- The Washington Times - Thursday, April 26, 2007

The medium-term and long-run financing arrangements for Social Security and Medicare are so precarious that the news media and voters should compel presidential candidates to offer genuine plans to address the grave problems on the horizon. Merely acknowledging the problem without offering a plan is unacceptable. Consider the current (and inadequate) views of Democratic presidential candidate Hillary Clinton and Republican candidates John McCain and Mitt Romney.

Beyond expressing opposition to President Bush’s plan for private retirement accounts, the “on the issues” section of her senatorial Web site (her presidential site has no “issues” section) says that “it is essential that the administration and Congress take the necessary steps to secure the solvency of [Social Security] for current and future retirees.” Regarding Medicare, she highlights her membership on the Senate Special Committee on Aging, which, she says, “continually reviews Medicare’s performance.” Yes, she is in favor of allowing Medicare to bargain for lower drug prices, but where is her leadership in ensuring its long-term solvency?

In his April 16 economics speech, Mr. McCain said, “If I’m president, I’ll submit a plan to save Social Security and Medicare.” Let’s have the plan now, senator. Asked by the Politico how he would address Social Security and Medicare, Mr. Romney said he would “meet quietly, probably in the basement of the White House, with Democratic leaders and Republican leaders, and talk through different alternatives that we have to rein in the excessive growth of certain ones of our entitlement programs.” Without providing any specifics, he added, incongruously, “I think we can get that job done.” Please tell us how, Mr. Romney.

The recent report by the trustees of the Social Security and Medicare trust funds confirms how serious the looming financial crises afflicting both programs are. Here are the facts:

m Over the next 75 years, the present value of the difference between the costs of currently scheduled Social Security benefits and the program’s tax revenues is $6.8 trillion. Today, Social Security benefits comprise 4.3 percent of Gross Domestic Product (GDP). By 2030, a mere generation from now, that proportion will rise nearly 50 percent, reaching 6.3 percent of GDP. Beginning in 2017, a decade from now, benefit payments will exceed Social Security tax revenues, requiring the program to begin receiving revenue transfers from the Treasury’s general fund. The assets in Social Security’s trust funds will be exhausted by 2041.

m Medicare is in much worse shape. Medicare expenditures will increase from 3.2 percent of GDP in 2007 to 6.5 percent by 2030 (and 11.3 percent of GDP 75 years from now). The present value of Medicare’s effectively unfunded liabilities over the next 75 years totals $24.8 trillion, $18 trillion more than Social Security’s unfunded liabilities.

What the media and voters must demand from presidential candidates are the specifics of their proposals to address these problems.

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