The Crisis Beyond This Crisis

We are all shocked by the cyclonic speed at which the credit crisis sneaked up on us, right? Oh sure, home prices that had skyrocketed were certain to moderate and retrace their gains, no big surprise to anyone but the last buyers of homes on either the left or right coast of the US. But, how come we didn't know that this crisis of credit was coming. The answer is that many did know.

Financial institutions leveraged to the hilt, nontransparent financial instruments such as the CDS's being traded by the trillions of dollars like they were candy, and an American consumer equally in debt coupled with falling asset prices doesn't take a NASA scientist to figure out that trouble is coming. The data was all out there for us to examine and request changes of course, we just chose to ignore the issue. We had to worry about elections, wars and Dancing With the Stars.

What about the next crisis, the one beyond this one? What about Social Security? What about the taxes I have been paying my entire working life that I am mostly convinced I will never get a dime returned.

We pretty much ignore this coming crisis as well...and it will quite likely hit us, and we will be shocked.

This year, 2008, so-called Baby-boom folk (those born 1946 - 1961) are commencing to draw Social Security payments. That alone may raise no alarm. The other fact is a loud alarm - namely, this year expenditures for Medicare hospital insurance exceed cash income.

The year 2011 will see two more dangerous manifestations. The oldest baby-boomers will become Medicare-eligible. Simultaneously the Social Security cash surplus will commence to decline.

The next hit is projected for 2017. Payment of money to recipients, commonly referred to as “benefits,” will exceed income.

Not surprisingly, it won’t take long thereafter before the Medicare Hospital Insurance Trust Fund will run dry - estimated for 2017.

In about 2026 the youngest baby-boom people, by then 65, will become eligible to draw Social Security payments.

But for how long will they or any other beneficiary draw? Five more years. In 2041 the Social Security Trust Fund will be an historical illusion - that is, penniless.

Will Obama have the courage to address this issue, and if so, will he be ruthlessly attacked by the GOP? Probably yes to both.

In a country still entrenched in wars abroad and an economic crisis at home garnering the attention and dollars to address Social Security for the next couple of years will be tough, but it needs to be done now, or it will be a much larger crisis down the road...when it sneaks up on us.

Interesting reads:

National Center for Policy Analysis

Less Government, Much Less Government