More about Social Security, Medicare, and ObamaCare

I’m going to quote straight out of Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity, an excellent primer on the state of our economy and what to do about it. I referenced this book previously in the post The Coming Tax Avalanche and now will copy other statements:

In fact, the Congressional Budget Office (CBO) estimates that Social Security expenditures will rise from 4.3% of our GDP to 6% of our GDP by 2033. For Medicare and Medicaid, the trend is even more alarming. If the rise in health care costs continues to dramatically outpace the rise in economic growth, Medicare and Medicaid obligations will escalate from a little more than 4% of GDP to 13% by 2035 — and 22 % by 2080.

…Historically, the entire federal budget has averaged  about 20% of GDP a year over the past 30 years. However, unless these entitlement programs are brought under control, Social Security, Medicare, and Medicaid alone may eventually consume over 20% of GDP.

Absent reform, the rapidly escalating funding requirements of America’s triple entitlement threat will inexorably lead to either a massive tax burden, a massive debt burden, or the squeezing out of virtually every other expenditure in the U.S. federal budget.

The authors continue discussing Social Security specifically and zero in on…

[Another] thing we all need to know about Social Security is that once it goes into a negative cash flow position, as it has now, it is supposed to begin drawing down on the alleged Social Security “trust fund” surpluses. These alleged surpluses supposedly were built up over the years during which we had plenty of workers…


These surpluses largely exist in the form of paper “IOUs” that the government issued to itself so that it can pay for other deficit expenditures in the federal budget. To put this shell game another way, our free-spending government has come to depend on the Social Security surpluses over the years to make its balance sheet and budget deficits look ‘less worse’ than they actually are


In summary, these five features of the Social Security program virtually ensure a crisis:

– A growing gap between the retirement age and life expectancy

-Perverse incentives against saving and investment

-A pay-as-you-go system characterized by an steady fall in the number of workers who can support a growing number of retirees

-Social Security crossing the negative cash flow Rubicon in 2010

-The past use of surplus Social Security funds to finance other federal budget expenditures so that no “trust funds” actually exist

The authors of Seeds of Destruction present hard-headed and workable solutions for Social Security, and I recommend everyone read those. Here though I want to move on Medicare (and Medicaid which they include routinely) and some of their comments about ObamaCare in relation to these programs:

President Obama’s Patient Protection and Affordable Care Act (aka ‘Obamacare’) simply and dramatically expands both Medicare and Medicaid spending while doing little to address the cost-containment issue.


In effect…all ObamaCare has done is create a very large new entitlement program. Part of it remains an unfunded liability, and another part will be funded by growth-stalling tax hikes and penalty fees.

Switching to another chapter in Seeds of Destruction, here are further key points about ObamaCare:

The fundamental question we must ask at this point is whether Congress should try to fix ObamaCare — or simply scrap it before it can do considerable damage.

Our strong recommendation is to start over. The key elements of ObamaCare — unreasonable mandates; heavy-handed insurance regulation; and entitlement-based middle-income subsidies — must go. None of these elements addresses the fundamental problem of health care: high and rising costs.


…once ObamaCare fully kicks in in 2014, the real cost of expanding coverage in the ten-year period from 2014 to 2023 will be more like $1.6 trillion, not $940 billion. Moreover, the result will be enlarged budget deficits in the hundreds of billions.

Again, after discussing all of the glaring faults with health care reform was undertaken by the president and Congress, the authors (remember, one is a Democrat and one is a Republican) present “a clear market-driven path to reducing health care costs, while improving the quality of medical care.” But this post will remain focused on the problems, so please beg, borrow, or buy a copy of Seeds of Destruction and read their solutions.

These quotes, from respected economists, again directly contradict assertions by congressional leaders who are pushing ObamaCare and who claim Social Security is solid and not in need of reform. Of course, Lynn Woolsey voted for ObamaCare, and she who claimed “Social Security…has not contributed a dime to the deficit.” Rep. Woolsey doesn’t want Congress to lift a finger to fix Social Security; she insists the system is financially sound. Apparently she hasn’t studied the evidence. Or maybe she has and simply refuses to acknowledge it. That kind of head-in-the-sand “leadership” in Washington must GO in November. We all need to honestly look at the seas of red in Washington spending and we MUST do whatever is necessary to STOP IT. Lynn Woolsey must be retired.


About district6voter

A concerned Northern California citizen who believes Representative Lynn Woolsey ought to be replaced in November, 2010.
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