Government benefit bills are now coming due

There is no painless solution to this crises since there are over 50 trillion dollars of unfunded liabilities coming due. The only significant thing that can be done about this is to reduce future benefits. If they just raised taxes to pay the costs it would further depress the economy and it would make the shortfall worse. Unless something is done really soon paying out these unfunded liabilities are going to rapidly add to our national debt. That means more erosion of our standard of living through stagflation.

Here is what I expect from the next government if the economy recovers:
- The full retirement age will be raised to 70
- Social Security and Medicare taxes will be increased
- Continued understating of inflation and CPI adjustments for benefit increases.
- Denial of some medical treatments.
- Means testing to receive full benefits
- Passing some costs on to the future.
If the economy collapses the government will default and just pay for the tents and soup lines.

Government Benefit Programs in Trouble

The first year that payments will exceed income for Social Security will occur in 2017, just nine years from now, reflecting growing demands from the retirement of 78 million baby boomers. Medicare is projected to pay out more than it receives in income starting this year.”The financial difficulties facing Social Security and Medicare pose enormous challenges,” the trustees said in their report. “The sooner these challenges are addressed, the more varied and less disruptive their solutions can be.”

Treasury Secretary Henry Paulson, one of the trustees, warned that the country was facing a fiscal train wreck unless something is done.

“Without change, rising costs will drive government spending to unprecedented levels, consume nearly all projected federal revenues and threaten America’s future prosperity,” Paulson said in releasing the new report. “Our nation needs a bipartisan effort to strengthen both programs for future retirees.”