Spendthrift Democrats ignore looming bankruptcy of Social Security and Medicare

Are Democrats serious about confronting the impending collapse of Social Security and Medicare? It sure doesn’t seem so.

Instead of focusing on the looming bankruptcy of these programs, Democrats are pushing to spend $4-$5 trillion on a progressive wish-list of expensive new federal giveaways. Perhaps they believe that promising voters free college, free child care, free elder care and so much more will distract them from realizing that our most important safety nets are falling into disrepair. 

Moreover, President Biden and congressional Democrats want to significantly hike taxes to pay for shiny new entitlements. But taxpayers are already facing big hits just to maintain the ones we already have.    

This week, the trustees of the Social Security and Medicare programs released their annual reports; the news is not good.

The bottom line: Both funds are running out of money, faster than expected. Both Medicare and Social Security will need to be propped up, the sooner the better. Specifically:

• Medicare’s Part A Hospital Insurance trust fund will go broke in five years; outlays are projected to exceed income by nearly $600 billion over the next 10 years. Over the longer term, we would need a 27 percent increase in the payroll tax or a 16 percent spending cut to keep the program running. 

• Gross spending on Medicare will increase from 4.1 percent of our entire economy this year to more than 6 percent over the next 20 years.

• Social Security will become insolvent in 13 years. Under current law, the administration cannot guarantee full benefits to today’s retirees.

• The trustees’ report says that Social Security will run cash deficits of $2.4 trillion over the next 10 years, equal to 2.3 percent of total taxable payrolls.

• Social Security is estimated to post a cash-flow deficit of $147 billion this year, equal to almost 0.7 percent of GDP 

The date of projected insolvency for these entitlements moved closer over the past year; the proposed remedies from the Committee for a Responsible Federal Budget (CRFB) become more draconian as time goes on.

In other words, the longer we wait to shore up these programs, the stiffer the increases in taxes will have to be or the fewer the number of retirees who can count on receiving benefits.

To achieve long-term solvency for Social Security, the CRFB advises, would require a 27 percent hike in the payroll tax today; if legislators don’t act until 2034, when the program will be broke, that payroll tax hike will be 34 percent.

That is, even if Congress acts today, the increase in the deduction from a worker’s wages will be more than three percentage points; if they wait, it will be over 4 percentage points. That’s a major hit to paychecks.

The other approach is to cut retiree benefits. The CRFB estimates that, “Social Security solvency could be achieved with a 21 percent across-the-board benefit cut today, which would rise to 26 percent by 2034. Cuts to new beneficiaries would need to be 25 percent today,” but “even eliminating benefits for new beneficiaries in 2034 would not be enough to avoid insolvency.” 

Is anyone listening?

The alarming reports were greeted with silence from the left,…