Friday, January 19, 2007
Federal Reserve Chairman warns on Social Security, Medicare
The new Federal Reserve chairman Ben Bernanke warned that federal deficits associated with social security and Medicare costs would eventually undermine the economy, and that more drastic steps should have started ten years ago or so.
Greenspan would be alarmist to the markets in the past, but these remarks don't seemed to have surprised anyone.
Nevertheless, social security would face hard choices: increased taxes, means testing, reduced benefits, raised retirements ages -- and even some of this would be necessary if the country gradually migrated to a system of portable private accounts that people control on their own, since the system started with workers who had not contributed.
Medicare faces choices as people can be kept alive longer and longer (with a lower population), and some ethicists want to eliminate certain life-prolonging treatments over a certain age. Ultimately, some treatments could depend on the sacrifice of other family members, with some policy choices. There are profound consequences for the eldercare debate. The emotional nature of family cohesion can certainly undergo change, as it has been doing for decades. In earlier decades, people lived a "natural" life span at home, and often unmarried family members were expected to take care of them.