BY MICHAEL S. JOHNSON | SEP 27, 2021
“A difficult or dangerous situation that needs serious attention.”
Merriam-Webster Dictionary definition of crisis
Crisis is a term not to be used lightly.
There are more crises confronting the country than there have been in decades. Far from hyperbole, “crisis” fits like a glove on the resurgence of COVID-19, the humanitarian debacle at our southern border, and the record number of homicides on our streets, too many of which have put teenagers and small children in the bullseye. We’ve had record floods, record fires, record heat, record drought, all crises when you consider the number of related deaths, lives and property destroyed, and damage to the environment.
But there are several other crises that are in urgent need of serious attention because their consequences can be just as devastating to millions. They’re insidious, not the kind that bring eyeballs and clicks to news stories. They creep up slowly and are dismissed because no one knows how to fix them.
A perfect example is the Federal budget, over which Congress and the President are engaging in age-old partisan one-upmanship. We haven’t adopted a legitimate Federal budget in decades.
Budgets are gargantuan political and fiscal monstrosities that reach into every aspect of American life. They’re like the Titanic. If not designed, built, and steered with the skill of a seasoned seafarer, they will sink functional fiscal policy.
The end of the fiscal year comes on September 30th and once again the budget process is itself in default. Without the appropriation bills that fund the government, none of which have been enacted into law, the major sections of the government run out of money and must shut down. This isn’t surprising. Congress pushes us to the edge of this fiscal cliff on an annual basis, pulling us back from the brink with huge, hastily drawn continuing resolutions that extend funding temporarily. The challenge is made worse this fall by another senseless battle over raising the debt ceiling, so that spending already enacted can be financed. Without the higher ceiling, the nation is in default.
This year presents bigger problems and greater challenges because Congress and the former and current presidents have been on a sustained spending spree that would put a drunken sailor to shame – $6 trillion alone in pandemic related spending in the past 18 months, with another $5 trillion expected to reach the House floor this week, plus billions more being requested for emergency disaster relief, Afghan refugee resettlement, and normal governmental operations.
The federal deficit for Fiscal Year 2020 was the largest in history – $3.1 trillion. Do you know how much a trillion dollars is? I don’t, either. This volcanic eruption of spending and borrowing is just too much for we ordinary Americans to get our minds around, so we don’t.
President Biden has proposed a massive tax increase to pay for the spending spree. “It is a zero price tag on the debt we’re paying. We’re going to pay for everything we spend,“ he insisted with a straight face. He claims the increases will only affect the rich and giant corporations. Don’t believe any of those claims.
The media often qualified most everything Trump claimed with the phrase “without evidence.” That is exactly what President Biden’s brash statement is, “without evidence.” There is no specific legislative language to assess actual cost, nor is there precise legislative tax language to determine the potential increase in revenues. We know from experience that such broad declarations are not supportable and most often prove to be way off the mark, no matter who’s making them. President Biden, of course, knows that better than most.
The lack of a budget, the ever-expanding spending spree, and the pending tax hikes, to say nothing of a required increase in the national debt limit have all the markings of crises, both economic and social. These elements of budget policy have gotten attention recently, but others, equally critical, have not.
Two of the cornerstones of our economic and humanitarian foundations, Social Security and Medicare, are facing insolvency, and soon. The budgetary impact would be catastrophic.
“It wasn’t that I expected anything, mind you, but I knew I’d been paying for something called Social Security and I wanted to ask the people in Rutland (Vermont) about it.”
— Ida M. Fuller, who on Jan. 31, 1940, received the first monthly Social Security check in the amount of $22.54, according to the social security online.
Social Security was embodied in the Social Security Act of 1935. It is a law that evolved from the work of Labor Secretary Frances Perkins, who President Franklin Roosevelt had appointed to head a Committee on Economic Security, charged with finding paths to lifetime economic security for Americans being devastated by the Great Depression. The Act created an old-age stipend for retirees, unemployment compensation, and other benefit programs for children and the disabled.
The initiative was launched by Roosevelt after the failure of several states to provide security for their citizens.
Ten years after Ida Fuller got her check, Congress authorized cost-of-living adjustments. The disabled were added in 1956. Early retirement at 62 became law in 1961. By 1982, Social Security was facing financial trouble. So, to avoid dealing with it in the grisly combat of the 1982 off-year elections, congressional leaders and President Ronald Reagan agreed on the creation of a Commission on Social Security Reform. Alan Greenspan was appointed to head it. Major changes included an increase in the payroll tax and a higher retirement age were adopted in 1983.
Today, Social Security has grown well past expectations and original intent. It is a vital lifeline for many of its 65 million recipients.
