The lead article in the Washington Post today prominently featured the "Social Security and Medicare" scare again. Regular readers of BTP know the story. Social Security costs are projected to increase moderately as life expectancies increase through time. Medicare's costs are projected to soar due to rapidly growing health care costs in the private sector. Those who want to cut both social programs try to portray the issue as a demographic problem when the real problem is the projected crisis in the country's health care system. If reporters covered this story accurately, the focus of attention would be health care reform, not cutting benefits for seniors. The arithmetic is simple, we did a short piece a few years back that shows what happens if we assume that health care costs only grow due to aging and otherwise track per capita GDP. This set of assumptions causes the problem to disappear. The article also includes the inaccurate claim that the Social Security trust fund is projected to "dry up completely" by 2017. Actually, the fund is projected to hold more than $4 trillion in U.S. government bonds by that date. President Bush's Social Security trustees project that the fund will hold sufficient assets to pay all benefits through the year 2040. The non-partisan Congressional Budget Office projects that it will be able to pay all benefits until 2046 (and 80 percent of scheduled benefits in future years). The paper should at least be able to accurately report the Social Security projections.
--Dean Baker
