Unfunded liabilties Posted by: McQ
on Wednesday, March 28, 2007
Both of which would be deemed mandatory spending. Social ("It's not broken, it's not even in trouble") Security:
In the 2003 Trustees Report, the present value of the difference between the system’s revenues and expenditures over the next 75 years is projected to be $4.9 trillion. Including the $1.4 trillion trust fund as an offsetting asset, or dedicated funding source, lowers this unfunded obligation to $3.5 trillion. New this year is an estimate of the infinite horizon unfunded obligation. That number is a whopping $11.9 trillion without the trust fund or $10.5 with the trust fund offset.
The 100-year closed-group Medicare unfunded liability is $13 trillion, the accrued debt is $16.9 trillion, and the perpetuity unfunded obligation is $38.3 trillion. Because of the expectation of rising medical care spending, future participants are a significant net burden on Medicare. Their benefits will exceed their tax payments by more than $25 trillion. Summing over current and future participants, Medicare debt exceeds the accrued Social Security debt by more than three to one.
* Taxpayers will face an estimated $29.7 trillion in unfunded Medicare liabilities. According to the latest Medicare Trustees Report, the estimated total of unfunded Medicare benefits increased by $2 trillion in just one year.
* Taxpayers will pay trillions of dollars to cover the Medicare drug costs. The latest Medicare trustees’ estimate of unfunded drug entitlement liabilities alone is $8.7 trillion over a 75-year period.
* Taxpayers will pay an increasing share of their income taxes just to keep Medicare afloat. Under current law and assumptions, Dr. Thomas Saving, a former Medicare public trustee (his term expired after the 2005 Trustees Report was issued), estimates that the program will consume 25 percent of all federal income taxes by 2020 and 50 percent of all federal income taxes by 2040.
People, of course, are now hearing Democratic candidates talk about a health care system in which everyone will be on a Medicare type program. John Edwards is one of them. And he, at least, is being half-way honest about the fact that taxes will be raised quite a bit. Of course he wants to pretend it will just be a front-end cost, but looking at the numbers above, that's just nonsense. As Jason Pye says:
Edwards plan adds between $6.75 and $9 trillion (using his estimates) in the same amount of time. I'd love Edwards to sit down and explain how he is going to avoid a fiscal disaster while adding to the liability. Yeah, a tax increase will garner some revenue, but unless he is going to impose a 90% tax rate like that bastard FDR...well, Edwards is off his rocker.
So, beware of silver-tongued pols who are going to promise you health care nirvana with a "small" tax increase. Study the numbers above and make them do what Jason suggests - explain how they're going to avoid financial disaster while adding to the liability. Then ask them how they're going to fix the liability.
Prepare to snicker derisively in response to their answer while guarding your wallet (not that it will do you much good, given the current 'bread and circuses' mood of the American people).
And remember, Edwards’ plan is $6.75T to $9T by HIS estimates.
I work with sales guys, and they have a multiplier. Whatever quantity the customer promises to buy, cut it in half and you’re probably in the general range. It’s the exact opposite for government. Take whatever cost they promise it’s going to be, double it, and you’re probably in the general range.