It seems a bit churlish to find a downside in an improving economy, yet it's undeniable that better economic conditions relieve the short-term pressure on the federal government to find long-term economic solutions. Today, no one in Washington is proposing any credible "grand bargain" that would secure the nation's continual fiscal health, and the result is that reform of the entitlement programs that threaten to overwhelm our financial means to fund them is not a top priority.
This is a serious problem, but it is a fixable one. Unfortunately, it becomes less fixable and far more serious as time wears on. And since politicians seldom plan for anything past the next election, it's a problem that is, once again, being kicked down the road. The frightening fact is that we're running out of road down which to kick. The nation's entitlement challenges are due to become major crises much sooner than most people realize.
Both the Social Security and Medicare Trust Fund trustees released their annual reports last week, and the news is not encouraging. Social Security will not have the ability to meet all of its obligations as of 2033, just two decades from now. Medicare's situation is far more dire. The Hospital Trust Fund can cover its obligations for only another 13 years, and, in what ought to be a huge wakeup call, the fund that pays disability benefits has only three years left before it will be forced to slash its payments by 20 percent across the board.
Trustees note that rather than enact such a drastic cut, it's likely that the disability fund will end up borrowing from the Hospital Trust Fund to pay its bills, which will end up drastically accelerating Medicare's day of financial reckoning.
What is frustrating about these challenges is that everyone can see them coming, and many people recognize what needs to be done to fix them. Changes now would require relatively minor tweaks. Changes made the day before these programs are forced to confront massive shortfalls would be excruciatingly painful, and perhaps economically devastating. Sadly, over the past few years, every attempt to modify these unsustainable behemoths has been met with political fear mongering, and those who have proposed even modest reforms have been accused of attempting to throw retirees off a cliff. That makes for potent electioneering but terrible public policy.
Now is the time for Congress and the president to fix the problem. Just because the economy is improving and revenues are rising doesn't mean these entitlements have veered from their destructive courses. The nation truly can't afford to wait.