@realjohnboy,
realjohnboy wrote:
AP has a story within the last hour re trustees' of SSAE and Medicare analysis of the strength (or lack thereof) of those funds. It ain't pretty.
Thanks to the recession, much less money is flowing in. Job losses and underemployment - especially from workers who had been making decent wages - are impacting hard.
Over at SS, trustees expect more benefits will be paid out than comes in by 2016, which is a year sooner than expected a year ago. The fund will be depleted, they say, by 2037, 4 years earlier than projected.
Medicare is in worse shape, with more in benefits going out vs collections as soon as this year. Insolvency could come -if nothing is changed- by 2017, 2 years earlier than projected a year ago.
rjb, your observation of what happens in a recession points out one huge effect, that tax revenues and tax rates are not directly linked, it all depends upon the economic activity. Tax revenues do not occur in a vaccuum, with nothing else besides tax rates involved. And tax rates impact the economy. Such a simple and obvious effect has been denied by many on this forum, but I think a good look around today at what is happening would be highly instructive to anyone that doesn't believe it still.
All of this explains why even Obama knows it is unwise to raise taxes right now, not until the economy recovers. If they had no effect, the answer to declining tax revenues and social security / medicare revenues could be solved with the stroke of a pen, simply raise the taxing rates. Such as take 20% of everybody's earned income instead of the current 15.3% or whatever it is, to fund social security / medicare. In the future, take 30% or 50%, no problem, right?
