Social Security and Medicare.
"The unfunded liability of the two programs is now about $83 trillion. See Table 2. (Print this out to view Table 2 horizontally. To make it fit on a standard computer screen, it’s vertical here.)
To pay for Social Security and Medicare, the government would have to raise income taxes by 81%.
Today, the combined programs of Social Security, Medicare, and Medicaid consume almost 50% of the U.S. government’s budget. For a report on this, click here.
If you are willing to view a balanced, brief presentation using about 30 simple graphs to describe that is inevitably going to happen, click here.
There is no statistical escape from bankruptcy or default, either open or through inflation, yet Congress pretends that this is not inevitable. Why? Because voters will remove from office any Congressman who tells the truth about what is statistically irreversible. The question today is the form that the bankruptcy will take: outright default, mass inflation, or a salami-slicing reduction of benefits."
These programs must be ended. A popular democracy that trys to do this will be voted out. Therefore the democracy will end, or the country dissolves into chaos.
This is what is known as the princepal-agent problem. The agent (politican) does what is popular, as a means to stay in power due to the limited term of his electoral stature. Ie, old people vote, and they want medicare. Thus in spite of knowing the long term fiscal consequences, the politician wants to stay in power and thus appeases the masses. Its a lot harder to explain measures in quantitative, practical realities than to make blanket statements “change we can believe in” and promises that have no method of achievement (ie healthcare for all! except how are you going to pay for it"). This may sound elitist, but the voting populace generally does not ask the hard questions.
One thing economics taught me is, there is no such thing as a free lunch. Yes something needs to drastically overhaul this system as we have not even reached the peak demographic of those claiming benefits, ie the baby boomers, with a lesser number of people paying into them (ie my generation) thus I pay for social security, medicaid etc, and will never see them, or will bankrupt the country. These programs were never intended to be permanant, social security was passed when the average life expectancy was 2 years above the benefit entitlement age. But we all know the reluctance of the government to give up power and vote grabbing social programs…