Parents’ requests for children to complete menial tasks are often met with avoidant responses like: “I’ll do it later,” and “Do I have to?”
Does this sound familiar? Unfortunately, many of our lawmakers sound more like distracted children than responsible grown-ups.
For those of us trying to prevent financial chaos from taking over, it’s frustrating to stand by while our elected officials say, “I’ll do it later.”
Easy examples of government’s, “I’ll do it later,” can be found in the lack of effective legislation to address pressing issues like sexual harassment, racism, infrastructure, climate change and balancing the federal budget.
When it comes to these important topics, Congress tends to have the mindset of a child who wants to put off cleaning their room; but, this time it’s not just for a day or two, it’s a decade or two. Sadly, by then, it will be too late.
Two pressing topics that need to be dealt with, a lot sooner than you think, are long-term funding for Social Security and Medicare.
The Social Security Act became law when President Franklin D. Roosevelt signed it on August 14, 1935.
Roosevelt created Social Security out of the necessity to give workers a retirement income during the most difficult financial time in our nation’s history, The Great Depression.
When the well-intentioned legislation was passed, the average life expectancy was the ripe old age of 61, and benefits didn’t kick in until you were 65.
Today the average age a citizen starts collecting Social Security is still about 65, but life expectancy has jumped to roughly 79 years old.
Because of increased life expectancy, a dramatically larger percentage of residents are now collecting Social Security than are paying into it.
As such, this problem will only continue to grow.
Today there are 25 Americans aged 65 and older for every 100 people in the workforce. By the year 2030, the number of Americans 65 and older will jump to 35 for every 100 people in the workforce.
As a result, the close to $3 trillion trust fund filled from both employee and employer contributions is projected to be depleted by the year 2034.
When that happens, Social Security will not have enough funding to be able to pay fully scheduled benefits.
In short, every day Congress delays taking action, the situation becomes more desperate and difficult to solve.
Medicare was signed into law by President Lyndon B. Johnson on July 30, 1965. It was created to give older Americans a universal right to access to health care, at a time when it was difficult to get private coverage if you were elderly.
The pool of money to fund Medicare is on course to be gone in the year 2026. If funding isn’t increased by then, Medicare will only be able to pay out claims at a reduced rate of 91 percent of promised benefits, leaving millions of people, with serious health issues, without access to proper treatment.
An additional reason why Social Security and Medicare are going to be in financial dire straits, besides increased life expectancy, is Americans are having fewer children than they used to, resulting in fewer people paying into the system.
In 1910, the birth rate was roughly 30 per 1000. Today, the birth rate has dropped to about 14 per 1000. With approximately 60 million Americans collecting Social Security and Medicare, there needs to be a greater number of people paying more money into the system to keep it solvent.
Declining birth rates don’t help. Neither does the Trump administration diminishing the rate of immigration?
The government has two choices.
Provide additional funding for Social Security and Medicare now, or wait for several more years to pass.
Unfortunately, the decision will likely be put off for another Congress to deal with in the future. By then it will be a problem too big to solve and those who can least afford it will pay the consequences.