it became obvious that our deficit problems stem from these two entitlements: Social Security and Medicare.

Doing away with both will easily bring our national budget into balance, but that act will wreck inconceivable havoc upon the life of every American citizen. Doing just the opposite, offering free unlimited health-care as well as a full blown retirement package to every aging American citizen, unfortunately is no longer affordable when one factors in both demographic and economic factors.

So what do we do?

If one opens one’s mind to possibilities, we have five choices. Simply put, they are these.

a) Keep both as they are:
b) Keep both with modifications
c) Get rid of one; keep the other as is:
d) Get rid of one; modify the other:
e):Get rid of both:..

If we do nothing about our two entitlements, and if we wish to balance the budget by 2040, we will need to:

1) cut federal spending by 60% (impossible)
2) raise Federal taxes to 2.5 times of today’s intake (impossible)
3) achieve sustainable economic growth in double digit range, every year till 2079 (impossible)….

Obviously choice one …. is out….

Second inning: choice 2

Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 14 percent in payroll tax revenues (from 12.4 percent to 14.1 percent) or an immediate reduction in benefits of 12 percent or some combination of the two.

It’s a small price to pay for solvency. But we must remember that Social Security is the easier of the two entitlements to fix. The problem with Medicare is people keep living longer, and medical costs keep rising at twice the rate of inflation!” No! That doesn’t sound good. “We’d have to have eight trillion dollars today invested in treasury rates, to deliver on that promise…

So what modifications are on the table? Some being mentioned are 1) means-testing supplicants for benefits, 2) increasing payroll taxes, 3) increasing the retirement age, 4) cutting back on benefits, and 5) paying cheaply for preventative health-care so fewer citizens require the more costly operations. But none of these options cover the looming demographic shift of baby boomers who are now beginning to reach retirement

However the surest method of entitlement solvency lies in increasing our payroll taxes. Yes, these are regressive taxes but if we would just be willing to pay 12% to 14% percent more in FICA taxes, which raises their rate from 12.4% to 14.1% percent, it would save social security.. That is an increase of 1.7% per paycheck… At 1.7% percent on an income of $60,000, the average family would receive $1020 less per year in take home pay…. But that extra $1020 would be enough to keep Social Security solvent for years to come… That averages out to $19.61 per week, or .49 cents for every hour you work! That is the unmentioned bottom line that is required to keep Social Security solvent… (Per person $510 or half of the $1020 will be paid by the employer, with the additional $510 being supplemented by the employee).

Jumping the retirement age upwards by 5 years from 65 to 70, adds 5 additional years of tax money pouring into the system, while also decreasing by 5 years the amount of benefits that are needing to be paid out….. If we garnish 5 years of extra funding and lose up to 5 years of paying out benefits, just moving up the retirement age by 5 years gains 10 years of funding per future retiree.. This is easy to do, and benefits all that do it…..

Reducing benefits, however, has a deadly side effect. Saying “yes” to Social Security cuts, ie. a reduction of benefits per person, does indeed cut down on the amount of Federal money being paid out; it also depresses the economy by that exact same amount which is being removed… Now, to diminish the pay-out to those receiving Social Security, hurts the very economy from which we need to acquire the additional income required to pay out those benefits in the first place… Instead of helping solvency, when we cut the benefits, we aggravate its costs spiraling out of control…

Representing 4.3% of our GDP, we do reap benefits from all of that Social Security money moving through the grid of our markets.

Indeed, 41 percent of older couples and 33 percent of singles would experience a living standard reduction of 90 percent or more were Social Security benefits eliminated…

We have looked at all but the last. So what happens to us if we rid ourselves of both entitlements, as conservatives have been arguing for almost a century? The answer is simple.

Upon retirement, many Americans would have no income and no health-care. Can we afford that budget cut? Is balancing our budget worth the social cost it imposes on our elderly and society?