Lew: Obama ‘Ready’ to Tackle Entitlement ‘Shortfalls’ but Privatization ‘Unacceptable’
In their summary of the report, the Social Security and Medicare Boards of Trustees detail the need for legislative action to save entitlement programs for future beneficiaries.
“Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare,” says the “message to the public” from the board of trustees.
“Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.”
In the fiscal year 2012, Social Security and Medicare “accounted for 38 percent of federal expenditures” and the trustees warn that both will “experience cost growth substantially in excess of GDP growth through the mid-2030s.”
This growth is attributed to “rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment.”
According to the public trustees, “both the Social Security and Medicare programs face substantial financing shortfalls that require legislative corrections, but the implications are different for each one.”
Social Security requires “more far-reaching legislative measures” to maintain its solvency while Medicare is “projected to experience relatively greater cost growth over the long-range valuation period, posing greater strains for the federal budget as a whole due to the extent to which its financing depends on general revenues.”
The White House called the report “good news for seniors and taxpayers” since “the Medicare program will be solvent through 2026, nearly a decade longer than projected at the time of passage of the Affordable Care Act.”
“This is 2 years longer than projected last year. Their annual report also shows that the long run actuarial deficit in the Hospital Insurance Trust Fund – a measure of its long-term fiscal health – has been cut by more than 70 percent since enactment of the health care law,” wrote Jeanne Lambrew, deputy assistant to the president for health policy and Gene Sperling, the director of the National Economic Council and assistant to the president for economic policy on the White House blog.