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May 2, 2006
Did We Say 'I Told You So' Yet?

When the Bush administration started off its second term by focusing its domestic agenda on entitlement reform, primarily on Social Security, it warned that the fiscal stability of these entitlements was eroding at a faster rate than predicted and pointed out the need for reform now, rather than waiting for the coming collapse. Democrats pounded the administration for its "scare tactics" and insisted that the programs had plenty of stability. Now the administration has released new numbers indicating that the erosion has picked up a little speed:

The financial condition of Medicare and Social Security deteriorated in the last year, the Bush administration reported Monday, and it warned again that the programs were unsustainable in their current form.

Medicare's hospital insurance trust fund, a widely watched gauge of the program's solvency, will run out of money in 2018, two years earlier than projected in last year's report, the trustees said.

And the Social Security trust fund will be exhausted in 2040, one year earlier than projected last year, the trustees said. At that point, in 2040, Social Security tax collections would be adequate to pay only 74 percent of scheduled benefits.

Lawmakers said they would never allow the trust funds to run dry. But the insolvency dates are a vivid way of showing that the programs are unsustainable. To keep them solvent, Congress would need to trim benefits, raise taxes or take some combination of such steps.

The reaction from the Democrats followed the same principle as in 2005: refusing to acknowledge the problem. Harry Reid proclaimed the reports as proof of entitlement stability, saying that "despite White House scare tactics, Social Security remains sound for decades to come." Max Baucus blamed the Bush administration for raising costs through the use of managed-care plans. And as before, none came forward to propose a reform that would address the looming fiscal disaster.

We can keep saying "I told you so" all the way until the system collapses under its own weight, following Europe to economic disaster, or we can continue to press for entitlement reform. The President took a courageous stand last year in demanding a national effort to address the Social Security problem. Some chastised him for taking that issue ahead of the much larger problem of Medicare, but it turned out that the Democrats were not prepared to work on even the lesser issue in any rational manner. Their party leadership still insists that no problem exists at all within either program. Porkbusting is a great idea, but at some point we have to address the far more destructive demographic time bomb in our federal budget.

We need leaders with courage and foresight in order to ensure that these government services do not trap us in massive financial burdens within the next generation. So far, those qualities do not appear abundant, especially among the Democrats.

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Posted by Ed Morrissey at May 2, 2006 6:20 AM

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