Wednesday, May 13, 2009

Article Of The Week

Some of us were distressed upon hearing yesterday of the annual report by trustees of the Social Security and Medicare programs of the impact of the recession upon the health of the two programs.

Not primarily because Social Security is now projected to pay out more in benefits than it receives in 2016 (a year earlier than suggested in 2008) as Medicare will this year. Or that the Social Security trust fund presumably now will be depleted by 2037, four years earlier than previously projected by the trustees, and Medicare in 2017, two years earlier than forecasted.

No, as Robert Reich, once a trustee of the trust funds, explains in "The Truth Behind the Social Security and Medicare Alarm Bells" (posted today on projections depend upon the assumptions made by the official actuary of the programs. Reich notes that since the Civil War, the economy's average annual growth rate is nearly 3 per cent- and with that growth, Social Security would be sound for the next 75 years.

Medicare, as Reich reminds us, is a far different matter because its continuing viability depends upon reform of the health care system. He points out

fixing it has everything to do with slowing the rate of growth of medical costs -- including, let's not forget, having a public option when it comes to choosing insurance plans under the emerging universal health insurance bill. With a public option, the government can use its bargaining power with drug companies and suppliers of medical services to reduce prices. And, as I've noted, keep pressure on private insurers to trim costs yet provide effective medical outcomes.

The real danger to the Social Security and Medicare systems lies in its opponents, masquerading as "reformers." During the last Administration, it was Mr. Bush and his, mostly Republican, allies, pushing the idea of partial privatization- which would have been right friendly to Wall Street and disastrous to recipients. Now with the downfall (however temporary) of the GOP, corporatist Democrats are left to fill the void. And so it was Timothy Geithner, enough of a failure as head of the New York Stock Exchange that he was appointed Treasury Secretary, who yesterday contended at a press conference

The sooner we come together to make the difficult but achievable changes needed to strengthen the solvency of Medicare and Social Security, the more time we'll give the American people to plan and to adjust, and the sooner we'll be able to ensure that these vital programs will be as important for generations to come as they are today.

(For any of us who may want to harbor a notion that Geithner wants to strengthen the systems, note the phrase "the more time we'll give the American people to plan and to adjust"- i.e., to decreased benefits or more rigid eligibility requirements.)

There is only one problem with Reich's post. Unfortunately, he raises the possibility of means testing (which would transform the program into something akin to welfare) or raising the retirement age. Fortunately, he prefers raising the cap (currently $106,800) on Social Security taxation- which would be a progressive improvement, arguably more so if it exempted wages between the current cap and $200,000-$250,000. And he concludes, rightly, "the main point is that Social Security is a tiny problem, as these things go." If this argument, and the importance of a public option in health care reform, prevail, Social Security and Medicare will withstand the effort of conservative and neo-liberal forces to weaken probably the most popular government programs in American history.

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