Fiscal Scolds Hoping For Catastrophe
Here's the latest from the catfood lobby:
When the trustees of Social Security and Medicare recently reported on the economic outlook for these programs, the news coverage was universally glum. The recession had made everything worse. Social Security, Medicare face insolvency sooner, headlined The Wall Street Journal. Actually, these reports were good news. Better would have been Social Security, Medicare risk bankruptcy in 2010.
It's increasingly obvious that Congress and the president (regardless of which party is in power) will deal with the political stink bomb of an aging society only if forced. And the most plausible means of compulsion would be for Social Security and Medicare to go bankrupt: trust funds run dry; promised benefits exceed dedicated payroll taxes. The sooner this happens, the better.
That the programs will ultimately go bankrupt is clear from the trustees' reports. On pages 201 and 202 of the Medicare report, you will find the conclusive arithmetic: over the next 75 years, Social Security and Medicare will cost an estimated $103.2 trillion, while dedicated taxes and premiums will total only $57.4 trillion. The gap is $45.8 trillion. (All figures are expressed in "present value," a fancy term for "today's dollars.")
The Medicare actuaries then dryly note what would happen once the trust funds for Social Security and Medicare's hospital insurance program are depleted: "No provision exists under current law to address the projected [Medicare] and [Social Security] financial imbalances. Once assets are exhausted, expenditures cannot be made except to the extent covered by ongoing tax receipts." Translation: benefits would fall. Social Security checks would shrink; some Medicare bills wouldn't be paid in full—and the shortfalls would progressively worsen. Retirees would scream. Hospitals might shut. No president or Congress would abide the outcry; even the threat of imminent bankruptcy would rouse them to action. But restoring the programs' solvency would confront Congress and the White House with fundamental questions.
My God, the sky is falling. Right now the social security trust fund isn't going to run out of the surplus we've all been paying into it since 1983 until 2037, which is a real shame. If only we could make it go bankrupt now and use all that money for tax cuts and wars.
Just a little reminder --- here's Ronald Reagan raising the same alarm over 45 years ago:
But we're against those entrusted with this program when they practice deception regarding its fiscal shortcomings, when they charge that any criticism of the program means that we want to end payments to those people who depend on them for a livelihood. They've called it "insurance" to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified it was a welfare program. They only use the term "insurance" to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. There is no fund, because Robert Byers, the actuarial head, appeared before a congressional committee and admitted that Social Security as of this moment is 298 billion dollars in the hole. But he said there should be no cause for worry because as long as they have the power to tax, they could always take away from the people whatever they needed to bail them out of trouble. And they're doing just that.
A young man, 21 years of age, working at an average salary -- his Social Security contribution would, in the open market, buy him an insurance policy that would guarantee 220 dollars a month at age 65. The government promises 127. He could live it up until he's 31 and then take out a policy that would pay more than Social Security. Now are we so lacking in business sense that we can't put this program on a sound basis, so that people who do require those payments will find they can get them when they're due -- that the cupboard isn't bare?
These people have been saying the same thing for over half a century and they'll keep saying it until the program is gone. I don't know why anyone still listens to them.
If only these people cared as much about the future of the planet as they do about the projected SS revenues a century out, we might start to make some rational policies. They simply want to break the generational bond between the young and old and are always looking for a good moment of impending crisis (or "opportunity" like a rising stock market) to put an end to the program. Whatever works.
As for Medicare --- there's no fixing it without health care. But they know that too --- which is one of the reasons they will block reform.
These people are zealots. And anyone who engages them with any earnest intention to make a deal will be thwarted. They know exactly what they want and it isn't "solvency." It's the opposite --- as that column makes crystal clear.
h/t to RA