Sunday, August 24, 2008

Why -- The Perpetual Sliding -- 75 Year Social Security Balance?


What in the world is with the 75 year Social Security balance?

If you want to keep the FICA rate the same for 75 years you could set it in the middle of what you think it will be half way through that span and it will generate a surplus which you would spend on on-budget items for the first half of that span and drop government owned bonds into the "balance" kitty. Then for the second half you would make up the retirement short fall with income tax by "cashing" government owned bonds from the kitty.

Then what; the world ends?

No; this system is to be kept in place forever. Leading us to forever raise the "mid-term" rate -- leading to forever paying for a portion on-budget items with regressively raised FICA funds and never "cashing" the government owned bonds in the kitty (I'm not completely sure why FICA is not progressive in the first place, but I'm not that smart).

I (think) I am just beginning to understand this.

In the case of Medicare and Medicaid balances: as future pay out projections climb exponentially with the projected exponential future rise of medical care costs, are we supposed to exponentially raise the "mid-term" rate on today's taxpayer who will neither enjoy the benefit of the future medical miracles nor has the benefit of future multiplied incomes (if not multiplied nearly as fast as medical costs) with which to pay for tomorrows higher costs.

Do I have this all wrong?


1 comment:

Paul Petillo said...

You're okay. It is easy to get confused. Social Security is not the problem. There is a surplus in the program (which is being siphoned off by a government that is deep in debt). It is sort of like leaving a dog and an unattended piece of meat and you will still have the dog. Surpluses are, in some officials eyes, meant to be spent. And after years of this thinking, the I.O.U.s are beginning to pile up.

Medicare and Medicaid are the problem and you can reassured there is no easy answer without some personal sacrifice. Time, effort and perhaps even increased taxes will all play a role in fixing "our" problem. This is OUR problem and we have to help fix it.

keep saving and maintaining your health. Hope this helps...