While politicians like to brag about "protecting" Social Security and Medicare, both are slowly going bankrupt while our leaders dither. A new report from the Congressional Budget Office (CBO) predicts Social Security trust funds will be insolvent by 2033 at the current pace...that's two years shorter than last year's estimate. At the same time, the Medicare Board of Trustees warns its Part A trust fund will be tapped by 2028.
All of this comes as leaders of both parties insist Social Security and Medicare are off the table in the current debt ceiling debate. President Biden falsely accused Republicans of wanting to cut Social Security and Medicare, while House Speaker Kevin McCarthy vows any proposed spending cuts won't touch entitlement programs. So it appears nothing will change with either program. "These politicians are doing exactly what you'd expect, which is pushing it off as long as they can," says Antony Davies, Duquesne University economist. "But we're going to run into the laws of mathematics here, where something has to happen...and nobody wants to be in the seat of power when that decision has to come."
Davies tells KTRH there is good reason both parties are avoiding the issue. "Because the fix is going to be painful," he says. "It's going to involve one of three things---either a substantial increase in workers' payroll taxes, a substantial cut in retirees' benefits, or we monetize the whole thing which means ongoing inflation."
"It's a no-win scenario, so it is no wonder that politicians aren't interested in solving this now," he continues.
In the meantime, leaders are arguing over modest cuts to discretionary spending while the national debt is at 31-trillion dollars and growing. "When you hear talk about things like closing a military base here or there, remember, we could shut down the entire Department of Defense---the whole thing---and still not balance the budget," says Davies. "That's the magnitude of the problem we're dealing with here."