An Impending Entitlement Crisis

The USA Today recently ran a pair of articles (here and here) about senior care that really illustrate an impending crisis.

Take a look at some of the highlights:

The cost of government benefits for seniors soared to a record $27,289 per senior in 2007, according to a USA TODAY analysis, an increase of 24% from 2000.  Benefits paid per household of those 65 and older grew 25% faster than inflation to $38,628.

The U.S. and state governments spent $979 billion on senior benefits in 2007, up 35% from 2000 after adjusting for inflation. 

Is this because more senior citizens are drawing benefits?  No:

Benefits per senior are soaring at a time when the senior population is not. The portion of the U.S. population age 65 and older has been constant at 12% since 2000.

That will change when the 79 million people born during the baby boom — from 1946 to 1964 — begin turning 62 this year and 65 in 2011.

Some more critical numbers:

Last year, for the first time, health care and nursing homes cost the government more than Social Security payments for seniors age 65 and older. The average Social Security benefit per senior in 2007 was $13,184.

The federal government spent $952 billion in 2007 on elderly benefits. It's the biggest function of the federal government. States chipped in another $27 billion in 2007, mostly for nursing homes.

All three major senior programs — Social Security, Medicare and Medicaid — experienced dramatically escalating costs that outstripped inflation and the growth in the senior population.

The cost of senior benefits is equal to $10,673 for every non-senior household.

About 35% of the federal budget is spent on senior benefits, up from 32% in 2004.

Are you understanding this?  First of all, these numbers put the lie to the statement that seniors are experiencing more hardship than ever before on their 'fixed' incomes.  Elderly programs are bigger than ever!  Next, the cost of senior care alone -- this doesn't include other entitlement programs like Medicare, Medicaid, welfare, food stamps, etc. -- is almost double our annual defense budget, and over a third of our entire country's budget!  It's the federal government's single largest function!  And it's getting worse each year.  Within the next few years, we're going to be experiencing the crisis full force as the majority of Americans who still work have to pay for more and more (proportionally speaking) seniors out of their own tax dollars.  As indicated above, every household in America that does not have a senior in it pays almost $11,000 a year to support these entitlement programs!  What happens when those baby boomers get thrown into the mix, and the elderly population doubles in the span of just a couple years?  YOU will pay for that increase!

Think about it this way.  General Motors has experienced a massive financial hardship over the past couple years because there are now so many former employees drawing on their pension and retirement plans.  The people who still work at GM are having to pay for the retirement of people who are no longer producing for the company, and the company is tanking because of it, prompting layoffs and other cost-cutting measures.  The same thing will inevitably happen to the U.S. at large if we don't change things in a hurry.

This is not a knock on the older generation.  They are relying on programs that were set up decades ago for their benefit, and were unfortunately neglected since then.  But, without some major reforms, this is a true impending crisis!

That brings us to the question of who should be the ones doing the reforming.  Remember, Bush wanted to reform Social Security, allowing some of that money (I think it was something like a piddly 3%) to be diverted into the private sector, which would result in better returns and allow more control for citizens while easing the tax burden on working people.  But, the Democrats blew up, scaring senior citizens into running away from that plan without proposing anything else.  Thus, the problem remained.

This cannot be ignored any longer.  This should be a question asked of each of the presidential candidates, and something that should be on everyone's mind when they go vote.  Do you trust the Democrats, who have fought every attempt to reform Social Security over the past few years, instead proposing massive new taxes to 'fix' the system when they bother to propose anything at all?  Or, do you trust Republicans, who have proposed real solutions for the impending crisis that is largely being ignored by the MSM and Democrats, seeking to put control and responsibility into the hands of American citizens?

It's a no brainer.

There's my two cents.