Amid the congressional battle over the nation’s
debt ceiling
and government spending, both parties have agreed to ignore the elephant in the room: out-of-control entitlement spending and the threat it poses to the nation’s fiscal stability.
We understand House Speaker
Kevin McCarthy
’s (R-CA) reluctance to touch
Social Security
and
Medicare
right now. Entitlement reform is hardly the way to gain the approval of a voter base that has become too dependent on the government’s excessive spending. Moreover, the debt ceiling showdown between House Republicans and the White House is not the appropriate context for the vast, complicated reforms that need to be made.
But lawmakers on both sides of the aisle should acknowledge that just because they’ve kicked the can down the road for so long doesn’t mean they can do so forever. Social Security and Medicare finances are unsustainable. The two programs already absorb more than half of all federal revenue, and according to the Congressional Budget Office’s projections, Medicare spending alone is expected to double by 2033.
Both Medicare and Social Security have for years been spending far more in benefits than they take in in
taxes
. During this time, both programs have been drawing down on their “trust funds,” which are accounting fictions. But there have never been any real assets in either of these accounts. As soon as these systems started paying out more than they took in, they began adding to the deficit each year. What will change when these trust funds run dry is that the federal government will not be legally authorized to spend what it has already promised to pay in benefits.
If lawmakers do nothing, Medicare’s hospital trust fund will run out in 2028. To put it yet more plainly, that’s just five years from now. When it happens, the federal government will not be able to pay doctors the full amount for the
healthcare
they provide. This will wreak havoc on the entire healthcare system.
Only four years later, in 2032, the Social Security trust fund will also run dry. Then the federal government will be able to pay out only 80% of promised benefits every month. Will everyone get a 20% cut? No one knows. There is no guidance in the law. It will be up to whoever is president at the time. But unless changes are made today, automatic and severe austerity will be the consequence tomorrow.
The longer lawmakers ignore this crisis, the harder and messier it will be to fix. It is fair to assume Democrats will continue to ignore fiscal reality since that’s what they do best. But Republicans should know better. If they’re as serious about fiscal reform as they say they are, they must know that ignoring Social Security and Medicare is not an option. If the nation doesn’t tackle it, it will tackle the nation, and it’s going to hurt.
Republicans would be wise to spend the next two years building a consensus on how to tackle entitlements so that when the time comes to fight, they will have both a strategy and the courage to do what must be done. Otherwise, taxpayers and the country’s finances will have to endure a long and difficult crisis that could have been avoided altogether.
