Social Security, Medicare Get a Reprieve

Social Security, Medicare Get a Reprieve

NewsMax.com Wires
Tuesday, March 20, 2001

WASHINGTON (UPI) – Medicare and Social Security will last a few years longer than previously thought, trustees of the two federal entitlement programs announced Monday.

Because of improved economic forecasts, trustees for the two programs reported that Medicare funds might last four years longer than expected, until 2029, and the Social Security trust fund could last one more year than previously forecast, until 2038.

Both programs still face ultimate insolvency because of increasing expenditures and decreasing revenue sources driven by the aging baby boomers, who will begin to drain resources from the programs without further contributions in the coming decades.

The two programs are huge. The Medicare program is the second-largest social insurance program in the United States, with 39 million beneficiaries and expenditures of $222 billion in 2000. Social Security ran a surplus of $153 billion in 2000 and ended the year with $1.049 trillion in assets. Nearly $3 trillion of the $5.6 trillion "budget surplus" predicted by the Congressional Budget Office to materialize over the next decade can be attributed to the two programs' trust funds.

Trustees for the two accounts called for fiscal discipline and great care to maximize the solvency of the two programs.

"The additional year of solvency is good news," Acting Commissioner of Social Security William A. Halter said. "However, we should both maintain fiscal discipline and move forward on a bipartisan basis to strengthen Social Security to face the challenges presented by the baby boom generation's retirement."

Republicans and Democrats announced Monday that only their respective plans could save the two programs.

Senate Minority Leader Tom Daschle, D-S.D., said President Bush's recent budget submitted to Congress would raid almost all of the Medicare surplus and some of the Social Security surplus to pay for his tax cut and a "contingency fund."

"I urge the Bush administration to dedicate the Medicare surplus for its intended use, and remove the Medicare Trust Fund from their so-called 'contingency fund,' " Daschle said.

But the Bush administration said that Medicare should be revamped and the president will soon launch a new commission to study how to reconfigure Social Security to last longer and perform better.

"While the short-term financial status of each program has improved some since last year's report, substantial challenges remain, which need to be addressed at the earliest opportunity," Treasury Secretary Paul O'Neill said.

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