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Econ 1 with John Taylor Discussion

The Economy and The Deficit

Discuss some of the factors that will contribute to the dramatic increase in public debt over the next few decades?

  1. Growth of Medicare

  2. Growth of Social Security

  3. Revenue will not grow along with spending in general—we won’t be able to cover the costs.


Medicare spending will increase with a graying population as Europe is acutely aware.
Americans continue to live longer, though 110 is considered the upper limit of human endurance.

Although Healthcare inflation appears to be slowing, it is still a runaway cost.

Medicare and Social Security are supposed be self funding. As a smaller workforce contributes less, these programs need constant bailouts from the General fund.

Another problem is the $11K income cap for Medicare recipients means there is a disincentive for older people to work and not contribute to the tax base, because they lose that benefit.

UAflyer pretty much nailed it. FYI, in the "Test your knowledge: Advanced" Answer A is also correct.

Kevin kappen I also thought A was correct as well in that quiz. What did I miss?
And, UAFlyer, would you explain the $11k cap?

Though both well-conceived, neither Social Security nor Medicare accounts for the aging of baby boomers.
I think UAflyer refers to the limit on earned income after which Social Security starts reducing your benefit. Either he is talking about something else, or he missed the current figure of $16,920. Clarification?