No doubt you’ve already seen the screaming headlines promising the immediate bankruptcy of Social Security and Medicare…it’s an annual Washington tradition tied to the release of the Social Security and Medicare Trustees report. Unfortunately, this tradition seldom stems from factual reporting of what’s actually in the trustees report. This year is no exception.
To help you sort fact from fiction about the true health of Social Security and Medicare, here is our President/CEO Max Richtman’s reaction to the Trustees’ projections and some data you likely won’t see reported in this week’s news coverage:
“Projections in the 2012 Trustees Reports come as no surprise to anyone who understands how Social Security and Medicare work. The trust fund solvency date for Social Security has seen fluctuations many times in recent decades, from a depletion date as distant as 2048 in the 1988 report to as soon as 2029 in the 1994 and 1997 reports. This year’s report is well within that range. Contrary to the crisis myths perpetuated by fiscal conservatives and many in the media, the prevailing facts show once again that Social Security remains among the nation’s most successful and stable programs. The Trustees report there is now $2.7 trillion in the Social Security trust fund, which is $69 billion more than last year, and continues to grow. Payroll contributions and interest will fully cover benefits for decades to come.” Max Richtman, NCPSSM President/CEO
**In the 2012 Trustees report:
-Trustees project Social Security will be able to pay full benefits until the year 2033. After that, Social Security will have sufficient revenue to pay about 75% of benefits.
-Social Security is still well funded. In 2012, with the economy showing slow signs of recovery, Social Security’s total income still exceeded its expenses by over $57 billion. In fact, the Trustees estimate that total annual income is expected to exceed program obligations until 2020.
-Beneficiaries will likely see a Cost of Living Allowance increase of 1.8% in 2013.
The 2012 Trustees report also shows Medicare’s Trust Fund solvency projection remains unchanged at 2024. This reflects the success that health care reform has had in improving Medicare’s solvency. If long-term solvency for Medicare is truly Congress’ goal, then repealing health care reform is not an option as it would set back that progress immeasurably.
The 2012 Trustees report also shows Medicare’s Trust Fund solvency projection remains unchanged at 2024. This reflects the success that health care reform has had in improving Medicare’s solvency. If long-term solvency for Medicare is truly Congress’ goal, then repealing health care reform is not an option as it would set back that progress immeasurably.**
“The challenges facing Medicare are the same that we see in the broader health care system…the high cost of health care in America. Thanks to health care reform, Medicare will save $200 billion by 2016, but even those savings would be lost if opponents have their way and the Affordable Care Act is repealed. We must allow reform to be fully implemented in order to realize the projected savings.” Max Richtman
The National Committee believes that Congress can also improve the long-term outlook for Social Security with modest and manageable changes in revenue without enacting harmful benefit cuts for current or future retirees. Recent polling has shown that a majority of Americans support lifting the payroll tax cap to ensure Americans contribute at all income levels.
So what do you do in 2033 when it can only pay 75% of promised benefits? That's only 21 years away, which doesn't seem very far given that I'm almost 40 years past my college graduation. If I send my creditors 75% of what I owe, it won't turn out too well for me.
I never said Social Security or Medicare was imminently insolvent. What I say, and to my knowledge has not been contradicted, is that we can fix the actuarial insolvency now without horribly painful changes. Fixing it later is an entirely different matter.
Please note, though, Karl, that the Daily Kos article doesn't really address Medicare, which is the first, and much larger, part of the entitlement actuarial insolvency problem. It proposes paying less to providers and suppliers (the reference to the ACA), but doesn't address how much less it would really have to pay to be solvent.
John
Edit:
The article makes it sound like the discussion is largely from the Trustees' report. It is, in fact, from NCPSSM, whose "official" dailykos profile is below:
An excerpt:
But Canada’s ongoing F-35 drama is but the tip of the F-35 iceberg. The United States still plans to purchase 2,443 of the aircraft at a total cost (purchase and operations) of well over a trillion dollars. But virtually all of the nations that have signed on to the F-35 consortium are seriously questioning their commitment to the jet. And there is furious debate and much unhappiness in Washington over the F-35’s costs and production delays.
From Wikipedia: http://en.wikipedia.org/wiki/Lockheed_Martin_F-35_Lightning_II
But in 2011, it was revealed that only 50% of the eight million lines of code had actually been written and that it would take another six years and 110 additional software engineers in order to complete the software for this new schedule.[72] The total estimated lines of code for the entire program (onboard and offboard) had grown from 15 million lines to 24 million lines by 2012
You see John, that Trillion for the lame useless fighter than even generals from the military don't say they want would cover a great deal toward medicare and social security. Just a little sacrifice of our imperialism is needed, not painful horrible costs
The military industrial complex and their paid political stooges have foisted this false choice on us. We should have war on them
not to mention the 700 billion we're planning to spend on Nukes we don't need during the next 10 years. To hell with people who value being able to blow up the world 10x instead of 5x over at the expense of the old and poor
I never said Social Security or Medicare was imminently insolvent. What I say, and to my knowledge has not been contradicted, is that we can fix the actuarial insolvency now without horribly painful changes. Fixing it later is an entirely different matter.
