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Social Security and Medicare: It’s all good
Posted by: McQ on Tuesday, May 02, 2006

Today the trustees of both Social Security and Medicare again sound the same warning with an ever shorter timeframe:
Medicare's trust fund will be exhausted in 12 years, two years sooner than an earlier forecast projected; and Social Security's trust fund will dry up in 34 years, one year sooner than projected, trustees for the programs said in an annual report released Monday.
According to USA Today, the trustee's report says both programs are in "serious finanacial trouble".

And Harry Reid? Well, it's all good:
In a statement released Monday, Senate Minority Leader Harry Reid (D-Nev.) said the trustees' report "confirms that, despite White House scare tactics, Social Security remains sound for decades to come."

According to Reid, "The real threat to Social Security comes from Republicans, most of whom support and voted for privatizing Social Security."
Well, he's consistent if nothing else.

UPDATE: Steve Engelhard charts the predictions made by the trustees concerning when the SS "fund" would be exhausted here.

One point: there is no Social Security Trust Fund regardless of what the trustees claim.
 
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Previous Comments to this Post 

Comments
When Social Security finally crashes, the SOTU address moment where the Dems wildly applauded doing nothing will be played over and over and over again.

So at least something good will come from the impending trainwreck
 
Written By: shark
URL: http://
...Social Security remains sound for decades to come.
Well, that’s a truthful statement. Three, to be exact. "Three" does make "decade" plural.
Color me unreassured.
 
Written By: Nathan
URL: http://brain.mu.nu/
Well, that’s a truthful statement.
Heh ... yeah, this week. Next week they may lower the estimate again.
 
Written By: McQ
URL: http://www.qando.net/blog
How fast have they been lowering the estimates? I believe I remember them lowering the estimate by a year only a year ago!

Can anyone graph this? The Y-axis is the year that each program is expected to reach insolvency, and the X-axis is the year that those estimates were calculated. I think we could establish a pretty disturbing trend line that would look GREAT on the internet.

In about a week and a half, I’ll have time to do this research myself.
 
Written By: OrneryWP
URL: http://
What is untruthful in Reid’s statement is that there is nothing in the trust fund but a truckload of IOUs. So when the outflows exceed the inflows in around 2018, the Federal government will have to start taxing more or cut spending. Based on current trends, neither will happen (resulting higher deficits) or taxes will increase, which a democratic Congress will most surely pass, especially given the number of "moderate" republicans.
 
Written By: Nuclear
URL: http://
Thank you, Steven Engelhardt!

And no, it doesn’t show exactly what I thought it would... shows a deeper dip leading into the late nineties than I’d have thought, and I thought it would have peaked before that.
But I’m glad I know now.
 
Written By: OrneryWP
URL: http://
Just curious....anyone want to speculate on how a mass anmesty for all these illegals would change these timetables?
 
Written By: shark
URL: http://
It’s all good - once those 11-12 million illegals (oops, sorry, they’ll be LEGAL then....) start paying into the fund.
"Ahhhhhh.....Fresh Blood! crowed Reid as he lifted his crimson stained lips from the throat of the now docile and exhausted Mexican-American virgin.
"How I love the blood of immigrants, it tastes so.....ethnic."
Dropping her lithe form on the blood soaked bed he called out to his familiar.
"Teddy...are there more? You must work harder, I need many more if our plan is to come to fruition! Soon the Democrats will rule the day and the night and we will be free to have our way with them all. BWAAAAAAHAHAHAHAHAHAHAAHA".
Harry probably isn’t planning on being around to answer for anything in 3 decades. He’ll be safe in his coffin.
 
Written By: looker
URL: http://
Harry probably isn’t planning on being around to answer for anything in 3 decades.
Bingo. That comment also applies to most of the CongressCritters.
 
Written By: Mark A. Flacy
URL: http://
Some of them may not be around to answer for anything NEXT year if they don’t get their acts together soon.
 
Written By: looker
URL: http://
The change in projection is an artifact: it’s based on a change in interest rate assumptions.

Does anyone know of a good Social Security Trust Fund simulator? The ones I’ve identified are all either steady-state or take the 2002 demographics and income projections as assumptions.

I don’t think that the additional contributors are an unalloyed blessing: depending on the expected incomes of the new contributors the new liabilities may accrue substantially faster than the added revenues.
 
Written By: Dave Schuler
URL: http://www.theglitteringeye.com
It’s all good - once those 11-12 million illegals (oops, sorry, they’ll be LEGAL then....) start paying into the fund.
Ahh you missed a chunk of the problem. Many of our current crop of illegals aren’t really undocumented, but mis-documented. Fake ID’s, wrong SSN’s etc. Their employers withold the taxes and send them in. The SSA can’t properly credit the work and just keeps the money. The amount is in question, but (according to the NYT) could be as much as 7B a year.

I have no math to back this, but something tells me the end cost to SS of making the illegals legal will not be positive over a 20 year time span. I predict some insane rider to allow them to recover the years of "lost" credits and a net negative swing for the contribution / cost equation.
 
Written By: Ryan
URL: http://

I have no math to back this, but something tells me the end cost to SS of making the illegals legal will not be positive over a 20 year time span.
That’s why I’m looking for a simulator, Ryan. Legalization or a guest worker program that includes participation in the Social Security program changes the demographic and income assumptions substantially.
 
Written By: Dave Schuler
URL: http://www.theglitteringeye.com
Steve E, can you chart the same data for Medicare? I suspect that one is a bit more dramatic.
 
Written By: Unknown
URL: http://
Hmmm, let’s have a guest worker program, charge them SS but then never offer it to them.
 
Written By: Harun
URL: http://
Steve E, can you chart the same data for Medicare? I suspect that one is a bit more dramatic.
I’m having difficulty finding a good source of historical data for Medicare. HHS’s Trustees Report Overview page only seems to go back to 2002. For an idea of what it might look like, in 2002 the Medicare HI trust fund was predicted to last until 2030; in 2006: 2018.
 
Written By: Steven Engelhardt
URL: http://www.deez.info/sengelha/blog/
I should set the sarcasm tag on that post.
 
Written By: looker
URL: http://

 
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