Fair Tax Nation

Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

We've been saying these things all along... The U.S. needs FairTax now not later.

Social Security and Medicare finances worsen

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 3 mins ago


The financial health of Social Security and Medicare, the government's two biggest benefit programs, have worsened because of the severe recession, and Medicare is now paying out more than it receives.

Trustees of the programs said Tuesday that Social Security will start paying out more in benefits than it collects in taxes in 2016, one year sooner than projected last year, and the giant trust fund will be depleted by 2037, four years sooner.

Medicare is in even worse shape. The trustees said the program for hospital expenses will pay out more in benefits than it collects this year and will be insolvent by 2017, two years earlier than the date projected in last year's report.

The trust funds — which exist in paper form in a filing cabinet in Parkersburg, W.Va. — are bonds that are backed by the government's "full faith and credit" but not by any actual assets. That money has been spent over the years to fund other parts of government. To redeem the trust fund bonds, the government would have to borrow in public debt markets or raise taxes.

Treasury Secretary Timothy Geithner, the head of the trustees group, said the new reports were a reminder that "the longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be."

Geithner said that President Barack Obama was committed to working with Congress to find ways to control runaway growth in both public and private health care expenditures, noting the promise Monday by major health care providers to trim costs by $2 trillion over the next decade.

However, Republicans pointed to the newly dire assessments as evidence the Obama administration has failed to come forward with actual entitlement reform to close the funding gaps.

"Instead of getting existing public programs in order right now, some are saying we should create a new government-run health insurance plan," Sen. Chuck Grassley, the top Republican on the Finance Committee, said in a reference to the administration's health care proposals. "When we can't afford the public health plan we have already, does it make sense to add more?"

House Republican leader John Boehner said the trustees report "confirms what we already knew: Our nation cannot afford to continue this reckless borrowing and spending spree."

The findings in the trustees report, the annual checkup given the two benefit programs, did not come as a surprise. Private economists had been predicting that the dates the programs would begin to pay out more than they take in and the dates the trust funds would be insolvent would occur sooner given the economic recession.

The deep recession, the worst the country has endured in decades, has resulted in a loss of 5.7 million jobs since it began in December 2007. The unemployment rate hit a 25-year high of 8.9 percent in April.

Fewer people working means less being paid into the trust funds for Social Security and Medicare.

The Congressional Budget Office recently projected that Social Security will collect just $3 billion more in 2010 than it will pay out in benefits. A year ago, the CBO had projected that Social Security would have a much higher $86 billion cash surplus for the 2010 budget year, which begins Oct. 1.

The trustees report projected that Social Security's annual surpluses would "fall sharply this year," then remain at a reduced level in 2010 and be lower in the following years than last year's projections. The report said that the Social Security annual surplus would be eliminated entirely in 2016, reflecting increased demands from the wave of 78 million baby boomers retiring.

That means Social Security will have to turn to its trust fund to make up the difference between Social Security taxes and the benefits being paid out beginning in 2016. The trustees projected the trust fund would be depleted in 2037, four years earlier than the 2041 date in last year's report.

At that point, the annual Social Security taxes collected would be enough to pay for three-fourths of current benefits through 2083. To tap the trust fund, the government would have to increase borrowing or raise taxes because Social Security bonds exist only as bookkeeping entries.

While the government is obligated to redeem those bonds, it has already spent the excess Social Security collections over the years to fund general government operations, providing the trust funds with IOUs.

While the smaller surpluses that will begin this year will not have any impact on Social Security benefit payments, the government will need to borrow more at a time when the federal deficit is already exploding because of the recession and the billions of dollars being spent to prop up a shaky banking system.

Medicare's condition is more precarious, reflecting the pressures from soaring health care costs as well as the drop in tax collections.

Obama on Monday praised the pledge by the health care industry to achieve $2 trillion in savings on health care costs over the next decade, but it was unclear how much help those pledges would be in achieving Obama's goal of extending coverage to some 50 million uninsured Americans. The administration is pushing Congress to pass legislation in this area this year, preferring to tackle health care before Social Security.

The trustees report is likely to set off renewed debate over Social Security and Medicare. Critics have charged that the Obama administration has failed to tackle the most serious problems in the budget — soaring entitlement spending.

The administration on Monday revised its federal deficit forecasts upward to project an imbalance this year of $1.84 trillion, four times last year's record, and said the deficits will remain above $500 billion every year over the next decade.

Views: 17

Reply to This

Replies to This Discussion

I heard something similar today on tv. Of course, my first thought was "Fair Tax!". I agree, Jim. This needs to happen yesterday. Marilyn's getting me some info re: our non-profit status; my hope is to get an ad on my local radio station as a public service announcement (psa). Do you know if we're a 501C3 organization? The station said it needs to be for a psa.

