Inflation is up, the job market is tight, and oil markets are volatile: These indicators seem, for the moment, to be the key factors determining the United States’ well-being. But they will shift substantially in a matter of months or years. In the meantime, seemingly no one pays attention to the long-term picture, which has remained alarmingly consistent. The nation has made promises to its elderly that it cannot possibly keep while continuing to do right by younger generations. That the country has muddled through so far is a testament only to the fact that the worst has not yet hit.
The trustees for Medicare and Social Security released Thursday their yearly projections of how these cornerstone old-age entitlements will fare as more Americans begin drawing benefits and coverage costs rise. They concluded that the Old-Age and Survivors Insurance Trust Fund, which finances retirees’ monthly Social Security checks, will run through its reserves by 2034. At that point the tax revenue stream backing the fund could pay for only about 77 percent of promised benefits.
Meanwhile, the Medicare trust fund financing old-age hospital spending will run short by 2028, and spending on other elements of the Medicare program, which is backed by general tax revenue, is set to balloon. Taxpayers are on the hook to pay massive amounts to keep them running in their current forms. Medicare will gobble up ever-increasing amounts of national wealth — from 3.9 percent of gross domestic product this year to 6 percent by 2040 and 6.5 percent by 2070. If, as expected, Congress adjusts Medicare payments so that doctors continue to take Medicare patients, Medicare spending would expand to 8.6 percent of GDP by the end of the century.
These numbers may seem small. They are not; total federal spending has historically hovered around 20 percent of GDP. The trustees are projecting a vast expansion of outlays for the elderly that would hollow out the government’s ability to spend on education, infrastructure, anti-poverty programs and other investments in children and working-age adults.
In a more rational political moment, Congress would make the broader reforms needed to stabilize Medicare and Social Security. They have many options, and it is obvious that any plausible future settlement would require some mix of modest benefit adjustments and tax hikes. Time is precious, the trustees warned: “Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”
The experts have, once again, projected a fiscal calamity on a generational scale. And yet fixing the problems are on just about no one’s to-do list in Washington. That is a scandal, and Americans — particularly young Americans who stand to lose the most — should demand better.