Perhaps the BEST B1G Forum anywhere, here at College Football Fan Site, CFB51!!!

12/27/74

Barely made it.

You are old, not like @Gigem and I, born in 1975.  LoL.  

We (born in 70-75) came along at the trough of the baby bust.  Births in the US bottomed out in the mid-1970's.  

I wonder what it would take for the dollar to no longer be the world's reserve currency.  There seems to be disagreement about the likelihood or even possibility of that.  IMO, anything is at least possible.  

I don't think the average person understands what that would mean in our current situation.  I understand it better than most, and I don't know that I fully understand it either.  To Gigem's original point, the answer to "What am I working for?" becomes "Nothing."  

I could be wrong about this and I admit I've done no hard math.  But assuming Elon/DOGE shored up everything with SS they intend to, I'm dubious that the expenditures of SS/Medicare/Medicaid combined could be reduced enough to help the country's debt situation.  There would have to be massive cuts to the entitlement programs just to balance the budget.  Paying down the debt?  That's even more cuts. 

I don't know Mike.  But you have to start somewhere, and do SOMETHING.  We know exactly what it looks like to do NOTHING.  
Cut the outright waste and fraud like people that are clearly dead, or people that are suspected dead.  That's #1.  Then cut the people who are getting what medina and I call crazy checks.  Fearless just gave an example of somebody he knows getting Medicare that maybe didn't deserve it or maybe doesn't still need it, I'm not sure where they are with it.  

The main thing I keep coming back to is that at one time the programs were in fact solvent and working.  What changed in the last 10-20-30-40 years?  Life expectancy?  Sure, that has went up, but I refuse to believe that alone is the primary driver.  

We've said it over and over.  You can cut all government discretionary spending and it's only like 20-30% of the total expenditures.  SS and Medicare are the number one costs by far.  In my mind the whole organization is out of control (talking about .gov).  No accountability whatsoever, and nobody seems concerned in the least.  

I think you are right. 

Federal Expenditures are so incredibly massive that cutting a few Billion here and there doesn't amount to enough to even move the needle. 

I think that if you did away with all the actual fraud (things like people collecting for deceased relatives) AND all of the stuff that I consider fraudulent (addicts getting 'crazy checks') it still probably wouldn't get the system anywhere close to balanced. 

It WOULD make me feel better though. 

I don't know Mike.  But you have to start somewhere, and do SOMETHING.  We know exactly what it looks like to do NOTHING. 
Cut the outright waste and fraud like people that are clearly dead, or people that are suspected dead.  That's #1.  Then cut the people who are getting what medina and I call crazy checks.  Fearless just gave an example of somebody he knows getting Medicare that maybe didn't deserve it or maybe doesn't still need it, I'm not sure where they are with it. 

The main thing I keep coming back to is that at one time the programs were in fact solvent and working.  What changed in the last 10-20-30-40 years?  Life expectancy?  Sure, that has went up, but I refuse to believe that alone is the primary driver. 

We've said it over and over.  You can cut all government discretionary spending and it's only like 20-30% of the total expenditures.  SS and Medicare are the number one costs by far.  In my mind the whole organization is out of control (talking about .gov).  No accountability whatsoever, and nobody seems concerned in the least. 

Well, I'd say a pretty healthy percentage of us here are concerned about it, for whatever kind of sample we represent.  And I agree with you, doing something is better than doing nothing, even if it's pissing in the wind.

As for what's changed over the last 40 years.....that's probably a wide range of factors.  You mentioned life expectancy.  I can tell you from having recently worked in the medical field that our elderly population are becoming increasingly less healthy (actually, all demographics are).  Add those two things together, and Medicare is strained much more than it used to be.  It costs way more, for longer, to keep old people insured.  Then factor in things like people below some version of the poverty line, illegal aliens, and decreasing states of health for the other age ranges....add those things together and Medicaid is strained much more than it used to be.  Now factor in what inflation has done to the dollar over that time, coupled with poor financial planning and/or rotten luck or unfortunate circumstances by a significant portion of the aging population, and you get increased necessity for SS, or monthly help to get by in your later years.  Way more than used to be necessary.  And the family demographics have shifted dramatically, in addition to the younger generations not being as flexible in the help they are able to give to their own aging parents, which exacerbates the issue.  

Put more simply, people need more money than they used to need, particularly in retirement, and their planning for meeting that challenge themselves has gotten worse and worse.  

IMO, there is no quick or easy fix.  We're talking about a societal overhaul which would have to take place over a long period of time.  I applaud you if you have faith that people can collectively endure short-term pain and turn away from the easy, addictive hand of the all-providing government.  I think human nature is weak, and people largely do whatever is easiest and least painful in the moment, and they'll vote out any politician who moves to cut entitlements.  Even Trump explicitly campaigned on, and continues to reiterate, that he will not touch the Big 3 Entitlements.  (Obviously, getting rid of fraud is a different issue than cutting benefits.)

Again, I go back to the budget from just a few years ago, maybe when Obama was in office.  The deficits back then were in the hundred billion dollar range (medina knows more than I do).  Before that, Bush II, he started with a surplus, but 9-11 changed that in a hurry.  Sometimes I think all those guys (Cheney and others) were secretly glad because it gave them a huge opportunity to overspend, all in the name of War on Terror. 

I think it was towards the end of Obama's 2nd term when shit really started going haywire.  Deficits started to hit $1 trillion and more.  2008-2012, they had the financial crisis as cover, but what really happened from 2012 to 2016? 

Trump as far as I'm concerned is as full of shit as anybody about this because he really ran the deficits up in his first term.  Sure, you had COVID in 2020 that drove some stuff, but he never really cared about it before then either. 

