Seniors may soon pay the price of a multi-billion-dollar tax cut. After recent years of surpluses, the Social Security and Medicare Trust Funds are once again at risk. Legislation that would add prescription drug benefits to Medicare and Notch Reform are increasingly in doubt.

President Bush’s tax cut and the weakened economy are shrinking federal surpluses. This has set off a fight over the use of the Trust Funds to pay for other government spending. The tax cuts were estimated to cost $1.35 trillion over 10 years, but gimmicks like delayed starts and arbitrary expiration dates or "sunset provisions" masked the true size, which is believed closer to $1.8 trillion. Compounding the problem, the budget resolution approved earlier this year did not include the price tag of increased spending on education, defense or for national emergencies.

Recently the Congressional Budget Office (CBO) reduced estimates of the budget surplus for the government’s fiscal year 2002 (FY02) which starts October 1st. In January the CBO estimated the FY02 non-Social Security budget surplus at $47.7 billion. By June the CBO estimate of the surplus dropped to $1 billion.

But almost nothing about the new tax law is irreversible. Even before President Bush signed the new legislation Congress was talking about ways to revise it. Many of the provisions would not become fully effective for years and would end almost immediately thereafter. For example, the estate tax repeal would only be fully effective for one year.

On the other hand, the pressures on Medicare and Social Security continue to mount as increasing numbers of persons retire with fewer workers to pay taxes into the system. A Social Security Commission may soon propose increasing the eligibility age and cutting Cost-of-Living Adjustments (COLAs). Prescription drug costs are expected to climb another 20% by the end of this year.

This is a crucial time of year when final appropriation bills are negotiated. Please contact your Members of Congress now and insist that they live up to their promises to add a prescription drug benefit to Medicare and to protect the Social Security and Medicare Trust Funds -- by repealing recent tax cuts if necessary. Washington has a promise to fulfill. They must not be allowed to give away the means to do so by accounting gimmickry.

To read more about the tax cuts, see "Tax Relief Bill Doesn’t Do Enough" by clicking this link: http://www.tscl.org/newcontent/101122.asp

August 2001