|Page 2 of 2 <|
Obama Plans Summit Next Week On Long-Term Budget Difficulties
Even as he lobbied for the $787 billion economic stimulus bill, Obama was promising to craft a so-called grand bargain with Republican and Democratic lawmakers aimed at addressing Washington's most intractable budget problems. The effort, he has said, will include revamping a Byzantine tax code that doesn't collect enough money and controlling spending on a vast social safety net for the elderly and the poor that threatens to bankrupt the government.
The administration is facing both an immediate budget crunch and longer-term financial pressures.
In addition to the two-year stimulus package and bailouts of the auto, banking and housing industries, Congress is expected to approve a $410 billion budget bill covering most of the government's expenses for the rest of this fiscal year. Lawmakers also will be asked to dedicate more money to the wars in Iraq and Afghanistan and perhaps another round of cash to prop up the crippled financial system and to stimulate the sagging economy.
Over the longer term, as things now stand, Social Security is projected to run out of money by 2041 and the Medicare health program will be bankrupt by 2019, according to trustees of the Social Security and Medicare trust funds.
"We have promised benefits to the baby boom generation, which because of its size is going to bankrupt the country," said Sen. Judd Gregg (N.H.), who will attend the summit as the top Republican on the Budget Committee.
The long-term solvency of Social Security "is an arithmetic problem," said Michael O. Leavitt, who was health and human services secretary in the Bush administration.
Policy experts long ago outlined the handful of changes that would prevent the retirement fund from going bankrupt. The primary options include raising the retirement age, increasing payroll taxes or adjusting the benefits structure.
"You could put 10 people who know Social Security around the table, and they could make Social Security solvent for the next 50 to 70 years within a day or so," Gregg said. "It's the politics that are very hard."
Constraining Medicare spending is more complicated, in part because mathematical tweaks similar to those proposed for Social Security will not generate large savings.
"The only really good option is dealing with health-care costs," said Karen Davis, president of the private Commonwealth Fund foundation. In her view, that means dramatically improving the health of the nation, reducing hospital admissions, increasing prevention and targeting chronic conditions such as diabetes and heart disease, which are responsible for 75 percent of health-care costs nationwide.
For that reason, the administration is expected to fold its efforts on Medicare into a broader push to reform the entire U.S. health system.
Even some of the guests expressed concern that the summit will go the way of so many before it. But Rep. Chris Van Hollen (D-Md.) said raising public awareness will make it more difficult for politicians to ignore the looming crisis.
"It turns up the heat on the issue, and I think it makes it much harder for the president and the Congress to duck the issue going forward," he said.
Staff researcher Madonna Lebling contributed to this report.