Neither of the two men most likely to be elected president in November has any viable plan to address the impending bankruptcy of America’s two largest welfare programs.
This week’s news from the Social Security and Medicare trustees should underscore how foolish this is. On Monday, an annual report from the officials who run the two elderly benefit programs once again confirmed that the clock is ticking for both programs: Social Security is expected to go bankrupt by 2035, while Medicare, which is used to pay for hospital visits and by 2036 Years other health services will become insolvent.
While the two projected bankruptcy dates have improved slightly since last year, when trustees predicted they would run out of cash reserves in 2034 and 2031 respectively, the scale of the problem cannot be ignored. When Social Security goes bankrupt, beneficiaries’ benefits are automatically reduced by 21%. The Committee for a Responsible Federal Budget said the insolvency of the Medicare Hospital Insurance Trust Fund would trigger automatic 11% cuts that “could result in significant disruption to health care services for seniors and people with disabilities.”
It’s worth emphasizing this. These benefit cuts are not the result of future choices Congress and the President may make, but are baked into the current status quo of both programs. Without changes in policy, they will eventually become a reality.
This is a reality that neither President Joe Biden nor former President Donald Trump seem willing to acknowledge. Both leading contenders for the White House have pledged to block potential reforms to Social Security — effectively promising to keep the welfare train running full speed down a dead end.
The Biden administration has decried a plan drafted by some Republican lawmakers to raise the retirement age to 69 — a modest change but not enough to avoid bankruptcy at the Social Security Administration. Trump, meanwhile, said in March that he was willing to “cut” entitlement programs and make other changes to them, but then immediately walked back those remarks. During this year’s Republican primary, the Trump campaign targeted Florida Gov. Ron DeSantis and former South Carolina Gov. Nikki Haley with ads because they were at least willing to talk about the need for welfare reform.
This should be disqualifying for both parties. The American people deserve to know how the next president will address this issue. We don’t need perfect solutions, but the complete lack of any plan shows an (admittedly, not surprisingly) level of lack of seriousness.
“Many political leaders on both sides of the aisle, from top to bottom, would rather stoke this issue than actually solve it,” Maya McInnes, chairwoman of the Committee for a Responsible Federal Budget, said in a statement. “As we enter At the height of the campaign, it is our responsibility as Americans and the voting public to ensure that we demand that President Biden and President Trump give us a realistic, detailed plan to avoid bankrupting the trust fund they need to work with Congress to implement it. Time is running out.
The best way to achieve Social Security is to allow American workers more freedom to plan their own retirement, rather than using their paychecks to fund retiree benefits, which in many cases are more accessible to retirees than to the workers who fund their benefits. rich. As part of any future changes, workers should be allowed to opt out of Social Security.
Medicare bankruptcy is a more complex problem, but it should be solved first by working to lower health care costs, not by raising taxes on working-class Americans.
Still, bankruptcy is only part of the problem posed by these two shaky welfare programs. Social Security and Medicare are expected to run deficits every year between now and 2098, the end of the trustees’ report’s 75-year budget window, and these deficits are a major contributor to the federal government’s increasingly weak fiscal position. Even if both programs are not expected to run out of cash by the mid-2030s, getting them on a more stable fiscal track is important for long-term economic growth. Refusal to address spending concerns could lead to significant tax increases over the next decade and beyond.
Cato Institute budget analysts Romina Boccia and Ivane Nachkebia reported in 2017 that Social Security’s unfunded liabilities totaled $25.2 trillion over the 75-year budget window. Debt Scheduling Substack communication. To close the gap through taxes alone, Congress would have to increase the payroll tax rate from 12.4% to 17.5%, equivalent to a tax increase of $2,450 per year for the median worker.
“Congress should address these entitlement programs now before they become an even bigger drag on people’s livelihoods due to higher taxes and increased government spending,” said Vance Ginn, a former White House economic adviser during the Trump administration. Posted on X. “It won’t be easy politically, but the stakes are too high, the government failures that got us to this point are excessive, and the path to big government socialism needs to be corrected through more free market capitalism, otherwise we will The situation will become more severe.
