Friday, February 04, 2005

Elephants in the room

1. Out of every six dollars that is collected from earnings in the name of Social Security is not used for that purpose.
It is spent, instead, as part of the general revenue. There is no federal budget equivalent to a "savings plan". Social security would have been akin to such a plan, and by now would have a real surplus instead of a pile of worthless special purpose bonds amounting to IOU's. It's like a parent borrowing from a childs "allowance" then telling the child he's sorry when the family runs out of money...

Incidentally, the phenomenon is still going on. Because no one is suggesting that by reducing spending we might push the purported "crisis" into the future a few more years by actually contributing to a surplus, we are in effect accelerating the arrival of that day. (I use the word "we" advisedly. Ain't much the minority of we can really do to stop it.)

2. Medicare is supported by an earnings tax just like Social Security is not.
Take a look at your check stub. The Medicare deduction is listed separately.
How come? It's because for accounting purposes these two amounts are not treated the same. For earners who reach a certain annual maximum or "cap", there are no more taxes for Social Security.
But there is no cap for Medicare.
Anybody listening?
There is no cap for Medicare.
Nobody is complaining because it is only a penny or so on the dollar. But it is enough to do the trick, because so many people at the high end of the wage scale contribute so much.
I don't know how much, but it's a bunch. Otherwise there would be a "Medicare Crisis" along with the "Social Security Crisis."
I wish someone would do the research and let me know the sticky details. I don't have either the time, patience or expertise. Besides, for those who do not want to think about these things, all the evidence in the world would not be enough to alter their thinking.
Raising (or eliminating, God forbid) the cap on Social Security taxes would make the problem evaporate. But not, of course, if it is going to be spent rather than put into reserve...

3. National healthcare is related to Social Security and no one is connecting those dots.
Anybody who cannot accept that statement is either independently wealthy, hopelessly poor, headed in one direction or the other, or terminally ill.
I don't have the language skills to say it more plainly.
If all of one's net worth can be annihilated by a catastrophic medical event or chronic condition that current insurance schemes deem "uninsurable," all the future Social Security plans in the world -- whether you call them Traditional or Private or Personal or IRA or Roth or Keough or by any other name -- none of these is worth a dime in the face of such a dilemma if you are either dead or on your way to dying before you qualify for Medicare.
And America does not have national health care and no intention of planning for one.
We are still so frozen in a cold war mindset that anything smacking of Socialism causes people to tremble.

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