Social Security and Medicare spending

[Dave says]

9. Recall the 1983 fix to keep SS whole for 75 years

Thank Greenspan and Reagan. The increase in tax and making it taxable was going to keep SS whole until the 2050s. Naw, they were kidding. Instead they set up a slush fund for Republicans and Democrats alike. Here’s how it works.

First, by design, SS is a pay-as-you-go system. Payroll taxes in go out the door to pay benefits. It does not dip into general revenue funds at all. Yet. But because of the numbers of baby boomers, at the pre-1983 tax rates there would not be enough SS funds coming in to pay projected benefits. So Greenspan/Reagan raised the SS tax rates for the purpose of building a trust fund that would cover the population blip. The boomers paid into the fund over the last 41 years.

The Trust Fund, by design, is invested in Special Treasury Bonds that pay 2%. So, until the Trust Fund is exhausted, one of two impacts on the budget is the 2% on $3T or whatever the balance currently is in the Trust. The second part is our government treats the trust as revenue, diminishing the size of deficits they report, allowing steeper tax cuts for the rich with less noise from us proles.

The third part, and by far the more troublesome part for the oligarchy, is paying off the bonds as they mature. At maturity, the cash is used by Social Security to continue paying benefits without interruptions. However, this portion of our benefits come directly out of general revenue, leaving less money for Starlink, less for Tesla, and less for additional tax cuts. Thus the attack on social security by the oligarchs.

The solution is to restore democracy again. Reverse Citizens United and elect the next FDR. I don’t know any Democrat that is FDR-like at present. But that is what we need.