In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.

And people try and tell me that Social Security isn't a Ponzi Scheme. If there isn't enough wealth in America to pay it ... remember that is every dime of the 1%'s plus the 99% isn't enough, that is a Ponzi scheme. Never mind how pure it was when enacted, someone, LBJ?, took it and destroyed America with it.

When do you expect the Bankruptcy to come?

http://www.washingtonpost.com/opinions/the-dirty-secret-in-uncle-sams-friday-trash-dump/2011/12/28/gIQArtWMNP_print.html

The dirty secret in Uncle Sam’s Friday trash dump
By Bryan R. Lawrence, Published: December 28

Releasing information on the Friday before a big holiday is a time-tested way to bury bad news. So when the Government Accountability Office’s fiscal 2011 financial statements for the federal government were released on the Friday before Christmas, it made sense to read them closely.

Since 1997, the United States has been a rare example of a government willing to publish financial statements using accrual accounting, which counts the cost of promises made as well as cash paid out. And the GAO’s professionalism over the years has won it a reputation for impartiality and effectiveness.

That professionalism is evident in the GAO analysis of the net present value of the Social Security and Medicare promises Washington has made to Americans. “Net present value” means the total that would have to be set aside today to pay the costs of these programs in the future. The government puts these numbers in appendices, rather than in headlines. But the costs are real.

In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.

If the government followed corporate accounting rules, that $2.9 trillion increase would be added to the $1.3 trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2 trillion deficit is something that Americans need to know about.

The Treasury acknowledges the need to show an accrual-based deficit, but the only retirement accruals it includes in its “Citizen’s Guide” to the GAO numbers are for promises to direct government employees and veterans. Promises to the rest of Americans are excluded, even though they are multiples larger than the $10.2 trillion of government debt held by the public.

The latest GAO numbers are particularly interesting because of a change in accounting standards that requires the government to explain why the cost grew by $2.9 trillion. Fully $1.5 trillion of that reflects the aging of all 312 million Americans by one year. In the GAO report from fiscal 2001, the cost of promises was $17 trillion. The growth in the cost from $17 trillion to $33.8 trillion averages about $1.7 trillion per year. The GAO doesn’t specify numbers for the other nine years, but one suspects that aging has driven most of the growth in the cost of the promises.

The cost would have been a lot worse but for two assumptions that the GAO found questionable.

First, Medicare’s cost projections assume legally required decreases in reimbursement rates to doctors that Congress has ignored for years — the so-called doc fix. For these projections to be realized, Congress would have to abide by its own cost controls and allow an immediate 27 percent cut to doctors’ rates, which is very unlikely.

Second, the Medicare projections assume that the 2010 Affordable Care Act (ACA) will reduce health-care cost growth by 1.1 percent per year, despite doubts voiced by the GAO and a panel appointed by the Medicare board of trustees.

The panel and the GAO recommended including an alternate scenario in the year-end figures, in which the doc fix continues and the ACA cost reductions do not materialize. The result is a $12.4 trillion increase in the cost of the promises, to more than $46 trillion. Given Congress’s history with the doc fix, and the general paralysis in Washington, it’s hard to argue with the GAO’s lack of confidence in Congress’s ability to honor its own cost controls.

If the government were a company, its huge and growing off-balance-sheet liabilities would set off alarm bells. But investor confidence has not been lost — Treasurys can still be sold at very attractive yields.

Confidence has been shaken, though, among the American people. Congress’s approval ratings are at record lows. Anger is flaring across the political spectrum, reflecting a sense that something has broken in our country.

In such an environment, is it right to release critical financial information the Friday before Christmas? Is it acceptable that politicians are not required to describe the cost of the promises they have made?

In 1990, the government required that companies begin to account for the net present value of retirement promises, not just current-year cash flows. General Motors began complying in 1992; and it recorded a $33.1 billion (pretax) charge to reflect the value of its promises up to that point, which led to what was then the largest annual loss in U.S. corporate history. Seventeen years later, the “free until accounted for” promises were a major factor in GM’s bankruptcy.

The United States is stronger than General Motors. And the good news is that small changes in health-care cost trends have a large impact on the government’s long-term promises. Our system is fixable. But our politics are toxic, and each side is dug into an ideological trench. In such an environment, when hard choices need to be made about promises and taxes, why should information be buried in an appendix?

Americans deserve better. One way for Washington to start earning back our trust is by giving us all the information, even if it is unpleasant.

