WASHINGTON — The Concord Coalition said that today’s release of the annual Social Security and Medicare Trustees Report is a timely reminder of how important cost-saving reform of these two vital programs is to the nation’s fiscal outlook. Concord urged lawmakers now deliberating long-term budget plans to focus on the programs’ growing costs, and the extent to which they will tap into general revenues, rather than rely on trust fund balances, which are a matter of internal governmental bookkeeping.

“No serious plan to address our nation’s unsustainable fiscal policy can ignore the enormous pressure that Medicare and Social Security will place on the budget in the coming years,” said Concord Coalition executive director Robert L. Bixby.

Today’s report shows that Social Security and Medicare Part A are now in permanent cash deficits. In considering solutions, Concord reiterated that what matters to the budget and the economy is cash flows, not trust fund accounting. Trust fund balances simply record a claim on future general revenues. They record how much the government owes itself, but say nothing about how society will meet the growing fiscal burden reflected in the existing commitments of the programs going forward.

The Trustees Report identifies population aging and rising health care costs as the main sources of growth. The number of beneficiaries will greatly expand and they will be making greater use of health care services, which continue to grow faster than the economy.
 
“This dynamic must be accounted for in any fiscal plan, whether by spending cuts elsewhere in the budget, increased revenues, or reforms to slow the growth of Medicare and Social Security. We may well need to do all three. What we can’t do is borrow our way out of the problem. That might work if we were dealing with a temporary spike, but the numbers show an expanding gap over time between promised benefits and dedicated revenues, ” Bixby said. 

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