Social Security & Medicare trustees 2021 report

Committee for a Responsible Federal Budget article (link) 

Two graphs show the looming financial crisis for the Medicare Part A Hospital Insurance trust fund and the Social Security Old-Age and Survivors Insurance trust fund. 

"The Medicare Trustees project the Medicare Part A Hospital Insurance (HI) trust fund will run out of reserves in only five years, by 2026. Upon insolvency, Medicare Part A spending must be cut by 9 percent, with those cuts growing to 22 percent by 2045."

"The Social Security Trustees, meanwhile, project the Social Security Old-Age and Survivors Insurance (OASI) trust fund will deplete its reserves by 2033 and the Social Security Disability Insurance (SSDI) trust fund by 2057. The theoretically combined trust funds will exhaust their reserves by 2034 ... Upon insolvency, all beneficiaries will face a 22 percent across-the-board benefit cut, growing to 26 percent by 2095."

The report does not address Medicare Parts B, C, and D. 

The report doesn't say what "insolvency" exactly means. The first quote above strongly suggests it is when the "reserve" is depleted. The "reserve" is an accounting gimmick. It is the result of the fund's dedicated revenues exceeding benefits paid in prior years. The "reserve" is merely IOUs from the U.S. Treasury. The federal government did not save the excesses, but spent them on other government programs. When benefits exceed dedicated revenues after the "reserve" is depleted, the excess will be paid from general revenues (income taxes, etc.) and/or by the federal government incurring more debt (by selling new U.S. Treasury securities).  

The benefit cuts the article describes is based on existing law. Of course, Congress can change the law before then, and Congress could cut benefits by non-uniform percentages. It could cut higher income benefits by greater percentages than lower income benefits.

USPS pension Ponzi scheme

This Reason magazine article is about the United States Postal Service's pension system. Its pension system has a $50 billion unfunded liability. That's an "accounting term for the gap between what actuaries expect the system to owe current workers and retirees for the rest of their lives and the revenue it's expected to take in from paychecks and investment earnings." 

If a private sector company's pension plan has a severe unfunded liability, the federal government's PBGC will intervene and shut it down. The federal government is not likewise intervening on the USPS pension plan. This shows the federal government's hypocrisy and a double standard. 

The article also refers to the $70 billion unfunded liability of the USPS fund for paying health care expenses for retired workers. There is no PBGC counterpart for private sector plans that pay such expenses. Private sector companies are not required to prefund health care expenses for retired workers mainly because they could, theoretically, eliminate those benefits at any time. If a private company terminates a plan that pays retiree health care benefits, it doesn't make a new gaping hole because the payments it makes are small. Nearly all retirees get most of their health care expenses paid for by Medicare, Medicare Advantage, Medicaid and Medicare supplement insurance. In other words, there are alternative resources. However, there is no different resource for retiree USPS health care expenses. The federal government still has the funding obligation. The only way the federal government could get rid of its liability for USPS retirees is to stop paying their health care expenses. Rest assured that won't happen.

Profligate Joe Biden

Big spender Joe Biden is proposing another big spending spree, this time the $1.8 trillion American Families Plan. 

1. >$200 billion in spending on childcare,

2. ~$200 billion to make pre-kindergarten universally available for free,

3. >$200 billion towards government-subsidized paid family and medical leave,

4. ~$300 billion towards making community college free for all Americans, and

5. ~$200 billion on health insurance subsidies available through the Affordable Care Act healthcare exchanges.  Source: Wikipedia

That's $1.1 trillion. MarketWatch says there is $80 billion for enhanced IRS enforcement.  It's not clear what the other $0.6 trillion is. NPR says the amount for IRS enforcement is $700 billion. However, most of that seems to be higher tax revenues rather than spending.

Forbes has an article about the American Families Plan, too. It refers to the Washington Compost's touting  the bill's proposal "to give all workers up to 12 weeks of paid leave" for medical reasons or child care. All? Since when do the self-employed have an employer -- company or another person -- the government can subsidize in order to pay for such paid leave?

Biden proposes tax increases on "the rich" to pay for a little of it. You can bet that many "non-rich" will pay for it indirectly via inflation and smaller wage increases.

Adding the spending numbers for Profligate Joe, the result is $5.7 trillion. 

American Rescue Plan           $1.9 trillion 

American Jobs Plan               $2.0 trillion

American Families Plan         $1.8 trillion 

Federal spending spree

In 2008 Rahm Emanuel, former Chief of Staff to President Barack Obama and mayor of Chicago, said: "You never want a serious crisis to go to waste. And what I mean by that [is] it's an opportunity to do things that you think you could not before."

It has become a common catchphrase. Emanuel repeated it last year amid the coronavirus pandemic (link). Spendthrifts Joe Biden and the "progressives" and leftist radicals of the Democratic party have strongly embraced it 

FEE: Federal ‘COVID’ Spending Just Hit $41,870 Per Taxpayer Signed by Biden last month, the 
American Rescue Plan Act of 2021 called for spending $1.9 trillion on the Covid19 crisis, with a large part of the $1.9 trillion not directly related to Covid19. It includes, among other things, spending on

• agriculture and nutrition programs;
• schools and institutions of higher education;
• child care and programs for older Americans and their families;
• mental health and substance-use disorder services;
• emergency rental assistance, homeowner assistance, and other housing programs;
• payments to state, local, tribal, and territorial governments for economic relief. (Link)

The $6 trillion stated in the FEE article includes the $4.1 in relief measures passed while Donald Trump was President (link).

Still far from satisfied, Biden and his cronies propose another spending spree called the American Jobs Plan. It proposes spending another $2 trillion on infrastructure and jobs (link). Of course, it includes lots of "pork", such as subsidies for buying all-electric vehicles and charging stations for them. In other words, it is a down-payment -- merely a down-payment -- on the so-called Green New Deal.

The $2 trillion would increase total spending to about 8/6*$41,780 = $55,707 per taxpayer.

As usual, the the promoters of such legislation hype how many jobs it will create while ignoring how many jobs it will destroy.

This proposed legislation also includes tax increases to pay for some of it. The corporate tax rate would rise from 21% to 28%, half way toward the 35% pre-2018 tax rate. It would mostly raise personal income tax rates for people with incomes exceeding $200,000 for single filers and $400,000 for married filing jointly. However, it will very likely hit a lot of people with incomes lower than those.

Of course, all this spending (over 10 years) will increase the federal debt and sow seeds of inflation. Much of the debt will likely be funded by the accommodating Federal Reserve.