Soon to Be Entitled to Bankruptcy? : Entitlements panel does the scary math

What’s in store for Americans in the 21st Century? By the year 2001 a bankrupt Medicare system? By the year 2029, a bankrupt Social Security system?

These are not worst-case scenarios but actual projections released last week by the Bipartisan Commission on Entitlement and Tax Reform. This extremely useful panel warns that entitlements such as Social Security, Medicare, Medicaid and civil service pensions will consume nearly all federal tax revenues by the year 2012, leaving the government with no money for anything else.

Self-interest, to say nothing of the prospect of a fiscal meltdown, should foster support of the commission in its search for proactive solutions. The panel, chaired by Sen. Bob Kerrey (D-Neb.) and Sen. John C. Danforth (R-Mo.), was created last year as a condition for President Clinton to secure Kerrey’s badly needed vote for the Administration’s budget. The commission’s goal is to deliver reform proposals to the President in December.

The 32-member commission faces the tough challenge of overcoming the most simplistic political interpretation of its task: Either cut entitlements or raise taxes. Actually, the commission’s job is far more complex: to slow expenditures--not cut benefits to current recipients--and to find money as more of the population arrives at Medicare and Social Security age. That will mean exploring remedies ranging from novel population policy to greater efficiency in tax collections.

Spending for mandatory federal programs and the interest on debt accounted for only 30 cents of every federal dollar collected and spent in 1963. By the year 2003, they will account for 72 cents of every dollar. And Social Security, Medicare, Medicaid and civil service pensions will account for three-fourths of those expenditures. Health care reform, now pending, could boost costs further.

Having reached a consensus on the magnitude of rising costs of mandatory federal programs, the commission now moves into its second phase: holding hearings. Because of budget constraints, only two hearings will be held, both in Washington. The commission is exploring using an electronic town meeting format in order to gather testimony from four cities. It indeed needs to broaden grass-roots access to the process.

The commission is an attempt to set aside politics and seize a big problem rather than wait to confront it in government’s usual reactive, thumb-in-the-dike mode. It is a vitally important job that deserves the careful attention of all taxpayers, of whatever generation.

Too Entitled?

Percentage of federal budget dollar going to entitlements and interest.

1963: 30%

1973: 45%

1983: 56%

1993: 61%

2003: 72%

Source: Congressional Budget Office