But it's the kind of story that the government is only too happy to
drop into the Friday afternoon news-hole. A
from the Boards of Trustees for Social Security and Medicare lays
out the financial situations of two of the government's biggest
Trustees Charles P. Blahous III and Robert D. Reischauer write
that "long-run program costs for both Medicare and Social Security
are not sustainable under currently scheduled financing, and will
require legislative modifications if disruptive consequences for
beneficiaries and taxpayers are to be avoided."
Specifically, the report shows that Medicare will be unable to pay
out full benefits (of course, there will still be funds for a
reduced level) by 2024, while Social Security will hit this
deadline in 2036. In addition, Social Security ran its first
deficit since 1983 in 2010, as the fund's supply of payroll
was battered by a vicious recession.
So, does that mean the government is bust? Is it time to pack up
and go home - or to hand over the reins of power to the hardcore
budget-cutters and privateers?
"The vital Social Security and Medicare programs face real and
substantial challenges, and that elected officials will best serve
the interests of the public if financial corrections are enacted at
the earliest practicable time," write Blahous and Reischauer.
Social Security will probably be subject to more means-testing.
Meanwhile, as the U.S. population ages and puts pressure on
funds, the government may be forced to raise the cap on payroll
taxes. There will undoubtedly be wailing and gnashing of teeth over
this - it makes the programs more overtly redistributive - but if
the alternative is cutting benefits to politically-active seniors,
Congress will likely see where its bread is buttered.
The real concern is Medicare, where a long-term failure to rein in
the surging cost of healthcare could very well trigger a
devastating scenario for U.S. finances.
Over the next week, though, look for a lot more apocalyptic
rhetoric and a lot less clear thinking.