. It does not recruit people or look for customers. It jettisons them. I love to laugh at those old man Tea Partiers who say they are going to shop for healthcare in the “free market” because they hate Medicare. Yeah, right. Good luck with that.

    Every other civilized nation has some form of national healthcare. Not just Canada & England. Japan, Australia, New Zealand, Germany….The difference is that Canada & England are single PROVIDER & the others are single PAYOR. All America has ever talked about is the latter system.

    We should have passed the Clinton program for insurance reform in ’94. Healthcare costs are the biggest threat to the nation’s economy and we have known that for decades. Who has been blocking change for the last 15 years, anyhow?

    • Owain says:

      “…private insurers do not want the old and sick and they drop them.”

      Do you understand the concept behind insurance? Take car insurance. If you have a good driving record, you pay a low rate. If you have a lot of tickets or accidents, you are a higher risk, so you pay a higher rate. If you are REALLY a bad driver, no one will insure you because you are too great a risk.

      Health insurance used to work the same way before the government stuck it’s nose into it. If you were healthy, you paid a low rate, etc., etc, etc. Naturally, if you were chronically ill, you may not be able to get health insurance at a price you can afford, but that isn’t the insurance company’s fault. Depending on the type of insurance you bought initially, if you didn’t get long term chronic disability, after your initial claim you might get canceled.

      It’s a trade off. Do you get a LOT of insurance and end up paying too much in premiums if you stay healthy, or do you economize and end up underinsured if you develop serious health problems?

      Risk management is a personal decision.

      It sounds like you don’t want insurance. Instead, you want a social program. There are differences between the two. Insurance is reasonably affordable, depending on the degree of coverage you pay for. Social programs are rarely affordable because too many people want it to cover everything, and they want to pay nothing for it.

      That isn’t real life, but then socialist were never very good at that.

  5. TV says:

    Owain: It’s like this … I’m \middle class.\ I have a car and a TV and I go on vacations. Life is good.

    If I give up my \mortgage interest deduction\ — which every deficit reduction plan seems to suggest is going to happen — then I give up one level more of the \good\ life. Not \great\ life. Basically it means I don’t get to go on a good vacation, or eat out as much; I deduct 6-7-8 thousand dollars, which means I \get out of\ paying about $2,000 a year and get it back. … as compared to … I don’t begrudge the fact that wealthy people are … wealthy. But that $2,000 I give up is about what a lot of people working on Wall Street paid the friggin’ drink caterer for their 16-year-old daughter’s coming out birthday party. Hell, I’m not your \poor\ by a long shot; but neither by an astronomical shot are lots, and lots, and lots and lots of rich people who can afford to pay more in taxes.

    • Owain says:

      So? How is that relevant?

      If you perceive that the services you receive are of value to you, you should then be willing to pay for them up to the point where you feel that the benefits you receive are worth what you are paying in taxes for them. If you have to give something up for that, then give something up for that. It isn’t a justification to have the government take more from someone else just because YOU think they can afford it more easily.

      If YOU were taking a bigger financial hit in taxes on this, I suspect you’d be less willing to allow politicians to spend as much as they have been spending. As it is, it sounds like you are just fine with spending as it is.

      In that case, you are part of the problem.

  6. Bob Becker says:

    Well, Doug, the plan the President endorsed included major entitlement cuts to both SS and Medicare as part of a long term and very large reduction in federal spending, coupled with increasing the debt ceiling sufficiently that it would take us to 2014. The problem with his proposal… the only problem… was that included as well $400 million cut backs in tax cuts and breaks to the wealthy and to businesses. That alone led to House Republican rejection of the plan. I thought the President’s point last night that Republicans are asking everyone to sacrifice to deal with the debt and spending problems… except those Americans who benefited most from the Bush tax cuts, and who were the only group whose income has grown over the past decade: the wealthy, the top ten percent in the nation. But for that, the Republicans in the House said, the President’s proposal was acceptable.

