April 26, 2007

Paulson on entitlement programs: "Rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues"

I've got a silly question.


Why doesn't anyone in America seem to care that we're lurching toward insolvency?

Or that the baby boom generation looted the treasure of the United States, at the expenses of all future generations?

One day soon we're going to have to face up to our problems, if we want to or not. And I can tell you one thing - Generation X and Generation Y are gonna be PISSED when they finally figure out what the baby boomers were up to (with their money).

The trustees who oversee Social Security and Medicare issued new warnings yesterday that the two programs are becoming unaffordable but pushed back slightly their predictions of when the crunch will hit.

By 2017, Social Security will pay out more in benefits than it collects in taxes, the trustees said in their annual report. The program's trust fund is projected to be exhausted by 2041, one year later than estimated last year.

Medicare, which serves more than 43 million elderly and disabled people, is in worse shape, with its hospital insurance trust fund projected to be insolvent by 2019, trustees said. But that also was one year later than last year's forecast.

"Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues, and threaten America's future prosperity," said Treasury Secretary Henry M. Paulson, who serves on the six-member panel of trustees.

Over time, the programs are expected to consume a growing share of the federal budget. This year, about 7 percent of federal tax revenue goes toward paying Social Security and Medicare benefits. The figure is projected to climb to more than 10 percent by 2012, and 26 percent by 2020, said economist Thomas R. Saving, a trustee.

To keep the programs going, Congress and the president will have to increase taxes, reduce benefits or do both, the trustees said. "Without significant reform, these programs are not sustainable in the long run," Saving said.

46 comments:

Frank said...

This is where Kiyosaki has been correct all along. His book "Rich Dad's Prophecy" is all about how Social Security and Medicare will completely bankrupt America and spark a depression when all the baby boomers retire and say "Time to collect a check!"

Anonymous said...

Why doesn't anyone in America seem to care that we're lurching toward insolvency?


A: Because the doomsday clock doesn't plan on there being much of a future ahead. So why not have a hell of a party in the meantime? Of course, it ould be poetic justice if it's the blowout party which causes the whole mess anyways...

traineeinvestor said...

It's an entitlement mentality: "I deserve and am entitled to a given lifestyle. Where the money comes from is not my problem." Self reliance and independence have become the exception rather than the rule.

PS: Kiyosaki may have written about the problem but there was nothing original in his thinking (as with much of his writings). People have been pointing out how unsustainable the welfare state is for decades.

Anonymous said...

It's none of this stuff.

The fundamental problem is PAPER MONEY.

When the government can borrow endlessly, they have no need to:

1) Cut spending and piss off voters.
2) Raise taxes and piss off voters.

They take the easy way out which is to borrow money, completely sidestepping solving any problems. Money "created" this way has two huge negatives

1) A dollar is a commodity like anything else. The higher the supply, the lower the value.

2) Money borrowed from investors via various Bonds the Federal Government issues must be paid back WITH INTEREST. Currently the 4th largest chunk of the federal budget is simply paying the interest on the federal debt. Nice.

http://zfacts.com/p/461.html

Anyway, we're doomed. Just remember the DOW is up on gains big U.S. companies make IN FOREIGN MARKETS. Our own economy is starting to go down. Our currency is losing value which means you'll pay more for imported good. Big deal you say? Oil is imported. Oil to make your gazzzzoline. How long is Bush going to stay in office when there is $5.00 a gallon gas?

Morgan said...

Medicare makes Social Security look like child's play. That monster will swallow us whole - the amazing part of it all is that there are very limited options that can actually make the program viable...

Anonymous said...

What is this "trust fund"? 2041? The "trust fund" consists of a bunch of IOU's. The money has already been spent!

It's operating on a cash basis so in 2017 the money will have to be pulled from general revenue (or by raising taxes)

10 years.

AMIGAUSER said...

if america can waste 500 billion on the military, theirs is no way people will accept that their is not enough money to pay social security.

