Opinion: Don’t fret about geezers; we’re fine

 As a recent inductee into the Geezer Brigade, I must admit that I’ve been a little concerned that Social Security, a program into which I’ve paid tens of thousands of dollars over the years, would go belly up, and I would be forced to either live in a tent or commit a tiny misdemeanor so Butch and his deputies would rent me a cell at a reasonable price.  Not to worry.  I’m pleased to report that Social Security will do just fine, both now and into the distant future.   Butch can continue to rent his cells to those who need them.

Last month, the Congressional Budget Office released its most recent anticipated projections for debts and deficits.  The deficit disciples immediately wailed and gnashed their teeth because the numbers show that our deficits are falling fast, and the ratio of debt to gross domestic product is projected to remain fairly stable over the next decade or so.  While most people think it would be nice to eventually reduce our debt, those who have made their careers around proclamations of imminent fiscal doom, this was not a report that they wanted to see, much less become public.

Still, we can still try to find a way to blame the baby boomers for delivering disaster, can’t we.  Doesn’t the tidal wave of retiring baby boomers mean that Social Security and Medicare are doomed?  Don’t we need to change (cut back) those programs now, like yesterday? 

Hmmm.  Maybe not.

To be fair, the reports of the Social Security and Medicare trustees released Friday do suggest that America’s retirement system needs some significant work. The ratio of Americans over 65 to those of working age will rise inexorably over the decades ahead, and this will translate into rising spending on Social Security and Medicare as a share of national income.

However, the numbers are nearly as overwhelming as one might think.  If one looks closely, the numbers suggest that we can, if we so choose, maintain our social insurance as we know it with only minor adjustments.  Eureka!

Start with Social Security. The retirement program’s trustees do project rising spending as the population gets older, with total payments rising from 5.1 percent of G.D.P. now, to 6.2 percent in 2035, at which point they stabilize. This means, by the way, that all the talk of Social Security going “bankrupt” is nonsense; even if nothing at all is done, the system will be able to pay most of its scheduled benefits as far as the eye can see.

Still, it does look as if there will eventually be a shortfall, a few score years into the future, and the usual Republican suspects insist that we must move right now to reduce scheduled benefits. But I’ve never understood the logic of this demand. The risk is that we might, at some point in the distant future, have to cut benefits (and let the old people eat pet food); to avoid this risk of future benefit cuts, we are supposed to act pre-emptively by – cutting future benefits. What problem, exactly, are we solving here?

What about Medicare? For years, many people have warned that Medicare is a much bigger problem than Social Security, and the latest information from the program’s trustees still shows spending rising from 3.6 percent of G.D.P. now to 5.6 percent in 2035. But that’s a smaller rise than in previous projections. Why?

The answer is that the long-term upward trend in health care costs — a trend that has affected private insurance as well as Medicare — seems to have flattened out significantly over the past few years. Nobody is quite sure why, but there are indications that some of the cost-reducing measures contained in Obamacare, are actually starting to “flatten out the curve” just as they were supposed to. And because there are a number of cost-reducing measures in the law that have not yet kicked in, there’s every reason to believe that this favorable trend will continue.

Even better, there is plenty of room for future savings, mainly because recent research confirms that Americans currently pay far more for medical care than the citizens of other advanced countries pay; and the price premium can and should be brought down to a more affordable level.  When it is, Medicare’s financial outlook will improve.

What are we facing here?  The latest numbers show the combined cost of Social Security and Medicare rising by a bit more than 3 percent of G.D.P. between now and 2035, and that number could easily come down with more effort on the health care front. Of course, 3 percent of G.D.P. is a big number, but it’s not an economy-crushing number. The United States could, if we really wanted to, close that gap entirely through modest tax increases, with no reduction in benefits at all, and still have one of the lowest overall tax rates in the advanced world.  The result would be senior citizens that are happy, happy, happy.

But haven’t all the great and good Republicans been telling us that Social Security and Medicare as we know them are unsustainable, that they must be totally revamped – and made much less generous?  Why yes, they have; they’ve been telling us that we must slash spending right away or we’ll face a Greek-style fiscal crisis. They were wrong about that, and they’re wrong about the longer run, too. The truth is that the long-term outlook for Social Security and Medicare, while not great, actually isn’t all that bad.   We’ll be just fine.  Don’t hurt us further.