    Everyone sacrifices, everyone… except Exxon [Republicans in the last weeks voted to end special tax breaks despite record profits in the billions annually for oil] and the wealthiest. Everyone else sacrifices.

    No.

    We all got in this mess together. There was over spending. There were ruinous and wholly uncalled for tax cuts favoring the wealthiest Americans. Any solution must spread the sacrifices across the whole of us. Not just middle class Americans and those below them.

    As for the trust fund not existing: the government “borrowed” the money working Americans put in the trust fund for decades in order to hide the true size of annual deficits. Presidents of both parties did this: Reagan, Bush I, Clinton, Bush II: all of them. Those trust funds are as much a debt, an obligation secured by the full faith and credit of the United States as US Savings Bonds or the bonds we’ve sold to foreign nations that Republicans are now willing to see us default on solely to protect the wealthiest tenth among us from sharing in the pain of dealing with the debt problem.

    As for the claim of a mandate to do this: yes, the House was elected. But so was the President and so was the Senate. They speak with the authority of having been chosen by The People as well. We’re going to have an election in about 16 months. Control of the House, the Senate and the White House will be up. If the Republicans win control of all three then, they will have a mandate to return us to the guilded age if they want to. They don’t have it now.

    There’s a huge offer to commit the nation to reduced spending of three trillion over the next decade [coupled with a modest rolling back of tax cuts for the wealthiest Americans] and raising the debt ceiling for three years. That would stablize things for the short term, create a framework for doing what the Right says must be done, significantly reduce spending, and resolve the default problem until the results of the next election indicate what the People want done. Make the debt THE issue of the next electioral campaign if you like and the let the chips fall where they may.

    But to play chicken with the full faith and credit of the US, to threaten national default because a party holds one of the three bodies necessary for national legislation, and to ignore the President’s commitment to significant spending cuts over the next decade in order solely to protect the Bush special tax breaks for the wealthiest among us is irresponsible in the extreme.

    • Owain says:

      “Well, Doug, the plan the President endorsed included major entitlement cuts to both SS and Medicare as part of a long term and very large reduction in federal spending…”

      Yeah? You have a link to the details of the President’s plan on that? No, you don’t, because there IS no plan. Congressional Budget Office Director Doug Elmendorf already informed Obama the LAST time tried he to float a bunch of glittering generalities, “We don’t estimate speeches.”

      Get back to us when Obama actually presents a plan. In writing. Don’t hold your breath while you’re waiting.

  7. Bob Becker says:

    The SE just posted on its op ed page the following from the Right-leaning Scripps Howard newspaper chain. I think he’s pretty much hit the nail on the head:

    http://www.standard.net/stories/2011/07/26/debt-quagmire-shows-profiles-without-courage

  8. Bob Becker says:

    An interesting take on how, in part, we got here:

    http://timpanogos.wordpress.com/

    And now Congressmen like Earmark Meister Rob Bishop are shamefully voting not to honor the debts he and his cronies happily ran up over their previous terms in Congress. And insisting, apparently, that a hole we’ve been digging for well over two decades now be filled in immediately, without any participation by those among us who profited most over that period from the policies that got us into the hole in the first place.

  9. Doug Gibson says:

    Owain is correct that more Americans should pay FEDERAL taxes (Of course, workers are paying federal FICA taxes but we need to share in the income tax. And Bob is spot on when he mentions the GOP’s bewildering love for tax breaks for major corporations and wealthy Americans. But with this current debate we are talking chump change. How we pay for all this in a generation or two is the puzzle for me. I think eventually our nation will be forced to scrap the income tax and move to a 30 percent VAT. They have a VAT in Hungary and it’s hard on the poorer people, but I fear we won’t have a choice then.

    • Dovie says:

      A VAT is an option. I don’t think the “only choice” is a 30% VAT like Hungary. That statement is a continuation of the narrow thinking that put us here. Anyway, I thought the whole tax system had to be converted to the “Fair Tax”: all or nothing. I suppose merely adding to the existing tax structure is a concession on your part.

