September 20, 2014

FUTURE GENERATIONS SHOULD COME BEFORE TAX CUTS

WASHINGTON -- The Concord Coalition today urged Congress to put the interests of future generations first by rejecting the proposed 10-year $792 billion tax cut, and instead turning its attention to the neglected issues of long-term Social Security and Medicare reform.

 

"We have a moral responsibility to lower the tax burden on future generations before we lower it for ourselves.  Our children and grandchildren should not be saddled with the twin problems of a huge national debt and unsustainable entitlement programs, which is exactly what they're facing if we don't rise above partisan politics and start making tough choices today,” said Policy Director Robert Bixby.

 

"Given the strength of the economy and the looming demographic pressures, our priorities should be to dedicate the Social Security surplus to long-term reform, determine how much money will be needed to modernize Medicare in a fiscally responsible manner, and use the remaining surplus to reduce publicly held debt. Together these actions will do more to enhance the economic well-being of future generations than a tax cut financed by a speculative surplus,” Bixby said.

 

Concord reminded lawmakers that despite rosy projections of huge surpluses, the budget is still in deficit without counting the “off-budget” Social Security surplus. Moreover, the projected surplus on which the tax cuts are based assumes deep cuts in discretionary programs that few are advocating and fewer still believe will be made. Recent emergency spending declarations threaten to further deplete the projected surpluses.

 

The most recent report of the Social Security and Medicare Trustees projects that these two programs will have a very small cash surplus in 1999.  But the fiscal outlook deteriorates rapidly as the Baby Boomers begin to retire.  By 2035, when the toddlers of today will be struggling to raise children of their own, current law Social Security and Medicare benefits will be draining nearly $670 billion, adjusted for inflation, from general revenues in that year alone.

 

"The existence of a non-Social Security surplus is a lot more uncertain than the long-term cost burden of Social Security and Medicare. We should tackle the problems we know we have before we celebrate a windfall that may never come,” Bixby said. 

###

 

Annual Combined Cash Deficits including Medicare Part B General Revenue Subsidies
(Billions in inflation-adjusted dollars)

1999 Estimate

 

2035 Estimate

 

2070 Estimate

 

Social Security

+70

Social Security

-292

Social Security

-517

Medicare Part A

-4

Medicare Part A

-161

Medicare Part A

-346

Medicare Part B

-64

Medicare Part B

-214

Medicare Part B

-455

Total

+2

Total

-667

Total

-1.32 TRILLION