Return to One-Page Economic Issues        Updated 12/05/17     Please  

Entitlements Require Political Action
Entitlement is a poor word as most people have invested some in SS and Medicare.

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Preface Definition Who Benefits from Most to Least Problems


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.

Social Security 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.

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


Possible Solutions 1. Bigger Deficit 2. Tax Increase 3. Cut Programs



2) Cash Outflow Will Increase



3. We Have the Funds


4. 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 had low income.
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 are  receiving a much higher SS investment return than higher earnings single recipients. But, life expended data indicates that on average low income recipients will die much earlier than high income contributors and therefore get a much lower return.

3) We need an older persons end of life exclusion for Medicare and Medicaid.  If necessary, create a Medicare Gold with a one-point charge for those who do not want to exclusion. States could pay this exclusion Medicaid.

4) With SS, we need to decide a change in age qualifications is not a decrease in benefits.