Latest Fake Crisis -- Geithner's Message to the Public: Social Security & Medicare Now in Dire Straits!!!

by Damozel | Geithner's message:  Will it surprise you to learn that Social Security may run out of money sooner than expected, maybe as soon as 2037? Or that  Medicare's in dire trouble and may run out of money in 2017?

Ezra Klein discusses the findings:

[B]oth programs face challenges. What probably won't make it into many stories, however, is the relative severity of the problems. The crude fix for Social Security actually sounds quite manageable: "Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two."

Conversely, the crude fix for Medicare -- and this is only the hospital insurance side of Medicare -- is more brutal...The relative urgency of Medicare's problem is pretty simple to explain. As the Trustees Report says, "While both programs face demographic challenges, rapidly growing health care costs also affect Medicare." In other words, Social Security is only affected by demographics. Medicare is also being buffeted by rising health care prices. If we can't get those under control, we can't fix Medicare. And if we can't fix Medicare, then it's not just the Medicare program that will be insolvent. It's the federal government..

In short:  duh.

James Ridgeway comments at MoJo blog on how the recession is fueling the fake Social Security Crisis of which we intermittently hear such terrifying reports.

[T]he straw man of Social Security “reform” is yet again raising his scruffy head. The phony crusade to “save” Social Security from bankrupting the country and destroying the lives of our grandchildren has gained new traction during the recession. This manufactured crisis is already being used by conservatives (apparently with some cooperation from the Democrats) in a quest to cut old age entitlements--in effect taking money away from elders to pay for the Wall Street bailout.  (MJB)

In fact,  Ridgway points out,

[i]n terms of solvency, the giant government program is still running 28 years ahead of Citibank, Bank of America, and the other behemoth private financial institutions run by the high-paid geniuses of Wall Street (and much longer, if you count the years when the bubble was expanding). In addition, the Social Security trust fund is still in better shape than it was a decade ago, according to the Center for Budget and Policy Priorities.  None of this, of course, will stop proponents of entitlement cuts from brandishing the new trustees' report as a weapon. Within hours of the report’s release, a new post on the Cato Institute’s blog was warning that it “shows that the program’s financial crisis is growing worse while Congress has continued to duck the issue.” (MJB; emphasis added)

So anyway brace yourself, because it ain't just the Republicans pushing "reform."

The Washington Post confirmed that Hoyer is looking to create ”a bipartisan consensus” for “overhauling the Social Security system.” Democrats, the Post reported, ”have found a willing partner in the Senate,” where South Carolina’s Lindsey Graham “has stated his desire to work with President Obama to make changes to keep Social Security solvent.” Even Graham, a longtime supporter of Social Security privatization, is now admitting that dog won’t hunt. Instead, he presents Social Security reform as a “math problem”: “You can do a combination of things, give a little here and give a little there, and get it done,”  he said. 

Anyone who supports the program that lifted millions of elders out of poverty should  be concerned by the ongoing disconnect between the “reform” rhetoric and Social Security’s actual fiscal soundness--and by where it all might lead. (MJB)

Meanwhile, what price Medicare?  That, my friends, is the question.  At the Wonk Room, Igor Volsky suggests a reason why Medicare is so overburdened --- a reason, that is, beyond those cited in the report.

One reason why we’re spending too much money on hospital care is because we don’t invest enough in preventive care — catching a disease early and preventing the need for hospitalization in the first place. Baby boomers, for instance — who make up 17 percent of non-elderly adults but account for 26 percent of those with at least one chronic illness — have a hard time finding affordable/continuous health coverage and contribute to increasing Medicare costs.

A recent study found that “chronically ill people turning age 65 who were previously uninsured had lower spending than insured people prior to Medicare. Yet once on Medicare, these uninsured Americans spent 50 percent more than previously insured Medicare beneficiaries who also had chronic disease.” If, as one study suggests, being uninsured increases spending by 50 percent, “having 2.4 million more chronically ill Americans join Medicare as uninsured rather than previously insured could raise its costs by $2.4 billion per year in 2005 dollars.”

Anyone who thinks it's just by chance that we're suddenly hearing this all now needs to read this piece by Mick Arran at Fact-esque.

More at Memeorandum....

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