Wednesday, May 16, 2012

Entitlements Will End - One Way or the Other


The country's two marquee social insurance programs, Social Security and Medicare, face worsening fiscal conditions driven by near-term economic challenges and long-term trends of population aging and health care costs, according to the annual report released by the two entitlements' board of trustees.

The trust funds of Treasury bonds that provide back-stop funding for the programs will be exhausted sooner than anticipated: the Medicare hospital insurance fund will exhaust five years sooner than previously expected, in 2024, and the Social Security trust fund will expire in 2036, a year earlier than last projected.

The trustees, led by Treasury Secretary Tim Geithner, concluded the two programs are not on a sustainable path and that legislative action will be needed to avoid "disruptive consequences" to beneficiaries and taxpayers.

If a sunset concept for our entitlements programs is not enacted, the fallout in the U.S. will make the meltdown in Greece look like an Alan Greenspan testimony.


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