This arrived in my postal mail a few days ago:
Today, 36 percent of the federal budget is consumed by Social Security and Medicare, a growing cost shouldered by the shrinking population of younger Americans.”
There were other numbers being bandied about. I bet readers of this, having heard repeated statements about the cost of “entitlements” and the proportion of older Americans accept this without challenge.
What I find most discouraging about the above statement, completely lacking in any description of its basis and terminology, is that it is made by AARP Bulletin editor Jim Toedtman in his “The Magic of the Fountain of Youth” opinion piece. There is no such “budget.”
It is amazing how much belief has been captured on the road from “Social Security will not be there for you” to “Entitlements [Social Security] are killing the economy and drowning us in debt” or words to that effect. No matter that Social Security and Medicare have nothing to do with the deficit, their urgent reduction/elimination is to be traded against increased revenues by taxation.
Members of Congress, including card-carrying liberals, also fall for this, lumping Social Security and Medicare disbursements as if they are part of a single overall budget. It is apparently too difficult, or inconvenient, to emphasize that contributions to those funds, and their disbursements, are by different arrangements. Such is the power of this cloak of fear and anger on the conventional wisdom.
It is time to find a heavy dose of Bill Clinton’s remedy: arithmetic.
A good place to start is your own (or any hypothetical) “tax receipt”. The White House provides an on-line calculator determining the separate contributions to Social Security, Medicare, and Income Tax. It is your income taxes that go into anything resembling revenues that are apportionment among government expenditures. Social Security and Medicare deductions do not go into that pot. Since the government is currently spending more than it receives, it is not clear how much of the apportionment is from debt, not revenues.
The available tax receipt is for 2011; 2012 should not be much different. The only way that Medicare and Social Security can show up in those expenditures is if it is necessary for the government to cover a shortfall beyond what those programs have available for their disbursements. That has not happened for Social Security. It is unclear what the Medicare portion is in the 2011 “tax receipt.”
That does not mean there is no cause for concern. I’ve read that 2012 is the first year that payments from the Social Security trust fund exceeded new contributions to the fund. Social Security is not directly funded by annual receipts. It is backed by a trust fund that is only now beginning to be reduced by the discrepancy between payments and new contributions. The expiration of reduced payments on December 31 may improve matters for 2013. But it is the case that the trust fund could be depleted sometime after 2030 if no remedies are put in place.
There are various remedies for preserving the health of Social Security that do not involve surrender to the ideological desire to eliminate it. One appraisal is in Samir S. Soneji’s New York Times opinion piece. Go past the scary title to the available numbers and the prospective remedies.
Medicare is more complicated, because the rate of increase of medical-care costs is overwhelming the ability of the program to cope. There is a separate trust fund that banks contributions against future need. There are measures for short-term relief, including provisions in ObamaCare, but the rate of increase in costs is daunting.
For both of these programs, it is important to look at the long term and be clear-headed about the opportunities for preserving the promise of these important social programs. Clarity starts with looking at the actual numbers and the factual state of affairs.