imported post
I need to comment further on this and provide some clarifying remarks on what is going on here. First off, I'll address social security.
Social security was created under the FDR administration and was NOT intended to be the sole basis of support during a person's retirement. Sadly, many people are using it precisely for that reason (which in my mind represents the major pitfall of any government entitlement program). This behavior lends itself to a strong "fear factor" that persists in the senior voting bloc. If a candidate can be successfully labeled as wanting to cut or reduce benefits, he is SOL in the election. Such an environment makes it extremely difficult - if not impossible - to enact any substantive reform. The 1% privatization attempt went nowhere for precisely that reason - which is comical considering how minimal an impact it would have on the overall problem. That is the political side to social security. Now here is the economic one: we all pay taxes which fund this program, regardless of our income. This is a payroll tax that hits both our end and the employer end of things, which essentially puts the true tax rate at around 12% for most of us (which by the way is twice the tax rate paid in the 1960s before benefits were dramatically increased).
Now then - what does the future of this program look like? Frankly, it looks bleak. The worker to retiree ratio will drop from 4-1 to 3-1 over the coming years. That will effectively cut the revenue stream - not just for SS but for the government as a whole - by one-fourth - unless those of us still working can somehow increase our incomes by that amount and still avoid rampant inflationary pressure associated with such a strong rise in income.
All of which begs the question, what do we do about it? "Nothing" has ruled the day for the past two decades. One way or another, we will be forced into action at some point sooner rather than later. Unfortunately, since the aging people have the strength in numbers, I think those of us who are working for the next 40 years are out of luck. We will almost certainly see another increase in payroll taxes at some point to preserve current benefit levels - since the politicians want to keep their power, which means appeasing the portion of the population which votes the most - even if it is at the expense of the rest of the population and at the long-term health of the entire population.
On to point number two: Medicare.
To put it bluntly: more people are getting older, which means more people will have medical problems. That means more people will use medicare and place a dramatic upward pressure on federal outlays to this program. Unlike social security, medicare does not have its own 12% tax rate to draw funds. Further complicating things is the fact that due to the shifting demographics, health care services themselves will be placed under tremendous stress in addition to the federal budget. We already have severe national shortages in nursing and in clinical laboratories (I know this to be true both on a personal level and on a broader statistical level). Malpractice insurance premiums are driving doctors out of practice, which is going to create a major shortage in thatarea of health care employmentas well. Drug costs are already high due to the massive expenses needed to fund the research and clinical trials necessary to develop them. Long term, this looks very ugly for everyone involved.
I expect salaries to rise dramatically in the medical field to compensate for the severe shortage of labor. I also expect massive increases in technological investment throughout healthcare to offset the fact that staffing needs are not being met (and in all likelihood, will never be). This means higher costs for medical care - which means higher costs for medicare... the net result meaning the government will be paying a lot of money in the future... which will place greater strain on the taxpayers. We already spend hundreds of billions on medicare annually. I can't fathom what this figure will balloon to in twenty years if current policies are left unchecked.
I don't care if people are liberal or conservative on these issues - what I do care about is the fact nothing is being done about them. If this goes on too much longer, we are looking at a financial disaster. The government cannot - nor should it be expected to - provide for our every need. We need to take some personal responsibility here and cut back on the benefits (not to mention gov't spending as a whole which has been recklessly out of control for many years). If we fail to act, we will be forced into the brutal decisions facing western europe and Japan - nations whose elderly population percentages dwarf even our own.
