Both sides in the pitched battle over Social Security are getting ready to argue over a whole new set of numbers – the annual assessment of when Social Security and Medicare will go broke.
Even before the report was released Wednesday, critics complained that the administration might try to fudge the numbers.
The report by the trustees of Social Security and Medicare will be in the spotlight this year more than ever because President Bush has made overhauling Social Security the top domestic priority of his second term.
Both Bush and Vice President Dick Cheney were on the road this week, seeking to build support for the overhaul drive, which has run into major opposition from Democrats in Congress who oppose the president’s plan to divert a portion of Social Security taxes to create private accounts for younger workers.
Democrats have accused the administration of overstating the funding crisis facing Social Security and contend that Bush is avoiding dealing with the even more serious financing problems in Medicare, the government’s health care program for the elderly and disabled.
Social Security provides retirement, survivors and disability income for 47.7 million Americans, and Medicare provides health care for 42 million seniors and disabled people.
The six-member board of trustees for both Social Security and Medicare is headed by Treasury Secretary John Snow and includes Health and Human Services Secretary Mike Leavitt, Labor Secretary Elaine Chao and Social Security Commissioner Jo Anne Barnhart.
In addition, there are two public trustees, Thomas Saving of Texas, who has been a proponent of Bush’s proposal to create private savings accounts, and John L. Palmer of New York.
While the trustees’ report will reflect the decisions made by the six-member board, some Democrats in Congress and other critics have been pushing to make public the recommendations that the board receives from the professional staff of the Social Security Administration.
Those recommendations are not made public, and the deliberations of the trustees also occur in secret.
Critics said the administration was able to conceal from Congress projections made by Medicare’s chief actuary that the prescription drug program Congress approved in 2003 would be vastly more expensive than Congress had been led to believe.
The Center for Economic and Policy Research, a liberal-leaning research organization, said unless the recommendations upon which the trustees make their decisions are made public “there is no way of knowing whether the trustees’ report is based on expert advice as opposed to political considerations.”
Saving and Palmer testified to a congressional committee earlier this month that there have been no major changes in the financial outlook for either Social Security or Medicare over the past year.
Last year’s report put the date that Social Security would exhaust all the resources in its trust fund at 2042. And much earlier, in 2018, the Social Security program will not be collecting enough in payroll taxes to meet its obligations to retirees, the trustees said last year.
The 2018 date is more significant because it is at that point that the government will begin cashing in the bonds that have built up in the trust fund.
However, since those bonds don’t represent actual assets, the redemption process will require the government to either borrow more from financial markets, raise taxes or cut spending in other government programs to come up with the resources to meet obligations to retirees.
The situation in Medicare is even more dire. The health care program crossed the threshold where payroll taxes were not sufficient to meet medical costs for current beneficiaries last year. It will exhaust all the resources in its trust fund in 2019, according to last year’s trustees report.
The financing problems of Medicare are more severe because health care costs are rising so much more rapidly than inflation.
The annual cost of Medicare is $325 billion while the cost of Social Security is $517 billion. However, the trustees projected last year that Medicare’s costs would overtake Social Security by 2024 and would be nearly double Social Security by 2078.
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