This from the Associated Press…
PARKERSBURG, W.Va. (AP) — The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.
It’s time to start cashing them in.
For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits – billions more each year.
Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes – nearly $29 billion more.
Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs – in the form of Treasury bonds – which are kept in a nondescript office building just down the street from Parkersburg’s municipal offices.
Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn’t be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.
Social Security’s shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program’s finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there’s concern that the looming crisis will lead to reduced benefits.
“This is not just a wake-up call, this is it. We’re here,” said Mary Johnson, a policy analyst with The Senior Citizens League, an advocacy group. “We are not going to be able to put it off any more.”
For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit.
Whatever you might think of the current system of American health care, the fact of the matter is that the federal government has no resources to provide a solution if one involves spending more money. Not whether the solution involves growing the deficit, mind you. SPENDING MORE MONEY. We have no more money to spend on ANYTHING. Not on Social Security, not on education, not on farm subsidies, not on welfare – and not on health care. We are BROKE. Social Security is BROKE. Medicare is BROKE. Medicaid is BROKE.
The federal government is broke.
Moody’s today is warning that the U.S. government is beginning to approach danger of losing its AAA bond rating. Should that happen the cost of continued borrowing will be astronomical; we’re already staring as much as $800 billion in interest alone per year in the foreseeable future in the face.
These are ruinous numbers. Existing entitlement programs are going to have to be ended – not because they’re bad policies (most of them are), but because America cannot afford them.
Why? Because the federal government is broke.
When you’re broke, you can’t spend any more money. You also can’t print any more money without destroying what is already a bad economy. And you can’t tax that bad economy any more than you’ve already done, because you won’t get any additional revenue out of it.
What you absolutely cannot do is take over an entire sector of the economy, either through nationalizing it or through turning insurance companies which make an average profit margin of less than four percent already into subsidized, heavily-regulated monopolies.
You just can’t do it. You don’t have the money.
President Obama and the Democrats say they’ll pay for Obamacare by cutting $500 billion in waste out of Medicare. There is waste in Medicare, waste which could easily have been ferreted out by past presidents by launching sting operations to smoke out fraudsters and then bury them under federal penitentiaries – or better yet, by turning Medicare into a voucher program empowering individual seniors to use the leverage of the market to come up with solutions which work best for them. Instead, Obama is cutting Medicare Advantage, a program which actually works and provides for better health for seniors. But from some of the president’s statements he doesn’t appear to want that – he’d rather just slip some of those seniors a pill and let them fade away so the government doesn’t have to pay for them anymore.
Here’s the problem, though. Kill off the seniors you’ve got, and you’ll find there are just a lot more of them on the way. American life expectancy continues to rise, and probably will for the foreseeable future unless Obamacare completely ruins the health care system.
But because Social Security is broke, and the American people know it, and also because the private retirement accounts of so many Americans were damaged when the stock market nose-dived in 2008, a great many of those seniors the president seems happy to write off will still be in the workforce – assuming their jobs don’t disappear as the economy continues to collapse. They’ll also continue working because the devaluing of the currency our current debt levels – and the growth in that debt Obama’s trillion-dollar deficits will produce – make inflation inevitable, and their retirement income won’t give them the buying power they’ll need to live. So denying them health care won’t save the expense the Democrats think; rather than writing off a bunch of retirees and laying claim to 55 percent of their estates through the Death tax, what they’ll actually be doing is destroying productivity by taking experienced workers out of the workforce.
But on top of this, Obama’s minions in the House purport to sweeten the noxious Senate bill by adding some 2,300 pages or more worth of “reconciliation” language, to include even more entitlements like a federal takeover of the student loan industry which is certain to generate runaway inflation in higher education (the current availability of Pell grants and subsidized student loans has already run costs through the roof) and likely break state governments’ ability to provide four-year educational degrees for average students. In no reasonable scenario can this action produce long-term savings, meaning the government is spending even more money that it doesn’t have when cutbacks on current student loan subsidies are what is required given the dire straits we’re in.
I could go on. The fact is, the resources do not exist for a larger federal role in health care, and it is the height of insanity for it to attempt to effect one.
After all, the federal government is broke.