---

[off topic] Are you aware that a harsher tone is allowed in the Politics forum because of the types of discussions that happen here? So long as the comment isn't "You're a freakin' moron and I hate you!", the Mods typically let a lot of things slide. Having said that, have you actually used the RedX feature to bring posts to their attention? And have you emailed seti _ moderators at ssl.berkeley.edu (remove the spaces to email) to follow up on their decision?

In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.

And people try and tell me that Social Security isn't a Ponzi Scheme. If there isn't enough wealth in America to pay it ... remember that is every dime of the 1%'s plus the 99% isn't enough, that is a Ponzi scheme. Never mind how pure it was when enacted, someone, LBJ?, took it and destroyed America with it.

When do you expect the Bankruptcy to come?

http://www.washingtonpost.com/opinions/the-dirty-secret-in-uncle-sams-friday-trash-dump/2011/12/28/gIQArtWMNP_print.html

The dirty secret in Uncle Sam’s Friday trash dump
By Bryan R. Lawrence, Published: December 28

Releasing information on the Friday before a big holiday is a time-tested way to bury bad news. So when the Government Accountability Office’s fiscal 2011 financial statements for the federal government were released on the Friday before Christmas, it made sense to read them closely.

Since 1997, the United States has been a rare example of a government willing to publish financial statements using accrual accounting, which counts the cost of promises made as well as cash paid out. And the GAO’s professionalism over the years has won it a reputation for impartiality and effectiveness.

That professionalism is evident in the GAO analysis of the net present value of the Social Security and Medicare promises Washington has made to Americans. “Net present value” means the total that would have to be set aside today to pay the costs of these programs in the future. The government puts these numbers in appendices, rather than in headlines. But the costs are real.

In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.

If the government followed corporate accounting rules, that $2.9 trillion increase would be added to the $1.3 trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2 trillion deficit is something that Americans need to know about.

The Treasury acknowledges the need to show an accrual-based deficit, but the only retirement accruals it includes in its “Citizen’s Guide” to the GAO numbers are for promises to direct government employees and veterans. Promises to the rest of Americans are excluded, even though they are multiples larger than the $10.2 trillion of government debt held by the public.

The latest GAO numbers are particularly interesting because of a change in accounting standards that requires the government to explain why the cost grew by $2.9 trillion. Fully $1.5 trillion of that reflects the aging of all 312 million Americans by one year. In the GAO report from fiscal 2001, the cost of promises was $17 trillion. The growth in the cost from $17 trillion to $33.8 trillion averages about $1.7 trillion per year. The GAO doesn’t specify numbers for the other nine years, but one suspects that aging has driven most of the growth in the cost of the promises.

The cost would have been a lot worse but for two assumptions that the GAO found questionable.

First, Medicare’s cost projections assume legally required decreases in reimbursement rates to doctors that Congress has ignored for years — the so-called doc fix. For these projections to be realized, Congress would have to abide by its own cost controls and allow an immediate 27 percent cut to doctors’ rates, which is very unlikely.

Second, the Medicare projections assume that the 2010 Affordable Care Act (ACA) will reduce health-care cost growth by 1.1 percent per year, despite doubts voiced by the GAO and a panel appointed by the Medicare board of trustees.

The panel and the GAO recommended including an alternate scenario in the year-end figures, in which the doc fix continues and the ACA cost reductions do not materialize. The result is a $12.4 trillion increase in the cost of the promises, to more than $46 trillion. Given Congress’s history with the doc fix, and the general paralysis in Washington, it’s hard to argue with the GAO’s lack of confidence in Congress’s ability to honor its own cost controls.

If the government were a company, its huge and growing off-balance-sheet liabilities would set off alarm bells. But investor confidence has not been lost — Treasurys can still be sold at very attractive yields.

Confidence has been shaken, though, among the American people. Congress’s approval ratings are at record lows. Anger is flaring across the political spectrum, reflecting a sense that something has broken in our country.

In such an environment, is it right to release critical financial information the Friday before Christmas? Is it acceptable that politicians are not required to describe the cost of the promises they have made?

In 1990, the government required that companies begin to account for the net present value of retirement promises, not just current-year cash flows. General Motors began complying in 1992; and it recorded a $33.1 billion (pretax) charge to reflect the value of its promises up to that point, which led to what was then the largest annual loss in U.S. corporate history. Seventeen years later, the “free until accounted for” promises were a major factor in GM’s bankruptcy.

The United States is stronger than General Motors. And the good news is that small changes in health-care cost trends have a large impact on the government’s long-term promises. Our system is fixable. But our politics are toxic, and each side is dug into an ideological trench. In such an environment, when hard choices need to be made about promises and taxes, why should information be buried in an appendix?

