Medicare is even more a problem than social security

By Daniel at 7 November, 2008, 11:44 am

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The S.S. administration said it would only take about a 16% tax increase to help social security (before this crisis hit) but, that 121% tax revenue increase was needed for Medicare or a slightly over 50% decrease in benefits.

Now, with unemployment rising, tax revenues are falling but, since Medicare isn’t capped, the lost overtime and other factors reducing income are going to hit Medicare more than Social Security.

At the same time the tax revenues are falling, spending on the people losing health care and jobs will go up.

Regarding how much this costs, look at the 2009 budget

2009 budget

Department of Defense–Military $ 588,290,000,000 Increase over FY 2008 -12.3 %
Department of Health and Human Services $ 733,298,000,000 Increase over FY 2008 2.3 %
Social Security Administration $ 694,683,000,000 Increase over FY 2008 5.5 %
Department of the Treasury $ 549,964,000,000 Increase over FY 2008 5.3 %
(Interest on the Public Debt $ 487,300,000,000 )
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That was from awhile back so may have changes some since but, it gives you an idea of what we face. When you add the $60 billion in food stamps and other food programs in the department of Agriculture, Social Security and Health and Human Services are about $1.5 trillion of a little over $3 trillion budget. But, look at interest which with the recent borrowing will be over $500 billion almost 1/6 of the budget is going for interest. Think of how much healthcare that would buy or how much social security could be fixed with that.

We have, since 1968, when we first started borrowing as much as GDP grew reached the point where now we borrow $5 for each $1 growth but, that was when we had growth. Now, we have negative GDP. Some believe we are at a point now where we will have to borrow more and more and more and yet, won’t see positive GDP growth from the economy but, since government spending is part of the formula, I guess they could spend enough to make it look positive.

That is about what they did for the last 8 years where using inflation calculated the way we did when we were a creditor nation, shows we only had one positive quarter of GDP. Yet, this current President and Congress and the new President and Congress are talking about spending trillions and adding $2 to $5 trillion in debt onto what we have now. That would, near the high end, put debt at over 100% of GDP.

No wonder the GAO told Congress this course is unsustainable.