The slowly moving crisis ahead.
Mike Whalen, former policy chairman of the Dallas-based National Center for Policy Analysis, commenting on last year's Social Security Trustees annual report on the state of the Social Security and Medicare programs, said, "The report on the state of entitlement programs is rather grim -- the combined unfunded liabilities of both programs are $101 trillion." What that means is that in order for government to make good on its promises, Congress would have to put aside tens of trillions of dollars in the bank today. Keep in mind that our GDP is only $14 trillion.
In the absence of massive tax increases or cuts in benefits, in order to meet its promises Congress must cease spending on one in four programs by 2020, such as education and highway construction, and one in two by 2030, and by 2050 or so all federal revenue will be spent supporting Social Security, Medicare and prescription drug benefits. Such a scenario is unsustainable. There will be economic and political chaos. Today's politicians are not likely to take measures to avoid the coming chaos because senior citizens, the major beneficiaries of Social Security and Medicare, vote in large numbers and will exact a high political price.
And that doesn't even count the government health care we're likely to see.