America, We Have a Problem

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- Tick tock, tick tock.

The high priests of the Social Security and Medicare "trust funds" (whatever happened to lockbox?) issued new warnings about the solvency of the "trust funds" they oversee.

The Social Security Disability Insurance trust fund will be gone, depleted, kaput in 2016, which is two years earlier than expected. Thank you, masters of the obvious!

A record 5.4 million workers and their dependents have enrolled since 2008. The increase has been attributed to many people giving up looking for jobs or exhausting unemployment and finding a new way to collect. Data from the Social Security administration shows that the number of applications was up 24% last year compared with 2008. However, the increase in enrollees is not just an Obama administration event. Enrollment has increased 53% over the past decade and has been going up quite steadily since George H. Bush was in office. There is little doubt that despite the broader trend (which has a lot to do with loosened eligibility standards that were put in place by Congress in 1984), the severe recession is really exacerbating the problem. Matt Rutledge, a research economist at Boston College's Center for Retirement Research, stated in Investor's Business Daily: "We see a lot of people applying for disability once their unemployment insurance expires."

Next shoe to drop: The Social Security trust fund, which goes to retirees, will be exhausted in 2036, two years earlier than projected last year. This, once again, should not be a surprise to anyone who pays any sort of attention to our fiscal situation, because like clockwork, every year, the death date for the lockbox gets moved closer.

The high priests of Social Security stated that the dismal outlook was due to "updated economic data and assumptions." It does not take a rocket scientist to figure that with the ratio of workers paying taxes in to the system to the individuals receiving benefits continuing to worsen every year, the world's biggest Ponzi scheme is on very shaky ground. The current ratio is 2.8 workers per beneficiary; when the program was started it was 41 to 1. If I were Bernie Madoff's lawyer, the defense for my client would have been the Social Security defense, arguing that my client just modeled his "investment strategy" on the third rail of American politics.

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