I'm Pete du Pont with the National Center for Policy Analysis. Tax revenues funding Social Security and Medicare entitlements are currently in surplus, but by the time the first baby boomers retire…both programs will pay out more in benefits than they collect. In a policy report issued today, N-C-P-A president John C. Goodman and policy analyst, Matt Moore, show that Social Security is not our biggest problem…Medicare is.
Their analysis shows that spending for health care entitlements will outpace Social Security by the time today's teenagers are in their retirement years. The rosiest outlook is that the current 15-point-3 percent tax rate will swell to nearly 24-percent by 20-50 to cover spending on Social Security and Medicare Part A. If you add Part B, Medicaid and Veterans health benefits, the tax bite bloats to nearly one-third of payroll.
And the burden will be even greater if Congress adds Medicare prescription drugs or long-term care benefits.
The solution? Replace the current "pay as you go" system with a fund of interest-earning assets that can be sold in the future to pay benefits. Under this approach, benefits are not dependent on the willingness of future generations to pay taxes.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont, and I'll see you next time.