      I suggest everyone google “Fair Tax”, look up the biographies of it’s founders, and then look “value-added tax” up in Wiki. It’s not a “new and revolutionary idea”. It’s been done.

  10. kent coleman says:

    The Government Accountability Office in a report to congress said “between 1998 and 2005 two-thirds of U. S. companies and 68% of foreign companies doing business in the U.S. avoided corporate taxes in the same period.”

    Collectively , the companies reported trillions of dollars in sales.

    Exxon made 35 billion in 2009, paid 15 billion in corporate taxes . The U. S. got none of the corporate taxes , it all went to foreign countries.

    G E made 10.3 billion the same year and took a loss in the U.S. and got a refund of 1.1 billon.

    Haliburton moved it’s corporation to Dubai to avoid paying corporate taxes to the U.S.

    This is the same (Cheney) company that gets unlimited no bid contracts from the U.S. that supports our troops overseas.

    More than about time we changed overseas contractors.

    According to NPR radio ,it costs 1.2 million dollars for every service man in Afghanistan and about $400,000 for every man in Iraq.

    Where is the oil money the Bush/Cheney administration said would more than pay for this war.

    60% of 14 trillion deficit is from 2 unpaid for wars ,tax cuts for the wealthy, and the drug gift to the pharmaceutical companies.

    Obama has underfunded social security this year by only taking 32% less out of paychecks, 4.2% instead of 6.2%.

    Obama is not a democrat, he is a republican by his actions, he is just filling Bush/Cheneys’ third term.

    • Owain says:

      Corporate taxes in the US are among the highest in the world. Accordingly, US companies take their operations and the jobs that go with them overseas, which causes tax revenues to take a double hit. Not only are there less corporate taxes coming in, there are less income taxes paid by individuals.

      In the meantime, http://abcnews.go.com/Blotter/democrats-rake-record-donations-corporations/story?id=9777742

      If you want tax receipts to go up, cut tax rates. That way, money comes OUT of the tax shelters where it is currently hiding, and jobs come back to the US instead of being outsourced overseas.

    • Dovie says:

      I agree that there is nothing more stupid in politics today than the Tea Party assertion that Obama is a socialist. Good Lord, what retards! (Well, maybe the continued “Sarah Palin is a victim” mentality is stupider).

      • Owain says:

        When Obama himself told Joe the Plumber during the election that he needed to pay more in taxes so as to “share the wealth”, how is it so hard for your to understand that some might suspect that Obama just might be a socialist.

        (Sounds like a Jeff Foxworthy joke, doesn’t it? “If you constantly are promoting socialist programs…You just might be a socialist”).

        Here’s your sign.

      • Owain says:

        During the election, Obama said to Joe the Plumber, “OBAMA: It’s not that I want to punish your success; I just want to make sure that everybody who is behind you that they’ve got a chance to success, too. I think when you spread the wealth around, it’s good for everybody.”

        How is it so hard for you to imagine why conservatives might suspect Obama of being a socialist when he says things like that?

        It’s like a Jeff Foxworthy joke. “If you are promote socialistic programs, and say socialistic things…you just might be a socialist”.

        Thinking of another comedian, Bill Engval, all I can say is, “Here’s your sign.”
        http://en.wikipedia.org/wiki/Here's_Your_Sign

    • Dovie says:

      White House Decides to Outsource NASA Work
      http://online.wsj.com/article/SB10001424052748704375604575023530543103488.html

      The Trib also carried a NY times article about the same thing. Private companies want to moon-mine. The public paid for something for years & years that would have been impossible for a private company to accomplish on it’s own. Now that it might become profitable, it goes private. Probably to Halliburton or some other multinational company that prefers Dubai to America.

      • Owain says:

        “The public paid for something for years & years that would have been impossible for a private company to accomplish on it’s own. Now that it might become profitable, it goes private.”

        This word ‘impossible’. I do not think it means what you think it means.

  11. Dovie says:

    I noticed that one, too. Seems atypical for the Scripps posts that the Standard selects to publish.

