A Budget Problem No One Wants To Face
The looming financial crunch in Social
Security presents options that bring to mind the entrees
at a prison cafeteria: Some are inedible, and some are worse.
The available ideas include such appetizing possibilities
as raising taxes, reducing future benefits and increasing
the retirement age. And the really bad news? Social Security
is not the tough problem. It's the easy one.
The tough one is Medicare. Amid the hoopla
over how to support baby boomers in their old age, no one
is paying attention to how to finance their hospital and
doctor bills. But in almost every way, the challenges of
Medicare are bigger and more complicated than those of Social
Security. Instead of taking steps to contain the fire before
it gets out of control, though, Congress and the president
are spraying it with gasoline.
The accelerant comes in the form of the
2003 prescription drug benefit, which will take full effect
next year and has already become more expensive than Americans
were led to believe. Over the next 10 years, the tab is
expected to reach $724 billion, far higher than the $395
billion advertised back then -- or even the $551 billion
that the administration's secret internal estimates predicted.
It turns out that the original 10-year cost projection really
covered just eight years, since the benefit was not available
for the first two years.
It would be dubious enough to add a huge
new entitlement in the best of times. But for Medicare,
the best of times are long past. A recent article by David
Nather and Rebecca Adams in the journal CQ Weekly notes
that "Medicare's spending is growing faster than Social
Security's, and its reserves are expected to run out sooner."
In 20 years, Medicare will most likely cost more than Social
Security, and it will keep growing.
To congressional budget-writers, the Social
Security gap resembles the Grand Canyon. But the distance
between Medicare's income and outgo looks more like the
Atlantic Ocean. Over the next 75 years, Social Security
faces a deficit of $3.7 trillion. The shortfall for Medicare
is $27.8 trillion -- more than seven times larger.
What needs to be done, it may not surprise
you to learn, is the opposite of what is actually being
done. President Bush is the first president since John Quincy
Adams to serve a full term without vetoing a single bill.
But recently, Bush threatened to take his club out of the
closet -- not to cut spending but to increase it.
The veto threat came in response to complaints
about the swelling cost of the prescription drug benefit.
Some Republicans think it should be cut to fit under the
original spending target. Bush, using phrases that could
have been borrowed from Ted Kennedy, declared, "I signed
Medicare reform proudly, and any attempt to limit the choices
of our seniors and to take away their prescription drug
coverage under Medicare will meet my veto."
But Kennedy wouldn't say that, because Kennedy
was among the many Democrats who opposed the prescription
drug measure as too stingy. The senior senator from Massachusetts,
at his most charitable, once referred to it as merely a
"down payment" toward the kind of program we need.
When it comes to Medicare, fiscal irresponsibility offers
a rare example of harmonious bipartisanship.
The prescription drug bill was a perfect
example of how Washington gets itself into budget trouble
-- by handing out treats today and putting off payment until
tomorrow. Fixing the problem requires Congress and the president
to inflict pain now for a reward that is years or decades
away, which is why no one in Washington is paying much attention.
By the time Medicare becomes unaffordable, after all, most
of the people in Congress will be out of office and possibly
residing in the next world, safe from the vengeance of voters.
At that point, though, drastic changes will
be in order -- none of them particularly enticing. One is
to impose higher deductibles and co-payments on seniors,
or to deny coverage for certain ailments, which would cause
hardship. Another is to lower reimbursements for physicians
and hospitals, which might induce some of them to stop treating
Medicare patients. Another is to raise taxes on today's
workers, who are already carrying a heavy payroll tax load,
and who may have to ante up for Social Security as well.
Given the magnitude of the challenge, it
might be understandable for our leaders to crawl under their
desks and curl up in the fetal position, moaning and weeping
and hoping the problem will go away. Which, as it happens,
is about what they're doing.
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