As
the article below indicates, we must
take action now to insure that we
will have the money necessary to see
us through the coming crisis in
Social Security and Medicare. Call
us today to get help planning your
own solution.
Solutions
for debt crisis go far beyond
tinkering
By Dennis Cauchon and John Waggoner,
USA TODAY
What if you didn't
qualify for Social Security and
Medicare until you were 73 years
old?
What
if the affluent got limited
government retirement benefits - and
"affluent" was $50,000 a year?
What
if the government said it wouldn't
pay for your $100,000 life-saving
operation?
Americans may soon have to start
thinking the unthinkable to solve
the severe financial problems that
the retirement of baby boomers will
bring the Social Security and
Medicare systems. These two beloved
programs are on a collision course
with financial reality that
threatens the nation's prosperity
and the well-being of the next
generation of elderly.
USA
TODAY reported Monday that taxpayers
have a hidden debt of at least $53
trillion in government obligations,
mostly from Medicare, Social
Security and the federal debt. This
debt equals $473,456 per household,
dwarfing the $84,454 in personal
debt per household owed for
mortgages, car loans and other
borrowing.
The
federal government would have to
double taxation or cut benefits in
half immediately to make good on its
promises of providing health care
and pension benefits for retirees in
the coming decades. Both major
political parties and the
presidential candidates have avoided
confronting the problem for fear of
angering voters.
"It's
a game of chicken, and nobody's
moving even though we have a crash
coming," says economist C. Eugene
Steuerle of the Urban Institute, a
research organization in Washington,
D.C.
The
first of 78 million baby boomers -
those born between 1946 and 1964 in
the post-World War II population
boom - qualify for Social Security
benefits in 2008 at age 62. Boomers
start qualifying for Medicare at age
65 in 2011.
Longer
life expectancies, soaring medical
costs and slow growth in the number
of young workers to help finance the
programs have created a formula for
disaster.
Despite the silence from most
politicians, Congress and every
recent president have encouraged a
small industry of experts - inside
and outside government - to analyze
what it would take to solve the
insolvency of Medicare and Social
Security.
What's
agreed: Big changes are needed.
What's disputed: Which changes to
make.
"Almost everyone agrees there will
be significant cutbacks in Social
Security and Medicare," says Nobel
Prize-winning economist Joseph
Stiglitz, chief economic adviser to
President Clinton. "What's still in
play is what the changes will be and
when they will occur."
In
general, Republicans favor solutions
that encourage people to save money
in tax-free investment accounts in
exchange for giving up some Social
Security and Medicare benefits.
Democrats generally favor solutions
that ensure equal access to health
care but give government greater
power to control medical costs.
Experts in both parties generally
agree that:
However, it is tricky to make even
these changes without triggering
other problems.
Conservatives and liberals also
concur that Social Security's
financial problems can be solved, if
dealt with soon. But Medicare, which
provides medical insurance from age
65 to death, cannot survive as we
know it without a huge increase in
the tax burden.
The
USA now spends about 15% of its
income on health care - about half
paid by the government, the rest by
private insurers and patients or
their families. Other industrialized
countries spend an average of 8.5%
of national income on medical care -
about 75% paid by the government.
As the
population ages, the federal
government will pay a growing share
of that amount, perhaps as high as
80% in 40 years.
U.S.
Comptroller General David Walker,
the federal government's chief
accountant, says the nation must
make Medicare and Social Security
solvent, control other spending and
consider higher taxes. "The problem
is so great that you have to do all
three," he says.
Delay
costs the nation more than $1
trillion a year.
"Before you can solve a problem,"
Walker says, "you have to admit you
have a problem."
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