From Facing Up Blog:
The good news from the Social Security and Medicare trustees is
that things haven’t gotten any worse. The bad news is that the
situation was bad anyway.
The projections stayed the same: the Medicare trust fund will run
dry in 2019, and Social Security’s fund will run out in 2041.
There are several good news stories on this today, from the
Associated Press, the New York Times, and the Washington Post’s
Dana Milbank, who calls the annual report “a rite of spring” that
everyone in Washington feels they can ignore.
But it’s going to get much more difficult to ignore this problem.
The most frightening part of the report is that Medicare will
have to start digging into its trust fund this year, probably
to the tune of $8 billion. (Social Security won’t have to draw
on its trust fund until 2017). That’s not much, in terms of a
$3 trillion federal budget. And after all, that’s what the
trust funds are for. But it’s the start of a process that’s
going to put huge pressure on the federal government in the
next few years.
The problem is that the government has long been borrowing from
these funds to pay its other expenses, and giving them Treasury
bonds in return (specifically, “intergovernmental bonds” used
when the government owes money to itself). There’s nothing secret
or illegal about that, and there’s nothing wrong with the bonds.
But now Medicare is going to have to start redeeming these bonds,
which means the government is going to have to start paying back
the trust funds. And where’s that money going to come from?
From general revenue; essentially, the rest of the federal budget.
Again, $8 billion isn’t huge in terms of the budget, but eventually
this is going to mean taking money from other programs or raising
revenue to cover it.
You’re going to start to hear the beams creaking on the federal budget
over the next few years as it starts to bear that additional weight.
And something’s going to have to give, whether anyone in Washington
is willing to face it yet or not.
Read the full entry with links at Facingup.org: