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Thursday, August 05, 2010

Medicare And Social Security Trustees Reports

The Medicare report can be found on this page. It's almost 300 pages. Scroll down and use the 2010 link. I haven't been through this one in detail yet.

The Social Security Trustees report is only around 240 pages in pdf, found here. The meat and drink is found in the appendices, as always.

The bottom line for Social Security is that we are running a primary deficit, which will come close to break even or a little on the positive side in 2013-2014, and then we'll slump back into deficit.

Click on this image and open it up (or right-click to open in another tab) to get a readable version.

For all intents and purposes we've rolled over already.

When reading this, you want to ignore the first total. That includes the payments from the general fund.

Instead, add the next two columns (net contributions + net taxes on benefits) and subtract the next total (benefits + admin costs + RR payments).

So that's why the Catfood Commission has been set up. The commission is due to give its report after the election, and if you think that's coincidence you have a beautifully innocent mind.

To reiterate, the reason why the interest payments and trust fund stuff doesn't matter is that they are almost totally commitments from the general fund. If the general fund were running a surplus, that wouldn't be a problem. But the general fund isn't running a surplus, hasn't been and isn't going to be, so Social Security will be cut some more and benefits taxation will have to rise.

Beginning on page 155, you can find a table of the trust fund operations since 1955. This shows when taxation of benefits began and the relationship between benefit payments and OASDI receipts.

Beginning on page 147, you can find a table of the wage base and OASDI tax levels since inception. To get the total employee contribution rates multiply the rate given by 2 - because believe me, your employer includes those taxes when figuring your cost on the payroll. The employer portion is a closet tax on your pay, but at least you don't have to pay income tax on that money that you didn't receive.

For all practical purposes, we cannot raise social security/disability (OASDI) taxes any further. You will note that in 1960, the total tax was 6%. By 1990 that had risen to 12.4%. This has a lot to do with lower savings in the general population, not to mention various other correlated trends such as much lower mortgage downpayments, lower wages for most, and higher consumer credit balances. We started building this wall long before we crashed into it.

PS: These numbers really have not changed much. They move around a bit because of the recession, but really we knew these dates back in Clinton's term as president. Scroll down to the bottom of this post from 2005, and read the numbers there. Also see this post from 2005. I supported private retirement accounts then, and I do now. There is no way the average American will waste their own money as foolishly as Congress has wasted it. Back then I had already figured that 2015 was still a good exhaustion date (tax in < benefits and costs out).

If all goes as planned, my pension, social security, and
Medicare, will all be busted when I hit retirement. Ain't
life grand !

Yep. In the meantime, you get to pay higher taxes so that Congress can avoid the issue, but those higher taxes won't produce any benefit for you.

We can all start singing:
"Isn't it daaandy,
Sugar and caaandy..."

I think a few beers will help.
Remyou buying ? ;)

We can all start singing:
"Isn't it daaandy,
Sugar and caaandy..."

I'll be singing the Candy Mountain theme song with Larry Kudlow!

Three More Years of Goldilocks? - Larry Kudlow, November 21, 2007

For those have not seen the video in the link above, it is a MUST see. I believe it describes our economy perfectly! I could listen to the song at the end of the video all day. It is very catchy, lol.

Talk about timing. I got that in just before the official recession hit too. Woohoo!
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