The best way for you to prove this for yourself is to read the pathetic attempt of a mainstream media financial columnist to defend it. When you are done reading my refutation, you will know. It’s going down.
The mainstream media never cry “wolf!” on the statistically inevitable bankruptcy of Medicare and Social Security. Instead, they cry “wolf cub.”
Robert Powell, the resident retirement economics expert at MarketWatch, has written a standard head-in-the-sand article on the #1 and #2 fiscal killers in the United States: Medicare and Social Security.
It begins with a tip-off to readers about his politics. “Congrats on your re-election! I hope you’ll forgive me for not dwelling on your victory and getting straight to the point.”
Powell knows that Obama will never read his column. So do his readers. So, the intro is for readers, not for Obama.
With all due respect, it’s time for you to tackle this nation’s retirement security issues, including Social Security, Medicare, and a host of other challenges that threaten the financial well-being and standard of living of current and future retirees.
Here is the short list: Social Security, Medicare, retirement security, caring for a nation of elders.
It’s time for Obama to tackle these, he says. It used to be time for Johnson, Nixon, Ford, Carter, Reagan, Bush 1, Clinton, Bush 2, and Obama in the first term to tackle these issues. But it did not happen. They all played touch football, not tackle. So, it’s time. Really. No kidding. He means it.
These are the politically untouchable — today — programs that will eventually bankrupt the federal government if they are not abandoned. So, they will all be abandoned. But the author refuses to admit this. His article is designed to persuade us that they will not be abandoned. All such mainstream articles are.
Nowhere does he refer to Prof. Lawrence Kotlikoff’s estimate of the present value of the unfunded federal liabilities: $222 trillion.
TRUST FUND FOR DUMMIES!
He begins with an accurate, though irrelevant, statement.
For the past four years, more really, politicians in this country have been kicking the can down the road. They’ve not had a serious discussion about how to fix Social Security despite years of knowing about a problem that will affect millions of Americans in 21 short years.
What he does not admit is that the Congress has been kicking this can down the road ever since 1983, when the then-technically bankrupt Social Security program was revised by Reagan and Congress: higher taxes by way of a sliding increase in the wages subject to the FICA tax. This was required because President Carter’s 1977 reform, which he said would hold until 2000, went bust in six years.
Perhaps a reminder is in order? Come 2033, unless Congress acts, the Social Security Trust Fund will be bankrupt; it will be unable to pay scheduled benefits in full on a timely basis. In fact, come 2033, Social Security would only collect enough tax revenue each year to pay about 75% of benefits.
This is the standard fakery. There is no statistically viable Trust Fund. There is merely a pile of IOUs from the Treasury that the Trust Fund has been cashing in for the last two fiscal years in order to keep making payments. The whole fund is bankrolled by the government. It’s just an accounting sham to hide the nature of this Ponzi scheme.
The program is in red-ink mode. This may cease next year because of the expiration of the Bush tax cuts. But the system’s cash flow will again go negative by 2016, if there is no recession between now and 2016. The year 2033 is always mentioned by the Trustees because it is so far away politically that it has no impact on voters or Congress.
(For the rest of my article, click the link.)