Social Security and Medicare are among the entitlements that are consuming an ever growing portion of the federal budget as the baby boom generation starts retiring.
Rep. Paul Ryan, R-Wis, has a plan for younger workers to switch to subsidized insurance, which sounds like a pretty good plan. Insurance companies negotiate contracts with hospitals and set reasonable doctors’ fees. Medicare is less discriminating, but politicians always seem to want to undercut the pay of doctors to the point that they don’t want to take Medicare patients. Subsidies — in the neighborhood of $15,000 — can buy some pretty good insurance.
In 2010 there were 47.5 million Medicare beneficiaries. In 2030 that will grow to 80 million, according to USA Today.
But what to do about Social Security? In 2010, there were 54 million people receiving Social Security benefits. Our preference would be for the government to open up federal land for oil and gas drilling. The resulting royalties would be enough to cover Social Security and reduce the debt.
Another option would be to increase the cap from $110,000 to $215,400. That would cover 90 percent of earning and would reduce the shortfall 36 percent, according to the June Bulletin of AARP. But eliminating the cap entirely “would end almost all the shortfall.” That would be a millionaires tax that would produce some real benefits.
Also, raising the retirement age to 68 would reduce the shortfall by 18 percent, according to AARP.
Some changes are in order. In 21 years the federal government will only be able to pay three-fourths of the promised benefits. It’s a crime that Congress has been spending the money that comes in for Social Security.
There are those who always try to claim that Social Security pays recipients more than they put in, but that’s a specious argument that doesn’t consider the interest earnings a person would have had if he had taken the 6.2 percent employers have been paying along with the 6.2 percent you have been paying and put it in the bank beginning with your first job. We would all be millionaires.
Unfortunately Social Security is not a saving plan with compounding interest. But don’t let anybody tell you that you make too much and it should only go to the poor. You paid for it. You earned it. You deserve it. Congress owes it to the American people to make Social Security and Medicare solvent.
What’s taking up all the money is the radical expansion of Medicaid and the 2009 stimulus bill that increased the maximum benefits for food stamps. That stimulus bill also gave states more money to administer the program. The result is it added 11.2 million more since 2009. There are almost as many people on Supplemental Nutrition Assistance Program as there are Medicare recipients — 44.7 million in fiscal year 2011 at a cost of $75.3 billion. Since 2008 the increase in people on food stamps has been 28.2 million and the cost has gone up $37.6 billion. This is a program that has gone out of control.
It’s time to dial back food stamps, quit extending unemployment benefits forever, quit using Medicaid as a backdoor universal health care plan and act to save Social Security and Medicare.