  12. kent coleman says:

    Social Security has not contributed one cent to this crisis.

    As far as Medicare, the corporate community that runs healthcare for profit ,as well as the whole medical practice needs to be scrutinised.

    Rick Scott ,Florida Governor, ran Columbia /HCA ,they were fined $1.7 billion dollars for health care fraud.

    How did this man get elected?
    Probably the the way Bush duce did, voter fraud.

    I had a colonoscopy in 2007 ,$1200 dollars,two years later i got on medicare and had another colonoscopy and the bill was $8000.00.

    This year i went to the emergency room at the Ogden Regional Hospital for a kidney stone pain, the bill for one hour was $4700.

    Before LBJ got us Medicare two-thirds of the elderly were bankrupt mostly due to medical bills.

    Obama, just like LBJ has bowed to his wallstreet masters and given us wars forever.

    Go to Amy Goodman and Democracy Now,Michael Hudson :GOP cries wolf segment.

    He talks about Sheila Bair’s statements upon leaving the FDIC and what went on during the 16 trillion theft by wallstreet, giethner,Bernanke,Larry Summers.

    Wallstreet made sure these guys would be in place or Obama would not have been their man, they put him in office not Acorn as faux news loves to report.

    • Owain says:

      “Social Security has not contributed one cent to this crisis.”

      Then why did Obama recently say in an interview, “”I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,”
      http://www.cbsnews.com/8301-503544_162-20078789-503544.html

      Obama sure thinks there’s a problem there.

      • kent coleman says:

        Bush said his biggest failure was not unending wars , his biggest falure was not delivering “social security to wall street”.

        Wallstreet finaly has the right man to deliver social security to them.

        Corpoate America has learned alot from the mafia ,
        How can you lose if you own both parties.

        • Owain says:

          I think there may be a point to your response, but I’m still trying to find it.

          • kent coleman says:

            Over the years Social Security has been tweaked by Clinton and others,but Obama cut the payments to Social Security by .3225%.

            Until he did that S S was solvent 100% through 2037, then after that 80% solvent.

            All that was needed was to up the limit from $107,000 to $200,000 and that would have again been tweaked to solve the problem.

            This current budget problem is a charade.

            As the former crook in the white house Rahm Emanuel advised Obama to take advantage of a good crisis.

        • Owain says:

          The solvency of SS was an illusion. Even now, more money is being paid into the treasury in the form of social security taxes than is being paid out. The problem is that previous congresses have robbed the SS piggy bank, and have obligated the US to pay part of it’s current general spending using SS funds. If a private company managed it’s retirement accounts like that, people would be going to jail for it.

          Not a bad idea, actually. The statute of limitations have run out on the original perpetrators, but there are plenty of accomplices in Congress and the White House now who are perpetuating the problem. Conservatives, at least, are trying to hollar “WHOA!!!”

          • kent coleman says:

            If a U.S. citizen hid money abroad like these U.S. corporations ,he might go to jail and pay fines and interest on the money.

            As an oil trucker in Oklahoma once said no one knows how much oil comes out of the ground , the companies report what they want to!

          • Owain says:

            People hide money in tax shelters all the time, and it’s perfectly legal. That’s what all those ‘loopholes’ in the tax code are that you keep hearing about. How do those get added to the tax code? Members in Congress carves them out to pay back contributors, which is why it’s more than a little hyocritical to hear lawmakers complaining about tax loopholes, since they are the ones who came up with them in the first place.

      • Efialtis says:

        Yet, all we hear is how Social Security is solvent for the near future…
        That wouldn’t be Obama doing some “fearmongering”, now would it?

  13. Lang says:

    ….um and the War on Drugs, and the IRS, and Afghanistan, and any institution that no longer serves its original need but now only exists to keep being funded. I think this is what Carroll Quigley referred to as the Institutionalization of Social Instruments. Using Quigley’s model our only choice is to wait for decay and invasion.. how pleasant :)

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