One more thing while I’m still thinking about the history of the budget I mentioned in the previous post. According to the Social Security and Medicare Trustees’ most recent report, the Social Security “trust fund”, the stack of IOUs the system has accumulated over the years, will be exhausted in 2033. Medicare’s HI trust fund will be exhausted in 2024. I think that both of those estimates are highly optimistic. If recent trends continue, I believe the Social Security trust fund is likely to become insolvent by 2020 and the HI trust fund shortly thereafter. It may actually be somewhat sooner than that depending on the timing and depth of the next recession, something almost certain to occur within the next five years.
The Chief Actuary of the Social Security Administration is already on record, questioning the Trustees’ assumptions along much the same lines as I am. He has further gone on the record in predicting that when the trust funds are exhausted, outlays will not decline to meet receipts but, unless the law is changed otherwise, will be augmented by payments from the general fund. I think that’s a correct political calculation.
I’ve asked this before and maybe it was dismissed as a dumb question, but – if this happens won’t it be no different than the day before when the fund wasn’t exhausted. Up until it’s exhausted, repaying the trust fund will be coming out of the general fund anyway, right?
It depends on who you ask, Sam. I say there will be no difference. Those who point to the redemption of the bonds that were purchased with the receipts in excess of outlays say there will be a difference.
I am but an economic lay-person when it comes to citing fiscal theory. However, it seems to me that money is generated from the ‘fruits of labor and creative innovation’ in a country, rather than magically from some fertilized, prolific tree, growing in the basement of big government, and producing crops of greenbacks.
It also seems that merely taxing the hell of the ‘rich’ is kind of a closed ended process of evacuating funds, by the process of monetary osmosis, having little replacement value of said funds. Isn’t there a Margaret Thatcher end point, where a country simply runs out of the money it is relieving others of, including the endless well called the ‘General Fund?’
It kind of reminds me of an obesity problem, where everyone is stuffing the suggestion box with ideas other than simply cutting back on intake — in other words dieting and exercise. Hey what a concept! That’s how our current government is today, IMO, telling the people that the government wonder pills of largess in rules regulations, sugary entitlement continuation without reform, is just fine — as long as we can level the private sector playing field into some kind of ‘fair share’ transfer of their earnings to others. Didn’t we learn anything from the early William Bradford colonial experience?