While the rest of America fulminates over Roseanne and Samantha Bee and NFL visits to the White House, a rather large piece of news just broke – a piece of news that essentially spells doom for the future of American governance. Here’s the news:
Whoops.
Medicare and Social Security, along with Medicaid, represent a majority of the federal budget each year, and represent mandatory spending. And Social Security has been running a negative cash flow for years. Our gigantic national debt number doesn’t include unfunded liabilities to these programs. According to some studies, if we include expected shortfalls from Medicare and Social Security in the debt, our debt is actually $90.6 trillion.
And yet politicians of both parties – with the possible exception of Speaker of the House Paul Ryan (R-WI) – are utterly unconcerned with entitlement reform. In fact, they demagogue anyone who dares to mention entitlement reform. President Trump campaigned on the notion that he wouldn’t change entitlement programs. Democrats have created full graphics of Ryan pushing old ladies off cliffs to signify their opposition to changes to entitlements.
But here’s the reality: for three generations, Americans have impoverished future generations to fill their own bank accounts. The amount of money Americans have taken out of Social Security and Medicare doesn’t relate in any way to the amount of money those same Americans have paid in. And someone will have to fill the gap.
So, how will that gap be filled? With tax increases. Either we will have to increase the payroll tax from its current 11.7% to something more like 14%, or we will have to cut cost-of-living adjustments, or we might have to simply confiscate cash from higher income-earners, or we might have to raise the retirement age, or we might have to tax benefits themselves. In any case, things will get ugly.
Our politicians won’t do anything about it, however, because we don’t have the guts to elect politicians who will tell us the truth about our benefits. And that means we’ll kick the can down the road until there’s no more road.