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Senior Politics
Concord Coalition Urges Serious Solutions to
Medicare, Social Security
Latest trustees'
report confirms 'fiscally unsustainable track'
May 1, 2006 - With today's release of the annual
Social Security and Medicare trustees' reports showing a combined
long-term unfunded obligation of $15.6 trillion over 75 years in these
two entitlement programs, The Concord Coalition warned that the two
programs are on a fiscally unsustainable track and urged lawmakers to
respond with serious solutions rather than free lunch plans or "do
nothing" promises.
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Medicare Trustees Annual Report
Medicare Cost to Pass Social Security in 2028, Part
A Trust Fund Broke in 2018
Higher cost in 2005
cuts fund's life by two years
May 1, 2006 - Medicare expenditures were $336
billion in 2005 and are expected to increase in future years at a faster
pace than either workers earnings or the economy overall and exceed the
cost of Social Security in 2028. By 2080 Medicare costs will be almost
twice that of Social Security. The data is in the annual Medicare
Trustees Report issued today, which also says the trust fund for
Medicare Part A will be exhausted in 2018, two years earlier that
projected last year, due to higher cost than estimated and
upward revisions of assumptions of utilization.
Read more...
Social Security Trustees Report
Social Security Fuse Gets Shorter by One Year - Goes
Boom in 2040
Funds to be exhausted in 2040, Medicare cost
will pass SS in 2028
May 1, 2006 - The 2006 Social Security Trustees
Report released today shows little change in the projected financial
status of the Social Security program over last year except that the
fund will run out of money one year earlier than thought last year.
Benefits of $702 billion were paid in 2005 - a $44 billion increase from
2004. The
Trustees Report projects that the Social Security Trust Funds will be
exhausted in 2040. And, Social Security will lose it's top spot as
America's largest social program in 2028, when Medicare will move ahead.
Read more...
Read more
on
Senior Politics |
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"This years trustees' reports again demonstrate
unambiguously that Social Security and Medicare cannot provide the level
of benefits promised without significant retooling. Some combination of
reduced benefits and additional revenue will be required to ensure these
programs are fiscally sustainable and generationally equitable in the
future.
"If these programs are to remain viable, lawmakers
must demonstrate the leadership and political will to make tough policy
choices now in stark contrast to current budgetary shell games being
played in Washington," said Concord Coalition Executive Director Robert
L. Bixby.
"Lawmakers and the media erroneously focus on the
solvency date as the primary indicator of Social Security's and
Medicare's financial health. But solvency is misleading. It's cash flow
that matters," said The Coalition's Policy Director, Ed Lorenzen.
"The existence of trust fund balances will not
change the fact that these shortfalls will place tremendous pressures on
rest of the budget and future taxpayer as well as the economy as a
whole. To redeem the bonds in the trust fund and cover the shortfall,
Congress will have to cut spending on other programs, issue more debt,
or raise taxes. Clearly, 'financially solvent' bears no relationship to
'fiscally sound.'"
Between 2017 and 2040 the U.S. Treasury will have
to come up with more than $4.2 trillion in today's dollars to cover the
shortfalls in the Social Security system. In 2030 alone the program will
need a general revenue infusion of $267 billion in today's dollars to
redeem its dwindling supply of Treasury bonds. Even if taxes were raised
by 2.02 percent of payroll to eliminate the actuarial deficit over
seventy-five years, the system would begin to run annual cash deficits
again in 2026.
Medicare's finances are in even deeper disarray
than Social Security. According to the Medicare Trustees report, The
Hospital Trust Fund that finances Part A expenditures already is running
cash deficits and will require ever-increasing infusions of general tax
revenues to stay afloat.
"These programs must not be viewed in isolation,
either from each other or from the overall federal budget. Our focus
must be on how much these programs are going to cost over the long-term
and how future taxpayers are going to pay for them," said Lorenzen.
"According to the Trustees report, the cost of Social Security and
Medicare will grow from nearly 7.4 percent of the economy today to 12.7
percent by 2030, consuming approximately 70 percent of all federal
revenues, crowding out all other discretionary spending. These programs
are simply unsustainable in their current form."
"Congress and the President cannot afford to wait
until a crisis is imminent to take action." Bixby warned. "The
consequences of inaction are dire. Waiting until the eve of insolvency
would require a payroll tax hike of more than one- third or benefit cuts
in excess of 25 percent. Try running for re-election on those numbers."
"We hope that these reports, when viewed in context
with the current projections of record budget deficits will incite
Congress to action," said Bixby. "Running huge budget deficits on the
eve of the retirement of the baby boom generation is just plain
irresponsible. These reports should be a wake-up call to get our fiscal
house in order, and fast."
The Concord Coalition is a nonpartisan, grassroots
organization dedicated to balanced federal budgets and generationally
responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and
Bob Kerrey (D-NE) serve as Concord's co- chairs and former Secretary of
Commerce Peter Peterson serves as president.
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