The 6-Year Fiscal Time Bomb Washington Has Been Kicking Down The Road

(SeaPRwire) –   By: Raymond Vance

The latest annual Social Security and Medicare reports carry a stark warning. Congress has just six years to fix this growing fiscal crisis. Most lawmakers have ignored the problem for decades. It can no longer be hidden from public view.

The report released this week was more than two months late. It lacks concurrence from two required public trustee positions. Both seats have sat vacant for more than ten years. The Social Security OASI Trust Fund will be exhausted in 2032. Medicare Part A’s Hospital Insurance Trust Fund will run out in 2033. If no action is taken, OASI benefits will be cut 22% across the board. Medicare Part A reimbursements will see an 11% across-the-board cut.

Social Security accounts for 22% of total annual federal spending. Medicare makes up another 14% of federal outlays. Interest on the national debt takes an additional 14% of spending. These three mandatory categories alone consume half of all federal spending. We reached this point after decades of eroding fiscal constraints. Before the Great Depression, two rules kept federal spending in check. The Constitution set formal limits on enumerated spending powers. Borrowing was only allowed during recessions or wars. Both of these long-standing constraints are gone today.

The bipartisan Fiscal Commission Act (H.R. 3289) already exists as a solution. It was introduced by Rep. Bill Huizenga (R-MI) and cosponsored by Rep. Scott Peters (D-CA). It splits recommendations for Social Security and broader budget reform. This split stops a filibuster on Social Security from killing the whole effort. The bill already has backing from the House Problem Solvers Caucus and fiscal watchdogs. Delaying action beyond this decade will leave millions of retirees with sudden, deep cuts.

Author bio: Raymond Vance, senior macro-economist and consultant to central banking policy research working groups.