The Trump Administration realizes that the quickly growing national debt must be reduced. The current public debt exceeds $36 trillion, and the interest expense is approaching $1 trillion annually. Since entitlement programs account for about half of annual government spending, that spending must be reduced. But how?
There are no good solutions to reducing deficit spending for Social Security and Medicare.
One solution is to raise the Social Security (SS) tax. But that tax is already 12.4% of an American’s wages up to $176,000, (the worker pays half, and the employer pays half.) That means about 90% of workers pay the SS tax on all their wages.
Worse, each American pays a 2.9% Medicare tax on all wages with no limit. (Again, the worker directly pays half, and the employer pays half.)
That totals 15.3% of wages. Then, of course, the worker pays federal income tax, state income tax in most states, a sales tax on most consumption in most states and local taxes.
Raising the tax rate on SS or Medicare is not a good solution. How about reducing those payments to retirees and the elderly?
That is not a good solution either. The elderly have paid those taxes for their entire working life, usually about 45 years. It is simply unfair to reduce the benefits to the elderly, many of whom find SS is their only means of support and Medicare is the only health insurance they have.
We are in this position because both Social Security and Medicare are pay-as-you-go programs. That means the people who are working now pay the benefits for those collecting. Then when the working people reach retirement, their benefits are paid by the next generation of workers. (Some have mentioned the name Charles Ponzi when discussing this arrangement.)
The system seemed to work well in its inception in 1935. At that time, the SS tax rate was 2%. The worker paid 1% and the employer paid the other 1%. Workers retired at 65. The average life expectancy was 67, so the average worker collected benefits for about two years.
Demographics and longer life expectancy are the problems. Baby Boomers are a sizable portion of the population. They began retiring in 2011. By 2028 all sixty million still living will have retired. And they are living longer, meaning they could collect Social Security benefits for twenty years or more. Some live a lot longer.
Making the problem worse, there is also a smaller portion of the population working due to lower birth rates in subsequent generations. In 1935 there were seven workers for each person collecting. Today there are less than three. That means something must be done or the system will be unable to meet its future obligations.
Many forecasts conclude that both SS and Medicare will be insolvent within the next eight to ten years.
Since government spending must be reduced to shrink the annual budget deficit and stop the public debt from growing and since there is no good solution to reducing the annual spending deficit for SS and Medicare, the least bad solution must be found.
Indeed, when there are no good solutions to a problem, the least bad solution makes the most sense. In this case, the least bad solution is to gradually raise the retirement age from the current 65 for Medicare and 67 for SS to at least 70 and eventually to 72
That would mean Americans, unless they plan for their retirement without depending on the government, would continue working past 67 and to at least 70. With more Americans working and paying into the system, revenue for both Social Security and Medicare would increase.
Also, there would be fewer Americans collecting from the system so spending on those programs would be less. With more revenue and less spending, the deficit would be reduced. Eventually, the retirement age would have to increase enough to eliminate any deficit spending for those programs.
While this may seem unfair to some, it is the least bad solution, especially since people are living much longer. The average American is likely to live about 20 years or more after retirement. It simply is not reasonable to expect the entitlement programs to pay for 20 years of retirement.
While this solution has been suggested in the past, it was never taken seriously. It is time to seriously examine this least bad solution.
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Spoken by a rich asshole that won’t have to depend on SS to retire. Screw you and screw working till a person is 72. The simple fix is invest the money properly and stop taking from the fund EVER. Also stop calling it an entitlement Jerk!
So happy this corrupt family of America last, Bidens family first is out of power. They should not be allowed to enjoy their ill gotten gains made off the back of tax payers, selling their American values down the drain, for personal family financial gain, hidden in off shore accounts etc.
In 1935 there were seven workers for each person collecting. Today there are less than three.
THANKS TO JOE-TATO BRINGING IN 30 MILLION ILLEGALS FOR SLAVE LABOR!. THEY DONT PAY INTO THE SYSTEM!
4 years of Potato paying people unemployment doesnt help either.
Solution is America has to increase the workforce. That means Manufacturing.. Democrats wanted a nanny state, and they almost got it.
Kids today want to be influencers and youtubers. You dont see them paying into the system other than yearly income tax day.
A BIG problem is these democrats and RINOS have convinced the people that its an “entitlement” IT IS NOT! Social Security and Medicare are PAID OUT OF ITS OWN FUND, PERIOD!
LBJ unlocked it so the government could steal from it. Separate that fund from the Government once and for all. Allow the Govt to put INTO it, but NEVER, EVER REMOVE FROM IT AGAIN!!!
Does it work as well when you call it “mandatory spending”. You won’t be taken seriously when you start past the starting line.