Robb: Day of reckoning coming for Social Security and Medicareby Robert Robb on May. 16, 2009, under Opinion
From the political notebook:
• The always gloomy report of the Social Security and Medicare trustees was released last week. The news focus was that the date for the Social Security trust fund to go broke had been moved up to 2037.
That, however, isn’t the relevant economic date. The relevant date is when annual income begins to fall short of annual expenses.
It is true that both Social Security and Medicare have IOUs from the federal treasury for the surpluses that have been being used for other purposes. But the government will have to raise the money to make good on the IOUs. That means higher taxes, more borrowing, or cuts in other programs.
The Medicare hospitalization fund is already running an annual deficit. For Social Security, annual expenses are expected to exceed annual income in 2016, just seven years from now.
Very shortly, the Social Security surpluses the government is currently using for other purposes will start to decline, beginning the pressure on the general fisc.
After they have come to an end in 2016, the amount the government will have to pump into Social Security and Medicare from sources other than payroll taxes will be small at first.
But it grows pretty quickly. By 2025, it is expected to reach over $500 billion a year.
The day of reckoning for Social Security and Medicare reform is fast approaching.
• Given the circumstances, the fix Legislative Republicans adopted as, they hope, the final tourniquet for this fiscal year, which ends in June, is excusable.
Primarily, they pushed bills due this year into next. Ordinarily, that would be outrageous. But the fall in state revenues has been so deep that it’s hard to work up a lather over any temporizing measures.
Democrats voted almost unanimously against the fix, even though they have recommended postponing payments as a strategy as well.
They objected to a provision requiring school districts to first use excess cash balances to cover their costs in lieu of actually getting their deferred payment next year. But the Democratic argument makes no sense.
School districts have been banking reserves beyond what they can legally spend. These excesses are supposed to be used to reduce property taxes the following year.
So, Democrats complained that using them to reduce what the state actually ends up forking out for its deferred payment to the schools amounted to a property tax increase.
However, the evidence is overwhelming that the districts have not been using excess cash balances to reduce property taxes.
According to the Arizona Tax Research Association, districts have more than doubled their cash balances over the last five years, from $219 million to $443 million.
Moreover, Democrats support reimposing a property tax at the state level. Why cavil at an increase at the local level?
• The lone exception to Democratic opposition came from Sen. Minority Leader Jorge Luis Garcia. He pointed out that using the excess cash balances now reserved more federal stimulus money to offset potential education cuts later. And he’s exactly right.
Independent thinking and actions are rare in politics. Garcia is to be commended for his.
• I attended President Obama’s commencement address at Arizona State University, not as a journalist but as a parent of a graduating student.
A few years ago, I also attended a graduation ceremony at Wells Fargo Arena. The latter was significantly less of a pain in the patoot, but I was struck by the same conclusion: This was a ceremony for the university, not the students.
Yes, my son will remember that Obama spoke at his graduation. And Obama gave a fine commencement address.
But my son petitioned us to get out of there even before his degree was officially conferred by having his college stand up and have a few words of incantation recited by ASU’s president.
There is only one moment that really matters to students and family at these things. That’s when the student’s name is called and he gets to tread across the stage while his clan hoots and hollers. At ASU, there are simply too many graduates to provide the main moment.
This big mega-ritual should be done away with at ASU. Have graduation ceremonies at the school level. Eliminate all the academic folderol and get right to the name-calling, treading and hooting and hollering.
Done right, the thing shouldn’t take more than an hour. And it would be much easier on aging patoots.
Robert Robb, an Arizona Republic columnist, writes about public policy and politics in Arizona. E-mail: firstname.lastname@example.org