WASHINGTON — Today’s reports from the trustees of Social Security and Medicare confirm once again that these critical programs are on unsustainable paths and will put increasing pressure on the rest of the federal budget in the years ahead, according to The Concord Coalition.
WASHINGTON — Today’s reports from the trustees of Social Security and Medicare confirm once again that these critical programs are on unsustainable paths and will put increasing pressure on the rest of the federal budget in the years ahead, according to The Concord Coalition.
Concord urges the American public, elected officials and candidates for federal office this year to carefully consider the warnings of the trustees, who each year emphasize the need to quickly start reforming these programs.
“The trustees do not issue these reports for their own amusement,” says Concord Executive Director Robert L. Bixby. “The annual reports are required by law with the expectation that responsible lawmakers will heed their warnings and take appropriate action.”
“For the past several decades,” Bixby added, “that has been a vain hope. Time is now running short. The longer we delay corrective actions, the more difficult they will become and the more onerous the burden will be for future generations.”
Today’s reports again show that Social Security and Medicare Part A (Hospital Insurance) are paying out more than they take in from their designated payroll taxes.
In addition, still more general federal revenues are required to support Medicare Part B, which provides various medical services, and Part D, which helps pay for medication. The premiums that older Americans pay for these parts of Medicare only cover a fourth of the costs.
According to the trustees in their summary of the reports, the general revenue subsidies for Social Security and Medicare will total $401 billion in 2016 — $328 billion for Medicare and $73 billion for Social Security.
The rising costs are no mystery. As more baby boomers retire, people live longer and health care costs rise, the government must pay more and more just to provide the same level of services to a larger population of beneficiaries. Any plans to protect or expand current benefits need to deal first with the imbalances stemming from this math problem.
“The presumptive presidential nominees of the major parties have yet to propose anything to deal with the problems highlighted by the trustees’ reports,” Bixby said. “With the political conventions just around the corner, it is time for serious discussion and debate on what should be done to fix these programs.”
Each year considerable public attention is focused on the trustees’ projections of how long the Social Security and Medicare trust funds will remain solvent. The trustees say the Social Security trust funds will be exhausted in 2034 while Medicare’s Hospital Insurance fund will be exhausted in 2028, two years earlier than last year’s projection. But the trust funds are internal government accounting mechanisms that do not provide meaningful information about these programs’ sustainability as their growth squeezes other national priorities.
The findings in a 2014 report by former U.S. Senators Bob Kerrey and Jack Danforth, who are now two of The Concord Coalition’s co-chairs, can provide some helpful perspective for reform.
Their report, which updated the work two decades earlier by a bipartisan commission they headed, notes that the government must act quickly to bring spending and revenues for Social Security and Medicare into long-term balance.
To do so, the Kerrey-Danforth report says, fundamental demographic changes and projected increases in health care spending must be taken into account.
“We cannot continue to allow entitlements to consume a rapidly increasing share of the federal budget,” Danforth said today. “Failure to act soon could jeopardize our economic future, undermine our standard of living and unfairly burden our children and grand-children with excessive government debt. We can’t just keep procrastinating.”
Kerrey added: “What this means is that current law will not allow Social Security to keep the promise to every future beneficiary under the age of 50. The longer Congress delays, the larger the cut in future benefits or the increase in future taxes. Inaction is grossly unfair to younger workers whose taxes are supporting currently eligible beneficiaries. Congress is counting on younger voters not realizing how much they are at risk.”
Media Contact: Steve Winn, (703) 254-7828, [email protected]
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The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC
