Issue 105 the entitlements part 1 June 24, 2013

Executive summary: 

Social Security is the most popular Federal program offered to the American people.  It provides various benefits to the elderly, unemployed, assistance to needy families as well as Medicare, Medicaid and more which is incorporated into the 20,000 plus page document.  Each aspect of the legislation is run in separate bureaucracies and agencies with old age insurance, what we call social security, in one, Medicare in another, unemployment managed some where else etc.  Our contributions which come in the form of the payroll tax go to pay for the retirement fund, and Medicare part A.  The payroll tax itself is six percent of our income and six percent comes from your employer (which is probably deducted from the pay you could be receiving).  All else in the Social Security legislation is paid out of the General Revenue of the United States.  In other words Congress decides how much money goes into the other programs. 

 The key problem:  The problem with Social Security today is that it is bogged down by new rules and benefits, in addition to Congress raiding its funds resulting in fiscal instability which could collapse Social Security as we know it.  In fact, Congress has borrowed against the Social Security fund and Medicare’s fund that the Federal Government owes approximately four trillion plus dollars and growing to both Social Security and Medicare combined.  All in all, Social Security has become unsustainable thanks to Congress’s combination of irresponsibility with the system and tacking on new benefits without regard to the costs.  So what are we to do to fix this dilemma?

 

Fixing the situation:  Well for one, Congress must not be allowed to borrow from within the federal government ever again.  This will not only prevent Social Security and Medicare from being raided but also prevent other important programs from having money taken and prevent increases to the national debt.  It is because of this problem as to why Social Security and Medicare are going broke, which is estimated to be around 2032.  So stopping the borrowing is a stop gap measure other steps will have to be taken. 

 

Other Steps:  Many of you have heard of Congressmen Paul Ryan and his "Ryan budget plan."

He provided an alternative for Medicare featuring Health care Savings accounts, Social Security with an investment style model so that your money going in is actually your own money, and block granting States to provide money to States to implement Medicaid and other similar programs.  You can find my summary of the Ryan budget in Issue's 26, 27 and 28.  I did like many of his ideas and thought they would give the nation the boost it needed to save the entitlements while making them stronger and at the same time jump start the American economy.

Conclusion:  Paul Ryan was not the only person to want to save the entitlements and as such my next few issues will deal with each one followed by a conclusion that lists the best options that I believe will secure the entitlements for a long time to come.  Stay tuned tomorrow for the first one.