Entitlements are the product of the Progressive Movement in the same way that our rights are the product of our founders and our constitution.
What we have been doing for the past century is trading our rights and prosperity for guarantees of free money and care. Progressives will point
to the decrease in poverty due to Medicare and Social Security but the success of these programs is based upon accounting trickery that would
land you in jail in the private sector.
Health care now joins Medicare and Social Security as the major entitlements guaranteed to us by the federal government. Medicare and Social
Security were the programs that got the progressive agenda's foot in the door. These programs were initially designed as statistical safety nets,
to provide a guarantee of enough income to eat and basic health services for those people that outlived their retirement savings. It's hard
to argue against these programs at their inception. Had they been designed properly and held to the principles they were sold upon they
would both be successful programs today.
So what exactly is the problem with both of these programs and how did they get to this point? When Social Security was created the average
American's life expectancy was around 62 years of age and social security benefits kicked in at age 65. The program was designed to never pay
benefits to the majority of people who payed into it. That's why it could be funded with a small payroll deduction.
Fast forward to today and our life expectancy has increased to upwards of 80 years of age and your benefits still begin at age 65. Now
you have people expected to receive benefits for almost 1/4 of their life. What has happened as the years rolled on is the ratio
of people paying in to the system to people getting payed has continuously decreased.
From the CATO institute:
"In 1950, there were 16 workers paying taxes into the system for every retiree who was taking benefits out of it. Today, there are a little more than three. By the time the baby boomers retire, there will be just two workers who will have to pay all the taxes to support every one retiree.
Fewer workers for more retirees mean each worker bears an increasing financial burden to pay the benefits that Social Security has promised. The original Social Security tax was just 2 percent on the first $3,000 that a worker earned, a maximum tax of $60 per year. By 1960, payroll taxes had risen to 6 percent. Today's workers pay a payroll tax of 12.4 percent.
It is going to get much worse. In order to continuing funding retiree benefits, the payroll tax will have to be raised to more than 18 percent. That's nearly a 50 percent increase."
So what about Medicare? The same logic holds true for Medicare as it does for Social Security but Medicare has additional problems that don't
apply to Social Security. The cost of medical services has risen faster than inflation since the inception of Medicare. The government has
handled this little problem by paying doctors and medical facilities less than their costs for the services they provide. The doctors make
this difference up by charging everyone else's insurance more.
What's happening though is the number of people on Medicare is continuing to increase not just in raw numbers but as a percent of
people with insurance. More and more people are now able to qualify for Medicare and its little stepchild at the state level, Medicaid.
Could an ever increasing number of people being on Medicare which underpays for services have anything to do with everyone else's
insurance premiums going up?
That brings us to the new health care law. You can think of this law as basically a massive expansion of Medicare eligibility along with
a ton of new government controls of health insurance companies and individuals. What is different about this entitlement than both Medicare
and Social Security is who this applies to and who pays for it. This is important.
The new health care law is intended to cover younger people (non senior citizens) and to be paid for exclusively by taxing the rich, businesses and
reducing the benefits of senior citizens. Got that.
Everyone who works pays Medicare and Social Security taxes. From minimum wage on up, everyone contributes and the target beneficiaries are supposed to be those too old to work anymore. With the new health care law Medicare gets cut by about $500 billion over ten years and taxes are increased by another
$500 billion on those who make over $250,000 a year. Only a small portion of the population contributes but people of any age making as much as $88,000
a year can collect benefits. This is not a safety net, it is Marxist system of wealth redistribution that fundamentally transforms America into a
socialist European style nation.
No matter what you believe about the merits of these programs or the idea of wealth redistribution there is no denying the cost burden that
is coming our way. Let's first take on Social Security.
Social Security for decades has been collecting billions of dollars more than it has paid out. Unfortunately the federal government has been
using that money and giving the Social Security administration IOUs in the form of Treasury bonds. The massive Social Security trust fund is just a
pile of Treasury bonds in a file cabinet somewhere. Up until we have been paying the interest on those bonds with more bonds but now, just this year
Social Security pay outs have exceeded the money coming in. Now the federal government actually has to pay the interest on those bonds because
they actually need that money to pay seniors their benefits. Where are they getting that money, they're borrowing it by selling Treasury bonds
to American citizens and foreign investors. As of now they have guaranteed to pay a mere 14 trillion more in benefits than they have funds to pay.
Medicare makes them look great with its 75 trillion in unfunded guarantees.
This house of cards is about to collapse.
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