Jim Byrd and his team from Safe Harbor Financial joined us on Studio10 to provide their views and incite into Social Security and Medicare.
Below is a list of some of the questions and topics discussed on Studio10. All the content below was provided by Safe Harbor Financial and does not necessarily reflect the views of anyone at Fox10 or LIN Media.
Is the lack of urgency a signal that Social Security and Medicare reform plans are being shelved?
The latest review of Social Security and Medicare funding shows they are going broke. But the Treasury Secretary and Human Services Secretary believe that it will be years until these trusts run out of money, siting it as “good news” that they have plenty of time to make the needed fixes.
In an annual report, Dan Weber, president of the Association of Mature American Citizens, pointed out that the trustees of these funds saw fit to add that chilling comment before signing off on the documents. “It is important to grasp that the amount of time remaining to enact a financing solution that is both reasonably balanced and politically plausible is far less than the amount of time projected before final depletion of Social Security’s combined trust funds.”
The AMAC said one of its most important missions is achieve reform before it’s too late and are active among lawmakers in Washington to make it a key issue in the media. It is important to acknowledge that Social Security and Medicare are not entitlement programs, but retirement and health care trusts that have been paid into for most of the American peoples’ working lives.
Weber calls the situation a clear and present crisis, explaining that that portions’ dedicated to paying benefits to the 11 million workers and their dependants will be depleted in less than three years.
Two noted economists, Robert Reischauer and Charles Blahous, seem to agree that the situation is desperate. “Under current law, both of these vitally important programs are on unsustainable paths.” Blahous said we don’t have much time left in which to act.
How does Social Security compare with Obamacare?
It was FDR who said during his signing of the Social Security Act in 1935:
“Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.”
Today we can broadly address both. To the former: Save up! And to the latter: Definitely not a lifetime.
As for comparisons, you don’t have to look far to see them.
*They’re costly. Essentially, Congress has been patching up payments to Medicare providers through a series of temporary fixes. CBO, however, did not capture this reality in scoring Obamacare. If Obamacare was scored correctly, it would not be deficit-neutral. Michael Tanner, a Cato fellow, examined the law in 2012 and concluded that Obamacare really costs $2.7 trillion instead of the below $1 trillion, as advertised, and will add $826 billion to the national debt.)
*Unsustainable. When it comes to Social Security, refer to the Trustees’ Report. Its conclusion is crystal clear. In sum, Social Security trustees reported that Disability Insurance is due to exhaust in just two and a half years in 2016. Old Age and Survivor Insurance will exhaust at 2033, at which point benefits will need to be cut significantly or large redistributive policy would require to remedy the fund. Both laws, in effect, are massive redistribution programs, where healthy, young people pay upfront to subsidize benefits for the sick and the elderly, and receive little if anything on the back end.
*Tedious. In terms of Social Security, the FICA rate of 12.4% is an employment burden that dampens hiring, which is why the Obama administration temporarily cut this rate for two years – to stimulate jobs. There’s also deadweight loss associated with Social Security that distorts the market.
*Extensive. Both Obamacare and Social Security are now massive monuments to the Progressive movement. Not only do they take up a significant portion of the government spending, but they also involve tens of thousands of workers, including thousands of bureaucrats from IRS, a key agency responsible for enforcing Obamacare. In light of recent expose of IRS practices, Daniel Henniger, Deputy Editorial Page Director of the Wall Street Journal and a Fox News contributor, cries out “Big Government Implodes.”
How will taxes be affected by Social Security in the future?
When Social Security was established in 1935, the average life span among Americans was 63. Today the average life span is more than 77 years, according to the National Center for Health Statistics.
In 1950, 16.5 workers paid retirement benefits for each retiree. By the year 2030, when baby boomers begin leaving the workforce in large numbers, the ratio may be approaching two workers to every one retiree.
By then, the burden of taxes on each worker may well be unmanageable. As baby boomers begin to retire, the strain on Social Security is expected to increase, since retirees will, for the first time, begin outnumbering current workers. This aging of the population has led some experts to predict that by 2040 the Social Security system may run out of funds.
James Byrd, has 30 years of experience, is Top of the Table of the Million Dollar Round Table, a member of the Better Business Bureau and the National Ethics Bureau.
Safe Harbor Financial Services has also been awarded Small Business of the Year 2012 for South Eastern Alabama by the Eastern Shore Chamber of Commerce.
For a free comprehensive personal review of your financial portfolio or to make an appointment with Jim, email Jim at firstname.lastname@example.org or call 1-251-625-1226 or toll free at 1-877-251-1984.
Find out how to get a free copy of his DVD or book, The Ultimate Success Secret, email Jim at http://email@example.com or call 1-877-251-1984.
Safe Harbor Financial Services
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Daphne, AL 36526
Call Toll Free: 866-251-1984 or local 251-625-1226
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