SS Doomed

Welcome aboard the ship of ethereal monies. I will now explain why SS will be ruinous to our economy. Without large new tax increases or benefit cuts there just won’t be enough workers in the economy to support the baby-boomers and sometime between 2010 and 2020 SS will bring in less than it spends. Big tax cuts wouldn’t help the economy and unless the demographic situation improves itself they would have to continue to rise. We could immigrate ourselves out of this problem, but that’s just exchanging problems because assimilating that many new people would be a monumental challenge itself. Raising taxes, cutting benefits and increasing immigration won’t fly politically. The solution is to take the hit know and privatize the system. Means test the rich out of SS (I’m sorry if this hurts anyone’s feelings…boo-hoo), raise the age of entitlement to 70 (if you can’t save for 5 years…tough), and cut everyone under 45 out of the system (you got 25 years to save…go).

Unfortunately SS is only 1/2 of the battle. Medicare is looming, but that is a different much more complex nightmare. Do you realize that easily 20% of all the money spent by Medicare is spent on last-ditch efforts to save someone’s life who’s condition is essentially terminal anyhow? Is it worth $50,000 in medical costs to prolong someone’s life for 2 weeks? How about spending $300,000 and about $25,000 per year of life after for a liver transplant on a 75 year old who has suffered from years of liver disease? Tough decisions that no politician wants to make.

ON the brighter side, I’m growing less pessimistic over the future of the economy. With China and India both rising fast it is now a race to see if Asia can replace Old Europe quickly enough for our economy to survive mostly intact. I see no hope for Old Europe as a whole. Our 2-5% economic growth can barely compete with Asia’s 7-12% as it stands, Old Europe’s 0-2% is quickly being left behind. Their pension system is in even worse shape and they don’t have much if any room to increase taxes above the current confiscatory rate. Their economies will implode, hopefully the US and Asia can work together to save themselves. I still think it will be bad, but perhaps not catastrophic.

One more thing:

THERE IS NO TRUST FUND!