President Joe Biden and Congress should be persuaded to establish a new panel on entitlement reform in light of recent Congressional Budget Office estimates for Social Security and Medicare.
Failure would spell doom.
The CBO predicts that the Social Security and Medicare trust funds will run out of money by 2033 and 2030, respectively. And the $93 trillion in total unfunded liabilities that the U.S. government will face by the turn of the next century include unfunded future obligations for these programs. For perspective, the present U.S. economy is much more than three times that size.
Several Possibilities
There are several possibilities for preventing catastrophic disasters, according to the reputable and neutral Committee for a Responsible Federal Budget, a private organization, but they all include at least a tiny degree of shared responsibility.
One is hesitant to use the phrase “shared sacrifice” because the majority of the solutions only call for minor changes to tax rates and formulae that nearly no one would notice unless they were explicitly looking for them.
The obligation could be divided among different income levels in a fashion that both public and private budgets could handle with hardly a glitch if any five or six of these possibilities were combined.
But for the time being, picking an alternative is less crucial than picking a strategy for implementing the option that is ultimately selected. The creation of yet another government “commission” is frequently mocked by cynics, who see it as a fig leaf to delay dealing with the issue.
But the reality is that commissions may be effective on occasion. The same is true for unofficial, nonpartisan working groups that function in a similar manner to established commissions.
With the support of then-President Ronald Reagan, Republican Senator Bob Dole and Democratic Senator Daniel Patrick Moynihan forged a deal on Social Security in 1983 that virtually doubled its lifespan while having little to no negative consequences on economic development. The military base closing commission made the armed forces more effective in the early 1990s, saving government money and igniting productive private-sector use of the sites that were being shut down.
Health Coverage
And in the middle of the 1990s, a fantastically nonpartisan committee on Medicare was just about to agree to an innovative and constructive rescue of the seniors’ health coverage when then-President Bill Clinton and a number of his key appointees abruptly withdrew their support. Unfortunately, Clinton suddenly found himself having to defend his more liberal “base” against the Lewinsky-related impeachment attempt. It is plausible to assume that Medicare’s finances would already be stable long until 2050 without the Lewinsky controversy, as opposed to becoming insolvent by 2030.
Legislators from all political parties need to uncover their “inner statesman” and work together despite differences in ideology and party. The Doles and Moynihans of today must identify themselves and recruit others.
To avoid disaster, we need an entitlement commission. The American people should have a right to leaders who would fight bravely to prevent economic disaster.
Other Reports, Social Security Insolvency
According to the most recent thorough Social Security predictions from the Congressional Budget Office (CBO), the trust funds will possibly run out of money by 2033. According to the CBO, payments would be automatically reduced by 23% after bankruptcy without legislative intervention.
The CBO estimates that Social Security will experience a shortfall over a period of 75 years equivalent to 4.9 percent of taxable payroll or 1.7 percent of GDP (GDP).
Accordingly, regaining solvency would need either a 26 percent immediate and permanent cut to anticipated benefits or a 40 percent increase in dedicated taxes.
The cash shortage will reach 7.4% of taxable payroll by 2096 (2.5 percent of GDP), which means that adjustments will need to increase to 35% of scheduled benefits or 53% of revenue.
