Deficits Put Social Security & Medicare in Doubt

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Deficits Put Social Security & Medicare in Doubt

The nation recently learned that we face the largest deficit in history. Shortly after the Congressional Budget Office announced a record deficit of $480 billion for 2004, the President informed the country that remaining in Iraq for another year will cost a staggering $87 billion, bringing the total deficit to about $567 billion.

With hundreds of billions in deficits forecast for the next 10 years, Washington will have to weigh priorities, especially those affecting Social Security and Medicare. In recent weeks virtually every mainstream economist has said that something will have to give, very possibly that could be the government’s promised health care and retirement benefits.
Indeed, even the head of the General Accounting Office, Comptroller General David M. Walker says “it is time to admit that we are in a financial hole and to stop digging!” Walker says the government’s current budget measurement and scorekeeping leave much to be desired. Here are a few of Walker’s key recommendations:

The federal government should start exercising more fiscal discipline on both spending and taxes. While many spending increases and tax cuts may be popular, they may not be prudent.
The long-term cost of major spending and tax proposals should be quantified and adequately considered BEFORE legislation is enacted into law. This is especially important with legislation (like a Medicare prescription drug benefit) where the costs are expected to significantly escalate after the government’s fiscal 10-year projection period.
We must take steps to assure that Medicare and Social Security are both solvent and sustainable. Focusing on solvency alone of Medicare and the Social Security trust funds is not an adequate gauge of financial condition of these two programs.

TSCL agrees that the time has come to begin the task of strengthening Social Security and Medicare. Waiting until a crisis can force drastic cuts, but acting well in advance allows smaller changes to be phased in gradually, giving everyone affected time to adjust their retirement plans. Let’s start the process by asking your Members of Congress what plans he or she has to address our nation’s long-term fiscal imbalance and to shore up our nation’s health care and retirement programs.

Sources:
“Truth and Transparency: The Federal Government’s Financial Condition and Fiscal Outlook,” David M. Walker, Comptroller General of the United States, September 17, 2003. “Dizzying Dive to Red Ink Poses Stark Choices for Washington,” David Firestone, The New York Times, September 14, 2003.

December 2003