Like the miracle food in Soilent Green, the utopic welfare-state envisioned by Democrats is composed of ground-up people, but in this case, those living in future generations. Without even considering ObamaCare: Medicare, Medicaid and Social Security will, with the influx of Baby Boomers coming into these three entitlements, leap from 8.4% of GDP to 18.6% of GDP. Without reform, this increased cost would require raising taxes by the current equivalent of $12,072 per household or eliminating every other government program [and still raising taxes after no-government-but-entitlements is no longer self-financing]. Funding all of the promised benefits with income taxes would require raising the 35% income tax bracket [the “rich”] to at least 77% and raising the 25% tax bracket [middle class] to at least 55%.
But, the trust funds for Social Security and Medicare Part A are supposed to save us from insolvency, aren’t they? They would have delayed the inevitable if they in fact existed, but they are empty, containing only IOUs in the form of special issue Treasury bonds. Congress has already spent the actual money. So, to redeem the bonds, Congress will have to either raise taxes to cover the bonds, add the redemptions to the debt, or have the Federal Reserve just print the money. Taxes, debt or inflation. The responsible thing for Congress to do, of course, would be for Congress to pay back the trust fund money they stole earlier by cutting spending on a dollar-for-dollar basis as the bonds are redeemed, this would transfer money already allocated in the current budget from programs to payout the bonds – that would require neither taxes, new debt nor fiat currency, but Congress would never do such a thing. According to calculations by Brian Riedl and others, offsetting this spending hike would require eliminating every other federal program by 2049 except interest payments on the federal debt. All non-defense programs would be eliminated by 2030, and defense spending would be eliminated by 2049. That’s just to cover Medicare, Medicaid and Social Security. Toss in ObamaCare, and the road to perdition becomes steeper and gets there quicker.
Aside from Congress’s theft of the trust funds, demographics play a great part in this problem, which, of course, makes the situation entirely predictable and therefore entirely preventable. In 1960, 5 workers supported each retiree. This ratio has now fallen to 3:1 and will drop to 2:1 by 2030. A 2:1 ratio means that each married couple in 2030 will be paying the Social Security and Medicare benefits of a retiree. This has been foreseeable since the recognition of a Baby Boom generation in the late-1950s and early-60s.
Only Democrats seem unprepared to face the reality of vacant trust funds coupled with a shrinking support-base and growing recipient-pool. They’re still in denial, so we can’t expect any genuine help from them with solutions, and in fact, all we see is whining about those who breach the subject. President Obama’s “eight grannies out in the snow for every rich guy’s tax break” is a perfect example. If he were advocating raising taxes by enough to cover the shortfall, that would be one thing, but he’s not. As we’ve seen, even the middle class would have to have its taxes more than doubled to cover this theft. Or, shut down all departments but HHS and Treasury, and he’s certainly not proposing that!
I’m not dismissing Republican Congress’s from blame here – they’ve taken monies out the trust funds with as much ease as Democratic Congress’s have. But at least they’re now articulating the problem and trying to find a way out. At least they’re out of denial. This is yet another aspect of governance that Democrats are going to cede leadership to Republicans if they don’t join in honestly trying to repair the damage, and the only way I see is structural, not trimming around the edges. Medicare, Medicaid and Social Security, as we know them, no longer work. We need to change how they are structured, and we need to do that now. The remedies will only get more drastic and more painful the longer we wait.
Unlike blind promises, which is politics, paying for “entitlements”, like soilent green, is people.
 That’s not what your taxes would be, that’s how much more your taxes would be than they are now.
 Grover M Hermann Fellow in Federal Budgetary Affairs, Thomas A Roe Institute for Economic Policy Studies, The Heritage Foundation.