Return to One-Page Economic Issues        Updated 10/19/23     Please Share!  

Do Entitlements Require Political Action
Entitlement is a poor word as all but the wealthy have invested substantial income in SS and Medicare.
Return to Economic Issues   Updated 6/8/18   Please link to, use to educate, and share.

Quick Notes Entitlements Summary


Should Elderly Think We Have Enough Socialism?

Summary Definition Who Benefits from
 Most to Least


Medicare Subsidized healthcare
for the elderly
All benefit are the same,
high income earners pay most

Required additional
health care cost
difficult for many

Longer life, especially for poor people who now also have subsidized health care, will increases cost. Free cases poorer health. Solutions, later eligibility, less coverage, higher deductibles currently not acceptable to electorate.

Retirement income, partial at 62, max at 70, Low income earners receive ha higher investment return, some receive death and spousal benefits
See  Table 1 and
 Table 3
Deficit concerns until baby boomers die, retirement age raised or young people vote.
SS Benefits are 100% Secure bur their real value depends on economic success..
Solution just time or later retirement but politicians will not act until forced by electorate Increased negative cash flow should add political pressure.
Tax Expenditures Legal deductions and exemptions from income decrease tax collections Employee sponsored health insurance,401K, long-term capital imputed rental income, mortgage interest, earned income tax credits, deferred income from controlled foreign corporations Table 2

Tax payers don't appreciate
 their benefit (entitlements?)


Solution of decreasing them by a third is unacceptable to electorate though this would have increase tax collections $400 billion in 2015 when the deficit was $439 billion.

Source: Entitlements Require Political Action


Reasons Political Action is Needed
1) Social Security Cash Flow Is Negative


2) Payroll Taxes Stable for Many Years


See Taxing the Rich

We Have Three Choices
  1. Increase Deficit 2. Increase Taxes
3. Cut Programs

Relevant Information
Cash Outflow Will Increase, It went negative in 2018

See Taxing the Rich



3. We Have the Funds


Is a New Entitlements Law Needed?
To Date No Political Solution Offered




Social insurance taxes -SS + Medicare = deep doo-doo
as employees do not pay taxes on employer's portion.

Making Employer Portion of Payroll Taxes
Part of Individual Income would Help.
Those on a Minimum Wage could be Excluded.


Editor's Notes:

1) The Greenspan Commission took two years to come up with a tax law
and then it took behind the scenes committees to come up with the eventually solution.

2) Many retirees with dependents have low income.  return to index
This means they contributed much less into the fund than those with higher income.
Because retirement income benefits are progressive and there are many dependent benefits,
these recipients earn a much higher investment return than higher earnings, especially
singles and couples with no dependents.

But, life expectancy data indicates average low income recipients will die much earlier
than high income contributors  and therefore may get a much lower return.

3) We need to eliminate extreme end of life benefits for Medicare and Medicaid. 
If necessary, create a Medicare Gold with a one-point increase for those who
do not want benefits limited.

4)  An increase in the qualification ages from 52 and 65+ is not a decrease in benefits because people live longer.