Are Social Security and Medicare Bankrupt?
The Rhetoric and the Truth!
Last Friday, the Trustees of the Social Security and Medicare trust funds released their yearly report on the fiscal strength of those programs. It wasn’t a surprise that their report indicated that the projected dates when expenses would exceed revenue for both programs were earlier than last year. Social Security is expected to go broke in 2036, one year earlier than last year’s estimate, and Medicare is expected to go broke in 2024, five years earlier than last year’s report predicted. This alarming news has added to the din of the politicians and pundits as they warn of debt and deficits and use this latest report as fuel for the funeral pyre being built around the two most important programs for older Americans. Unfortunately these two programs get mixed into the dire projections of trillions of dollars of debt to be passed on to our kids and grandkids with no context or explanation. We need to separate the truth from the rhetoric.
Rhetoric – This latest report shows that Social Security and Medicare are getting more and more expensive.
Truth – The shrinking years of solvency are due entirely to the prolonged economic downturn. Nothing has changed in the two programs to make them more expensive, the bad economy has:
· Reduced the number of workers paying into the programs,
· Encouraged the President to try to stimulate the economy by reducing the payroll tax this year, thus reducing the revenue for both programs,
· Caused more people to decide to start drawing Social Security because they can’t find jobs,
· Forced more people into Medicaid rather than using their own insurance if they were working.
Rhetoric – Our current economic condition would be better if these two programs were changed.
Truth – These two programs are not now or will they be for many years a draw on our economy or are they adding one dollar to the current debt. They are solvent and had nothing to do with the current economic downturn.
Rhetoric – Older Americans are just being greedy and don’t care about the younger generations.
Truth – Nothing could be further from the truth. The older generation was and is still willing to give everything to their kids and grandkids. They paid taxes their whole life into these programs; it was the politicians who mismanaged the people’s money. Everyone knew in the early 60’s how big the boomer generation was going to be, and it wasn’t a secret what the outlying costs were going to be. The government collected the money and chose to spend it elsewhere rather than save and invest it.
The cause of our debt woes has been muddied by short term political goals. This din of rhetoric can’t and shouldn’t hide the long-term truths. Shame on the Washington politicians for their willingness to incite generational strife, just to foster their short-term political goals . It was Washington’s bad public policy that allowed the American taxpayer to become co-signers with borrowers who couldn’t afford houses. It was Washington who decided to bailout companies who put short term profits ahead of long term stability.
Somehow Washington politicians forget that it was the “greedy” older generation that welcomed their kids and grandkids back into their homes when they lost their jobs, even when they saw their retirement investments shrink from the bad economy. It’s not fair to ask the very people with the fewest options to shoulder the burden of debt caused by decades of irresponsible spending. Old age may dull our memory but I can guarantee that older Americans will remember the out-of-control spending of years past and will vote for those who also remember them and vow to make sure history does not repeat itself. In the battle between truth and rhetoric, in the long term, truth wins.