"This report should be required reading on the campaign trail. Anyone who is serious about becoming our next President must be prepared to confront the long-term fiscal challenge and be willing to lead a national dialogue on how to deal with it," said Robert L. Bixby, Executive Director of The Concord Coalition.
"It is understandable that Democrats and Republicans will have different perspectives on the specifics of any reform plan. This report demonstrates, however, that the first step is to reject the 'Do Nothing Plan.' The debate should be about realistic options, not about who can promise the most without asking anyone to give anything up. In effect, those who pledge not to consider any benefit reductions or new funding are pledging to stand by and watch as Social Security and Medicare go over a fiscal cliff." Bixby said.
According to the Trustees report, the cost of Social Security and Medicare will roughly double from 7 percent of the economy today to 14 percent by 2040. To put that number in context, if the federal government spent 14 percent of GDP on these two programs today they would consume about 80 percent of all revenues.
Despite the attention focused on when the Social Security and Medicare Part A trust funds become "insolvent," The Concord Coalition again warned that trust fund solvency is a poor indicator of the fiscal outlook for these programs.
"The magnitude of our long-term fiscal challenge should not be minimized by trust-fund accounting. This indicator not only misleads the public about the timing and magnitude of the looming fiscal burden, it says nothing about these programs, impact on national savings and generational equity. Trust fund solvency also says nothing about how society will meet the growing fiscal burden reflected in these projections. Because the trust funds are primarily an accounting device for keeping track of the programs' claims on general revenues, their existence does not ease the burden of paying future benefits," said Bixby.
"These programs must not be viewed in isolation, either from each other or from the overall federal budget. What matters fiscally and economically is their combined total cost. Reform efforts will need to either reduce costs or raise revenues to pay for them. Those are the choices that must be confronted," Bixby said.
The Concord Coalition is a nonpartisan, grassroots organization dedicated to balanced federal budgets and generationally responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and Bob Kerrey (D-NE) serve as Concord's co-chairs and former Secretary of Commerce Peter Peterson serves as president.