Are Democrats seriously considering dealing with the looming Social Security and Medicare collapse? It certainly does not appear to be the case.
Instead of focusing on the impending bankruptcy of these programs, Democrats are pushing to spend $ 4 trillion to $ 5,000 billion on a progressive wish list of expensive new federal giveaways. Perhaps they believe that promising voters who promise free colleges, free child care, free senior care and more will keep them from realizing that our most important safety nets are falling apart.
Plus, President Biden and the Congressional Democrats want to dramatically raise taxes to pay for shiny new duties. But taxpayers are already facing big hits just to maintain the ones we already have.
This week, administrators of the social security and health insurance programs released their annual reports; the news is not good.
The bottom line: Both funds are running out of cash, faster than expected. Medicare and social security should be supported, the sooner the better. Specifically:
- Medicare’s Part A Hospital Insurance trust fund will go bankrupt in five years; spending is expected to exceed revenues by nearly $ 600 billion over the next 10 years. Longer term, we would need a 27 percent payroll tax increase or 16 percent spending cut to keep the program running.
- Gross spending on Medicare will grow from 4.1% of our entire economy this year to over 6% over the next 20 years.
- Social Security will become insolvent in 13 years. Under current law, the administration cannot guarantee all benefits to today’s retirees.
- The directors’ report says Social Security will run cash flow deficits of $ 2.4 trillion over the next 10 years, or 2.3 percent of total taxable payroll.
- Social Security is expected to post a cash deficit of $ 147 billion this year, or nearly 0.7% of GDP
The expected insolvency date for these rights has approached over the past year; the remedies proposed by the Committee for a Responsible Federal Budget (CRFB) become more and more draconian over time.
In other words, the longer we wait to consolidate these programs, the greater the tax increases will have to be or the less the number of retirees who can count on benefits will be reduced.
To achieve long-term solvency of social security, advises the CRFB, today would require a 27 percent increase in the payroll tax; if lawmakers don’t act before 2034, when the program will end, that payroll tax increase will be 34%.
That is, even if Congress acts today, the increase in the deduction from a workman’s wages will be more than three percentage points; if they wait, it will be more than 4 percentage points. It’s a big blow to paychecks.
The other approach is to cut benefits for retirees. The CRFB estimates that “Social security solvency could be achieved with an overall reduction in benefits of 21% today, which would drop to 26% by 2034. The reductions for new beneficiaries should be 25% today” hui â, butâ even cutting benefits for new beneficiaries in 2034 would not be enough to avoid insolvency.
Is anyone listening?
The alarming reports were greeted by silence from the left, including Sen. Bernie sandersBernie Sanders Spendthrift Democrats ignore impending Social Security and Medicare bankruptcy Briahna Joy Gray pushes back moderates blaming Sanders voters for Supreme Court makeup Manchin warns Democrats: press ‘pause’ on the .5T plane of Biden PLUS (I-Vt.), Head of the budget committee and author of the $ 3.5 trillion “social infrastructure” bill that Democrats hope to bring about through reconciliation. Apparently, for Sanders and his progressive colleagues, the new programs are better than the old ones, even though most Americans rely on Social Security and Medicare.
In fact, in July, Sanders and Sen. Chris Van HollenChristopher (Chris) Van HollenSpendthrift Democrats ignore impending Social Security and Medicare bankruptcy Progressive pollster: 65% of voters likely to support polluter tax Senate backlog of Biden candidates frustrates White House MORE (D-Md.) Introduced a bill that would exacerbate Social Security’s financial problems. According to the Maryland senator’s website, the bill would “extend Social Security benefits up to age 26 for surviving students, children of disabled workers and eligible grandchildren of retired workers.”
While it is true that benefits are paid to children or workers who died young or disabled, social security was not intended to support young people during their studies, as is the aim of the Sanders and Van bill. Hollen. Given the current projections reported by administrators, adding to demands on program finances is unwise.
Likewise, Sanders wants to lower the age of Medicare eligibility from 65 to 60 or 55 and expand coverage to include dental and vision expenses. He offers to pay for these changes by allowing Medicare to negotiate prices with drug companies.
Studies have shown that lowering the age of eligibility to 60 would cost up to $ 100 billion per year, while a 2019 plan to add coverage for vision and dental care would cost $ 350 over 10 years. Estimates of savings from Medicare’s negotiation of drug prices – in total some $ 500 trillion over 10 years – are not enough to cover the additional costs.
Earlier this year, President Biden fired Andrew Saul, a business executive who was commissioner of the Social Security Administration. Saul worked under both Republican and Democratic presidents, initially as chairman of the Federal Thrift Investment Board, where he modernized the organization that provides retirement savings plans to military and federal employees. The Republican received such high marks for his management that the unions of federal employees supported his reappointment in president obamaBarack Hussein Obama Iranian President: Country ready to resume nuclear talks without Western “pressure” Spending Democrats ignore impending Social Security and Medicare bankruptcy Changing Joe Biden’s mind is no task easy PLUS.
Biden fired Saul not because he was doing a bad job, but apparently because he was doing a good job reducing fraud and waste in an effort to make the Social Security Administration more efficient, while improving customer services. Biden has not named a successor to Saul, although Social Security is the biggest item in our federal budget. And that’s how serious Democrats are.
Liz Peek is a former partner of Wertheim & Company, a major Wall Street support company. Follow her on Twitter @lizpeek.