Social Security, Medicare promises made, but how can they be paid for?

[WhiskeyGirl]

Social Security, Medicare promises made, but how can they be paid for?

By Jason White
Senior Editor
MSNBC
updated 11:51 a.m. CT, Mon., Aug. 11, 2008

This week, we look at the massive burden which future taxpayers must carry to redeem the promises Congress made in creating the Medicare and Social Security entitlements.

Why it’s a problem
The former head of the government’s in-house watchdog agency warns of the seriousness of the entitlement issue, saying it's a problem that could dwarf the nation's subprime emergency.

Government accountants estimate that, in the long-run, imbalance between federal spending promises and expected revenues is about $54 trillion in today’s dollars.

This is largely the result of two programs geared toward senior citizens, Medicare and Social Security.

Thanks to escalating medical costs and a large population of retiring baby boomers, a shortfall equivalent to roughly $470,000 per American household has been created.

While neither Barack Obama nor John McCain have made this issue a central theme of their campaigns, the candidates, along with their advisers, acknowledge its severity.

Unanswered questions
With the U.S. economy sputtering, will Americans have an appetite for changes to these massive entitlement programs? Are they open to having their taxes raised or benefits cut during a time of economic hardship?

“We can turn this around with leadership,” said Walker. “But we’re also going to have to recognize that the regular order, the regular way of doing business in Washington is broken.”

“If there is one thing that could bankrupt us, it is health care costs,” Walker said. “We are the only country in the world that writes a blank check for health care, and that is mindless and it must end.”

Surprises for the new president
If the economy keeps stumbling, neither candidate is likely to have much luck raising taxes or cutting benefits. But that doesn’t mean the shortfalls in these programs won’t affect a McCain or an Obama presidency.

Starting this year, the oldest members of the baby boom generation are eligible for Social Security, according to the GAO. In three years, they will be eligible for Medicare. As more boomers collect benefits, the budget will be pinched, with bigger and bigger percentages of total outlays going to support the programs for retirees.

Analysts say that will put the burden squarely on the youngest Americans, who may have to foot the bill someday through higher taxes, reduced benefits or slower economic growth.

“We’ve got massive taxation without representation going on right now,” Walker said. “In many cases, the people who are going to have to pay the bills are too young to vote or aren’t born yet. That is not only fiscally irresponsible it is morally reprehensible.”

read the rest of the article here - http://www.msnbc.msn.com/id/26091249/