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In March of 1988, the cover and an essay in The New Republic depicted selfish “greedy geezers” draining America of resources that might be utilized in a more constructive fashion to provide growth and economic development. Funding of the entitlement programs Medicare and Social Security were leaving less money available to be spent on education and preschool activities, and the maintenance and expansion of the nation’s infrastructure. The money being spent for these entitlement programs was also increasing America’s debt and a change was required in the way these programs were financed in order to cover the expenditures.
What was described then remains an issue today, with federal, state, and municipal debt, and unfunded pension obligations skyrocketing. While federal debt and budget deficits are partially the result of unwarranted tax cuts while the nation was involved in two wars, the burgeoning of an aging population with their requirements for Social Security and Medicare is the major driver of America’s long-term debt. The questions raised by this, are how can a decent quality of life and medical care for the nation’s older population be maintained, debt controlled, and programs that will promote America’s future prosperity be funded?
The Social Security and Medicare Boards of Trustees in their 2014 annual report noted that “neither Medicare nor Social Security can sustain projected long-run program costs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers.” The two programs together were responsible for 41 percent of Federal expenditures in fiscal year 2013. As it has been doing, the Trust Funds will pay out more in hospital benefits, Social Security benefits, and other expenditures in future years than it obtains in income, given the growing aging of the population and the retirement of the Baby Boomers. The report states that the earlier these problems are addressed by lawmakers, “the more options and more time will be available to phase in changes so that the public has adequate time to prepare.” Unfortunately, a do-nothing Congress has thus far done nothing to tackle these dilemmas which will entail some difficult decisions.
While recently, the overall trajectory of medical inflation seems to have been reduced, costs are still rising instead of stabilizing or going down. And it may be that the last recession was responsible for some of the dip in costs as medical spending was up in 2013 and 2014. Some of this escalation, however, may have been because more people were covered by the Affordable Care Act and sought care, as actual medical price increases were below 2 percent. Whether health care inflation will continue to moderate in the future is uncertain. The only sure way to reign in heightened spending on health care is to end fee-for-service medicine. (A single- payer system with physicians on salary is needed to cut excessive overhead and unnecessary care, though it will be difficult overcoming the resistance of stakeholders in the health care system to get this done.)
In 1950, there were sixteen workers for each Social Security beneficiary. There are now 2.9 workers with only two predicted by 2030. In addition, recipients of Social Security are living considerably longer than in the past, which means that more benefits must be paid out to them over time. This can be cured by having Social Security benefits kick in later by raising the retirement age. Besides helping with Social Security’s finances, this would also aid the economy by keeping more needed skilled workers on the job. Having Social Security taxes paid on an individual’s entire income would also help, as would more taxes on the benefits of those with higher incomes.
The problems with public service pensions must be solved by negotiations between the unions, municipalities, and states before more situations like Detroit occur. Sacrifices will be have to be made by both sides, as pension and health care benefits previously promised to workers are not sustainable. However, current workers and services cannot be cut significantly if the quality of life in the cities is to be maintained. Some taxes and fees may have to be raised, but workers will also have to surrender some of their benefits which were negotiated with past municipal administrations that did not appreciate the burden their worker contracts would generate for future taxpayers.
All of America’s unfunded obligations, Social Security, Medicare, public worker pensions, must be adjusted in a realistic fashion to keep the nation’s long term debts in check and not burden the next generation with paydown. Increased funding, longer years of work, and later retirement should all be in the mix.
Resurrecting Democracy
www.robertlevinebooks.com
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Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020