I just can't stress strongly enough to everyone I meet just how urgent, how crucial, this issue really is. I've taken to wearing a Fair Tax button/pin almost every where I go just so people will ask me about it.

I feel like we're on the brink of some major insanity economically, and the Fair Tax is the only sane remedy, the priority #1 remedy. Other economic issues will necessarily need addressed secondarily.
Ask Marilyn....
I think it's obvious that because of our income tax system, we have three major problems:

1) Americans are participating in the difficult-to-trace all-cash "underground economy" estimated as large as US$2 TRILLION.

2) American businesses are sending both corporate headquarter and manufacturing operations out of the USA because of taxes on earning money.

3) American citizens and businesses have funneled somewhere between US$12 and US$17 TRILLION out of the USA as a tax reduction measure.

4) Foreign investors won't invest in the USA because of our taxes on earning money.

With FairTax in place, we can close to eliminate the "underground economy," stop the sending of corporate headquarter and manufacturing operations out of the USA, and end the incentive to funnel liquid assets out of the country. The result is a liquidity injection into the US economy that could exceed a mind-boggling US$20 TRILLION from repatriating most of the money currently siphoned off to the "underground economy" and sent offshore, not to mention attracting trillions more in new foreign investments.

What can US$20 trillion in new liquidity do? It would immediately make distressed companies like AIG, Citicorp and the Big Three automakers whole again. It would create a gigantic new base of liquidity so necessary for new loans and lines of credit for businesses to start running again. It will provide a base of funding for Social Security and Medicare that will finally defuse the "financial time bomb" of them running out of money. And finally, we can finally start to retire the national debt on a huge scale.

FairTax, because it eliminates the corporate income tax, payroll tax, dividend payment tax, and capital gains tax, should be something that EVERY American business from a little food cart stand all the way to the largest American petroleum companies should support wholeheartedly. It would result in American businesses keeping as much of their operations in the USA as possible, and foreign companies would be setting up American subsidiaries en masse to take advantage of no more taxes on earning money.
My feelings have been that they do not want to solve the problem and they know it will not be a popular thing to do with the choices they have in their minds. That is to RAISE TAXES, EXTEND the retirement age, or BOTH! If they wait a little longer, they will paint a picture so bad that the American people will be asking them to raise taxes!
Just another political game that they are playing. I heard some already are asking people which they prefer! They will not see all the benefits of the Fair Tax! More jobs, more consumer spending (not the wasteful Gov'mt spending which creates debt and does not solve anything), and more people actually paying into Social Security and Medicare that are not doing it now!

We need the Fair Tax for many reasons but this one has long been the item that has brought me to Fair Tax to begin with!
They're going to push Universal Healthcare as a fix for this and bring up the $90+ trillion dollar debt they are in to form a new crisis.

Living under socialised medicine for 20+ years I can tell you its great to have if you never have to use it.
Universal Healthcare will destroy this country beyond repair and I'm scared to death of it.

We need the FairTax and we need it yesterday!!
This is just plain as day proof that so many people either ignore or just don't care about.
They don't even try to clean up their present social programs. Social Security and Medicare loses billions, not just in fraud, but due to the ineptitude and inefficiency of the agencies. I have first hand personal knowledge of this. Same with Medicaid. One would think it behoove the government to clean these agencies up and see what kind of money they really have already before instituting new agencies, which will, no doubt, be equally inept and inefficient. In other words, fix what you've got first before implementing more social agencies to waste precious tax dollars.

Thoroughly disgusting, thoroughly idiotic.
Here we go, taxing health insurance benefits as income, that sure makes healthcare more affordable and reduces spendable income. Sounds like a great ecomonic stimulus plan. Then add on to it by eliminating the credits/deductions for companies that provide health insurance to their employees. Nothing like driving up the price of goods, driving more jobs out of the country or companies completely out of business.
Wasn't this what John McCain was wanting to do but his opponent said it was a bad idea?
Yes it was and yes he did.
Hope y'all will set me straight: I see this gal is from AP.

Heard that the gov debt + interest = $12 trillion (in 2yrs).

The SSecurity fund is full of IOU's since the 1st dip into the fund in 1968. How is there ever a "surplus" associated with this program?

Where can I check the figures in Mr. Chuang's comments? $20Trillion in repatriation?-heard it was $13trillion.

Mccain had a "tax credit" plan for health, but his delivery was so lame y'all probably didn't catch the "tax credit" part. He was also laughable on capitol gains. Wanted us to have a "post card size return", but didn't say how.

I still have the page from hillary's 800+pg health plan saying it was illegal to privately make a contract w/ a Dr. Pretty scary.


© 2024   Created by Marilyn Rickert.   Powered by

Badges  |  Report an Issue  |  Terms of Service