Today, it is also threatened by insolvency again as it was 38 years ago.
The Social Security trustees recently issued their annual report on the condition of the trust funds, and it wasn’t good news. Charles Blahous, a former trustee, wrote in Barron’s that “To call the newly released …report alarming would be a gross understatement. Only in a federal capital paralyzed by dysfunction would such a report fail to galvanize lawmakers to move immediately to rescue this most vital of all federal programs. Urgent action is necessary…”
The trust funds that administer the revenues from payroll taxes that sustain the program won’t be able to sustain current obligations by 2034, less than 13 years away. Already outlays are exceeding tax receipts. If Congress doesn’t act on major reforms, benefits would likely be cut beginning in 2033. If Social Security becomes insolvent, the law requires a 22 percent immediate decrease in benefits. The trustees believe such a cut could come in 2014. Eligibility may be restricted, as well. Eventually, Social Security as we know it could disappear. The Disability trust fund will be depleted by 2057.
Social Security’s demise isn’t the most urgent problem. Medicare is.
President Harry Truman proposed a national health insurance program in 1945, but it wasn’t until twenty years later in 1965 that President Lyndon Johnson was able to push Medicare through Congress. He signed the legislation in Independence, Mo. the home of President Truman in July of that year. Nineteen million Americans signed up the first year of operations.
Since then, Medicare has grown in cost and benefits, including catastrophic care, hospice treatment, supplemental insurance, and drug payments. Today the program insures 63.1 million people and will consume 18 percent of the total federal spending in just seven years.
Medicare Trustees are raising the alarm that the trust fund will run out of money in just five years. The Wall Street Journal noted in September that “Medicare Trustees project that hospital spending will exceed revenue by $578 billion over the next decade…”
The depletion of the Medicare trust fund will mean either drastic reductions in services to the elderly, severe reductions in payments to health care providers, which will mean fewer doctors will accept Medicare patients, tax increases to make up the shortfall, or some or all of the above.
None of those solutions is anything politicians want to talk about or deal with heading into an election year. To make matters worse, progressive Democrats in the House and Senate are demanding massive increases in Medicare benefits including vision, dental, and hearing as well as lowering the age of eligibility to 60. Socialist Democrats want more, what they call “Medicare for all.” The progressives also want to expand Medicaid, which is in financial trouble as well, and usurp states that have not expanded services under the Affordable Care Act.
The word ‘scam’ aptly describes the promise of vast new benefits with no plan to pay for them or create the new bureaucracy needed to implement, regulate, and oversee them. Improper Medicaid payouts are currently estimated to be about $100 billion, according to the Wall Street Journal. What is driving all of this is a political imperative to ‘strike while the iron is hot,’ not responsible governance or measured and rational deliberation.
You can bet Congress will fail to act to resolve Medicare’s critical financial situation because Congress has been mandated by its own law for 18 years to fix the program and has fragrantly neglected to do so.
In 2003, as part of the Bush Administration’s Medicare Prescription Drug Improvement and Modernization Act, Republicans in the House insisted on a provision requiring Medicare Trustees to issue a warning when Medicare spending broke through a ceiling on the amount of money taken out of the Treasury to cover shortfalls in trust fund receipts. The ‘Medicare trigger’ as it is called then required the President to submit to Congress legislation that would fix the problem.
The trustees pulled the trigger for the first time in 2007, and President Bush dutifully sent Congress reform legislation. The Congress, true to form, ignored it. The trustees issued the warning in 2008 and 2009 and in every year since, spanning the Obama and Trump administrations. Neither President sent legislation to Congress, ever. Not once.
This is an old story played out on the national stage repeatedly with new actors, new sponsors, and new twists in the plot. Those of us well beyond the age of Social Security eligibility have watched the tragedy for decades. Unfortunately, this is real life.
Crises in American politics only gain attention and spur action or the political perception of action when they are immediate. It is when the destructive force of crises has been felt that politicians react. It is the nature of our politics and our media. The hitch with the fate of Social Security, Medicare, and Medicaid is that when the destructive forces of insolvency come to bear on so many millions of vulnerable, elderly, and disabled and for generations that follow them, it will be too late to act.
My thanks to Billy Pitts, who helped write the Medicare trigger legislation and veteran budget expert Steve Bell for their help.
Editor’s Note: Mike Johnson is a former journalist, who worked on the Ford White House staff and served as press secretary and chief of staff to House Republican Leader Bob Michel, prior to entering the private sector. He is co-author of a book, Surviving Congress, a guide for congressional staff, co-founder and member of the Board of the Congressional Institute, and a participant in the Congress of Tomorrow congressional reform project. Johnson is retired. He is married to Thalia Assuras and has five children and four grandchildren.