The government would have to put aside $11.1 trillion today to finance Social Security's promised benefits indefinitely, the trustees reported. But just the new Medicare prescription drug benefit included in the 2003 Medicare Modernization Act has an unfunded liability of $18.2 trillion projected out infinitely.
"The problem is, they've got the cart before the horse," Bartlett said of the Bush administration. "They've made Medicare vastly worse, and now they're saying to be responsible, we have to take on Social Security. It's utterly illogical."
Treasury Secretary John W. Snow said the 2003 Medicare law included measures designed to bring down costs.
(Charles Dharapak -- AP)
Saving briefed Republicans on Capitol Hill yesterday, presenting data that showed Medicare's total unfunded liability at $65.4 trillion, almost six times Social Security's. Saving strongly favors Bush's push to add private accounts to Social Security and said such accounts could be established to help young workers fund their health care in retirement, lessening the fiscal burden on Medicare. But he agreed with Bartlett that the administration had exacerbated Medicare's financial predicament with a drug benefit that was not paid for.
"The way to solve a problem in the future is not to add benefits to make it more underfunded," Saving said.
In the past five years, the date when Social Security would begin taking in less in taxes than it pays in benefits has actually slipped, from 2015 to 2017, the public trustees wrote, while the date of Social Security trust fund exhaustion has been pushed back from 2037 to 2041. Looking 75 years into the future, Social Security's cost, measured against the size of the economy, has also improved, from 6.8 percent of the gross domestic product projected in 2000 to 6.4 percent projected in yesterday's report.
In contrast, Medicare's financial outlook has deteriorated on all fronts. The year Saving and Palmer joined the board, Medicare's hospital insurance trust fund was projected to begin paying more in benefits than it collects in taxes in 2010. Instead, it reached that point last year. The point of trust fund exhaustion has moved up from 2025 to 2020.
Total Medicare expenditures are expected to approach 14 percent of the economy in 75 years, nearly the total tax take today. That is nearly triple the cost of Medicare projected in 2000.
"Medicare's costs are expected to grow at a much faster rate than those of Social Security," they concluded.
Snow and Leavitt said yesterday that the administration is focusing on Social Security because the 2003 Medicare law had measures to increase competition and bring down costs. But when pushed, Leavitt said, "I would do nothing to minimize the dilemma we face in the future with Medicare."
The savings from the law are not captured in the Medicare trustees report. It catalogues more than $1.1 trillion of costs from the new drug benefit through 2014 and an unfunded obligation of the government through 2079 of $8.7 trillion.
"Based on the report, Congress . . . needs to examine ways to make the Medicare program more effective," said Senate Finance Committee Chairman Charles E. Grassley (R-Iowa).