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Regarding Social Security -- why should it be a problem that the worker to retiree ratio is dropping?
In the 60's and 70's, when there were more workers (baby boomers) contributing to Social Security and fewer retirees receiving it, shouldn't this have created a surplus? A surplus that should have balanced out the problem now, where the reverse situation is true -- there are more retirees (same baby boomers) that need Social Security but fewer workers paying into it?
The rising cost of the programs and the demographic trends do not work out that way.
Yes, the surplus funds have been spent by the US congress. But that is not the cause of the shortfall. Of course, the Congress gave IOUs bonds to the Social Security Trust fund in exchange. The "publicly held" debt was around $5.3 Trillion in September. However, if we count the IOUs owed to the Social Security Fund and other such obligations, the total debt exceeds $10 Trillion.
Let's assume that the Federal government honors all of its IOUs and the borrowed funds are restored to the Social Security Trust Fund. The demographic changes are such that it is still not going to be enough to pay for all the promised benefits of Social Security, medicare and medicaid for the anticipated boom in the number of retirees. The unfunded obligations to programs such as Social Security, medicare, and medicaid are said to run close to $59 Trillion.
Obviously, borrowing $5 Trillion from the fund is not the problem. The program has inherent flaws in its design. As the previous post points out, it does indeed look like a pyramid scheme in its current form.
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