The front page of the New York Times today reads: Recession Drains Social Security and Medicare. The latest report card on the social safety net is not encouraging. The officials who oversee the program forecast Tuesday that the Social Security trust fund will be exhausted by 2037 — four years earlier than estimated last year.
Bob Weiner, former chief of staff for the House Committee on Aging, says when it comes to fear over Social Security, it's much ado about nothing. He joined John Roberts on CNN’s “American Morning” Wednesday.
John Roberts: You say everybody has it wrong on the alarm bells being sounded about Social Security. How do we have it wrong?
Bob Weiner: Not everyone has it wrong. There are a lot of experts in Social Security who understand that this is a program that has been the most successful one in the history of American social programs – taking half of senior citizens out of poverty. Half of seniors rely on Social Security for 90% of their income.
Roberts: What do we have wrong, though?
Weiner: The program is solvent for the next 30 years. Once, and even then, when they say insolvent, it still will be able to pay 75% of the benefits even under the worst economic model. And the economic model that they're using is the crash that we're in right now. So they've taken the worst case scenario, instead of recognizing that the economy will improve and that we’ll go back to a solvency situation with Social Security.
Roberts: So what the Social Security trustees have said is that the system is going to go insolvent in the year 2037, that’s four years earlier than had been thought. It was earlier thought it was going to be 2041. But they say they have taken into account the bad economy and an economic recovery at the beginning of next year. What are they missing?
Weiner: They’re missing the fact that 11 years there have been deficits that the Social Security trust fund has already absorbed. In the past 15 years, there have been three times that they stated that the system will go downward rather than upward. This is a fluctuating system. What we have now, John, and I don't want to get in to the weeds, but you have the lowest birthrate by the baby boomers: 2.1. You have a 2.9 birthrate for the current baby-boomers but they're having the fewest children. So as soon as you get past this little blip, the system goes back into complete solvency. And that's a point nobody takes into account.
Roberts: So you’re saying the pressure will be taken off as we go forward. But you do say, and Tim Geithner was talking about this yesterday, Medicaid and Medicare are the real problems. They're expected to go broke in 2017. This is a real problem, is it not?
Weiner: That is the real problem. Social Security is solvent for at least 30 years and one third of the cost of the Iraq war or one third of the tax cuts; even then in the worst case scenario would solve it. Let’s worry about that in thirty years. As Nancy Pelosi said, first, do no harm. But Medicare is in dire straits and it can be solved with allowing imports. It can be solved with vying and buying and it can be solved with the national health care program that there seems to be a consensus toward right now.
Roberts: In 2008, we had 45 million people on Medicare. It cost $11,000 per year per person. In 2018, the Medicare trustees project that number to rise to 59 million as the baby-boomers retire. An average cost per person at $17,000 a year. Are we looking at higher taxes, co-pays, deductibles? Is health care for seniors going to cost a lot more than what it's costing right now?
Weiner: No, you're looking at cost controls in the health care system as the president has proposed and you're looking at building a volume through national health insurance that will be able to absorb these kinds of problems. We have to get a handle on health care or it's going to break us... Business, the hospitals, the doctors – there’s a building consensus for the first time to solve the problems that are not only in Medicare but in all of health insurance where you have 47 million people who don't have health insurance.