The U.S. ship of state is sailing full steam ahead — straight toward a massive debt iceberg.
Here are some genuinely shocking figures from “Medicare and Social Security Tabs Coming Due,” an article by Michael Tanner, senior fellow at the Cato Institute, in the March 2015 issue of Reason magazine:
- The national debt recently reached $18 trillion — approximately 101 percent of the United States’ GDP.
- The Congressional Budget Office projects the debt will rise to $27.3 trillion within the next decade.
- But those numbers are actually far too low — because they ignore Social Security and Medicare’s unfunded liabilities. Add those in, and the national debt hits $90.6 trillion.
- Social Security, Medicare and Medicaid are responsible for fully 47 percent — nearly half — of federal spending, and they continue to grow.
- Social Security has a $24.9 trillion shortfall, while Medicare has $48 trillion in unfunded liabilities. Should healthcare costs rise, the Medicare figure could soar to $88 trillion.
- Just this year, Social Security will have a $69 billion cash-flow deficit. Every year after, that shortfall will worsen. And Medicare is in even worse financial shape than Social Security.
In an article at Vice News last January, Tanner described the difficult choices we face:
“To pay all the benefits promised in the future, Social Security would have to increase the payroll tax by as much as half, or find that revenue elsewhere. The government can always cut benefits, but without a tax increase those benefits would have to eventually be slashed by 23 percent. That would be very hard for seniors who depend on the program to get by.”
What to do about these problems? You can read Cato’s proposals for reforming Social Security at their Social Security reform website.
Cato’s research and proposals for health care and welfare reform (including Medicare and Medicaid and Obamacare) can be found here.
Libertarian Party presidential candidate Harry Browne offered his plan for replacing Social Security with consumer-based choices in his 1996 book The Great Libertarian Offer. Though the numbers are a bit dated, his explanation of Social Security’s problems, and his solution, remain very relevant, elegant, and easy to read and understand.
For a quick overview of genuine market-based health care reform, see this short 2015 article “What True Health Care Reform Would Look Like“ by Matt Battaglioli, published by the Mises Institute.
Finally, see “How to Eliminate Social Security and Medicare“ by George Reisman (Mises Institute, 2011) for more reasons why these programs should be eliminated, and a plan to accomplish this.