The federal government budget is one of the most important things to keep track of. It provides a way for the United States to be able to pay its bills and operate as it should, but what happens when programs such as Social Security and Medicare come into play? These two programs put an enormous strain on the budget because they are not funded by tax revenues. This means that any revenue that comes in from other sources must go towards these programs, which leaves less money for other parts of the budget.
In addition to this, these programs are growing at a rate faster than the general population. This means that in order for these two programs to be fully funded by taxes and other revenue sources, they would need an even larger share of those funds which will make it difficult for all parts of the budget.
Some people think that cutting either Social Security or Medicare is necessary in order to keep up with what’s going on financially but others disagree because there is not one simple solution. There may be some adjustments made over time as part of a compromise between different political parties but until then both social security and medicare pose problems for federal government budgets.”
The future doesn’t look bright when it comes down to how much money we’ll have to put into social security and medicare.
Population growth is causing more people to retire now than those who are entering the workforce which means there’s less money coming in for these two programs. The problem with Medicare, specifically, is that it was never designed to cover this many seniors who are living longer thanks to advancements in medicine. Because of increased life expectancy, we need a larger share of taxes and other revenue sources just to keep up funding
Some believe that cutting either Social Security or Medicare will solve our budgetary problems but others disagree because they don’t want any one program being cut without allocating funds elsewhere first (e.g., military spending). There may be some adjustments made over time as part of compromise between different political parties until then we’ll have to wait and see.
Why do social security and medicare pose problems for the federal government budget?
-There are several reasons why Social Security and Medicare pose a problem for our nation’s current budgetary situation but some of them include higher costs, an aging workforce which means there’s less money coming in for these two programs, increased life expectancy because of advancements in medicine also causing more people living longer (and thus requiring a larger share of taxes/revenue sources) without making any adjustments or trade-offs first, or cutting either Social Security or Medicare will solve our budgetary problems but others disagree because they don’t want any one program being cut without allocating funds for other important programs.
-Some of the solutions that are being proposed to help with these problems include a higher cap on income before it’s taxed, gradually raising the retirement age, taxing employer or employee contributions more heavily in order to push people into saving for themselves rather than relying on Social Security and Medicare as their primary source of funding during retirement years.
How does social security pose a problem?
–The program provides benefits from workers’ earnings subject only to an annual limit amount ($127k) and has no investment returns built in so there is no way to pay for the benefits promised.
-Medicare is expected to have insufficient funds by 2024 because it’s been spending more than it takes in.
How does medicare pose a problem?
-It has spent $316 billion more on care this decade than what it would have taken in had Congress not intervened with supplemental funding and raising payroll taxes; there are mounting costs of caring for an aging population that make it difficult to balance its budget without changes; Medicare also needs reforms so seniors can gain access to high quality, affordable health coverage options through private insurance or public programs such as Medicaid and CHIP (Children’s Health Insurance Program).
What do these problems mean?
If we don’t take any steps now then future generations will have to pay the price.
What can we do?
-Look for ways to reduce healthcare cost growth; The Affordable Care Act (ACA) provides some tools that make it easier but there are still many challenges ahead of us. We need leaders who understand how important Medicare is and what needs to be done in order to preserve its future stability and ensure that seniors don’t face a more difficult time accessing care than they already have.
-The Social Security program, which provides monthly income benefits during retirement or periods of unemployment, has been receiving less money from payroll taxes because fewer people work at jobs covered by Social Security as baby boomers retire. At the same time, Americans’ life expectancy and health spending on aging populations continues increasing.
-In order to keep the program healthy, Social Security needs a new source of revenue. To do this, we need to change how benefits are calculated by adopting a more accurate measure of inflation called the “chained CPI.”
-We also need to increase the level of income taxed for Social Security, which would result in higher taxes on both workers and employers.
-The Medicare program provides health coverage to Americans over age 65 or those with disabilities. Under current law, an additional 0.05% payroll tax will be levied this year (from January) until 2037 in order to provide payouts through 2024 while gradually reducing payments thereafter as a way of stabilizing its finances.
-Medicare’s financing issues stem from healthcare costs being much higher than expected since it was developed back in 1965. Today we spend more than three times what they originally anticipated per person! In addition, there are new innovations that have been introduced into medicine that were not included when Medicare was first created.
-The Social Security program provides income for retired workers, their spouses and children. Under the current law as of January 2017, payroll taxes will be reduced from 12.40% to a mere 11.90%. If this is not corrected then by 2034 there will no cash left in its trust fund which pays benefits!
However, these are long-term problems that need solutions soon or they could cause major disruptions in our economy, potentially leading to recessionary effects on other sectors such as housing and auto sales.”