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History Collides

By: Breeanne Howe (Diary)  |  March 15th, 2010 at 04:49 PM  | 

RESIZE: AAA

In another twist in the American story that only God could author, the nation’s largest social program is beginning it’s implosion at the same time the Democrats are forcing through their health care monstrosity.

This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes – nearly $29 billion more.

Since the government has nothing but IOUs to pay the $2.5 trillion in debt that is Social Security, it will have to, once again, borrow money.  However, Moody’s Investors Service warned today that the U.S. is at the brink of losing it’s “AAA” credit rating; which sent stocks falling on Wall Street.  In order to keep U.S. credit in good standing, Moody’s recommends harsh and potentially unpopular policies that will test social cohesion.  According to their report, the U.S. could face a downgrade in rating by 2013; and that’s without the current healthcare bill that the CBO has yet to even give a cost estimate.  Once downgraded the cost of borrowing money would increase, making the $2.5 trillion in Social Security debt a drop in an alarmingly overflowing bucket.

Time to cue the snow God…

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  • nessa
  • kyoufuu

    And I’m fine with that, personally. The question is this: how much destruction will be wreaked upon this republic and its economy in the futile attempt to continue this failed and ill thought out entitlement program? Because as it is, there are only three options that can be pursued to keep it going: 1)Borrow more money, 2)Print more money without borrowing, 3)Remove the cap on S.S. taxes and raise the rates.

    Any of those three choices spells a fiscal nightmare, which will only be exasperated by the current recession. Borrowing money seems like the most likely option for the government to take, because that way it pushes the necessary increase in taxation out to the future, making it someone else’s problem.

    Ugh.

  • Achance

    for the care of aging parents. That was thought to be a desirable outcome in the New Deal days as it gave a way to remove the surplus labor from the agricultural areas of the Country where poverty was deep and intense. Children could move away and into the urban industrial workforce and SS would provide for aging parents when they became unable to work to farm or small business.

    It worked and children have left the farms and small towns in droves since the ’30s. The “12 mile towns” that were ubiquitous in the older parts of the Country in the early 20th Century are all but ghost towns now and children leave farms and small towns these days before the last echo of Pomp and Circumstance fades. They don’t want to have to give up their lifestyle to come back and care for an aging parent. Those aging parents mostly believe they paid into the system for their whole working life and are entitled to the benefit.

    The problem is that because of inflation and changes in the benefit population, what they paid in does not remotely resemble what they are entitled to be paid in benefits. Even real retirement plans that experts try mightily to manage in such a way as to keep them healthy have had a tremendously difficult time keeping up with inflation and for those reitirement plans that include a health insurance benefit, almost none have been able to stay fully funded.

    So, when we look at what needs to be done, we have to consider both the economic issue of increase contributions or decrease benefits but we also have to look at a cultural issue surrounding the demise of the extended family and its interdependence. Right now those aging parents have predicated their aging years on being able to live off SS and Medicare and their children have predicated their lives and livelihoods on not having to care for those parents. It is going to take awhile to change that and an abrupt change will cause a lot of people real hardship.

  • Xasteius

    To solve SS and the Medicare financial crisis, this country will need a cultural transplant; that is, getting away from the ” more government will solve my problems/ I’m entitled to it because….” Both the younger and elder generations will need to sacrifice: the former will need to be taxed although they won’t get the benefits, and the latter will need reduced benefits although they’ve paid into the system. I’m not sanguine about the latter prospect (of course, that may be my personal bias as a ‘spring chicken’ speaking).

  • kyoufuu

    I can’t say how many of my generation will continue to pay into a system if the guarantee is that we’ll get nothing from it, especially since so many of us are burdened with debt from college.

    But a hard choice must be made, which will no doubt involve what you mentioned (taxes and entitlement cuts). There’s an entitlement mentality in this country which must be cut down before any real work can be done. After all, how many people will support a radical change in something like Social Security if they think that they deserve to get it when they retire?