Our country is on an unsustainable fiscal course, but this situation did not arise overnight or as result of the 2017 tax reform, which reduced the taxes for workers in every income bracket on average.
In fact, last week the nonpartisan Congressional Budget Office reported that federal revenues were up 3 percent, or $92 billion, for the first 10 months of fiscal year 2019 compared to the same period last year. The problem is that federal spending grew by about 8 percent, or $276 billion, during this same time and is projected to grow dramatically even after major portions of the tax reform are scheduled to expire.
CBO projects that debt will rapidly increase over the next several decades as mandatory spending – particularly Social Security and major health care programs – and interest payments permanently grow faster than federal revenues.
This autopilot spending, which is not subject to the annual appropriations process, has grown from 36 percent of the budget 50 years ago to 70 percent today. If left unchecked, nearly 80 cents of every dollar the government spends will be on mandatory spending and interest payments in the next 10 years. That leaves less money for national security, veterans and other important investments, including biomedical research.
The editorial claims that Social Security and Medicare are “in danger” because “there will soon be nowhere else to cut unless Congress does something to boost revenue.” The truth is that Social Security and Medicare do need stabilizing, but their problems are not the result of tax relief for working families.
We are facing a demographic fiscal storm. For decades, nonpartisan experts have warned of the budget pressures that we would face as baby boomers aged and began to retire. On average, more than 10,000 people per day turn 65 years of age. The number of people 65 years or older has doubled in the last 50 years and is forecast to increase by a third in the next 10 years.
The combination of an aging population, longer life spans and rising per-beneficiary health care costs puts enormous pressure on our budget.
The Social Security and Medicare Hospital Insurance trust funds are financed largely through payroll tax withholdings and are now paying out much more than they are taking in.
CBO projects Social Security’s combined trust funds to be exhausted in 2032and Medicare’s Hospital Insurance Trust Fund, which covers inpatient hospital services, hospice care, skilled nursing facilities and home health services, to be depleted in 2026.
Under current law, once their respective trust funds are exhausted, these programs will only be able to pay out as much in benefits as they have coming in. For Medicare, that means only being able to pay 86 percent of hospital-related Medicare spending. For Social Security, revenue is projected to cover only 76 percent of scheduled benefits. I don’t know many seniors who can afford a 24 percent cut.
I want to make sure Social Security and Medicare are able to provide benefits to current beneficiaries, as well as those who will need these programs in the future. That will require being clear-eyed about the problem and working together in a bipartisan manner to ensure these programs are solvent.
The longer we wait to address the imbalance, the more severe the changes will need to be and the fewer options we will have.
We need to change the way we do things in Washington. In the Budget Committee, we are focused on developing bipartisan budget process reforms that will help us to confront challenging fiscal issues in a more reasoned, timely and responsible way. These issues are too important to ignore, and we are going to need to work together if we are to put our country on a more sustainable fiscal course.
ABOUT THE AUTHOR
Mike Enzi, a Republican, is the senior U.S. senator from Wyoming and Senate Budget Committee chairman. He