The political class may lack the will to deal with impending doom of the two largest entitlements in the federal budget, but that doesn’t mean that the clock isn’t ticking until the moment when both Medicare and Social Security will run out of money. The annual reports of the trustees of these two federal programs were released this afternoon, and the verdict is just a bit darker than last year’s report. According to the figures, the Social Security trust fund will be exhausted in 2033, three full years earlier than last year’s estimate. The news about Medicare was no worse than 12 months ago but was already bad enough. It will collapse in 2024.
These alarming pieces of news ought to be greeted with dismay and resolve to deal with the entitlements problem that is leading the country to insolvency. But one end of the political spectrum believes things are just fine:
Representative Nancy Pelosi of California, the Democratic leader, said that “Despite the repeated efforts of Republicans to privatize Social Security and end the Medicare guarantee, these vital initiatives remain strong.” She argued that the trustees’ report “demonstrates that health care reform has strengthened Medicare by extending its solvency.”
This complacence would be shocking if it were not rooted in a basic tenet of liberal ideology. Despite the nonsense she uttered about the strength of the programs, Pelosi and other liberals understand that no government program no matter how financially ruinous will ever truly run out of money so long as the government retains the power to confiscate as much of the income of the public as the federal leviathan needs. The essential difference between the parties about how to deal with this problem is not so much about the existence of the problem but whether the solution should be found in the pockets of the taxpayers.
Less extreme was the response of Treasury Secretary Timothy Geithner, who acknowledged the danger but reassured himself — and the Democratic base — that the funds are adequate “for years to come.” But that’s just a polite way of saying that the government won’t go bust on his watch, even if it is inevitable that it will implode on someone else’s.
But the more pessimistic assessment of Social Security’s prospects is directly related to the poor record of the administration on the economy because:
The trustees cited slower growth in average earnings of workers, lower earnings from interest on the trust fund’s holdings of federal debt, and the persistence of unemployment during the slow recovery from the recent recession.
Nevertheless, Geithner threw down a challenge to Republicans intent on fundamental reform of the system by saying the administration would oppose any effort to institute changes that would “destroy” the system or save “tax cuts for the wealthy.” But this sort of class warfare sloganeering is a thin façade for a policy of doing nothing to stop the exponential growth of expenditures in order to stir fear among the elderly and play to the liberal base.
Contrary to Pelosi’s policy of denial and Geithner’s determination to kick the can down the road, the trustees’ reports make reform plans like those of Rep. Paul Ryan even more important. Rather than being an issue with which the Democrats can demagogue the GOP, the latest reports about Social Security and Medicare can serve to build a broader constituency for a common sense approach that will discard liberal cant and address the fundamental problem. Though the Democrats believe the voters are too fearful or too stupid to understand the facts, their attempts to obfuscate the clear responsibility of Washington to deal with this crisis may run aground on the sea of red ink that is too large for even the trustees of these funds to ignore.