Financial Future of Medicare, Social Security. Glass Half Empty

Report from the New York Times Re: The Financial Future of Medicare and Social Security:

The Social Security trust fund will be exhausted in 2033, three years sooner than projected last year, the administration said. And Medicare’s hospital insurance trust fund will be depleted in 2024, the same as last year’s estimate, it said.

Social Security Commissioner Michael J. Astrue, a trustee of the two programs, said Social Security’s disability insurance program faced the most immediate threat, with its trust fund expected to run out of money in 2016, two years sooner than predicted last year.

For the disability program, as for Social Security over all, tax receipts would be sufficient to pay about 75 percent of promised benefits after the trust fund was exhausted.

In the past, Congress has occasionally shifted revenue from one trust fund to another to avoid any interruption of benefits. But if the disability trust fund borrowed money from Social Security’s old-age trust fund, the loan would have to be repaid, officials said, and the measure would not solve the programs’ problems.

Richard S. Foster, the chief Medicare actuary, said the projections in the report, based on current law, “are probably poor indicators of the future financial status of Medicare.”

 But, the public trustees said, “the reported long-term financial outlook has grown worse,” primarily because the government accepted advice from technical experts suggesting faster growth in Medicare costs.

In explaining changes in their Social Security projections, the trustees cited slower growth in average earnings of workers and the persistence of unemployment in the slow recovery from the recession. They lowered their projection of average real earnings in the future, primarily because of a surge in energy prices and “slower assumed growth in average hours worked per week after the economy has recovered.”

Representative Pete Stark of California, the senior Democrat on the panel’s health subcommittee, said, “Today’s report continues to show Medicare on a sound financial footing,” mainly because of the 2010 health care law. Still, Mr. Stark said, Republicans keep trying to “end Medicare as we know it, not because the program is unsustainable, but because they want government out of the business of guaranteeing health care.”

What Mad Dog infers from this report of various experts, trustees and actuarials is that both Medicare and Social Security would run out of money, unless new money is provided , sometime in the next 20 years.  That is, if things stay static for the next 20 years, and we do not pump any more money into these programs, these programs will start to run out of money. 

That new money could come from an improved economy, with more taxpayers paying more into the programs, or from, Heaven forbid, higher tax rates to support these problems. That is, we might solve the problem of the bank account, by depositing more money into it. What a novel idea!

But, because Republicans have taken a no tax pledge, the option of generating more money for the programs does not exist for them, which means the only thing to do is to cut expenditures.  That means, coupon care, abandoning the promise to pay for your medicare expenses and abandoning the promise to pay out pensions under Social Security. It's the only way, the Republicans say.

And it is, if you vote Republican.

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A version of this article appeared in print on April 24, 2012, on page A13 of the New York edition with the headli