For all of this week’s focus on Donald Trump’s legal travails — and the breathless commentary and speculation surrounding it from all quarters — there was significantly less ink spilled on what looms as a far more consequential development, at least in the long-term and for average Americans contemplating a secure retirement. The annual evaluation of the financial condition of Social Security and Medicare, released last Friday, outlined how both remain in deep financial trouble with the Old-Age and Survivors Insurance Trust Fund hurtling toward depletion in 2033, which is one year earlier than expected. And Medicare’s standing is even worse with the health care insurance program unable to pay for full benefits in 2031. Should Washington continue to ignore Social Security’s plight, beneficiaries would earn just 77% of what they are due. Given that the average Social Security retiree receives slightly less than $30,000 annually, the consequences of inaction are serious.
And while 10 years (or eight in the case of Medicare) would seem a perfectly adequate amount of time to achieve some sort of remedy if the White House and Congress could negotiate a solution — as was provided them in 1983 when the bipartisan Greenspan Commission pondered a far more imminent crisis — the polarized politics of 2023 make the situation seem more bleak. President Joe Biden has already pitched the sort of reforms that play well with his Democratic base, including higher taxes on high earners to help underwrite Medicare and tougher rules on prescription drug prices, but Republicans have been more focused on using the debt ceiling as a weapon to force Democrats to rollback federal spending overall. That certainly raises the possibility that Republicans may try to force through Medicare and Social Security cuts as part of any deal but curiously, House Speaker Kevin McCarthy has declined to discuss specifics.
Such is the power of two popular safety net programs known as the “third rail of politics,” meaning that to touch them is as deadly as making contact with the electrified third rail used by subway trains.
Yet it is this strong public support for Social Security and Medicare that also offers the best hope for a rational remedy. Older Americans vote and putting the squeeze on retiree and disability benefits or even on payments to hospitals for their care is likely to have consequences in Washington and beyond. Of course, the various solutions will have their critics as well. As in 1983, it could mean postponing the minimum age to qualify for full retirement benefits (at least for people born before a certain date), for example. Proposed pension reforms in France raising the retirement age from 62 to 64 have sparked protests and strikes. And U.S. Social Security is already well above that with anyone born 1960 or later not eligible for full benefits until age 67. Or it may involve raising payroll taxes — which is unlikely to make anyone in either political party more popular.
Still, the piper must be paid. There are any number of factors that have contributed to the financial mess but one of the big ones is simple mathematics. Population growth has slowed over time so that the ratio of beneficiaries to payers (and remember that both programs are not financed with general tax revenue) has gone in the more problematic direction. Higher rates of inflation hurt. So does longevity. And the most recent forecast for Social Security was down, in large measure, because the U.S. economy is expected to face challenges. Curiously, Medicare’s finances actually improved slightly because of COVID-19 mortality — essentially killing off sicker patients, a short-term circumstance.
What would a true solution for long-term insolvency look like? It would surely start with another high-profile bipartisan commission pulling together individuals with actual expertise on these programs and not a political agenda. And they would need to do their deliberations in public to better educate average Americans on the complexity and tough choices involved. With that, there might for some broad consensus about the direction to go, likely a balance of unpopular corrective measures (much like losing weight by exercising or dieting or a combination of both). This isn’t a secret. That’s what happened in 1983 but the longer Washington waits to pursue this path, the more painful the approach. The clock is ticking.
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Baltimore Sun editorial writers offer opinions and analysis on news and issues relevant to readers. They operate separately from the newsroom.
