This is a simple explanation that will help you understand how those government types and economists figure that there will be a shortfall in both Social Security and Medicare.

If you invest a dollar today in something safe such as a government bond and when you collect that investment twenty years from now, you will have two dollars. That means that $2 twenty years from now is worth a dollar today. The actuarial folks estimate that Social Security will have a $3.5 trillion shortfall 75 years from now. Medicare will face a shortfall of almost twice that much. Planning will allow us to make the necessary investments to cover those shortfalls. In our little example, a purely hypothetical one at that, $1.75 trillion invested would cover those shortfalls and probably any actuarial mistakes. Same with Medicare.

So why does our President insist that a $12 trillion debt is a not so bad?

[ Close Window ]