Report From Congress: 4/30/07

Statement

REPORT FROM CONGRESS
By Congressman Roger F. Wicker

Social Security and Medicare face a growing crisis that threatens to bankrupt the two programs and damage the nation's economy. That was the ominous news emerging last week from the annual report of the trustees who oversee these vitally important entitlement programs.

The combined cost of the programs is currently about 40 percent of total federal revenue, and that total is projected to double over the next three decades. On their current path, Social Security, Medicare, and Medicaid benefit payments in 2040 will cost Americans as much as the entire federal budget does today. This rate of growth is unsustainable. We must take action now to address this looming disaster.

WARNING TRIGGERED

The Republican majority in Congress began entitlement reform efforts in 2003. The legislation included a Medicare "funding trigger," requiring the trustees to issue a warning when the program's funding is projected to exceed 45 percent of federal revenues. The trustees issued such a warning in this year's report. The law requires the president to respond with a proposal to address this issue in the next fiscal year budget, and Congress must consider it on an expedited basis.

The good news is that there are ways to preserve and protect these two essential programs. The 2008 budget plan proposed by House Republicans included additional entitlement reform provisions. Unfortunately, the budget resolution pushed through by Democrats ignores this crisis altogether and delays consideration of critical reform measures for at least five years. Instead, their budget takes the country on a course that includes new federal spending and the largest tax increase in American history.

The details in the trustee report provide a sobering picture of the threat we face. Among the findings:

- Medicare's hospital insurance program is already paying out more than it collects in payroll taxes, and its trust fund reserves will be depleted in just 12 years.

- Medicare presently accounts for 12.5 percent of federal income tax revenue. With medical costs rising substantially higher than the rate of inflation, that percentage is expected to be 25 percent by 2022.

- Social Security benefit payments will surpass Social Security income in 10 years, forcing the program to begin drawing from general revenue funds to meet its obligations.

This crisis threatens more than just these important retirement security programs. It poses a threat to the overall U.S. economy. Without changes, taxes on our children would likely be doubled to fund Social Security and Medicare expenditures. This tax burden would be felt throughout the economy by slowing growth, limiting job creation opportunities, and hurting competitiveness.

'FINANCIAL ALARM'

Health and Human Service Secretary Mike Leavitt said, "We are approaching a point in time when this problem is going to tip into the unsolvable." The Los Angeles Times said the report represented a "financial alarm sounding." Congress should take heed to this alarm and begin a bipartisan initiative to reform these programs. Each day we delay, the problem worsens and the solution becomes more difficult to reach.

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