No Runny Eggs

Tom Blumer’s latest column at Pajamas Media uses the history of Social Security, Medicare, and Fannie Mae/Freddie Mac to knock down the continuing myth that liberals are smarter than everybody else, as well as explode the idea that the federal government be awarded the remainder of the health care system. Since my acquired “specialty” is Social Security, I’ll give you the meat of that portion of the beatdown:

Yet the reported $7.677 trillion liability shows that it’s still nowhere near enough to meet future promises, primarily because:

• FDR and his smarties didn’t build the improved life expectancy of future generations into the program. If they had, today’s normal retirement age would be somewhere between 70 and 75, instead of its current 66-67, depending on one’s year of birth.
• The method of indexing chosen in the mid-1970s has caused benefits to go up faster than the real living standards of everyone else, and has subtly changed the program’s perceived purpose from preventing destitution to providing the means to ensure a lower middle-class lifestyle.
• The smarties also didn’t anticipate lower birth rates that were already occurring, and which were then dampened even further almost 40 years later by legalized abortion. As a result, at the end of 2008 there were less than 2.6 employed workers for each Social Security beneficiary (143.3 million divided by 55.8 million).
• Additionally, as shown in several previous columns (one is here), the so-called Social Security “trust fund” has been wantonly raided for the past 40 years and used to pay for the government’s everyday operations. The “trust fund” contains virtually nothing except $2-plus trillion in IOUs from the rest of the government, which is itself trillions of dollars in debt.

Because of all of this, even the astronomical taxes noted earlier have been less than benefits paid for most of the past year — and it’s going to get worse. The crisis that supposedly didn’t exist in 2005 is here. Thanks, smarties.

The bad news is that is the good news, and that was based mostly on the Trustees’ look at the long-term health of Social Security from last year. Medicare’s unfunded liabilities are much worse – $38.1 trillion (again, as of last year), while Fannie Mae/Freddie Mac, which aren’t even accounted for in the Treasury Department’s 2009 Financial Report, lost $100 billion last year and may end up costing the government between $1 trillion and $5 trillion in losses.

A bonus item from Tom’s tease back at BizzyBlog – that employed/beneficiary ratio dropped from 2.56 (rounded up to 2.6 in the column) at the end of 2008 to 2.39 at the end of January 2010, and is likely to worsen through the end of the year.