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Funding Senior Citizen Programs – Social Security &
Medicare – to Crowd Out Funding for Other Government Programs
First Time in Recent History Benefits to be Paid
by General Fund
June 4, 2004 - Social Security and Medicare
benefits are on a course to crowd out funding for every other government
program in the absence of significant tax increases, according to a new
report co-authored by Social Security and Medicare Trustee Thomas R.
Saving. The report, released by the National Center for Policy Analysis
(NCPA), documents the startling speed at which elderly entitlements will
balloon.
"Medicare and Social Security are already eating
into the government's discretionary spending and without higher tax
revenues will soon begin to crowd out other programs," said NCPA Senior
Fellow Thomas R. Saving, director of the Private Enterprise Research
Center at Texas A&M University.
According to the study:
-- This year for the first time in recent history,
the federal government will have to use general revenue to pay Social
Security and Medicare benefits -- about $45 billion, or 3.6 percent of
federal income taxes.
-- The general revenue requirement as a share of
income taxes will double in less than five years; and five years beyond
that, it will double again.
-- In 10 years, one out of every 7 income tax
dollars will be needed; in 15 years, we will need one in every four.
-- By 2030, about the mid-point of the baby boom
retirement years, we will need more than half of federal income tax
revenues to pay promised benefits.
-- By 2040, we will need two of every three income
tax dollars; by 2050, three of every four.
-- By 2070, the unfunded deficits in Social
Security and Medicare will require 100 percent of federal income taxes.
"The choices are going to be difficult," said
Andrew Rettenmaier, executive associate director of the Private
Enterprise Research Center at Texas A&M University and the study's
co-author. "Beginning in the next few years we are going to have to
start raising taxes, cutting benefits or squeezing other federal
programs."
The NCPA is a nonprofit, nonpartisan research
institute with offices in Dallas and Washington, D.C., that advocates
private solutions to public policy problems. NCPA depends on the
contributions of individuals, corporations and foundations that share
its mission. The NCPA accepts no government grants.
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