And to close out my argument:

-The US will get to a point where the economy isn't expanding fast enough to cover the structural problems in Social Security and Medicare. Already debt service is greater than what we spend on national defense.

Everyone cheering for rate increases from the Fed ought to stop cheering.


-Social Security especially has structural problems. As I've posted the math many many times already, the effective 'rate of return' is massively inefficient (there really isn't a rate of return because it's all pay as you go), it was never designed for a population blip (the Boomers didn't have enough kids and Gen X is too small) and it was never designed to pay out benefits to anyone for 20 years or more (the expected payout timeframe was roughly ~13 years back then). There is no mechanism to account for increasing life spans.

-Medicare suffers from being a middleman in a broken market that is not allowed by statute to function as a coherent market. Price equilibrium is never applied. Price transparency doesn't exist. Therefore, the entire system is riddled with cost inefficiencies.

The last adult in the room who understood how these programs worked was...

...wait for it...

...wait for it...

William J. Clinton, who had the best grasp of economics of any President in my lifetime. He had a plan for reforming Social Security and another one for making Medicare more efficient and introduced competitive pricing.

Alas, the GOP was so crazed for revenge they flushed the future for impeachment.

So what are the most likely outcomes for the United States?

1. Benefit reductions. Gen X'ers should plan for not getting the max SS payouts and instead expect a haircut of 15-20% at some point in our lifetimes. On the Medicare front, there will be benefit caps that ration health care for seniors at some point.

2. Ceilings lifted. They're going to have to raise the earnings ceiling above $184k for SS and increase the rate for Medicare.

Those 2 might get the nondiscretionary part of the budget trajectory back under control.

As for the rest, debt service is a problem until rates come down. Discretionary spending in areas outside of defense are going to have to be studied. And the feds need to search for other revenue sources besides endless taxation.