Do Entitlements Require Political Action
 Entitlement is a poor word as all but the wealthy
 have invested substantial income in SS and Medicare.

SS Bankruptcy Unlikely
Payroll Taxes Stable, but		 Entitlements Basics

 

1. SS Bankruptcy Unlikely

Introduction. As a result of changes to Social Security enacted in 1983, 
benefits are now expected to be payable in full on a timely basis until 2034,
 when the trust fund reserves are projected to become exhausted.

Social Security Bankruptcy Date 
Year of Projection

Bankruptcy Date
1997

2019
2010 2035
2023 2034
The SS bankruptcy date keeps moving forward
because of the trustees use a conservative 1.9% GDP growth rate, a conservative 5% unemployment rate, and other conservative measures. Note the economy slowed down during the recession decreasing the delay.

Note: If SS Fund were to go bankrupt,
Treasury could easily make up the difference.
 

2) Payroll Taxes Stable, but a change may be needed

 `

See Taxing the Rich
 

We Have Three Choices
   1. Increase Deficit      2. Increase Taxes      3. Cut Programs

Best Guess Boomers Collecting Could Rouse Interest

Personal Advancement   
 Career Path Options       Personal Finance       Healthy Lifestyles      

 

Relevant Information
Cash Outflow Will Increase, It went negative in 2018

 

  

3. We Have the Funds

  


4. Is a New Entitlements Law Needed?
To Date No Political Solution Offered  Source


 

  

 

Social insurance taxes -SS + Medicare = deep doo-doo
 as employees do not pay taxes on employer's portion.

Making Employer Portion of Payroll Taxes
Part of Individual Income would Help.
Those on a Minimum Wage could be Excluded.

 
 

Editor's Notes:

1) The Greenspan Commission took two years to come up with a tax law
and then it took behind the scenes committees to come up with a solution.

2) WHY SS retirement benefits are progressive.

Low income retirees contributed less into the SS fund than those with higher income.
Someone with low income who paid in half the maximum tax
receives more than half the maximum income benefit,

  There here are also many SS dependent benefits.
These benefits provide much to people with children. 
Thus, low income with children SS recipients receive a much higher
 return than there childless high earning counterparts.

But, life expectancy data indicates average low income recipients will die much earlier
than high income contributors and therefore may get a much lower return.

3) We need to eliminate extreme end of life benefits for Medicare and Medicaid. 
If necessary, create a Medicare Gold with a one-point increase for those who
do not a want benefits limited.

4)  An increase in the qualification ages from 62 and 65+
is not a decrease in benefits because people live longer.

  
 

 
Entitlements Basics
Summary Definition Who Benefits from
 Most to Least		 Problems

Concerns
Medicare Subsidized healthcare
for the elderly		 All benefit are the same,
high income earners pay most

Required additional
health care cost
difficult for many

Longer life, especially for poor people who now also have subsidized health care, will increases cost. Free cases poorer health. Solutions, later eligibility, less coverage, higher deductibles currently not acceptable to electorate.
Social
Security		 Retirement income, partial at 62, full at 67 and max at 70, Low income earners receive a higher investment return, some receive death and spousal benefits
 		 Deficit concerns until baby boomers die, retirement age raised or young people vote.SS Benefits are 100% Secure, but their real value depends on economic success.. Solution just time or later retirement but politicians will not act until forced by electorate Increased negative cash flow should add political pressure.
Tax
Expenditures		 Legal deductions and exemptions from income decrease tax collections Employee sponsored health insurance,401K, long-term capital imputed rental income, mortgage interest, earned income tax credits, deferred income from controlled foreign corporations Table 2

Tax payers don't appreciate
 their benefit (entitlements?)

 

 Solution of decreasing them by a third is unacceptable to electorate though this would have increase tax collections $400 billion in 2015 when the deficit was $439 billion.

Tax Expenditure Amounts (billions)


 

cut
where
the
money
 is.

 

 

 

 

 

 

  

 

 

49% go to top income quintile