Social Security and Medicare-Touch the Third Rail?

One of the most contentious issues in modern American politics involves changes to Social Security and Medicare. The subject is often referred to as the third-rail of politics.

The third rail references the high voltage rail of electric trains and subways. Contact with the third rail can lead to death. In politics, the same goes Social Security. Proposing to change the current program can lead to political suicide, or at least the loss of an election. Since getting re-election is a high priority for most politicians, it's understandable why politicians try to avoid this topic as much as possible.

No matter how hard the resistance, Social Security and Medicare will change. Why? Social Security and Medicare programs are spending more than they are currently collecting in taxes. Ignoring the potential concerns about the Social Security Trust Fund and the "Lockbox" (which are addressed in A Sinking Nation), the U.S. government predicts the retirement surplus of Social Security will be depleted by 2034 and the disability funds will be depleted by 2023. Consequently, even without any legislative revisions, future benefits will eventually be reduced to about 70% of the amount due because of a lack of funds. Of course, Congress could proactively pass legislation to fix the problem, but it would require them to touch that third rail.

Although 2034 sounds like a long time in the future, it's less than 18 years away. Do you remember Y2k and the start of a new millennium? Seem like a long time ago? The new millennium started 16 years ago, and we're nearly halfway to 2034. In reality, 2034 will be here before you know it.

Unless something changes dramatically in Washington, don't expect Congress to take any action on Social Security in the near term. However, the fact remains... changes to Social Security will eventually occur; either through legislative changes or a lack of money.