Underneath a few headlines

We get so consumed with the person who shall not be named, we lose sight of other stories. Here are a few on this Father’s Day.

– Hong Kong citizens reminded the financial city leaders they are promised a different path forward by their owner. One million people equal to 1/7 of the city’s population protested the proposed law to extradite people to mainland China. The law was postponed, as a result. It should be noted some big money investors threatened to move money to Singapore to aid their cause. I applaud their protest and shows the power of people. China can ill-afford the notoriety or flight of capital away from Hong Kong.

– An issue that needs attention today, is a subset of our US debt issue. Social Security will soon pay out more than its revenues. This will draw down the trust fund in a way to require automatic 20% cuts in sixteen years. Of course, we could act now and make less onerous changes, but politicians are not even talking about this issue, which is par for the course, in my view. Why plan ahead they ask by their failure to act? I have seen exercises where a group of locals solve the Social Security funding dilemma. It should not be that hard for our representatives to act like such.

– Another shooting at Costco in the Los Angeles area occurred this weekend. Public shootings are now so commonplace in the US, it made page four of my newspaper. And, that shows how derelict our so-called leaders are in failing to do anything of substance. We have become too inured to gun deaths in the US. This makes me sad and angry that our representatives are failing to address a huge problem that is killing people. If Sandy Hook and Parkland school shootings can’t bring greater change, I truly do not know what will.

– Both Brazil and the US need more doctors, especially in rural areas. Brazil is seeing visiting Cuban doctors bail on them, as they are not getting paid what they are owed. Why is a good question? In the US, medical students are going more into specialty areas. With student debt, it is hard to practice in low income areas and in lower margin general services. There are good ideas with telemedicine, but doctors need to see their patients up close to assess risk, physical and environmental.

If you have not heard of these issues, it reveals how little we pay attention to news and news not related to a someone who commands so much attention. I am hard pressed to ever remember an occupant in the White House consume so much attention.

I could use a heavy dose of boring competence in a leader who need not be the center of attention. Maybe then, we could address some of these issues. So, let’s celebrate Hong Kong’s successful protest and speak to issues like these and others. Again, I hope fathers are having a wonderful day.

A specific deficit problem – Social Security and Medicare

While we have an annual US deficit approaching $1 trillion on budgeted revenue around $3.4 trillion, nothing much is being done about it or our current debt of $22 trillion. A tangible subset of this problem includes Social Security and Medicare, which were reported yesterday by trustees to run out of money in the near future – Medicare by 2026 and Social Security by 2035.

A nonpartisan group called The Concord Coalition, who tracks and reports on our debt and deficit issues, offered the following statement.

“Today the trustees once again warn that Medicare and Social Security are not on sound financial ground,” said Robert L. Bixby, Concord’s executive director. “Sudden and substantial benefit cuts await beneficiaries in less than 20 years — well within the lifetimes of many current beneficiaries — if lawmakers fail to act. Any ‘political leader’ worthy of that title, including those out on the 2020 campaign trial, should make it a priority to find solutions that are both fiscally and generationally responsible.”

Bixby added: “The trustees’ warnings seem all the more alarming because the country is not in a position of current or projected fiscal strength. Delaying reforms, however, would simply exaggerate the generational inequities of reform. For example, the trustees say it would now take an immediate and permanent benefit cut of 17 percent to keep the Social Security trust fund solvent for 75 years. Waiting until 2035 to take action would increase that benefit cut to 23 percent.”

As a retired actuary, I have written before about a few ideas, not limited to the following:

– increase the Social Security taxable wage base to above $180,000 drawing more FICA taxes from employees and employers;

– reduce Medicare retirement age to 62 and use ACA funding for that group to shore up (it will help the risk pools of both groups);

– limit cost of living increases on Social Security benefits along with measured changes to select Medicare benefits;

– increase judiciously FICA taxes to shore up shortfalls (Medicare Part A is currently 1.45% and Social Security is 6.2% up to the taxable wage base of roughly $128,000). Medicare Part B premiums change annually.

Please encourage your legislators to act now on these issues. Bixby’s caution is a good one. As we age as a country, it will only add pressure. Also ask candidates what they propose. Do not let them off the hook with a non-answer. Deferring action has been the norm.