There are no assets in the “trust funds” to pay for benefits, simply claims on Treasury revenues

Better hope the Chinese didn’t hear that!

[...W]e’re all about due for a rude awakening when these ever-worsening problems reach a head.

In 10-20+ years, Social Security and Medicare will blow up in our faces. (The Trustees have warned us about this fact for years.) There are no assets in the “trust funds” to pay for benefits, simply claims on Treasury revenues, which will have to be found from all-new sources (new taxes or tax increases).

A more immediate issue is the growing burden that the programs will place on the Federal budget well before the trust funds are exhausted. … The total draw on general fund revenues (as a percentage of GDP) has three components: the gaps between tax income and the cost of scheduled benefits for the OASDI and HI programs, as well as the general fund revenue requirements to finance SMI’s Parts B and D (75 percent of expenditures). … Note that neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public. … the difference between outgo and dedicated payroll tax and premium income will grow rapidly in the 2010-30 period as the baby-boom generation reaches retirement age. Beyond 2030, the difference continues to increase nearly as rapidly due primarily to health care costs that grow faster than GDP. … To put these magnitudes into historical perspective, in 2006 the combined annual cost of HI, SMI, and OASDI amounted to 40 percent of total Federal revenues, or about 7 percent of GDP. That cost (as a percentage of GDP) is projected to double by 2042, and then to increase further to nearly 18 percent of GDP in 2081. It is noteworthy that over the past four decades, the average amount of total Federal revenues as a percentage of GDP has also been 18 percent, and has never exceeded 21 percent in a given year. Assuming the continued need to fund a wide range of other government functions, the projected growth in Social Security and Medicare costs would require that the total Federal revenue share of GDP increase to wholly unprecedented levels.

At the same time, the Boomers will be selling assets in large numbers to finance retirement, which points to a long, cold bear market for assets of all kinds. (No, the rest of the world cannot be counted on to develop to the point where foreigners will be in a position to buy everything for sale and support asset prices.)

[NOTE: GAO says there won't be a sudden, sharp drop in asset prices. Note also wealth distribution at bottom of page.]

This does not even begin to account for the unpredictable, such as more terrorism, a civil war or revolution in Mexico (with attendent refugee problem in the USA), et cetera.

2020 may be a watershed year; the 2020s will be an, ahem, interesting decade.

The next generation, however, may be even less prepared to deal with the country’s massive problems than we were. Many have never performed manual labor or had to develop inventiveness or ingenuity, having had indulgent parents who did it all. I think each subsequent generation is getting softer than the last one, which means we’re all about due for a rude awakening when these ever-worsening problems reach a head.

Obama’s candidacy in this sense is a potentially transformational one. Unlike any of the other candidates, he could take America—finally—past the debilitating, self-perpetuating family quarrel of the Baby Boom generation that has long engulfed all of us. So much has happened in America in the past seven years, let alone the past 40, that we can be forgiven for focusing on the present and the immediate future. But it is only when you take several large steps back into the long past that the full logic of an Obama presidency stares directly—and uncomfortably—at you.

At its best, the Obama candidacy is about ending a war—not so much the war in Iraq, which now has a mo­mentum that will propel the occupation into the next decade—but the war within America that has prevailed since Vietnam and that shows dangerous signs of intensifying, a nonviolent civil war that has crippled America at the very time the world needs it most. It is a war about war—and about culture and about religion and about race. And in that war, Obama—and Obama alone—offers the possibility of a truce.

(here)

* * *

genetics and overall immaturity

Don’t forget the hair coloring over the gray. Guys can “cheat,” too! Hiding the gray works great especially in ageist times or environments, especially if you are one of those who has gotten gray (much) earlier than average.

Given the poor behavior of younger people that we so often see, we’ll be assuming greater risks in the years to come then we have assumed before. And just wait until the Social Security and Medicare “war” begins (beneficiaries versus taxpayers) in 10-20+ years.

Also, Obama was born as a baby boomer but as Andrew Sullivan notes he really is not part of it. Sullivan has done a lot of stuff on this..and I agree.

Here’s an intriguing link on this issue.

This could be a highly symbolic vote since it could show how younger voters are ready to shove aside the Baby Boomer generation

Arrgh.

a) Barack Obama is a Baby Boomer.

b) It is silly (if based on observation) or conceited (if based on experience) to mischaracterize the entire Baby Boomer cohort as being monolithic and like the few at the head end (the oldest) in that cohort.

c) One should not be youth-obscessed and ageist (take a look at Yahoo’s stupid main page sometime).

d) May the Left someday also prefer substance over symbolism.

This could be a highly symbolic vote since it could show how younger voters are ready to shove aside the Baby Boomer generation which has probably done more to polarize American politics than any generation since the Civil War.

Let’s not be as silly-youth-oriented as the Yahoo main page. Also, do not fall into the trap of conceit (if you’re one of them) or of ignorance about Boomers, and mischaracterize the entire cohort as the same as the leading edge of that cohort.

For your information, once again, the darling of the young-voter crowd, Barack Obama, is a Boomer.

May the Left one day also prefer substance to symbolism.