But recently Congress and the public have been learning that Medicare and Medicaid are in even worse shape than Social Security.  The Congressional Budget Office testified that under conservative estimates Medicare and Medicaid would grow more than 5 times faster than Social Security over the next 45 years.

Last year the Medicare Part A Hospital Insurance Trust Fund, which is funded by payroll taxes, dipped into a deficit, requiring the need to draw from general federal revenues, which are also in deficit.  Medicare Part B (doctors and outpatient coverage) relies on general federal revenues for 75% of its funding.  Medicaid costs, which also come from general federal revenues, are soaring, and the President has proposed deep cuts in that program which the majority of seniors rely on to pay for nursing home costs.

We agree that Congress should start to work on Social Security — and the first place to start is by placing the Trust Funds off limits from other government spending—to be protected from deficits and used only for retirement benefits.  Since the formation of the Trust Funds in 1983 workers have paid more Social Security taxes than needed to pay benefits.  The government has spent the excess for other purposes and replaced the taxes with IOUs.  While the IOUs authorize the government to pay benefits, no law specifies how the government will get the cash to do so.  Congress could cut benefits instead.

Recently legislation was introduced in the House and the Senate that would begin to address this problem.  “The Social Security and Medicare Lock–Box Act (H.R. 116) was introduced in the House by Representative Rush Holt (NJ) and a similar bill, “The Social Security Lock-Box Act” (S.292) was introduced in the Senate by Senator David Vitter (LA).  The bills would prevent the Social Security Trust Funds from being used for any purpose other than retirement security.

Until Congress acts to protect Social Security and Medicare revenues, any reform will only last until deficits veer out of control once again.  Please contact your Members of Congress and ask for their support of “The Social Security Lock–Box Act.

Sources: “The Future of Social Security,” Statement of Douglas Holtz-Eakin, CBO before the Senate Special Committee on Aging, February 3, 2005.