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Mark Amerman

Social Security slips into the red in 2018. That's 13 years
into the future and, yes, 13 years is a long time -- long enough
that the world will have changed significantly. But still
13 years, that can go by kind of fast.

Of course nothing really terrible will happen in 2018, or
at least not because of this. It will just be marginally
in the red, and it will be just marginally in the red
in 2019, so it will be easy to work something out.

The real question and the real problem is the rate at which
the system plunges into the red. That's kind of hard to state
for sure, since it'll be a different world thirteen years
from now. Many things we can't anticipate now will have
happened in between. But my understanding is that at some
point the system simply has to break. It will become
unsustainable in the worst case because the resources that
it would be necessary to take from the young to sustain
the old in the style they are accustomed to just won't be
there.

Now just when that year will be I don't know because
there are unknowns, and actually we know that the breakdown
will be sooner than that theoretical year because people
won't let it get that far.

Another factor to consider is that in the above we are
acting like Social Security is the only social security
program when in fact it isn't. There is also for example
Medicare. We should really lump it together with Social
Security because it has a similar sort of impact.

Medicare is in the red right now. If we consider the combination
of Social Security plus Medicare, when does the combination
go in the red?

Actually I don't know that number and of course it isn't
absolutely predictable because Medicare expenditures keep
accelerating, but I think we can safely say it's less than
five years (or 2010).

Of course the system can be patched up for quite a while
longer than that. Taxes can be raised; Medicare benefits
can be slashed. But unless the system is changed
dramatically there will arrive a point where the combination
is impossible, and that date is a lot sooner than the date
for Social Security alone.

How far away is the date of necessary disaster assuming
no profound change? Is it twenty, twenty-five, or thirty
years?

Would George Bush's proposed personal retirement savings
accounts solve the problem? No, of course not. For one
thing we have that now and although they help the situation
some; it's not nearly enough. But Bush's proposal isn't
just these personal retirement savings accounts but that we
act like we have a problem and start seriously looking
for solutions. Seems like that would be hard to argue
with but many do.

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