Where We Stand:
We can’t ignore the problems in national benefit programs: Listen to program trustees and act now.
This month’s glowing U.S. jobs report, showing the lowest unemployment rate since 2000, grabbed headlines, but it was followed by a couple of less-noticed gloomy forecasts for the health of the two biggest government benefit programs. While jobs numbers rise and fall from month to month, for years the indicators for the financial health of Social Security and Medicare have been headed only one direction — down.
Social Security trustees reported that the federal retirement and disability benefits program would need to dip into its trust funds this year to cover its obligations for the first time since 1982, and those funds would run out of money by 2034, just as today’s 51-year-olds are eligible for full benefits. Medicare trustees reported that its hospitalization trust fund would be depleted by 2026, three years earlier than they projected just last year.
Economic growth isn’t enough
The trustees, all appointees of President Trump, called on members of Congress to take action to close the funding gaps in both programs “sooner rather than later” to cushion the blow to beneficiaries and taxpayers. That’s the same message that was delivered for years by the current trustees’ predecessors, appointees of President Obama.
Ironically, Trump ran on a promise not to touch Social Security or Medicare. He insisted economic growth would be enough to cure the ills in both programs. The latest reports from his own trustees show otherwise.
The longer lawmakers sit on their hands, the worse the problem gets. Waiting until 2034 to deal with Social Security’s shortfall would require much larger tax hikes or benefit cuts — at least 35 percent larger than today, according to the nonpartisan Committee for a Responsible Federal Budget. Doing nothing could lead to a 21 percent cut in Social Security benefits for all recipients in 2034, regardless of age or need.
Both programs are especially vital in Florida. More than 4.5 million state residents receive Social Security checks every month, and more than 4 million rely on Medicare for health coverage. Together the two programs pump tens of billions of dollars a year into the state’s economy.
Trust the trustees
Democrats in Congress, who failed to block the $1.5 trillion tax cut Republicans passed in December at Trump’s urging, are understandably balking at the prospect of any cuts in Social Security or Medicare benefits. Even so, it’s not realistic to expect a GOP majority to go along with a plan to bolster the two programs that relies exclusively on tax hikes. A more politically viable strategy would include elements of both approaches — such as means testing to slow the growth in benefit costs for affluent retirees, and a hike in the cap on income subject to payroll taxes.
A refusal to do anything to extend the solvency in both programs is indefensible for members of both parties, but it would be especially self-defeating for Democrats. Social Security and Medicare already consume about 40 percent of federal spending. With the number of Americans eligible for both increasing as the population ages, and with health-care costs continuing to rise, the programs’ share of the budget will keep expanding if no changes are made to either one. That will leave fewer dollars available to invest in categories that Democrats hold dear, including other social safety-net programs, as well as education, environmental protection, housing, transportation and medical research.
Lawmakers would be wise to heed Trump’s trustees, and apply “informed discussion, creative thinking and timely legislative action” to strengthen Social Security and Medicare — “sooner rather than later.”