So I ask, if entitlements are the largest expenditure of the federal budget what really happened from about 1999-present day?  Boomers aging out en masse, retiring and getting in SS and Medicare, or what else happened? 

What if Elon and DJT just focused on getting us back to the mid 2000's level of spending/deficit?  Does anybody here think that it's not possible? 

A few thoughts:

First, I think you really have to denominate both the deficit (annual shorfall) and the debt (cumulative) in % of GDP terms.  Dollars make it impossible to compare over time.  As an example, nearly all Presidents have added more to the debt than any predecessor (Clinton is a notable exception and before any pro-D's get political with that, the R's controlled Congress for the last six years that he was in office).  

Percentage of GDP is the best measure, IMHO, because it is a decent measure of ability to pay.  Ie, if Elon Musk owes $1 Billion to a bank somewhere well, he just got $1 Trillion from Warren Buffet for Tesla so that isn't a big deal.  If I owed $1 Billion to someone well, they aren't getting that money because @medinabuckeye1 is absolutely unable to repay a loan that large.  

It really started to get unsustainable when the massive expenditures to prop up the economy (Keynesian Economics) in the credit bubble crash in 2008 didn't completely go away.  Here is a good chart.  

They only go back to the mid 1960's but the debt as a percentage of GDP was MUCH higher during and shortly after WWII then got paid down and was about 30-40% of GDP from sometime prior to the mid-1960's up until it surpassed that mark in the mid-1980's.  It peaked at around 65% of GDP in early 1995 then dropped back down to around 55% at the time of 9/11.  Post 9/11 the Government spent a lot of cash on stimulus and the military so it started to rise but not that the rise was VERY gradual and debt was still less than 64% of GDP when the Credit Bubble Crash and Recession hit in 2008.  Then it soared quickly to around 100% in about four years.  Then it was relatively stable, "only" growing from about 100% in late 2012 to about 107% right before COVID hit but then it shot up to where we are now, at about 120%.  

It is pretty clear that Debt in the range of about 60% of GDP or less IS sustainable.  We were at or close to 60% for almost 30 years from roughly 1990 to the 2008 crash.  Now, less than 20 years later we are at double that.  IMHO, debt of 120% of GDP is not sustainable.  

The Baby Boomers retiring is a major factor.  The Baby boom is defined as 1946-1964.  I've noted before that you and I were born at the trough of the baby-bust.  Here is a good chart for that.  Quickly:

• There were about 3M births per year in the 1920's
• That dropped in the 1930's both due to industrialization (less farmers) and due to the depression (less money)
• The number of births per year got back to around 3M (like it had been in the 20's) in 1943-1945 then
• The number of births per year skyrocketed post-WWII.  It was 3.4M in 1946 which was WAY over the prior record and peaked at 4.3M in 1957.  1964 (last year of Baby Boom) was the last year over 4M until 1989 but note that the population was vastly higher in 1989.  
• The trough of the baby bust is 1973-1976 at <3.2M births per year.  This is barely over the levels seen half a century earlier in the 1920's with a MUCH smaller population.  

SS eligibility is at 65-67.  The oldest baby boomers (born in 1946) became eligible when they turned 65 in 2011 and the last of them (born in 1964) will become eligible when they turn 67 in 2031.  

The really stupid and annoying part of this is that this problem should have been abundantly obvious by 1976.  

The last major reduction to SS payments was the 1983 law that raised the age from 65 to 67.  This change as phased in, the age goes up two months for each birth year from 1938-1960.  The rather obvious problem here is that the phase in took so long that life expectancy outpaced it.  

The other problem is that nothing has been done to improve the situation since 1990.  The current SS tax rate of 12.4% (split between employer and employee for employed individuals) has been in effect since 1990.  Look at the rate historically:

• 1% 1937-1949
• 1.5% 1950-1953
• 2% 1954-1956
• 2.25% 1957-1958
• 2.5% 1959
• 3% 1960-1961
• 3.125% 1962
• 3.625% 1963-1965
• 3.85% 1966
• 3.9% 1967
• 3.8% 1968 - Not sure if that is a typo or why they reduced it
• 4.2% 1969-1970
• 4.6% 1971-1972
• 4.85% 1973
• 4.95% 1974-1977
• 5.05% 1978
• 5.08% 1979-1980
• 5.35% 1981
• 5.4% 1982-1983
• 5.7% 1984-1987
• 6.06% 1988-1989
• 6.2% 1990-2025

The rate hasn't been increased in 35 years.  Look, 35 years prior to 1990 was 1955 when the rate was 2% so in the 35 years from 1955-1990 the rate more than tripled and in the 35 years since it hasn't increased at all.  

Something appears to have happened in our Governmental system.  SS was always a looming disaster but for the first ~50 years of it's existence Congress increased the rate every year or every few years to stave off the catastrophe.  Then after the last increase they just stopped doing that.  I can't tell you why.  

The main thing I keep coming back to is that at one time the programs were in fact solvent and working.  What changed in the last 10-20-30-40 years?  Life expectancy?  Sure, that has went up, but I refuse to believe that alone is the primary driver. 

Simple. Look at the ratio of workers to beneficiaries. 




That's it. 

It's not just life expectancy at age 65 (extending) over time. It's also birth rate (declining) over time. It's also all cause mortality over time, meaning more people reach age 65 than used to. 

It all means that there are fewer workers per retiree than in the past, which means that because SS is a pay-as-you-go program, the only way to make it financially sustainable is to raise taxes (BOOO!!!) or to reduce benefits (BOOO!!!).