UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

May 15, 2009

THE SOCIAL SECURITY SCARE

Douglas McIntyre, Money Central - The 2009 edition of the "Status of the Social Security and Medicare Programs" is a swamp of data that is only useful if it turns out to be correct. There is no evidence that most of the assumptions are accurate any more than there is proof that the new federal budget and its forecast deficits are accurate. The White House recently changed its deficit projection for the next fiscal year by $89 billion.

The report from the trustees blames the economy for the fact that Medicare's Hospital Insurance Trust Fund will have exhausted its reserves in 2017 and that the Social Security trust fund will be in the same position in 2037.

The report for the two funds makes an attempt to project income and expenses for the funds from 2009 to 2018. While it is improbable that the numbers are correct, a forecast that makes a prediction for a period of a decade could be, if well argued, plausible.

But, to accept the results of the report, anyone looking at it would have to believe that the trustees have the capacity to have an accurate picture of the economy 75 years from now. One of the critical assumptions of the report is that in 2083, the combined cost of the programs would represent 17.2% of GDP.

Putting the public on notice that it faces a sharp diminution of critical social programs based on data that will need to be correct 10, 40 and 75 years from now is an example of why citizens and taxpayers often ask how the government bases financial decisions on opinions offered by people who spend years in windowless rooms. In those rooms, they evaluate data and change it as they get new pieces of financial information, some of which requires subjective interpretation. Economists and actuaries do not like being told that their forecasts are likely to be less accurate than those of veterinarian scientists forecasting the gestation terms of mules. . .

The subject that has not been raised with the announcement of the new projection about the Social Security and Medicare funds is what government expenses might be eliminated to save benefits from the two programs decades from now. People would like to know why the income side of the ledger is at the center of the conversation and the issue of government expenses is neglected. The federal government admits that payments from Medicare and Social Security could disappear in the future, but immediately offers a solution that requires its citizens to increase payments into the system.

1 Comments:

Anonymous Anonymous said...

Nationalize the Fed Reserve, pass HR676, and bring the Military home. Problem solved.

May 15, 2009 4:02 PM  

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