Americans deserve better. One way for Washington to start earning back our trust is by giving us all the information, even if it is unpleasant.

Source: http://www.gao.gov/financial/fy2011/11frusg.pdf Chart on page xv.

To further put things into perspective:

FY2011 total taxes and other revenues = $2.36 trillion. Yes, this *includes* the payroll (FICA & Medicare) taxes.

The National Debt increased by $1.31 trillion in FY 2011.

The net present value of the projected Social Security + Medicare payments over the next 75 years increased by $2.97 trillion during FY 2011.

The increase in the National Debt + the NPV of 'social insurance' during FY 2011 was, therefore, $4.28 trillion.

Just the increase in NPV of social insurance during FY 2011 was greater than the entire amount of all the taxes and other revenues collected by the Federal Govt. in Washington D.C. during FY 2011. When the social insurance NPV increase during FY 2011 is combined with the increase in the national debt during FY 2011, it exceeds the total amount of revenue collected from all sources during FY 2011 by almost $2 trillion.

Nope, we can't afford it.

And people try and tell me that Social Security isn't a Ponzi Scheme. If there isn't enough wealth in America to pay it ... remember that is every dime of the 1%'s plus the 99% isn't enough, that is a Ponzi scheme. Never mind how pure it was when enacted, someone, LBJ?, took it and destroyed America with it.

Social Security was implemented by Public Law 74-271 in 1935. As originally sold to the American people, social security taxes collected from you would be held on reserve by the government and paid back to you upon your retirement in the form of an annuity. For reference, see FDR's message to Congress Jan 17, 1935.

... In the important field of security for our old people, it seems necessary to adopt three principles: First, non-contributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps thirty years to come funds will have to be provided by the States and the Federal Government to meet these pensions. Second, compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans. ...

In 1939, Social Security was amended by Public Law 76-379. This had several changes in it, namely it started benefits 2 years earlier than planned (1940 instead of 1942), it tied a wife's benefits to her husband's, and it started the move to 'pay-as-you-go' and away from annuities.

Social Security has been amended at least 45 times since then.

So, to answer your question, it wasn't LBJ that 'took it and destroyed America with it', though he did establish Medicare (which will eventually prove much worse of a drain on the US Treasury than the 'retirement). The damage had been done much much earlier. The 'pure form' lasted only about 4 years.

---

https://youtu.be/iY57ErBkFFE

#Texit

Don't blame me, I voted for Johnson(L) in 2016.

Truth is dangerous... especially when it challenges those in power.

All I want back is every penny I have paid into it for the last 40 years or so and my employers have paid in on my behalf.......

I know, good luck.

---

"Freedom is just Chaos, with better lighting." Alan Dean Foster

...

Now, that being said, there's only one viable way to actually fix it. I've already begun to base my long-term decisions on the premise that it's not a matter of IF we crash financially; it's a matter of WHEN.

...

Someone else *gets* it... At least I am not the only one to see the hand writing on the wall...

---

https://youtu.be/iY57ErBkFFE

#Texit

Don't blame me, I voted for Johnson(L) in 2016.

Truth is dangerous... especially when it challenges those in power.

I've suggested this before -- one approach to balancing things requires a combination of changes.

1) Privatize Medicare -- that way only the wealthy elderly can afford health care -- saves a lot of money for the government.

2) Eliminate Medicaid -- same premise as above but instead of the elderly, the target uncovered are the poor, very sick, and some of the lower middle class.

3) This is the big one which makes the first two 'work' -- eliminate the requirement of 'duty of care' on health care providers. The pay off here includes the reduction of life span, this will help out the Social Security issue big time. If instead of living to 80 or 85, people die off at 70 or 75, the Federal budget saves 10 years of Social Security payment.

Problem solved. -- And it seems something that some folks in the TeaPublican party (or those who fund the TeaPublicans) would generally approve. After all the morality of fiscal balance offsets the morality of duty of care doesn't it?

...

Now, that being said, there's only one viable way to actually fix it. I've already begun to base my long-term decisions on the premise that it's not a matter of IF we crash financially; it's a matter of WHEN.

...

Someone else *gets* it... At least I am not the only one to see the hand writing on the wall...

duty of care

Is that an inalienable right? I don't remember that being on any list of them I've seen. I could be wrong.
http://en.wikipedia.org/wiki/Human_rights#Substantive_rights

---

Gary, you are correct according to Wikopedia life is not a basic right. As a source document one can question Wikopedia because of the lack of documentation on sources, but I'll follow you on this one. As Barry stated it is much more cost effective to eliminate those who no longer produce due to age or infirmities.

---

Where did you get life from duty of care?

