Policy makers will face difficult decisions because fiscal balance can be restored in such programs only by reducing promised benefits, raising taxes or through some combination of the two. Two of the more palatable and often discussed options are the removal of incentives that encourage early retirement and a gradual increase in the age of eligibility for retirement benefits to reflect increased life expectancy. Whether such reforms will be sufficient will depend, of course, on how quickly they are implemented and how far they go.
Republican front runner, Donald Trump, has vowed to save Social Security and Medicare through creating a vibrant economy, which will in turn increase the amount of money that the government takes in as a result of growth. Maybe that will work, but I doubt that it’s a viable long term problem because the boom and bust cycles of market economies dictate that sustainable growth (over a long period of time) is an elusive goal.
Success in America requires that a combination of things happen and they’ve never happened for long enough. If you could have cloned Ronald Reagan and kept him in office indefinitely, maybe it would have been a reality, but that’s not how it has worked in practice. There’s always a Jimmy Carter or a Barack Obama waiting in the wings to appeal to people’s greed or lust. President Johnson liquidated the Social Security Trust Fund to pay for the Vietnam war. Somebody will always there be there to steal it from the people paying into it.
I hear people’s impassioned cries that it’s “their money”. As New Jersey Governor Chris Christie said in his inimitable way, “You’ve been jobbed. Your money was stolen.”
Social Security was never intended to be a retirement plan. Medicare is emblematic of all government programs that grow to be absolute entitlements and economies grow up around them. And both of those ponzie schemes will end. The only question is how much they destroy on the way out.
The nation needs a safety net for the poorest, weakest and the generally f-ed up among us, but it can’t be a debt that accounts for 71% of the federal budget (entitlements). I understand that not all of the entitlements are social security and medicare, but they count for the bulk at roughly two and a half trillion dollars.
In order for Social Security and Medicare to be sustained at their present level, my sense is that they need to be reduced by 50%. To put it in crude terms, it’s a shit sandwich and we all need to take a bite.