How to fix Social Security and Medicare? Plenty of suggestions but no action
By Paul Wilson
Global Compass Insurance Family
Think you’re having a bad Monday? Imagine being one of the trustees who oversee finances for Social Security and Medicare. The group released their annual financial reports today and let’s just say they didn’t surprise us with any unexpected good news.
Both benefit programs are in pretty bad shape — expected to become insolvent over the next few decades. With each passing year, the numbers in the yearly reports seem to get worse, and this year is no exception.
The program’s trustees said the combined Social Security retirement and disability programs are now expected to be exhausted three years sooner than previously estimated.
Social Security’s disability insurance program is faring especially poorly, failing both short- and long-term tests of fiscal health. The fund will exhaust its trust fund in 2016, two years earlier than estimated last year, the report said.
The general consensus is that the sooner these two programs are addressed, the better. The argument goes that if Congress moves now, changes can be rolled out gradually, providing more adjustment time for Americans. But what changes?
Many Social Security advocates say the program can be repaired by increasing the amount of wages subject to Social Security taxes, a strategy with which the majority of Republicans in Congress strongly disagree.
Meanwhile, the most common Republican suggestion is to partially privatize Medicare, a suggestion equally distasteful to many Democrats. Treasury Secretary Timothy Geithner said, “We will not support proposals that sow the seeds of their destruction in the name of reform, or that shift the cost of health care to seniors in order to sustain tax cuts for the most fortunate Americans.”
In his blog on The Huffington Post, Richard Eskow states, “The simplest, and by far the most popular, solution to Social Security's future revenue gap is to lift the payroll tax cap. Such a move would end any future doubts about its ability to pay benefits, would be politically popular, and would harmonize with the wealth inequity that is the source of that future shortfall.”
Mitt Romney favors converting Medicare into subsidies to help seniors purchase private insurance, a strategy that Democrats say would bolster Medicare at the expense of seniors’ benefits.
Like everything else these days, opinions on fixing Social Security and Medicare are deeply divided, largely along party lines. As the squabbling and name-calling continues, the annual reports will continue to roll in. And something tells me next year’s isn’t going to look any better.