Actually, never mind, I wouldn't understand it as I don't have any mushrooms handy.

---

No of course not, neither is life of course.

Currently it is (I believe) required by statute in addition to being required of hospitals which receive Medicare and Medicaid payments. So eliminate the statute support and since Medicare and Medicaid go away the hospitals are no longer compelled to treat accident victims or those without insurance that get very sick. That is what some folks in one of the early Teapublican reality show debates were cheering for.

duty of care

Is that an inalienable right? I don't remember that being on any list of them I've seen. I could be wrong.
http://en.wikipedia.org/wiki/Human_rights#Substantive_rights

I didn't go from one to the other. Inalienable rights after all are so 18th century anyway.

I guess I draw a distinction between morality and ethics on one side and fiscal self interest on the other. You consume your mushrooms, I'll consume mine <smile>

Where did you get life from duty of care?

Actually, never mind, I wouldn't understand it as I don't have any mushrooms handy.

I've suggested this before -- one approach to balancing things requires a combination of changes.

1) Privatize Medicare -- that way only the wealthy elderly can afford health care -- saves a lot of money for the government.

2) Eliminate Medicaid -- same premise as above but instead of the elderly, the target uncovered are the poor, very sick, and some of the lower middle class.

3) This is the big one which makes the first two 'work' -- eliminate the requirement of 'duty of care' on health care providers. The pay off here includes the reduction of life span, this will help out the Social Security issue big time. If instead of living to 80 or 85, people die off at 70 or 75, the Federal budget saves 10 years of Social Security payment.

Problem solved. -- And it seems something that some folks in the TeaPublican party (or those who fund the TeaPublicans) would generally approve. After all the morality of fiscal balance offsets the morality of duty of care doesn't it?

...

Now, that being said, there's only one viable way to actually fix it. I've already begun to base my long-term decisions on the premise that it's not a matter of IF we crash financially; it's a matter of WHEN.

...

Someone else *gets* it... At least I am not the only one to see the hand writing on the wall...

BarryAZ,

Well, I think that perhaps you might have gone a little... funny in the head on that post of yours... I do not agree with much of your proposed solutions.

But, that said, you did hit one valid point: that of life expectancy increases costing social security a LOT of money.

Source: http://aging.senate.gov/crs/aging1.pdf Appendix B, Table A1, beginning on page CRS-26.

The year that The Social Security Act (H.R. 7260, Public Law No. 271, 74th Congress) became law, 1935, the average life expectancy of someone born in the USA that year was 61.7 (both genders, all races), yet the retirement age was fixed by that law at 65 years old. (source: http://www.nationalcenter.org/SocialSecurityAct.html). Furthermore, with the exception of an anomalous year in 1918 (Spanish flu, anyone?) of 39.1 years, it had been floating from between the upper 40's to the low 60's since the year 1900.

In 2007, the average life expectancy for someone born that year in the USA was
77.9 years, with the retirement age at 67 years.

So, we have gone from a program which at inception (1935) didn't start distributing benefits until about 3.3 years after the point when, statistically speaking, half the people born that year would have passed away, to a program where (in 2007) someone born that year would draw benefits for 10.9 years before reaching the halfway point.

By and large, the average life expectancy has slowly crept upwards over the course of time from 1900 to the present adding 30.6 years between 1900 and 2007 and 16.2 years between 1935 and 2007, yet the retirement age has been moved only once, only adding 2 years to raise it from 65 to 67 years.

In and of itself this suggests a solution. Index retirement age to average life expectancy. Retirement age = average life expectancy for everyone in the USA for the year you were born + 3.3 years (the difference in 1935). This would give a retirement age of 81.2 years for someone born in 2007.

But, I know, it would never work.. First, the AARP would have a cow over it and increase the number of Representatives and Senators they have bought and paid for to oppose it. Also all the young kids (teens and twenties) would oppose it since the older people would be working for as much as 11 more years there would be fewer jobs available for the young who are just starting out.

In his initial post to the thread, Gary Charpentier correctly pointed out that continuing on in the status quo is unsustainable. There just isn't enough wealth available to transfer.

Also, Guy Navarro points out that a financial crash is inevitable, and tells why.

I am truly sorry that you got your knickers all knotted up over this, BarryAZ, but truth is truth and facts are facts. You can Hope&Change in one hand, and poop in the other and see which one fills up first.

Nobody wants the elderly to all die off... At least nobody sane, that is... But, so much has been promised by the big-government politicians on both sides of the aisle in Washington DC that we can no longer pay for all of it. And every day that we continue to try to pay for all of it through deficit spending, we reduce the amount that we can actually afford to pay for due to ever-increasing interest payments. You know, the same problem much of Europe is in right now.

