I have referred to the dire warning sent out by John Lewis a few months ago about Social Security, Medicare, and Federal Spending. Dr. Lewis used a report written by a former government budget official, which was based upon current information at that time. Well, surprise, the recession has had an impact.
According to a report (here) Social Security is experiencing a shortfall in its revenue this year, many years before the last Social Security report expected. It will need to draw on the “Trust Fund” this year. The SSA won’t need much to meet its needs, but the real problem is that SSA revenue was expected to exceed it needs and add to money to the Federal Budget. So the deficit will be larger than they expected.
Further, as long as the number of workers contributing to Social Security remains less than needed to meets its needs, we will see Social Security dipping into income tax revenue and the deficit will become larger.
I am sure that there is consternation in the Treasury Dept. I am sure that BO and most of his gang aren’t paying any attention.
It doesn’t mean that the problems that John Lewis warned us about will happen that much sooner, because that mess is more dependent upon the age of the population.
What we will see is larger deficits, larger Treasury Bond auctions, more resources removed from real economic activity, slower growth, slow job growth, more recession, more made-up money being created, and probably higher price inflation.
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