Monday, April 23, 2012

It's The Economy Stupid: Social Security To Exhaust Funds???


I love government math!  It’s so witty!




Medicare to exhaust funds in 2024, Social Security to exhaust funds in 2035, both earlier than previously thought.


The Social Security program will exhaust its trust fund in 2035 and have to start reducing benefits to senior citizens unless Congress intervenes, its trustees said in a report released today.  The trustees of Social Security and Medicare are the secretaries of the departments of Treasury, Labor, and Health and Human Services; as well as the Social Security administrator and two public representatives.


The report’s new estimate is three (3) years sooner than projected just last year in 2011!!!




Social Security’s disability program, which aids 11 million Americans, will run through its trust fund in 2016, two years earlier than predicted.


The combined Social Security trust funds would be depleted in 2033, three years earlier than projected.




The main fund that supports the Medicare health-care program for the elderly will run dry in 2024, the report said.




House Republicans propose replacing Medicare with government subsidies to help seniors buy private insurance. Democrats and the Obama administration rejected that plan and

want to find ways to shore up the program. Neither side has offered a plan for Social Security, which at a 2011 cost of $736 billion is the U.S. government’s largest single program.


Social Security has two parts: the old-age and survivors insurance program, which supports senior citizens, and the disability insurance program. Each has a trust fund financed

primarily by a payroll tax that is split between workers and employers. Medicare is funded through a combination of payroll taxes, beneficiaries’ premiums and general tax revenue.


It seems that the most recent addition to the problem was the fact that Congress cut the payroll tax for workers by 2 percentage points for 2011 and 2012 in an effort to stimulate the economy.  The cost was added to the U.S. deficit and exasperated the funding of the trust funds.




The disability program took in $106 billion last year, while spending $132 billion, according to the report. At the end of the year, it had $154 billion left in its trust fund.  These facts are not in dispute.  That’s what the government bean counters say.


Okay, let’s look at the very, very basic math.  I am going to do this so that even people in Washington DC can follow (I know Sister Caesarea is smiling down at me from Heaven right now):


+ $106 Billion Cash Inflow

- $132 Billion Expenses

= -$26 Billion Deficit In One (1) Year


Looks like negative cash flow to me, but I am not a congressman.


Okay, now stay with me because now we are going to do some real cutting edge math, it’s called DIVISION!:


+ $154 Billion Fund Balance

/ -$26 Billion Deficit Per Year

= 5.9 Years To Exhaust The Fund


I hope I haven’t lost you yet.  Now we are going to do some more addition.  This is not a trick question.  What year are we in today.  2012?  Right?  Please tell me you got that question right.


+ 2012 Current Year

+ 5.9 Years To Exhaust The Fund

= 2017.9, so let’s just call it 2018. 


2018 is not 2024, it’s not 2033, it’s not 2035.


Some people look at this and think, “What’s wrong with these people.”  I look at it and I see things differently.  I think it takes great imagination to look at these numbers and come up with their estimates!







John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury


No comments:

Post a Comment