The Daily Dish

Social Security and Medicare Trustees’ Reports

Today the trustees of the Social Security and Medicare programs are expected to release their annual reports. (Spoiler alert: It might not be today. That’s just my best guess. But I ran the Congressional Budget Office, so I’m used to being wrong.) For many, the focus is solely on the numbers – exhaustion dates for trust funds, actuarial imbalances, and the like. These numbers are important and will be dire. Readers can expect a full analysis of the reports from AAF’s Michael Baker and Jordan Haring.

But there have been terrible numbers in trustees’ reports for years and it has changed nothing. Social Security and Medicare are still facing financial disaster. They are, together, still responsible for more than 50 percent of all non-interest spending over the next 10 years. And their spending is still growing faster than anything else in the budget – including revenue – over the next 10 years. In short, they are at ground zero of the fraying social safety net and fiscal threat to the U.S. economy. If the shock value of size and imminence of the problem has not produced reforms, what will?

Politics. And the politics are about to change. Take Social Security, for example. For a long time new retirees could look forward to getting their benefits and leaders of both parties could pledge to not touch Social Security. And if a member was daring enough to raise the issue of reforming Social Security at a town hall, he or she was viewed as dangerous or evil and was soon working at the local Tastee Freez.

Now the system is facing an imminent exhaustion of the trust fund – in 2031 or 2032, we’ll soon know for sure. Under current law, when that happens every retiree will face a roughly 25-percent across-the-board cut in their retirement benefit. There is no way Congress will sit idly by and let that happen. Indeed, as the date approaches, more and more people will be aware of the threat. Instead of going to a town hall to stop Social Security reform, they will go and demand it. The retail politics will switch 180 degrees.

The national politics will change as well. Anyone running for president in 2028 will expect to have reform happen on their watch, so Social Security will be on the platform in that year. Also, Social Security cannot be reformed using budget reconciliation. It must be done in regular order, so the two parties will have to talk to each other. It will look nothing like 2026.

None of this suggests this will be easy. There are, and will remain, large differences in views of the best path forward. But something has to happen. And it will likely drag into the discussion the larger fiscal woes and what to do about other troubled programs such as Medicare.

So pay attention to the reports and the size of the problem. But know that now the game will soon become solving the problem rather than denying it exists.

Disclaimer

Fact of the Day

Across all rulemakings last week, federal agencies published roughly $15.1 billion in total cost savings but added 50.4 million paperwork burden hours.

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