Entitlements: Myths Versus Facts
Social Security, Medicare, and Medicaid together represent our nation’s compassionate commitment to the elderly, the sick, and the less fortunate. They must be reformed and modernized to ensure that every family can count on them now and in the future. But before our nation can have an honest debate on how to fix them, we must separate the myths from the facts.
Myth: Making any changes to these programs will undermine our commitment to care for the elderly and those in need.
Fact: Reform is the best way to ensure that these programs survive for the long term. As currently structured, they will not be able to withstand rising medical costs and the huge influx of retirees who are living longer than ever. Failure to address this problem will guarantee that we can’t uphold our responsibility to seniors and low income Americans.
Myth: We must make deep cuts to the programs, resulting in drastically reduced benefits.
Fact: Leaders on this issue are not proposing actual spending cuts. But to sustain these programs, we must slow their explosive growth. It can be done through slight adjustments in payments, benefits, eligibility, administration, coverage options, and program efficiencies with minimal effects on beneficiaries. And the sooner we act, the smaller the impacts will be.
Myth: We may have a problem, but there’s plenty of time to fix it.
Fact: All major entitlement programs are projected to be insolvent in 20 years. The trust fund for Social Security Disability Insurance will be exhausted in 3 years. The trust fund for Medicare Part A, which pays for hospital services, will go bankrupt in 13 years. Social Security will be unable to pay full benefits beginning in 2033.
Myth: These programs pay for themselves and don’t contribute to the deficit.
Fact: Entitlement programs have almost never been self-funding. Medicare has had a cash shortfall every year except in 1966 and 1974. Its annual shortfall in 2011 was $288 billion. Social Security had a cash flow deficit of $58 billion in 2012. Money must be borrowed to make up these shortfalls, contributing to the deficit. Entitlement spending also squeezes our investment in national priorities like defense, education, infrastructure, science, and research.
Myth: We can solve the problem by raising taxes.
Fact: It would take almost $40 trillion to make the programs solvent for the next 75 years. Hiking taxes by $40 trillion would cripple our economy and stifle the growth we need to support our nation’s social safety net.
To learn more about the entitlement crisis and how the U.S. Chamber is leading an honest debate on reform, visit uschamber.com/TenTruths.