The federal government’s largest two programs, Social Security and Medicare, are at the center of a vibrant national debate over our fiscal future. Each program faces a significant financial shortfall, the solution to which remains elusive.
The following are five myths that have been particularly damaging to our national discussion of Social Security and Medicare.
This elusiveness exists in part because of inherent substantive difficulties: many Americans will have to give up something to bridge the significant gaps between program revenues and promised benefits. It’s not easy to forge bipartisan agreement over how to allocate these sacrifices. Yet these decisions have been made unnecessarily difficult by rampant confusion about each program’s finances.
MYTH #1: We "only" have a healthcare financing problem, not a population-aging or senior-entitlement problem. Medicare’s financing shortfall is therefore much bigger and more urgent than Social Security’s.
Unlike many myths that arise from popular ignorance, this damaging myth gained currency through being pushed by several influential policy advocates.
Make no mistake: the growth of healthcare costs is indeed a huge problem. But mainstream budget analysts have long understood that the graying of the Baby Boom generation would by itself create enormous financial challenges. When the Boomers left the ranks of taxpaying workers and entered the ranks of Social Security and Medicare beneficiaries, federal expenditures would soar. These financial strains would be great enough to require a reassessment both of the annual benefits promised to these birth cohorts, and of the number of years they should be allowed to spend in subsidized retirement.
But as George W. Bush’s second term drew toward a close, many of Washington’s influential policy wonks began to sing a different tune. Suddenly population aging wasn’t such a big deal. Even Social Security itself didn’t face such a large problem. The entire fiscal shortfall was due, it was now said, to healthcare alone.
(photo credit: LVCHEN)