Social Security and Medicare Funds At Risk Even Before Coronavirus

[melm00se]

14. As has been pointed out

above, this is a known issue but it doesn't take a statistical genius to figure it out.

Social Security is "pay as you go" program which works when you have up and to the right population growth and a population that is uniform in distribution. Unfortunately with the end of WWII, the US experienced the well known "baby boom" which jacked up the US population born between 1946 and 1964 which skewed the distribution curve well outside the "norm".

It was inevitable that when the baby boomer generation hit retirement age, it was highly likely that the "pay as you go" model of Social Security was going to take a hit. There really was no way for the US population to match or exceed the population boost (as a percentage of the total population) that accompanied the boomers.

Government is no different than individual people: they-do-not-like-change. Couple change averse with people who would not see the why something is being done (ideologues are like that regardless of where they are on the political spectrum) and they begin to beat the "anti" drum against the needed winds of change.

I have seen plenty of proposals on how to fix this problem, most notably raising the cap on FICA eligible incomes, but none of them face reality.

If the cap is raised, that would equal a 6% tax increase on individuals and a portion of the 6% employers component would hit all businesses. In and of itself, that is something that most businesses could weather. Unfortunately, there are similar calls to raise income tax rates. Which, in and of themselves, could also be weathered. It is when you begin to couple all the suggested tax hikes together that you put enormous pressure on the economy.

While yes, there could be coincidental cuts in government spending, it would be key that these cuts be in such a way not to (or at the very least minimize) impact the government's ability to discharge the obligations that are absolutely necessary.

The way the US political system is set up, no one party will dominate sufficiently for a long enough period to pass both the sets of actions and make them stick past the next election. The midterm elections (19 of 22 times since 1934) have not been kind to the President's party so it is possible that the tax hikes and spending cuts could be overturned within one of two Congresses.