Latest Pajamas Media Post (’Should the ‘Smarties’ Really Be Put in Charge of Health Care?’) Is Up
It will appear on Monday morning here at BizzyBlog (link won’t work until then) after the blackout expires under the column title I submitted — “Ruining a Country for Smarties.”
_______________________________________________________
Left on the cutting room floor:
The column noted the status of Social Security’s demographic time bomb a little over a year ago:
… at the end of 2008 there were less than 2.6 employed workers for each Social Security beneficiary (143.3 million divided by 55.8 million).
Extended another decimal point, the worker-to-beneficiary ratio was 2.56.
That was only halfway into the recession As Normal People Define It, which began in the third quarter of 2008 and endured until the second quarter of 2009.
As of January of this year, the ratio is now below 2.4:
- The Bureau of Labor Statistics estimated that we were down to 138.3 million workers in January.
- Meanwhile, ” the POR (Pelosi-Obama-Reid) Economy has caused a spike in the number of Americans putting in applications for benefits. A Forbes columnist reported that in fiscal 2009, ended Sept. 30, new applications for benefits increased by 22% to nearly 2.6 million (vs. an anticipated 15% increase).” Social Security’s web site tells us that there were 57.78 million beneficiaries at the end of January.
- 138.3 divided by 57.78 is 2.39.
That’s a really serious decay of 6.6% (.17 reduction in the ratio divided by 2.56) in the demographic imbalance in barely more than a year.
That ratio will continue to decline for at least another year. The administration’s prediction (overoptimistic, based on what’s really happening) of about 1.14 million new jobs (i.e., 95,000 a month) may not even offset the increase in the number of new Social Security beneficiaries.
This is unsustainable. (Thanks, smarties.)
As is Medicare. (Thanks again, guys and gals.)
As are Fannie Mae and Freddie Mac. (Y’know, the mortgage business wasn’t that tough until y’all trashed it.)
As ObamaCare will be — which is why it must be stopped.
[...] bonus item from Tom’s tease back at BizzyBlog – that employed/beneficiary ratio dropped from 2.56 (rounded up to 2.6 in the column) at the [...]
Pingback by No Runny Eggs » Blog Archive » Weekend Hot Read – Tom Blumer’s “Should the ‘Smarties’ Really Be Put in Charge of Health Care?” — March 6, 2010 @ 12:10 pm
When you give these estimates of future obligation for Medicare ($38.1) and Social Security ($7.677) in the trillions of dollars, could you give over what period of time? 10 years, 20 years, 75 years… I think some context is in order given they take in over $670 billion a year excluding interest (OASI and DI as of 2008) in tax collections.
http://www.ssa.gov/OACT/TRSUM/index.html
Furthermore, are you saying $7.677 trillion is “unfunded” expenses (beyond tax revenue) based on current demographic trends OR are you saying $7.677 trillion are total estimated expenses for the time period of which some of it will be partially offset by projected tax collections.
Comment by dscott — March 6, 2010 @ 7:02 pm
Further context: BEA Government receipts and expendatures
http://bea.gov/national/nipaweb/TableView.asp?SelectedTable=86&FirstYear=1999&LastYear=2017&Freq=Qtr&Java=Y#mid
$670 billion/ $3.7 trillion (total est. receipts) is roughly 18% of total tax receipts.
The income versus expenses are nearly in balance which means Congress can no longer EMBEZZLE dedicated income from SSI and DI. From my perspective this is a good thing as it now puts pressure on politicians to CUT expenses as they no longer have the SS piggy bank to raid to fund and hide their vote buying scams (my pet peeve). The smoke and mirrors accounting gimmicks are now gone with the balance of inflow to outflow. Even better politically, Obama and the Dems get blamed for spendthrift behavior.
So Tom, while you may not be happy with the current unsustainable direction of SS and Medicare due to job creation, IF at this point ALL of Obama’s objectives are DOA and Congress is forced to slash all subsidies and earmarks, then the economy will take off and in the process SS and Medicare tax receipts will mirror the increase in employment causing them to track with expenses with some caveats. The major one being a direct frontal assault on the supposed $60 billion annual waste, fraud and abuse in Medicare. That’s a whole article in itself. In ten years that’s $600 billion IF this annual number is to be believed. The second one being the massive fraud occurring in DI where able-bodied people are collecting disability at top retirement rates. The third will take care of itself, that being early retirements since the ending of intense competition for jobs will allow seniors to stay in the workforce to some degree.
Comment by dscott — March 6, 2010 @ 8:02 pm
#2, the graphic links in the column explains that it’s “the estimated present value of projected revenues and expenditures for scheduled benefits over the next 75 years.”
So to answer the Q, it IS beyond tax revenue. To further elaborate, it’s really a lot more spending because future-year amounts are discounted back in present-value terms (something that all pension plan reporting does).
#3, I agree that it’s nice that the stealing can’t continue in a sense, but it’s pathetic because it shows that the government is incapable of being a custodian of any kind of find without eventually raiding it.
Comment by TBlumer — March 7, 2010 @ 9:41 am
#4, so 7.667 trillion over 75 years is roughly a short fall of $102 billion a year. The shame of it is that if these funds were properly invested as with normal pension plans since the 1980s, the rate of return would be more than adequate to cover the unfunded liability. That Tom is the crime of financial mismanagement by Congress claiming they were “borrowing” the funds giving a pittance of interest via so called bonds.
Medicare is a different story, given the $38 trillion, no amount of prudent fiscal management could generate enough interest and capital gain to cover that expense. But the situation wasn’t helped by Congress EMBEZZLING the funds in any event. $60 billion over 75 years is roughly $4.5 trillion, so even with solving the fraud angle the program was unsustainable. Unlike SS, I personally believe an increase in the tax rate for Medicare is prudent and justified BUT only if those funds are to be kept out of Congress’s irresponsible hands and invested appropriately to attain the maximum return on investment. When I speak of investment that means a strictly financial return, not this BS they have foisted in claiming give away vote buy scams are investments. Given the realities of the temptation of so much money sitting around to politicians, Medicare should be treated more like standard health insurance by adjusting the tax (the future premium) on an annual basis. BUT that’s only AFTER ALL the money Congress STOLE is paid back otherwise they would be rewarded for their Criminal Behavior. Annual premium adjustments would force annual accountability on those who administer the plan.
Comment by dscott — March 7, 2010 @ 3:38 pm