Since for the next 30 years, the baby boomers will decide just who gets to goto congress, the senate and be the next president, their is no way that social security will be cut.

Anonymous said...

You know, I was born in 1953 and have been forced (along with my employers) to “contribute” 7% of my lifetime salary to Social Security. As of my last Social Security issued statement, my employers and I have “contributed” $217,000. I want the !@%#&^% money I was forced to hand over and I don’t give a shit what you gen x and gen y’s think about it.

Anonymous said...

``I want the !@%#&^% money I was forced to hand over and I don’t give a shit what you gen x and gen y’s think about it.''

I can certainly understand that sentiment. Unfortunately, the governments that your peers elected have already spent the money. So it isn't there any more and hence you can't have it back. All you can do is steal from the younger generation.

I'm Gen X, I suppose. I'm not excited about funding your retirement. If my taxes are raised much more then I will simply leave the country or stop working.

Anonymous said...

Of course - if this is true you will want to hold HARD assets - gold, real estate, etc.

Marky Mark

Stephen said...

``I want the !@%#&^% money I was forced to hand over and I don’t give a shit what you gen x and gen y’s think about it.''

I'd be pissed too if I were you. Imagine how I feel (born in 1980), considering the prospect that I have been, and will be paying confiscatory taxes from my paltry paychecks to a bunch of greedy geezers who destroyed the U.S. manufacturing base, jacked home prices up out of my young family's reach, and have recently put the U.S. economy in danger of severe inflation/deflation, and/or deep recession, depending on how things shake out.

What you don't seem to understand is that you will never get YOUR money back out. That money is gone. It was paid to your parents and grandparents. Current socialist security taxes do not go into an account for current taxpayers; they go to pay current benefits for current retirees.

You are a forced participant in a Ponzi scheme. At your age, you may get some money out of the system. At my age, I'm not counting on it.

Don't be pissed at the younger generation; we are just the people further down on the Ponzi pyramid. The people who screwed you over are already dead and gone. I hope it makes you feel good to rob young families in retribution for the robbery that was committed against you.

Anonymous said...

Gimme a break. Bushie's war and ax breaks for the rich are breaking us, not the social programs commonly smeared as "entitlements."

The more I undersand about Greenspan's monetary policy, and his and Bush's explicit encouagements to buy houses and things, the more sympathetic I am to FBs. No, I don't think they should be bailed out, but only because doing so will most benefit the sleazy, greedy Bush-types who got the ball rolling.

Stephen said...

``I want the !@%#&^% money I was forced to hand over and I don’t give a shit what you gen x and gen y’s think about it.''

Like anonopuss 12:42, I can't balme you. Imagine how I feel -- born in 1980, I have been paying, and will continue to pay confiscatory taxes from my paltry paychecks to finance the 30 year retirements of a bunch of greedy geezers who destroyed the U.S. manufacturing base, jacked home prices up out of my young family's reach, and have recently put the U.S. economy in danger of inflation/deflation, and deep recession, depending on how things shake out.

However, I must say that you are engaged in a bit of doubletalk -- you want the money that you paid in, but you also acknowlege that Gens X and Y will be screwed by this. You must acknowlege that YOUR money is gone. It went to pay the benefits of your parents and grandparents. Any money that you will get out was paid in by Gen X and Gen Y.

Current socialist security taxes do not go into an account for current taxpayers; current taxpayers go to pay current benefits.

It's a big Ponzi scheme in which we are all forced to participate. Don't be pissed at the young people further down the Ponzi pyramid, who don't want to pay in because they know they will get nothing out. Would you want to pay in if you were them? At least you stand some chance of seeing some money from the system; we don't.

The people at the top of the scheme -- the people who screwed you -- are dead. (Good riddance.) You should be pissed at them, not us. We are just the suckers on the low end of the totem pole. I hope it makes you feel good to rob the younger generation to make up for the injustices committed against you by a bunch of dead flappers and WWII vets.

Mort said...