We can't close the gap through tax increases. There just isn't enough wealth there to tax. The economy is so shaky right now (and for the foreseeable future) that ANY tax increases would be a Bad Thing(tm).

We must cut spending... NOW. On this forum in the past, I advocated an immediate 50% spending cut across the board (only fair way to do it) which at the time would have left about 10% as a surplus to pay down the national debt. But things change. An across the board 55% spending cut would leave us dead even right now (no deficit, but no surplus either). And by this time next year, it will likely be a 60% cut (or worse) to leave us dead even.

But, politicians being politicians, nothing is going to get done to fix it. I (and others advocating fixing the problem) am/are about as useful as the dance band on the Titanic playing 'Nearer my God to thee' as the Titanic slid beneath the waves. The crash is inevitable.

I mentioned the hand, writing on the wall...

Belshazzar's Feast. Danial 5, 1-4...

Mene, Mene, Tekel u-Pharsin

(to Belshazzar)
Thou art weighed in the balance and found wanting...

---

https://youtu.be/iY57ErBkFFE

#Texit

Don't blame me, I voted for Johnson(L) in 2016.

Truth is dangerous... especially when it challenges those in power.

I didn't go from one to the other.

BarryAZ is your name betreger? betreger did. Please follow the threading.

---

Snip
I, too, believe we've recently passed the point of no return. The real thinkers must now start operating from a different premise. The previous was, "If we don't change our ways, we will crash." The new premise is now, "We are going to crash." The question is, "When are we going to crash?"

Let's face it....the West is finished. As for Medicare & Medicaid... "Logan's Run" anyone?

---

What a "HOT" thread this is !!! Clearly joining seti does not mean just
looking for alien radio signals, does it? It also means read the
threads and become informed on many things going on around you that your
not normally/really aware of. What's it all about here then, simply, a
prime example of what happens to a nation that's inundated by too much
government intervention/control. Nope, your not on your own, the same
problem throughout the Western countries and the ECM definitely no
exception here. The answer to all this, we need a new way to run ourselves
but not involving our politicians in charge with there old ways of doing
things. These polititians need to be shunted out from the front line and
relegated to the second tier line. We all know that our modern day politicians
are in for what they can get out of it when trying to or actually getting
into government. This has to stop so all western countries need to be
properly run by people who are qualified to do the job, basically the job
of business first for that's what all our countries are...they are a business.

Running a country as a business, first, forces you to adopt sound business ethics.
No sound business in it's right mind would give it's employees a pay rise and
do so by covering this extra cost via a bank loan. But our governments do, they
offer greater social handouts etc, because it might get them more votes, then
cover this cost by increasing the amount of government bonds issued to cover
this extra expenditure. That's OK they say for in 30 years time we may be
richer and be able to pay off these bonds and in any case it's someone else
problem then, the next generations. What happens if in thirty years time if
we are not wealthy enough to pay down these old bonds then we have what we
have in the west today, financial catastrophe at all our door steps.

---

The Kite Fliers

--------------------
Kite fliers: An imaginary club of solo members, those who don't yet
belong to a formal team so "fly their own kites" - as the saying goes.

MajorKong, as Gary knows from previous Politics boards .. interactions -- what I suggested is not the approach that I would propose -- but rather what I've seen as the gist of suggestions coming from the KochTeaPublican partisans.

A curious thing is that this same group of partisans is lambasting 'Obamacare' for its inclination to evaluate cost control approaches to Medicare -- anything that comes from a non Kochite regarding Medicare is either socialism or death panels it seems (a rather curious juxtaposition of false flagging).

Clearly there is much heavy lifting to be done regarding health care and social security to come to grips with the demographic reality along with the explosion of high tech very high cost high profit health care system that has developed over the past several decades.

There are a number of useful suggestions out there for both of these major problems, but, as you noted, there simply is no political will to get there from here -- ESPECIALLY in the current 'diviseness = good, compromise = bad' environment we are saddled with.

BarryAZ,

Well, I think that perhaps you might have gone a little... funny in the head on that post of yours... I do not agree with much of your proposed solutions.

But, that said, you did hit one valid point: that of life expectancy increases costing social security a LOT of money.

My apologies, Lord Charpentier, I misread your lambastations.

BarryAZ is your name betreger? betreger did.

And the 'east' isn't that far behind -- China actually has a much more severe demographic time bomb in its relatively near future.


[/quote]

Let's face it....the West is finished. As for Medicare & Medicaid... "Logan's Run" anyone?[/quote]