How to calculate and the meaning of our federally unfunded liabilities for Social Sec and Medicare.

Bruce Bartlett, a former supply sider who has repudiated Reaganomics and was kicked out of a think tank for blasting George W Bush has done the numbers for 2009. He gives the names of the federal reports and quotes directly from the documents with page numbers so you can verify them.

This was done before Obama passed health care reform, so some of the Medicare numbers have improved.

In 2009, this was the sum of it: "To put it another way, the total unfunded indebtedness of Social Security and Medicare comes to $106.4 trillion. That is how much larger the nation's capital stock would have to be today, all of it owned by the Social Security and Medicare trust funds, to generate enough income to pay all the benefits that have been promised over and above future payroll taxes. But the nation's total private net worth is only $51.5 trillion, according to the Federal Reserve. In effect, we have promised the elderly benefits equal to more than twice the nation's total wealth on top of the payroll tax."

His analysis is that it would be politically impossible to cut these benefits because the elderly vote. His assessment: "To summarize, we see that taxpayers are on the hook for Social Security and Medicare by these amounts: Social Security, 1.3% of GDP; Medicare part A, 2.8% of GDP; Medicare part B, 2.8% of GDP; and Medicare part D, 1.2% of GDP. This adds up to 8.1% of GDP. Thus federal income taxes for every taxpayer would have to rise by roughly 81% to pay all of the benefits promised by these programs under current law over and above the payroll tax."

http://www.forbes.com/2009/05/14/taxes-social-security-opinions-columnists-medicare.html?

thank the Maker I have years over which I can pay them off. Just like social security.

I should forward this article to Michelle Bachmann. Bet she'd like to quote it in her next speech on the subject.

However, I have high confidence that I can satisfy the obligation.

Look, Barlett's number is scaremongering. When he says you need to have $106 Trillion in assets to meet current obligations it is kind of analogous to me saying I need $5 million dollars in investments to generate the same amount of money as I currently earn. Somehow I make it with far less, and it only takes a few minutes of scrutiny to figure out why -- just like with Social Security.

Assets - liabilities = equity (aka net worth)

Your home is an asset. Your mortgage is a liability. The difference is the equity in your house.

It's sophistry and fundamentally dishonest to the discussion. Besides, I place little stock in whatever makes it's way out of one the mouths of the original supply siders these days. He was wrong on that so where is is credibility on this.

Rule of thumb is you can safely take out 4% a year. So if you want to withdraw $40,000/yr then you probably want to save $1,000,000.

Using an infinite measure you could probably fabricate all kinds of scary numbers.

His piece really does read like a collection of talking points from the Heritage Foundation trying to scare us into cutting or privatizing Social Security. No sale.

I don't get it.

You may color me unimpressed by this....

But spending will be coming down with the end of extraordinary expenditures. Also these do not account for any growth in the other parts of the budget like Medicaid.

Here are the Government's long run calculations:

http://www.fms.treas.gov/frsummary/frsummary2010.pdf

A great deal more of the wealth generated by our economy should be taken in for public benefit.

It seems like he's comparing the total amount for promised payments over a span of time to the resources we have available to pay it right now. Obviously we couldn't pay all future debt with the resources we have available now. The entire economy runs on the idea of having more debt out there than there are current resources, as I understand it. It looks to me like the situation is being misrepresented.

Have I misunderstood? I wouldn't be surprised if I have. I'm not a math guy. :D

Out.

Basically the expected expenses exceed the revenues so you take all those short falls and bring it to a value of assets we would need today to fund the shortfalls. That calculation is done by the trustees of the funds so you can look up the government documents if you think the numbers are suspect.

and wealth are allowed to dodge, unemployment and under employment are out of hand, and we spend too damn much on military adventures for resources to be exploited by industry and maintaining Pax Americana.

You get the money from those who have it, you transform the military to defense, you end the dim witted trade debacles, declare war on private education so that we are all in the same ships when the tide rises, you work to increase wages, you reform the tax code to punish wealth hoarding and reward domestic investment, who get the infrastructure up to standard and move on to modernization so we can realistically compete instead of being like 37th in the world, single payer or a NHS must be adopted, and you get folks to understand that taxes aren't making your money to disappear but rather making an investment that covers education from head start to PhD's, health care, national security, retirement income, research and development, roads, water supply, sewer systems, the electrical grid, communication infrastructure, energy development, environmental protection and maintenance, and what is day to day central to maintaining a modern society.