Having known that SS taxes were never trust funded, in the 70's this was the "smoke and mirrors" euphemism. Carter was the last president to take on the bureaucratic establishment in DC and was made a laughing stock. The current deficit run up was started by Reagan and a democratically controlled congress, and federal spending has run completely out of control in the succeeding three decades, to the point where the Fed will have to bail out the Fed. It's nice to see a number attached to the unfunded liabilities. I believe I've seen it in print a couple of times at $52T. Of course, that's over the lifetime of current payees into the system, but the reality is that cost can not be covered in one generation, can not be sustained, will be reduced or eliminated for future generations that will be paying off the $52T debt.
Another alternative is default on the unfunded liabilities a strategic default. This includes federal retirement, social security, medicaid and medicare, and major pension funds backed by the full faith and credit of the United States. Given a US Senate that approved Y2K funding for it's own payroll system, but not that of it's staff, it's not hard to see where the chips will fall, essentially on the backs of the taxpaying middle class. When there is no more middle class, which it appears where we're headed, and entitlement spending is threatened, civil unrest will follow, that is, if no distraction appears on the horizon in the form of a foreign threat. Even so, in the inspiring words of Reverend Jeremiah Wright, "the chickens have [will] come home to roost".
The simple fact of the matter is this, either the federal government reduces deficit spending and reforms entitlement spending, or the end of the federal government will be as violent as it's beginning.
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