THE BALLOONING COST OF SOCIAL SECURITY AND MEDICARE
November 2, 2005
The estimated present value of the unfunded liabilities of Social Security and Medicare ranges between $61 trillion and $75 trillion dollars. That is the money that would have to be put aside right now, at current interest rates, in order to meet future obligations of Social Security and Medicare. By comparison, the value of our entire national output of goods and services (GDP) in 2004 was only $12 trillion.
Congress can't put aside $75 trillion as reserves against future liabilities of Social Security and Medicare. Therefore, according to the Dallas, Texas-based National Center for Policy Analysis (NCPA), the annual rate of Social Security unfunded liabilities is growing at a $667 billion clip and Medicare's at $4 trillion.
Here's what that will mean to future generations, according to House Ways and Means Committee testimony by Dr. John Goodman, president of the NCPA (May 2005):
- "In 2020, combined Social Security and Medicare deficits will equal almost 29 percent of federal income taxes. At that point the federal government will have to stop doing almost a third of what it does today.
- "By 2030, about the midpoint of the baby boomer retirement years, federal guarantees to Social Security and Medicare will require one in every two income tax dollars. By 2050, they will require three in every four."
- And by 2070, Social Security and Medicare will consume all federal revenues.
According to some estimates, by 2030, Social Security and Medicare obligations alone will require a 50 percent increase in payroll taxes, or a 30 percent reduction in promised Social Security benefits and stringent rationing of health care services promised by Medicare.
Young people are unlikely to be willing to pay Social Security taxes of 20, 30 or 40 to take care of old people, warns Williams, laying the groundwork for intergenerational conflict.
Source: Walter E. Williams, "Math Behind Social Security and Medicare Is Enough to Make Euthanasia the Vogue," Investor's Business Daily, November 2, 2005; "Do we really care about children?" Townhall.com.
Browse more articles on Tax and Spending Issues