By: Sid Salter
Both here in Mississippi and nationally, congressional candidates are making no mention of the serious challenges faced by the present iterations of the Social Security and Medicare programs. Baby Boomers poised to collect the entitlements are decidedly not ignoring the issues, but are nervously reading disturbing warnings that fiscal danger looms.
The Social Security and Medicare Trustees released their annual report earlier this month and documented the fiscal realities of the two programs. The latest projections show that Medicare Hospital Trust Fund (Part A of Medicare) will be depleted in 2026, three years earlier than projected last year.
At the point, trustees project that Medicare could continue to pay out 91 percent of current benefits in 2026, then see that decline to 78 percent in 2039, then rebound to 85 percent in 2092. Bottom line, less Medicare benefits to cover skyrocketing healthcare costs.
Social Security Disability insurance is projected to experience similar difficulties in 2032, which the Social Security retirement program is projected to be impacted in 2034 – that is to say that the Social Security Trust Fund will deplete its reserves by 2034.
What does that mean? It means that Social Security will in 2034 not be able to pay beneficiaries in full and that beneficiaries will face a 21 percent across the board benefit reduction from numbers shown on the annual benefits projections from the Social Security Administration.
Those facts matter only to voters who have plans to actually receive Social Security and Medicare benefits from the same federal government who deducted taxes supposedly dedicated from their paychecks expressly for the purpose of funding the programs.
What retirees and Baby Boomers really have in terms of that “nest egg” they thought they had in Social Security and Medicare when FICA was being deducted from their payroll checks is in reality a pile of congressional IOUs in a U.S. Treasury Department Bureau of the Public Debt’s filing cabinet in Parkersburg, W. Va. The bonds aren’t backed by the cash we gave the government from our payroll deductions.
They are backed by the “full faith and credit” of the federal government. But Congress long ago spent the actual assets to fund other government functions and to redeem the bonds, the government would now have to borrow money or raise taxes.
Conservative Republican former Social Security and Medicare public trustee Charles Blahous recently wrote: “What’s really important is the magnitude of the (Social Security and Medicare) shortfalls and the difficulty of correcting them, which grows each year. Whether depletion is distant or near, the problem had to be confronted sooner rather than later. Unfortunately, later has come sooner than the trustees thought it would.”
Democratic former chief economist to former Vice President Joe Biden took this posture on the entitlement programs: “What is the way forward? Surely, the sooner we tackle these shortfalls, the better. Wouldn’t it be awesome to avoid yet another one of those fiscal cliffs that we know is coming but are too dysfunctional to address until the last minute, when we kludge together some patch?”
The bottom line is that Social Security and Medicare as we know it today is on borrowed time.
“Saving” the programs – and even that concept is a stretch in the current fiscal and political climate in this country – will require additional government revenues and austerity measures both in terms of healthcare costs and in program eligibility.
In other words, the entitlements have to be reformed at the same time that revenues are found to shore up the shortfalls. And yet, while cruising through congressional elections, voters aren’t having conversations with the candidates about these two vital issues – and that fact is a true electoral mystery.