Stand by... for higher taxes. Really higher taxes. And reduced benefits.
There is an old joke about a boy who grows angry over his oversized toy truck. He tries to park it between chairs. But he cannot get the knack of it. His dad suggests he walk down the street to the trucking company. To watch how the pros park their rigs.
Next night the youngster shows dad what he learned. He rams the chair in front. He rams the chair in back. He jumps up, kicks the truck and mutters “Screw it. Leave it for the night crew.”
This is what our politicians have done to us. When it comes to Medicare. When it comes to Social Security. They have arranged payouts the government cannot come close to making. They have said “Screw them. Leave it for the night crew.”
Have they been irresponsible? Utterly.
We do not have enough money to keep Medicare solvent. Medicare will run out of money. Especially after the prescription plan gets into full swing. Social Security will run out of money.
Let me re-state my concern. These systems will not run out of money. But nobody is going to like what the night crew will have to do to keep them operating.
Future congresses will have to reduce the payouts from Social Security. By a lot. There is no way to escape this. So if you are 30 or 40 or 50 you can forget about collecting what is now promised. You will not get that much.
Future congresses will have to increase the Social Security tax on all paychecks. By a lot.
Future congresses will have to slash the payouts Medicare makes. And they will have to raise the taxes we pay to support that system. These will be hefty cuts and tax hikes. They will need to be.
I am sorry to report that we have run out of options. Our economy cannot possibly grow enough to take care of these problems.
And it will grow a lot less anyway. Because it will be burdened with ever higher taxes. To pay for the benefits promised.
Blame the Democrats. Blame the Republicans. Blame the last several presidents. Well, at least this Bush tried to get Congress to change the funding of Social Security. Congress did nothing. Because not enough voters give a damn. They sang out “Leave it for the night crew.” And Congress joined in the chorus.
Each year we put off raising taxes and cutting benefits the situation grows worse. There are no reforms on the horizon. This president will now punt the problem onto the next president. The next congress people will stick their heads deeper into the sand rather than face the problem.
In fact, they all make the problem far worse by spending like drunken sailors. In the last six years spending by government has soared.
All of Washington was in on the party. The President has done next to nothing to try to restrain wild spending. Neither party’s people have seriously tried to reduce the crazy spending. This spending has pushed up the deficit, the national debt. More debt makes it more difficult for government to meet its obligations over at Social Security and Medicare.
The night crew is going to be in a fix. The crew is our young people, of course. They will have to pay the higher and higher taxes. To support us old codgers. They will have to see their benefits shrivel.
A good but depressing book on the subject: “Running on Empty” by Pete Peterson, former Secretary of Commerce. Read it and you will have to agree we have no choice. Soon we will cut payouts. Soon we will increase payroll taxes. Soon we will have to follow the path trod by the Europeans. It is a path of higher taxes, slower economic growth, more modest standard of living.
From Tom ... as in Morgan.
For more columns and for Tom’s radio shows (and to write to Tom): tomasinmorgan.com.