War between the Generations

Federal Spending on the Elderly Set to Explode

by Chris Edwards and Tad DeHaven

 

Chris Edwards is director of fiscal policy studies and Tad DeHaven is a research assistant at the Cato Institute.

 

 

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Executive Summary

 

At the signing ceremony for the new Medicare program in 1965, President Lyndon Johnson said, "No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents." But taxes to support growth in Medicare and Social Security will severely eat away at young people's income in coming years unless those programs undergo fundamental reforms.

 

In the 20th century politicians replaced personal savings, family obligations, and private charities with giant centralized transfer systems to support the elderly. The main programs for the elderly, Social Security and Medicare, are primarily funded by taxes on the young. That funding mechanism has set the nation on a financial collision course as the number of elderly will soar 116 percent by 2040 while the number of workers supporting them will grow just 22 percent. Without reforms, the combined cost of Social Security and Medicare Part A is expected to rise from 13.8 percent of taxable wages today to 24.2 percent by 2040. Adding in projected spending on Part B of Medicare pushes up the total projected costs of the two programs to 30 percent of wages by 2040.

 

Congress is considering making the looming fiscal crisis much worse with a costly and unfunded prescription drug program. But increasing the already high transfers from the young to the old is neither economically sound nor fair. Consider that, on average, the elderly used to consume less than the young, but now they consume more. Also, the elderly today are in better physical shape and better able to earn income to support themselves than before. Major entitlement reforms are needed to reduce taxpayer costs and head off a generational war between the old and the young.

 

A wide range of reforms is needed to deal with rising entitlement costs. Social Security and Medicare should be turned into savings-based systems with payroll contributions funding personal health care and retirement accounts. Taxes on saving should be sharply reduced so that Americans can put more money aside for their own future. Medicare reforms should reduce health care costs by increasing competition and relying more on out-of-pocket payments. Centralized redistribution systems for the elderly need to be replaced by personal savings and greater individual responsibility for retirement in the new century.

 

Link

 

If you want to read the full analysis (which I did not post because of its length) it is available at that link in .pdf format.

medicare and social securty must end. it should be transitioned out of existence.

That surplus we had would have helped a bit.

 

You cant end medicare social security. This nation will never return to the time when the eldery walked the streets destitute. No half intelligent politician would ever say so.

 

That said, it is going to be a large problem for America once the baby boomers hit. Why dont we go to war in Iraq and cut more taxes.

 

Government in this country needs to be streamlined. Of course if you try to streamline things like military funding(ie make sure there is no wasted money), you get called a terrorist.

That surplus we had would have helped a bit.

 

You cant end medicare social security. This nation will never return to the time when the eldery walked the streets destitute. No half intelligent politician would ever say so.

 

That said, it is going to be a large problem for America once the baby boomers hit. Why dont we go to war in Iraq and cut more taxes.

 

Government in this country needs to be streamlined. Of course if you try to streamline things like military funding(ie make sure there is no wasted money), you get called a terrorist.

The surplus that was spent away by both the republicans and democrats...arg.

 

Yes, we can end medicare and social security. It is not MY responsibility to pay for your grandparent. It is not yours to pay for mine. The family should be responsibile for their own family. It's more humane and its cheaper. Furthermore, it would help the economy. People should stop throwing their grandparents/parents away like garbage. They're old, they are SUPPOSED to impose on you like you did when you were a kid.

 

Here's my analysis of the subject:

http://www.xanga.com/item.aspx?user=craigr...gs&uid=56259685

Yes they definitely need to end social security, using a plan where people currently under the age of 10(or another age where they have not been taxed yet) is no longer obligated to pay or recieve social security. I will probably have to wait until I am 85 if I ever want social security checks because they are going to keep moving the age back.

that's the first way to phase it out, moving back the age. people don't drop like flies when they hit 70. They keep going, into their 80s and at times 90s.

 

My sister might be a little extreme, but she said that what's going to happen is that because so much old people vote and they want to keep the free money flowing, and because old people won't die and keep on lving, they will become a powerful faction, forcing a revolution because the taxes will get so bad.

If only all policy analysis was based on singular assumptions or one persons perception of the average family. I dont have the time to get into how youve massivley oversimplified an extremely complex situation with a couple of one liners.