Agreed.. but how
The problem as I see it is that a number of powerful people in the GOP wanted to privatize social security and others it appear to me want to do away with it entirely. So what do we do? I don't' really see the Dems coming up with good answers either. ( except maybe to reduce the military, which I agree with but don't' want a fast draw down. )
By the way.. I deleted the post about what you said about TGT. I still think that it is true. I wish that you would take your blinders off. If I posted that "your" side of the argument only posted nasty things and Dr. F. only posted reasonable arguments, you would cringe. I feel the same way about TGT. I see more hateful things come out of him then reasonable arguments.
Social Security has tons of money. The government has just been borrowing from it and needs to pay it back.
Exactly, Karl. When you place money at interest, you are loaning it to the party paying interest. Whether we loaned it to the government (usually considered the safest investment) or to private parties, we're still loaning it. Otherwise, we're just putting it under the mattress, which is almost always a poor investment.
The problem comes because the government does need to pay it back. When it does, it affects the cash flow negatively. According to the (self-interested) NCPSSM report you quoted, we will need to start doing this for Social Security in about eight years, and big time for Medicare perhaps sooner. There is only one source for the payment of those funds: federal revenues.
Thus, when NCPSSM says Social Security has "plenty of money," what they really mean is that they can appropriate a larger and larger share of federal revenues starting in 2020. Where is that going to come from.
For the life of me, I can't see how NCPSSM, AARP, and the other insolvency deniers can purport to want to preserve Social Security and Medicare by denying financial facts, or how otherwise responsible (but, apparently, financially ignorant) news organizations let them get away with it. I'm not trying to destroy these programs, I'm trying to save them, not only now, but in the future. NCPSSM and AARP don't give a rip about the future. They want it unchanged now, and let the problems get fixed when they're all dead.
My preferred way would be to gradually raise eligibility ages to reflect current demographic reality, rather than 1930's demographic reality.
I think this would be less contractionary (if it is contractionary at all) than raising payroll taxes, and would be more in keeping with the original intent of the programs, namely to provide for necessities for people after they can no longer work.
I don't like means testing, particularly for Social Security, because of the moral hazard issue Dave Kos has so accurately described on the thread involving the Republicans. Nonetheless, if some means testing is necessary to reach a political compromise that actually gets passed, I'd rather have that than a stalemate. Politics is (or at least should be), after all, the art of the possible. leaving the current system unchanged simply guarantees the demise of both programs.
As a suggested bumper sticker of one of my friends says, "Warning: dates on calendar are closer than they appear."
John
Edit: Eric and Karl, I agree that there's plenty of platinum-plated military expense that we can't afford, not the least of which is where we send our troops. That isn't the only conservative favorite I would reduce substantially. In my opinion, our drug laws -- with their ridiculously long sentences (and ridiculously longs sentences generally) are a luxury we can't afford, and are actually counter-productive.
I could go on, but it's increasingly clear that a majority of Americans -- of all political persuasions -- prefer the buy now, pay later (preferably after I'm dead) plan to confronting our financial issues realistically.
Edit: Eric and Karl, I agree that there's plenty of platinum-plated military expense that we can't afford, not the least of which is where we send our troops. That isn't the only conservative favorite I would reduce substantially. In my opinion, our drug laws -- with their ridiculously long sentences (and ridiculously longs sentences generally) are a luxury we can't afford, and are actually counter-productive.
Agreed, and when we consider REAL cuts to the military and the prison industrial complex, it's enough to save medicare and social security if we go back to Clinton era taxes
John: ... but the biggest spending issues remain Medicare, Social Security and the increased costs inherent in the ACA.
John, hey, that (edit: fourth) spike in the deficit chart I posted above didn't come from any of those things. And those things, minus ACA, were all in play during Clinton era surpluses. It just doesn't wash or compute in any way.
My preferred way would be to gradually raise eligibility ages to reflect current demographic reality, rather than 1930's demographic reality.
This is a really bad idea. The folks who will need to rely upon Social Security the most (the bottom income quintiles) have not made much in the way of life expectancy gains in the last 40 years.
A modest raising of the income contribution cap would probably handle things just fine and not leave the most vulnerable with a gap between the age at which they can no longer effectively work and when they are eligible for SS.
Social Security funding is a easily solved issue and it's disingenuous to throw it into the same mix as Medicare.
We went over the fiscal cliff when Junior suckered us into 2 wars , gave the well off a tax cut that they didn't need , and handed the bill to the middle class...here's to looking back up at the top of the cliff at the moron republican saboteurs who insist on stealing the America Dream...Go big R ! ...RJ
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