Social Security, Medicare, Budget Deficits
|March 29, 2005||Posted by Staff under Progress Report, The Progress Report|
Bush Administration Mixed Up, Confused on Priorities
In the midst of a record-breaking budget deficit in 2005, why do Republicans care only about a deficit forecast for the year 2041? And why do politicians overlook Medicare?
Here is a news update from Taxpayers for Common Sense. TCS is the best organization that monitors excessive government spending, corruption and corporate welfare.
A Funny Thing Happened on the Way to Social Security ‘Reform’
Last week, the Secretary of Health and Human Services, the Secretary of Labor, and the Secretary of the Treasury used their position as Social Security trustees to push the issue of overhauling social security by creating private accounts at the annual trustees report release. But while all the press attention went to Social Security, the real elephant in the room went unnoticed: Medicare, which provides medical insurance for the elderly, is surging towards insolvency, and it has yet to get the attention it deserves.
Yes, the trustees report predicted that the Social Security trust fund will start losing money in 2017, and that it will not be able to pay full benefits by 2041, both estimates that are one year prior to earlier estimates. But the reality is that we control all the variables in social security: inflow in the form of tax rate and amount of income subject to tax, and outflow in the form of the amount of benefits, the rate of benefit growth and when you can start receiving benefits. With Medicare, we only control the inflow, and the outflow is rising incredibly fast as overall costs of health care explode.
Simply put, Medicare goes bust sooner and more spectacularly than Social Security. In fact, Social Security solvency issues are just a tempest in a tea pot by comparison — a mere firecracker compared to the 4th of July fireworks extravaganza that will accompany the eventual bankruptcy of Medicare.
Perhaps that is why the two independent trustees, one Democrat and one Republican, stayed away from the political release of the trustees report. Instead of reading from the Administrations script, they wrote a separate letter commenting on the state of Medicare. The report by this pair of bipartisan public trustees drew a dire picture of the state of Medicare, and emphasized that, Medicare’s financial outlook has deteriorated dramatically over the past five years and is now much worse than Social Security’s.”
To be fair, last years prescription drug bill contained a few minor cost control mechanisms for Medicare. They included weak provisions to encourage private sector competition and expand access to health savings accounts. But in reality, these were only Band-Aids for a program that is in desperate need of a tourniquet
The fiscal realities of the Medicare trust fund are sobering: the Hospital Insurance trust fund will run dry by 2020, and by 2024, Medicare will pass Social Security in total spending. The trustees found that Medicares cost as a percentage of GDP will grow from 2.6% now to 13.6% by 2079.
Remember, a huge amount of Medicare isnt even paid for by the trust fund or the payroll taxes we all pay. The entire prescription drug plan, projected to cost more than $700 billion over 10 years, comes directly out of the US treasury. That giant sucking sound you hear is Medicare vacuuming up tax dollars.
While Capitol Hill argues about Social Security, Medicare has once again captured the distinction of being our most imperiled entitlement program. If politicians are seriously committed to Americas seniors, they need to start finding solutions for Medicares imminent collapse. If they dont, we may find ourselves looking back on this Social Security crisis fondly.
For more information, contact Keith Ashdown at (202)-546-8500 ext. 110 or by email at firstname.lastname@example.org
TCS is at www.taxpayer.net
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