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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Re: MAULDIN: The Coming Generational Storm Date: 4/5/2004 11:53 AM
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11,

There's a concerted effort going on by those who have an ideological hatred for social security, because it is a government mandated retirement savings plan, to distort the social security short-fall issue, by pointing out, without changes, how it will run out in about 70 years or by combining social security with medicare, which really will run out much sooner. Remember, there was a huge reform to social security a few years ago, when actuarial problems were actually confronted with large increases in payroll taxes and slight upward adjustments to the age of eligibility. Thanks to these adjustments, social security has been running a huge surplus (being raided, of course, by the general fund, which is running something like $200 billion more in the red than we usually hear about, because they are lumping in the social security surplus). At any rate, with the current and recent surpluses, presuming they get repaid from the general fund, plus the previous adjustments, even with no further fixes, social security is projected to still be able to pay approximately 75% of current promises in 2040. Obviously, that's not 100%, which means there will either have to be some reductions in pay out or some increases in revenues. But, if adjustments are made soon, they don't have to be large to make up the difference.

Medicare is a very different situation, because medical costs continue to rise at far higher rates that overall inflation and because the older people live, the more a strain they are on medical costs. There is really no way to support the medical needs of an aging population strictly with payroll taxes, without these taxes becoming so burdensome they will severely curtail consumer spending of those of working age. The fix is going to have to come from general funds (ie., raising taxes on the rich, on the Willie Sutton principle, which the rich know and which is why they are trying to run the usual feints) and by severe cost containments—there will be cost containments, and the only question is whether they will come primarily at the expense of health or through getting to most health bang for the buck.
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