Last week the Administration suggested a change to how inflation would affect Social Security benefits. Why?
The present value of the underfunding of the future expenses of Medicare and Social Security (OASDI) is about $77.9 trillion. See The Fiscal Cliff Is a Molehill Compared to Entitlement Underfunding
The question then is: can an increase in taxes make these funds solvent?
Total household wealth as of 4Q2012 was, according to the Federal Reserve, $66.072 trillion. Note that “household wealth” includes the most of the value of all U.S. corporations because those corporation are owned mostly by U.S. households in the form of direct ownership, mutual funds, and pension holdings.
If all of the net wealth of all Americans were seized and donated to the entitlement trust funds they would still be underfunded.
In addition of this liability which exceeds all household wealth by $11.9 trillion the Federal government also has debt of $16.8 trillion.
Scarier yet is that these estimates assume that the future care of medical expenses will rise at CPI-U +1%. Take a look at this chart which shows medical care rising at a higher rate than CPI.