It isn't the gen BB that made X and Y take on so much debt. I suppose next X and Y will tell me they had nothing to do with the housing bubble or trade deficit either. Yeah, those poor X and Y they were perfect in every way and got shafted by the old folks. Give me a break whiners.

Anonymous said...

You gold pimps are even more pathetic than the realtywhores.

corvinus said...

It's true.

I and my four siblings are Generation Y. The younger ones bash the baby boomers all the time, and I cannot really disagree with them. (Both our parents were born during WW2, and are thus not boomers.)

Anonymous said...

"``I want the !@%#&^% money I was forced to hand over and I don’t give a shit what you gen x and gen y’s think about it.''"

hahahahh the Gen X and Y will be pissed once the gobbermint takes away their 401k ! HAHAHAHAH

Now you know WHY the gobbermint doesnt count the 401k as SAVINGS!
It's NOT YOUR money, it's the goverments! SUCKERS!

Anonymous said...

Hasn't anyone noticed that the Republicans in power have been trying to gut Social Security and Medicare/caid for the past 6 to 25 years? So why exactly is anyone believing the 'trustees' (yeah, right), who are Republican appointees? This reminds me of Bush's call a few years back that Social Security was on the brink of total collapse and had to be privatized. (yeah, right) Except that his math was not exactly credible, the 'problem' was pretty far away, and it could be corrected completely with some jiggering of the SS tax--notably, by removing the 90g annual cap on taxed wages, which is totally arbitrary and just another handout to the rich and well-off. (I am in that category, and think the cap is absurd.) All of this waving of hands with hair on fire is pointless, and you folks are falling for the oldest right-wing, screw-the-middle-class crap in the books. Dummies.

Anonymous said...

I propose that all Home Depot stores be turned into Disco Baby Boomer Clubs handing out Viagra, tax cut papers, entitlement forms, reverse mort. applications and music remembering free love, divorce, and pre aids promiscuity to these groups of perverted fatties. Then the doors close and we gas them all.

Ed said...
This comment has been removed by the author.
Anonymous said...

Kieth:

I have seen this coming since I was probably 16 years old (now 35) and have tried to act accordingly. I put myself through college and obtained a professional degree in order to get a high paying job. I still have a way to go regarding paying student loans and personal debt, etc., but I am doing my best to save my money for my retirement as it is supposed to be done. I don't expect there to be anything in SS when I retire at the new retirement age of 85.

Anonymous said...

They need to just scrap medicaid and medicare and while they're at it, they should outlaw medical insurance too- the existence of medical insurance is the primary reason why medical care costs so much- doctors and patients who know there is a dedicated source of money have no interest in keeping medical costs down. I suppose the HSA can assist with this, but not too many employers are offering them.

unomyname said...

Regardless whether a full spectrum exit is preferred (financial, geographic, psychological), or just a partial, you need to start heading for the exits now, before the fans of Dale Earnhardt Jr. catch on.

Anonymous said...

As a 35 year old I can relate to this depressing reality. a few points:
-Inflation should be mentioned. Homes, healthcare, education-things that matter have doubled in a decade.
-Stocks and housing will not go up several times in the next decade or two like they did from 1980-2005(give or take)
-The next recession will be painful since we can't cut taxes and lower interest without a complete worldwide exit of dollar realted investments. Plus you have no "equity" anymore.
-New information is showing the world is less dependent on us to buy stuff. We already have aweakening dollar. We are losing our reserve currency status-A giant blow.
-and of course we have absolutely no way of paying or obligations. A ton of debt with no new income. That's fantastic

casey

Anonymous said...

Flat tax, no deductions- I am tired of paying for your house and your freeloading f*cking uncontrollable dipsh*t kids. If you want to have kids, pay for them your f*cking self you f*cking leeches. Why should a family of 4 pay less in taxes than a single individual? And, I don't want to hear this sh*t about government interest in strong families- most people having kids these days are uneducated morons that should not be having kids anyway. In fact, if people had to pay their own way, the only people having kids would be those capable of taking care of them, further serving the evolutionary goal of humankind.

