I was wrong...kinda
I've been having debates on Social Security and have been using numbers from the Office of Management and Budget to bolster my case. Unfortunately I was using some wrong numbers, That is I was looking at discretionary spending rather than Mandatory Outlays. The distinction is important. The Department of Defense, which is budgeted for $401 billion in discretionary spending, is supposed to use that money for all it's operations including paychecks for all soldiers, aquisition of arms. It should be noted that $200 billion is earmarked for R&D. The DOD basically has no "mandatory outlays" as the Social Security Administration and Human Services department have.
When we look at the mandatory outlays that the SS administration has, we would note that it must put out upwards of $500 billion for 2005 in SS benefits alone. The Department of Human Services also has a large mandatory outlay in the form of Medicare/Medicaid which is $286 billion and $188 billion respectively.
The next mistake I made, and it is a very important one, was to look at these totals next to the GDP. That was wrong. Looking at the GDP which is expected to be $12 trillion in 2005, one could easily argue that it would be easy to fund SS, Medicaid and Medicare. After all their mandatory outlays are but 10% of the GDP. However, the GDP is not what the Federal Government actually takes in. What the Fed actually takes in is faaaaaar less than the GDP. In fact it is about 10% of the GDP. In 2004 the receipts of the Federal Government was $1.79 trillion. This is very important in the diuscussion of SS (and why I should have been more careful in my initial argument). If SS will take $500 out of those receipts and Medicare and Medicaid another $474 billion then combined these two programs actually take out over 1/2 the receipts of the Federal Government. The DOD would take out half of what is left, leaving $600 billion to divide up among the remaining agencies (17 large and many small) and programs.
This should alarm folks becuase when you look at the US debt. The actual Gross Debt of the Federal Government is 2003 was $6.76 trillion. Out of this amount $2.846 trillion is held by Government Accounts. and $3.914 trillion is held by "the public".
In fact the official US Budget as proposed by President Bush plans on deficits through 2009.
It would appear that the US is one big bad check waiting to hit the bank. There is absolutely no way that the US debt can be paid at any time in the near future. All the people who know these numbers know it and don't really care. If anything, the problem is not Social Security, it's the Debt. the Social Security debate pre-supposes that the US will continue to operate on borrowed money. This supposition only means that at some point the treasury goes bankrupt. The only reason why the Fed has not gone bankrupt is because it's creditors, bond holders and who knows who else have not called in for their money and that convenient issue of Oil being priced in Dollars which makes it the premier currency on the market. But for how long?
At the end of the day it would seem that the US population has apparenly been hoodwinked. Millions of dollars have been paid into a system that may or may not be able to pay out. Furthermore most of these same people have also been made to pay for medical Insurance and the likes, which have been pushing more and more financial responsibility onto the policy holders. It would seem that the only groups that have beeb guaranteed to make out are the medical providers who bill the insurance companies, those doing business with the DOD and those on the receiving end of cashed SS checks.
Either way though, I was wrong in my previous use of the numbers, the corrected numbers indicate that Tax cuts are not the answer. Taxes, both individual and corporate (especially corporate) are going to have to rise. it's not going to be pretty.