Social Security

Social Security, Medicare and the US federal budget deficit combined are the three largest and most serious fiscal challenges that face our US government. These challenges, that if not managed properly, will negatively impact our economy in away that will take our country years to recover from. Social Security is currently funded with about $1.5 trillion dollars and will need about $10.5 trillion to be able to fully fund social security entitlements for the baby boomers. In other words, the US government does not have the money and a slower economy means less social security revenue to add to the social security fund.

The social security crisis that faces the US economy does not end with whether or not the individuals who are entitled to the benefits receives the money or not. But instead the broader ramifications that lie in two other areas.

One is the reputation of the US Federal Government and its ability to keep its word as it relates to fiscal matters. The greatest impact of a bad reputation for not paying the social security benefits will be with foreign countries who hold the US debt. If our foreign debt holders get nervous and want their money back we run the real risk of having our ever declining US Dollar being devalued.

It is the devaluation of the US Dollar that is the second and most serious possible negative impact on the US economy, if the problems with social security are not managed properly. Remember, a debt related problem in Mexico was one of the reasons the Mexican Peso was devalued years ago. So we do not need to look too far geographically nor historically to realize how dangerously close we are coming to having our currency devalued.

The same end result of a devalued currency can occur, if we seek to borrow money abroad to pay for social security entitlements. If social security is not resolved, there will be a series of cascading problems that will take place that will undue white middle class American.