$13 Trillion Deficit Looms for Social Security

If something isn't done soon we could face a catastrophic collision with fiscal chaos. The Social Security system is broke, along with Medicare. The reason: a Congress unwilling to deal with the political consequences of dealing with the hard choices involved with the infamous "third rail" of politics. Politicians, Republicans and Democrats, won't touch the issue because if they do it means political termination. So they've allow the problem to fester for decades. That, along with the Medicare prescription drug plan, has given us a financial monster that could eat us alive:

The Bush administration said in a new report yesterday that Social Security is facing a $13.6 trillion shortfall in coming years and that delaying reforms is not fair to younger workers.

A report issued by the Treasury Department said that some combination of benefit cuts and tax increases will need to be considered to permanently fix the funding shortfall. White House officials stressed that the President is opposed to new taxes.

The Bush approach would be to privatize Social Security, an approach that might have some logic to it. For years IRA (Individual Retirement Accounts) have been used to supplement Social Security. That might be the way to go. The problem is Dubya has no political capital to get any changes done. He also doesn't mention that the Iraq quagmire has eaten away much of funds needed to sustain the Social Security system. Consequently, any solution will not be forthcoming until we face a crisis, which is coming soon:

"The administration's new report is a reminder of President Bush's determination to not only privatize Social Security but to make deep cuts in the benefits that American workers have earned," said Senate Majority Leader Harry Reid (D-Nev.).

"Nobody should be fooled into believing that the only way to save Social Security is to destroy it with privatization or deep benefit cuts," he said. Bush had hoped to make Social Security reform the top domestic priority. He put forward a reform plan in 2005 that went nowhere fast.

If you don't believe me, trying listening to David M. Walker, the Comptroller General:

David M. Walker, the nation's top accountant, is instead touring the country to warn Americans about the consequences of a federal debt he says is on an unsustainable course.

David M. Walker, the nation's top accountant, is instead touring the country to warn Americans about the consequences of a federal debt he says is on an unsustainable course.

[...]The federal debt has soared during the last two decades -- from $2.13 trillion in 1986 to $5.22 trillion in 1996 and $8.51 trillion in 2006.

The federal debt now stands near $9 trillion.

The way programs such as Social Security, Medicaid and Medicare are structured, the government will incur an additional debt of $50 trillion during the next 20 years, according to GAO figures.

[...]The primary drivers behind the additional rise in spending are the baby boomers, who start becoming eligible for Social Security in 2008 and Medicare in 2011.

The crisis is only months away