Crimson Dynamo said...

If Gen X and Gen Y realize their true interests in the matter, they can and will outvote the boomers. It's just that right now there's no Generational Consciousness about these issues. There WILL BE, and I can't wait to lead the charge!

Anonymous said...

Yeah, you think you'll have to work until age 80.

problem is, THERE WONT BE ANY WORK FOR YOU.

Any 'normal' paying job now --- that isn't in Big Gubbermint --- you get canned at age 50.

The baby boomers will surely vote themselves the U.S. Treasury and massive taxes from the rest of us.

Just see where the votes are going.

Just watch---everything will be devoted to slavishly kissing ass to The Geezing Boomers. Schools will go down the toilet even more, scientific research will be eliminated (and who cares since US won't be doing any more R&D anyway) , infrastructure will look like Chechnya, but how dare you make them pay one dime for anything.

Income taxes on pensions and social security will be eliminated ("We need to pay for our medicine!" ) and payroll taxes on wages for actually working people (under 65) will be ginormous.

Will gen x and gen y outvote the boomers? Hardly. They can do so now, but don't. It will get worse.

Always, the old people vote early and often, and they'll be lazer focused in campaign donations.

Why else is voting day in the middle of the week, where it is on a weekend in every other civilized country?

Old people can wait for hours to vote. That simple fact will further increase the power of the boomers until they are literally too decrepit to vote---but that's 30 years away and the money will be gone by then.

The wealth of the nation will be expended on nappy wipes for bodily excrement of incontinent boomers. There will be no infrastructure or industry left.

Already supposedly "US" companies on the Dow are making lots of money selling overseas----and since they make their stuff overseas too, it reflects nothing about the health of the US and benefits nobody except a tiny few execs. If the US gets poorer, then the value of the US as a market will be even less, and they'll pay less attention. The NYSE or NASDAQ is just a convenient place to park the supranational wealth extraction machine.

Doktaire said...

It makes me so mad, this is the generation that got either free or relativly inexpensive education, much more job security in the pre-globalization era. Not only that, but a house was a much less expensive when they got out of college, without any student loans around their necks. It seems like all through their lives they have ruthlessly pursued only their own interests. For example, once they got in the position to call the shots, they made sure education funding was taken away and that tuition rose explosively. Now young couples, just out of college have no hope of affording a home, for a number of reasons a) ridiculous taxation to pay for entitlement programs, I paid almost as much in Fica SS, Medicare etc as I did in Federal Income Tax (Chances are when we retire, the system will be bankrupt and gen Y and X will not get a penny back, ROBBERY in the most literal sense) b)student loan repayments, some at interest rates that border on usary (Note that these loans probably form a large portion of baby boomers portfolios), c) Baby boomers bidding up house prices to make money to offset their inability to save for themselves during retirement. More young people need to vote, so that those lummoxes in DC actually work towards a sustainable America that offers real opportunities to all citizens, not just the ones who have been around the longest, and shout the loudest as they think they deserve it all, without having to pay for any of it.

Smokey Bill said...

The most generous thing they did was burn all the world's oil, ensuring that, thanks to the greenhouse effect, we will at least be warm.

buy_high_sell_low said...

"Why should a family of 4 pay less in taxes than a single individual? "


hey, it is the "progressive" tax system at work! It sure feels regressive when you are at the paying end of "progressive".

Anonymous said...

"Now you know WHY the gobbermint doesnt count the 401k as SAVINGS!
It's NOT YOUR money, it's the goverments! SUCKERS!"

Like everything else, you can't count on the rules of the game not changing over time. Outright confiscation is difficult to believe but I could see a special one time tax. Perhaps an "advance" on the taxes you pay when you start taking distributions from your 401k.

Anonymous said...

I am 51.

Most people my age have not saved a dime. Social Security will be their only income.

Less than 10 of people my age have saved over 50,000 for retirement. It aint enough.

I have been socking it away since I was 18 and could retire now if I wanted to.

