(Image: Jared Rodriguez / t r u t h o u t; Adapted: BOSSoNe0013, SqueakyMarmot)

The trustees report for Social Security and Medicare shows that the slow recovery out of the Great Recession continues to damage the finances of the safety net programs. Expect every Republican in the country to blast out this headline.

Social Security will have sufficient resources to pay 100% of promised benefits through 2036, Treasury Secretary Tim Geithner said. That’s one year earlier than predicted in August 2010.

Medicare’s hospital insurance program, meanwhile, should be able to pay full benefits through 2024. That is five years earlier than the trustees predicted last year, but later than had been projected before Congress passed the new health reform law.

The accelerated date of trust fund expiration is due to changes in economic assumptions, Geithner said in a statement.

Geithner could have said, “I failed and our economic team failed in filling the shortfall in demand. As a result, tax receipts have been lower as idle capacity in the form of millions of workers sit out the recovery. This has long-term effects on our biggest programs, which have been deprived of tax revenue for no reason.”

What you’ll likely hear from anyone on the right talking about this: “Told you, these programs are going bankrupt, so we have to dismantle them.”

Here was a different reaction from the White House, from HHS Secretary Kathleen Sebelius. . . . [cont’d.]:

The Social Security Board of Trustees report shows that Social Security has sufficient assets to continue to provide benefits for seniors and people with disabilities in the coming decades. The combined Social Security Trust Funds have resources to pay full benefits for the coming 25 years.

The Obama Administration has already taken steps to strengthen and extend the solvency of Medicare, implementing policies including those in the Affordable Care Act that will save nearly $120 billion for Medicare over the next five years. Thanks to these essential reforms, today’s report found that the Medicare Hospital Insurance (HI) Trust Fund will remain solvent until 2024 and the actuarial deficit has fallen by 80 percent of taxable payroll since 2009, the year before the Affordable Care Act was passed. Over the next 75 years, Medicare’s Hospital Insurance costs are projected to be about 25 percent lower due to the new law.

And without the historic deficit reduction in the Affordable Care Act, Medicare would have gone bankrupt in 2016 – only five years from now.

This is all true, but Sebelius also says that Medicare must be improved, rather than eliminated in favor of a too-small voucher program. She goes back to the two proposals from the President, to allow for bulk purchasing of prescription drugs in Medicare and to empower the Independent Payment Advisory Board to keep cost growth to a manageable level.

The safety net is having financing problems because we’re in an economic slowdown. A better economy will yield a rosier outlook. Until that time, we can pay all scheduled benefits, and simply forcing Bill Gates to pay taxes on more of his income than a middle manager at Microsoft handles the entire Social Security problem. On Medicare, the long-term choice is to improve the overall health care system, and that can only be done by making American health care less expensive than it is today.

related.

The trustees report for Social Security and Medicare shows that the slow recovery out of the Great Recession continues to damage the finances of the safety net programs. Expect every Republican in the country to blast out this headline.

Social Security will have sufficient resources to pay 100% of promised benefits through 2036, Treasury Secretary Tim Geithner said. That’s one year earlier than predicted in August 2010.

Medicare’s hospital insurance program, meanwhile, should be able to pay full benefits through 2024. That is five years earlier than the trustees predicted last year, but later than had been projected before Congress passed the new health reform law.

The accelerated date of trust fund expiration is due to changes in economic assumptions, Geithner said in a statement.

Geithner could have said, “I failed and our economic team failed in filling the shortfall in demand. As a result, tax receipts have been lower as idle capacity in the form of millions of workers sit out the recovery. This has long-term effects on our biggest programs, which have been deprived of tax revenue for no reason.”

What you’ll likely hear from anyone on the right talking about this: “Told you, these programs are going bankrupt, so we have to dismantle them.”

Here was a different reaction from the White House, from HHS Secretary Kathleen Sebelius:

The Social Security Board of Trustees report shows that Social Security has sufficient assets to continue to provide benefits for seniors and people with disabilities in the coming decades. The combined Social Security Trust Funds have resources to pay full benefits for the coming 25 years.

The Obama Administration has already taken steps to strengthen and extend the solvency of Medicare, implementing policies including those in the Affordable Care Act that will save nearly $120 billion for Medicare over the next five years. Thanks to these essential reforms, today’s report found that the Medicare Hospital Insurance (HI) Trust Fund will remain solvent until 2024 and the actuarial deficit has fallen by 80 percent of taxable payroll since 2009, the year before the Affordable Care Act was passed. Over the next 75 years, Medicare’s Hospital Insurance costs are projected to be about 25 percent lower due to the new law.

And without the historic deficit reduction in the Affordable Care Act, Medicare would have gone bankrupt in 2016 – only five years from now.

This is all true, but Sebelius also says that Medicare must be improved, rather than eliminated in favor of a too-small voucher program. She goes back to the two proposals from the President, to allow for bulk purchasing of prescription drugs in Medicare and to empower the Independent Payment Advisory Board to keep cost growth to a manageable level.

The safety net is having financing problems because we’re in an economic slowdown. A better economy will yield a rosier outlook. Until that time, we can pay all scheduled benefits, and simply forcing Bill Gates to pay taxes on more of his income than a middle manager at Microsoft handles the entire Social Security problem. On Medicare, the long-term choice is to improve the overall health care system, and that can only be done by making American health care less expensive than it is today.

related.

UPDATE: Economist Dean Baker writes that a lot of the change is due to a recalibration of life expectancy.

The 2011 Social Security trustees report is far more optimistic about life expectancy than last year’s report. It projects that men who turned age 65 in 2010 can expect to live another 18.6 years compared with the 18.1 figure projected in last year’s report. Life expectancy for women at age 65 was projected at 20.7 years in the 2011 report, compared with 20.4 years in the 2010 report.

This assumed increase in life expectancy is the largest factor in a projected deterioration in the program’s finances. The shortfall expressed as a share of payroll over the program’s planning horizon is 2.22 percent, compared with 1.92 percent in the 2010 report. Expressed in dollar terms, the projected shortfall over the 75-year planning horizon is $6.5 trillion or 0.7 percent of GDP.

He adds that the shortfall on Medicare over the 75-year time horizon is around $2.3 trillion, whereas the Congressional Budget Office said that the country would pay $34 trillion in extra insurance premiums over the same time horizon if Medicare were dismantled like the Paul Ryan plan wants, in addition to a shift in costs to seniors of $5 trillion. So just for the record.

David Dayen

David Dayen