Social Security has always been a Ponzi scheme. Under the guise of "paying in" to your Social Security "account" through payroll (FICA) taxes over the course of your working life so that you would have a "retirement account" from which to draw once you reached retirement age, what the First Entitlement really did, and does, is force current workers to subsidize former/retired workers' government pensions, secure in the belief that when they attain full geezer status, they will be subsidized in turn by future workers, and so on and so on and so on forever. It's an intergenerational wealth transfer in perpetuity. In other words, a Ponzi scheme. But one which was sold so well, and become so ingrained, that the insatiable supply of suckers consider it to be holy writ.
And maybe it could have remained sustainable, had conditions not changed over the years. Such as benefits levels incessantly rising, and other entitlement programs, like Medicare and Medicaid, being enacted, and the overall metastasization of the welfare state, and the ballooning, exploding national debt, and most of all, the rise in both living standards and natural life expectancy. The retirement age has always been sixty-five since Social Security was created in 1935. But the average American life expectancy in that year was sixty-one. The program was initially set up so that most people would not live long enough to collect government retirement benefits. That made it actuarialy sound - or, in more familiar terms, fiscally sustainable. But as the years passed, average American life expectancy grew - sixty three in 1940, sixty eight in 1950, seventy in 1960, seventy one in 1970, seventy four in 1980. As a result, the population of Social Security recipients grew and grew and grew to the point where the program was losing its sustainability. Benefits outlays were outstripping payroll (FICA) tax inflows.
The simple, logical, and fiscally sound policy remedy would have been to index the official retirement age to the average life expectancy, as the program was aligned originally. But the welfare state isn't about simplicity, logic, or fiscal responsibility, but malignant growth, eternal expansion, and political power. So when Social Security reached its first fiscal crisis in the early 1980s, the decision was made to "fix" the problem by kicking it down the road several more decades via draconian increases in payroll tax rates to 12.4% for Social Security (FICA) and 2.9% for Medicare, to be borne half and half between employers and employees, along with other policy gimmicks. Thus was the now-running joke of the Social Security "Trust Fund" born.
Like all fake "fixes", the 1983 Social Security "amendments" just deferred the day of reckoning, as well as providing them a great, big pool of tax money in which for lawmakers and presidents to wallow naked, explicably transmogrifying it into an ocean of general fund IOUs. But it has enabled two generations of voters, seventeen Congresses, and six administrations to blissfully ignore the inexorable fiscal armageddon rumbling beneath all of their feet like a dormant but soon to explode volcano.
With all of the above as context, here is the latest ominous harmonic tremor:
Citing the latest annual report from the trustees of Social Security and Medicare**,** the Journal reported Social Security will have to go into its nearly $3 trillion trust fund to cover benefits.
The program's income comes from tax revenue and interest from its trust fund, which will be depleted in 2034 unless Congress takes action to shore up the program's finances, the Journal reported.
The report also said Medicare's hospital insurance fund would be depleted in 2026 — three years earlier than anticipated in last year's report — and would be able to handle 91% of costs, the Journal reported.
The Journal noted the aging population is boosting the costs of Social Security and Medicare, while revenue gains lag due to slower growth in the economy and the [still-shrinking] labor force.
Remember when the Newt Gingrich-led GOP Congress tried to just modestly slow down the growth in Medicare spending twenty three years ago, and got filleted for their trouble? And ten years later, when President Bush43 merely proposed the idea of optional Social Security private accounts and was fed backwards through a rhetorical wood-chipper? Do you think that maybe, just maybe, the entitlements cliff might be a ways further off, or even averted, if these two efforts had been embraced and endorsed instead? But no, Democrat "pushing granny off the cliff" demagoguery, which Republicans first nutlessly feared and now, under Donald Trump, have embraced with equal zealotry, triumphantly prevailed, and we are now within a decade of Medicare's collapse and twice that long until Social Security brings down the whole rotten federal welfare state structure, and the tattered remnants of the U.S. economy right along with it. Given that my retirement age threshold is right in between those two implosions, I can't express the full magnitude of my excitement.
But I can express my disgust that this appalling bipartisan fiscal malpractice and neglect not only persists, but continues to escalate. So can Clayton Felts, who did so outstandingly this morning at this very site:
In an era where we desperately need politicians that are statesmen, we get politicians that would rather be pundits [i.e. Donald Trump]. Many in Congress have forgotten that when your house is on fire, you don't stop to find out how the fire got started, you instead pick up a hose and put the fire out.
I wrote one time that in the era of smoke and mirrors, we need more substance. Instead of substance with entitlement reform, we get news about Roseanne, Samantha Bee, and kneeling for the national anthem. Those issues may fire up the base, but they do nothing to move the nation forward. Instead of bold attempts toward fiscal solvency, we are left with clowns juggling fire and hoping not to get burned. Or at least clowns that blame the other clowns when disaster strikes. Culture wars may be good for those who want to make [heads explode and] the other side cry, but they do nothing about solving real problems.
Solving real problems was what the 2016 election was supposed to be about. After nearly a decade of Barack Obama's Marxist-Alinskyist tyranny and kakistocracy, there were so many new problems to be solved on top of the ones with which the country was already inflicted. The Democrats have been a lost cause for decades, but the GOP offered numerous serious statespeople and problem-solvers with the talent, experience, ability, and, frankly. balls, to do what needed to be done to lead the nation back towards fiscal solvency, economic stability, and constitutional government. Or at the very least to slow, even halt, the continuing deterioration going back to FDR's harrowing rise over eighty years ago.
Instead, Republican voters embraced the Left's cultural putrescence and their inner rage monsters, went full reality-TV reactionary and chose a Manhattan liberal and lifelong Democrat who vowed to not only never touch entitlements but promised that "we're gonna take care of everybody and the government's gonna pay for it". Which is why we're past the point of no-return in a very bleak future and rather than at least try to frantically turn around and paddle madly back up the fiscal falls, we are wallowing drunkenly in celebrity idolatry and culture war tropery instead.
Did Nero whistle past a graveyard at the same time he was fiddling while Rome burned? I bet he did.