Editor’s Note: There is a lot of news this morning. The Federal government apparently woke up and realized the situation in East Palestine, Ohio, might be a RBFD. The Chief of the EPA showed up on Friday to “examine” the consequences of the “train wreck” or disaster, take your pick. The little town and State apparently responded in good order with nothing forthcoming initially from EPA or CDC or the other national agencies. Now they are flooded with visitors to ensure we know they care. The EPA Chief assured us they just didn’t want to distract the First Responders. In a minor way, this demonstrates how we respond to the impending failure of a few Federal Trust Funds. We still don’t know whether the Highway Trust Fund is fixed with the multi-trillion dollar Bipartisan Infrastructure Bill just passed, or whether the matter has simply been “kicked down the road.” We understand the Norfolk Southern Rail management was aware of some problems before the derailment and kicked that can themselves down the road. Or rail, as the case may be.

– Vic

We made some choices last week. We do not claim they were right or wrong, but they seem to avoid personal Really Big Effing Deals (RBFDs). They will, with luck, accommodate requirements that will emerge in the decade or so we anticipate being alive. We claim, independent of appraisers and other onlookers, that we have the nicest two-bedroom unit in Big Pink’s 200-unit base infrastructure.

The Farm was a grand idea. We did not factor in the sad reality that going out on the back deck for a smoke was becoming an adventure. The New Unit solves some of those problems in terms of access and availability of necessary services.

We now accept the notion that the move after this one may not be voluntary. Oh well. Other factors contribute to a sense of finality with all this. Two that did not play much of a factor were the two major government programs that actually and directly impact our lives. Those have been in the news as we have transitioned from being members of the working population to being in the retired “recipient” community.

A pal is known for his useful analysis about how things work in a generational manner. He will put down his coffee cup at times and utter this phrase: “Demographics is Destiny.”

We agree. We would not want to be a Chinese public policy official dealing with the consequences of the One Child policy. But we have similar sorts of things happening here. And of course we are talking about “Social Security” and “Medicare.”

They are periodically in the news these days, since the people who manage them say that both funding streams will be inadequate to continue to pay for what they are paying now. That means some changes are coming, though we have no idea what they will be.

As usual, though, some of the people we pay to think of these things are doing so. And some of the people who are spending the money we pay in taxes for the two programs have been thinking about it for a much longer time.

Some of these assorted interest groups have standing. The Congressional Budget Office is one of them. The 2022projections are the latest available on the Biggest Effing Trusts. You may have heard of them- or two of the three of them- in the curious State of the Union address last week. CBO took on an examination of the three major trust funds and announced they “will be tapped out” over the next decade.

What are they and when will things have to change?
1. Highway Trust Fund will be “exhausted” in 2027
2. Medicare’s Hospital Insurance Trust Fund goes negative in 2030
3. Social Security’s Old-Age and Survivors Insurance Trust Fund goes negative in 2033

It will suffice for this little introduction to the problem to bound some of the issues. Since we have been operating in ‘budget crisis mode’ since the Clinton Administrations, there are some low-hanging fruits in terms of truth and falsehood. We will first try to outline what we are dealing with. They used the term “exhausted” for the Highway Trust, which to us implies some shifting terminology. Background? We went negative in the FY 2021 budget.

What were we spending? What is the Highway Trust Fund? It is a Federal system that collects revenue on excise taxes for motor vehicle fuels, including gas and diesel. It was $47 Billion when fuel use declined in 2019 (last year of available figures) and made up the difference in transfers from the General Fund. The Federal funds are matched by about three times that amount in State and Local funding. The shortfall from today to 2031 is just a little short of $200 Billion. You can see why things are falling apart. We won’t know what impact the Infrastructure multi-trillion dollar bill will have for a while.

Initial reports from Forbes indicate the 2,702-page bill had about ten percent ($110 Billion) for “improving the nation’s roads and bridges” and included $39 Billion for “the largest-ever” investments in public transit, including funds to improve access (elderly/disabled), repair 24,000 buses, 5,000 railcars and thousands of miles of train tracks.

You can see the issues with all this. The Public Transit issue may help people get on the bus, but with Covid, safety on mass movement systems declined along with ridership. The Bill is the core of all state and local road programs, and we are unsure if the public transit is subtracted from that. Actual numbers will naturally default to the amount of excise taxes collected by the Feds, and the policies of the Federal government.

The roads and rails are a matter of diverse interest, mostly to those who use them. Grandma appears only in improved access for her wheelchair. We have not gotten to the matters of Social Security and Medicaid, but wanted to ride the highway process with you to see how the system responded to the first of the “exhausted” Trust Funds. It isn’t what they talk about, and there is no discussion about the shortfalls to come.

Increasing miles-driven will increase fuel sales, lessening the disparity between income and outflow. There is a contradiction with the official policy on use of fossil fuel, and the imposition of requirements for Electric vehicles, which use the infrastructure but do not contribute to the Trust.

Naturally there will be some RBFDs to come as we settle that all out. The way it works though, we will probably still be arguing about it when Medicaid goes negative, and we will still be arguing about that when the wheelchair starts to go over the cliff.

We will take on the other looming Trust Fund issues this weekend. We just want you to be ready.

www.vicsocotra.com