I am sure, because I will have a viable income that I will be stiffed on Social Security.


I paid out the ass for all this time into a system that owes me big time. I will be the one shafted.

My tax dollars go to pay for freeloaders, to bail out idiots, to feed educate and medicate illegal criminal border crossers and to pay for social programs for lazy deadbeats.

I am ready if Social Security becomes insolvent but fear for my neighbors who will be starving.

Anonymous said...

It may help to clarify that it is social security disability that is the major problem and not the social security payment streams that get repaid to people who paid in during working years.

(The payments made to the people who never paid in and the looting of those funds have created insolvency.)

FGWB said...

Keefie,

We're not "lurching toward insolvency", we zoomed past it long ago...

FGWB said...

Oops, sorry Keefie, that was an anon...

Anonymoustard said...

What happens when the retirees start cashing out all those tax deferred accounts and Wall street is in sell mode EVERYDAY? How far DOWn will the market go? Sometimes I get the feeling that the house of cards is MUCH MUCH bigger than any of us realize.

Hayley said...

Well we can talk about the boomers, who, as I've said before, really need to revisit the idea of why they should be able to spend over a third of their lives in retirement.

But, the other thing is, OK the programs grow to 25% of federal spending. So just how much is federal spending on defense. And just what is so criminal about limiting profit on drugs to five percent.

I tell ya what if Merk and Glaxco just can't survive on those profit margins and leave the business in disgust I'll take the chance that someone else will step up to take their share the paltry billions of "limited profits" left over.

Yeah_But said...

"By 2017, Social Security will pay out more in benefits than it collects in taxes, the trustees said in their annual report. The program's trust fund is projected to be exhausted by 2041, one year later than estimated last year."

Yeah, but for the last 80 years, the SS surplus has been used to subsidize the military. Keep Social Security and send the bill for the difference over to the Pentagon.

Realistic said...

traineeinvestor said...
"It's an entitlement mentality: "I deserve and am entitled to a given lifestyle. Where the money comes from is not my problem." Self reliance and independence have become the exception rather than the rule."

Nobody feels more entitled than the well-off with their call for more and more tax cuts (tax cuts for them anyway).

Doktaire said...

"Most people my age have not saved a dime. Social Security will be their only income."

Well, that's just too bad, should have thought about it earlier.

One other thing, when SS was established most people didn't actually live to see retirement, that is why it is called a "Survivors" benefit. Since people are living so much longer now, why not raise the retirement age by a proportional amount, that seems fair to me. Noone, I mean NOONE deserves a 25 year holiday, at the expense of their children.

Anonymous said...

The Most Irresponsible Generation. Great post. Somebody needs to write a book detailing the ridiculous irresponsibility that the baby boomers have promulgated upon my generation (Gen-X). I swear their irresponsibility has ruined this country and it is very questionable whether they will be able to fix it. Gen Xers and Yers should expect their taxes to go through the roof to pay for all of our parents fiscal irresponsibilty. My plan is to have my money saved and just refuse to work if possible when taxes go crazy in a few years.

john said...

love the pic keith.

Anonymous said...

"We're not "lurching toward insolvency", we zoomed past it long ago...
"

Damn straight! Uncharted territory, we are there for sure!

Unfortunantly, it will ONLY GET WORSE from here.

Thanks Dick, Bush, Cliton, and last but not least, Greenspan for burying the NEXT generation in DEBT!

Ron Paul for prez!

Anonymous said...

Get ready for the blowback from GenX and GenY towards the baby boomers.

So sad... Thanks a lot Greenspan, and the phony FED for what YOU have created! You should be punished for what you have done to the US dollar over the last 20 years.

Anonymous said...

nothing like opinion from one of the greatest robber barons of the modern era first thing in the morning, sweet!!!!

Anonymous said...

Go to your coin deale and buy precious metals and hord them. The gov'ment won't even know about and you can sell online. I started buying over the last few years. I don't have a fortune but you'd be suprised how a little her and ther adds up.