Richard Eskow
Campaign for America's Future
Actuarial
science is the art of prediction. And speaking of predictions, here’s
one that hasn’t been wrong yet: No matter what new data emerges about
Social Security and Medicare, the well-funded opponents of those two
worthy programs will always insist that we’re on the brink of
catastrophe – unless something is done right now to slash their
benefits.
Consider the
Trustees’ Report for the Social Security trust fund, which was released
Monday. The report indicated that Social Security’s retirement program
is fully funded for the next 20 years, until 2034, after which it will
be able to pay three-quarters of benefits.
Social
Security’s disability insurance fund is projected to run out of savings
in 2016, but its growth rate is the lowest it’s been in 25 years.
The 2016 shortfall is easily fixed with a transfer of money from the
retirement fund – a fix that Congress has performed 11 times in the
past, but which this Congress has so far refused to do for ideological
or political reasons. Even if that transfer were never repaid, the
overall fund would still be in the black until 2033.
Social Security
experts have known of these reported shortfalls for many years. They’re
relatively modest, amounting to 2.88 percent of taxable payroll over the
next 75 years, and easily remedied.
The trustees
also reported that Medicare’s finances have improved considerably. A few
years ago they were predicting that the hospital fund would be depleted
in 2017. Just last year they were forecasting that it would run out in
2026. Now they tell us that hospital fund is now fully solvent until
2030.
In other words:
There’s no bad news on Social Security, and Medicare’s outlook has
improved. So how did the well-funded naysayers react to these positive
developments?
“Social Security Trustees Show Program Headed Toward Insolvency,” shrieked
the all-caps header from the anti-government Committee for a
Responsible Federal Budget. “Trustees’ Reports Underscore Need For
Prompt Reforms to Make Medicare, Social Security Programs Sustainable,” insisted the right-wing Concord Coalition.
Billionaire
hedge funder and former Nixon cabinet officer Peter G. Peterson funds
both organizations, along with Fix the Debt and other groups that echo
Peterson’s conservative anti-government agenda. It should be no
surprise, therefore, that they’ve chosen fear over facts once again.
The Committee
for a Responsible Federal Budget, for example, plays up a slight shift
in Social Security’s finances while completely ignoring the substantial
improvement in Medicare’s. The Concord Coalition falsely states that
“Social Security and Medicare will increasingly squeeze other parts of
the federal budget.” (Social Security is forbidden by law from drawing
funds from “other parts of the federal budget.”)
Neither group
notes that Medicare provides health care coverage at lower cost than
private insurers, or that Medicare’s rates of cost inflation have
historically been well below that of private carriers.
There are
several lessons to be learned from this. The first is: Don’t panic! The
second is: Check your assumptions. Medicare’s health care expenses rose
more slowly than expected because the assumptions behind past
predictions were off. Cost increases were slower than expected,
partially as the result of the Affordable Care Act and partially due to
other factors which are not yet fully understood.
Nor do we have
to cross our fingers and hope that the assumptions behind these numbers
change. We can change them ourselves, through smart policy choices. For
example: If we reduced wealth inequality, which has grown dramatically
over the last 20 years, the situation would improve considerably.
Despite the talk about “aging populations” – we’ve known about aging
Baby Boomers since 1964, after all, and have factored them into past
calculations! – unequal wage growth was a major factor leading to the
current (and relatively) minor shortfalls, as Monique Morrissey has documented.
Even without
addressing wealth inequality, lifting the payroll tax cap would cover
much of the shortfall. We could also modestly raise payroll taxes and
increase benefits, a move polls show that most Americans would support.
We could supplement revenue with other measures, like a financial
transactions tax.
But scenarios
like wage equity, lifting the cap and a financial transactions tax
aren’t attractive to billionaires. That helps explain the existence of
well-financed groups which generate fear and push for benefit cuts,
while pretending that revenue-raising options simply don’t exist.
We do have real
problems, of course. We need to end our dependence on private insurers
and rein in for-profit providers in order to get our health costs in
line with other developed countries.Wealth inequality and the erosion of
employer pensions will lead to a retirement crisis unless we increase
our nation’s meager Social Security benefits.
We can certainly
meet these challenges. All that’s required is a rational conversation
about revenue-generating alternatives. But groups like the Committee and
the Concord Coalition exist to foster fear, not wisdom. Here’s another
prediction we’re not afraid to make: No matter what next year’s Trustees
Report says, they’ll tell us it spells catastrophe.
(Additional data sources for this article include the Social Security Administration and Christian Weller and Rebecca Vallas, Center for American Progress. They are not, however, responsible for our interpretation of the data.)
1 comment:
Please sign our petition to have Medicare cover hearing aids under HR 3150. http://petitions.moveon.org/sign/to-pass-hr-3150.fb73?source=c.fb&r_by=6379786
Please repost to all social media.
Janice Schacter Lintz, Chair, Hearing Access Program
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