Entitlements: A Cliff Too Far

The nation's fiscal cliff is little more than a molehill compared to the steep entitlement precipice.  Social Security and Medicare are running worsening deficits.  Despite the mounting crisis, there appears to be little appetite in Washington to deal with the problem.

Social Security and Medicare, the two largest federal expenditures, accounted for 36 percent of federal spending in fiscal 2011, according to the annual report published last year by the programs' boards of trustees.  The taxpayer tab for the two programs was $1.21 trillion.

In its report, the trustees warned that the two programs "cannot sustain projected long-run costs."  Social Security trust fund reserves will be exhausted by 2033 at current growth levels, while the depletion in Medicare funds will be reached earlier in 2024, the report estimates.

By 2021, the report forecasts that Social Security costs alone will amount to $3 trillion.  To illustrate the severity of the problem, the entire federal budget for the last fiscal year was $3.7 trillion. Without changes, the government will be forced to borrow increasing amounts of money to fund benefits.

Despite the dire warnings, President Obama and his Democrat Party disciples have refused to discuss meaningful reform for the programs.  In fact, the president has taken to vilifying Republicans for daring to suggest tampering with seniors' entitlement programs.

Demographics guarantee that the two entitlements will bankrupt the country.  Consider these facts from the National Center for Health Statistics (NCHS) and the U.S. Census Bureau:

• The nation's population aged 65 years and older is projected to increase from 12.4 percent of the population in 2000 to 19.6 percent in 2030.  There will be an estimated 71 million people over 65 in 2030, including more than 19.5 million 80 years and older.
• More than 7,500 people are turning 65 every day.  By 2025, that number will crest when a projected 11,700 people will celebrate their 65th birthday every day.    
• The country's birth rates have fallen to the lowest level since 1920, when the government began keeping reliable data.  In 1957, there were 122.7 births per 1,000 population, compared to 63.2 in 2011. 

These statistics have far-reaching implications for public health care and pension systems.  While more people are living longer, fewer people will be available to pay taxes to fund the benefits.  Today there are 2.9 workers for every retiree.  In 2030, the number drops to 2.0 workers for each retiree.

An aging population will dramatically hike medical costs.  The NCHS estimates that the per capita health care costs for a person over 65 is three to five times greater than the cost for younger people.

Ignoring the problem will only hasten the day when drastic cuts will be mandated by law.  For example, legislation precludes payment of benefits beyond the amount that can be financed by Social Security trust funds.

Social Security and Medicare must be reengineered to accommodate the nation's demographic reality. By stubbornly resisting change, Obama and his party are jeopardizing the future of the programs. Republicans must tell the American people the truth and rally the nation to save senior entitlements.