December 21, 2014

Trustees' Numbers Highlight Need for Fiscal Sustainability Plan

  • Social Security, established in 1935, is the federal government’s largest program. It represents approximately one-fifth of the federal budget and...

In their latest updates on Social Security and Medicare, the trustees for the programs include data that show the growing strain they will put on the rest of the federal budget unless Washington can agree on a long-term fiscal sustainability plan.

That’s why Republicans and Democrats must get beyond their current budget impasse and move forward on broad fiscal reforms through regular congressional order.

Concord Coalition Executive Director Robert L. Bixby called the trustees report “a powerful reminder that our nation’s most difficult fiscal problems have not been solved.”

Many people believe that Social Security and Medicare are self-financed, but that is not the case. The Social Security and Medicare Part A (HI) trust funds are simply a matter of internal government bookkeeping.

While the projected dates for insolvency in the trust funds receive a great deal of attention, the more relevant information for the budget is the amount of general revenue needed to make the benefit payments promised by law. That figure is rising rapidly and should not be ignored.

“As the population ages and the number of beneficiaries steadily increases,” Bixby says, “the strain on general revenues will grow, squeezing out other federal programs and putting upward pressure on taxes.”