WASHINGTON -- As Congress debates legislation this month to expand Medicare by adding a prescription drug benefit, The Concord Coalition urges lawmakers to carefully weigh three key points before rushing a bill to the President's desk:
- Medicare already promises more than it can afford to deliver over the long-term. According to the latest Trustees Report, Medicare Part A will begin to pay out more than it takes in by 2013. General revenues will then have to cover the shortfall, which under current law never ends. Medicare Part B already gets 75 percent of its funding from general revenues. Thus, even without adding new benefits Medicare will claim a growing share of taxpayer dollars. Meanwhile, the program is on track to double as a share of the economy by 2035 and triple by 2065.
- Three successive tax cuts since 2001 will drain more than $3 trillion in general revenues over the next 10 years, assuming that they do not “sunset.” After spending three years cutting taxes, it makes no fiscal sense to greatly expand entitlement spending. This completely abandons the responsible “pay-as-you-go” (Paygo) rule of the 1990 Budget Enforcement Act in which tax cuts and entitlement expansions must be offset to prevent deficits from spiraling out of control. Instead of raising taxes to pay for this new entitlement, or cutting entitlements to afford the long-term cost of recent tax cuts, Congress and President Bush are brushing aside all thoughts of hard choices and turning “Paygo” into “Pay? No.”
- With a record deficit projected for this year and deficits now expected for as far as the eye can see, the entire federal share of a new Medicare drug benefit will have to be paid for with borrowed funds. The Congressional Budget Resolution allows $400 billion for Medicare expansion over 10 years. However, the Treasury does not have an extra $400 billion sitting around waiting to be spent. The government is already borrowing heavily just to meet its current commitments. It is entirely reasonable for the federal government to deficit-finance a war or other national emergency, but it is entirely unreasonable for the government to deficit-finance a new entitlement. Future generations will ultimately pay the bill for both the unfunded benefit promises and the rising costs of servicing a burgeoning national debt.
“The Concord Coalition does not dispute that adding prescription drug coverage to Medicare is a worthy goal. Prescriptions are an integral part of modern medicine and often the most cost effective therapeutic alternative. But policymakers must not lose sight of the long-term consequences of today's fiscal policy decisions. Given the already grim outlook for future taxpayers, the prerequisite for a prescription drug benefit should be comprehensive Medicare reform, including effective cost savings. The proposals now on the table duck the hard choices of long-term Medicare reform,” said Robert L. Bixby, Executive Director of The Concord Coalition.