Waste of the Day: The Entitlement Spending Doomsday Clock is Ticking

Topline: If the federal government wants to keep Medicare and Social Security intact for the next 75 years, it will need an extra $78.2 trillion in cash that is not available under current law. 

Medicare and Social Security headed for insolvency

To say this is a Herculean task would be an understatement. The government has only $5.7 trillion in assets. 

Key facts: The Treasury’s annual “Financial Report of the United States Government” warns every year that Medicare and Social Security are headed towards insolvency.

The latest report estimates that in the next 75 years, Americans will contribute $91.3 trillion to Social Security through payroll taxes and benefit taxes. They will also contribute $52 trillion to Medicare through payroll taxes and premium payments. 

That’s not enough money for the programs to function. Social Security will cost the government an estimated $116.7 trillion in the next 75 years, and Medicare will cost an estimated $104.8 trillion, leaving a $78.2 trillion funding gap.

The outlook becomes even more dire when looking beyond 75 years. The Treasury’s projection of the “infinite horizon” — the lifetime of everyone in America today — shows an unfunded gap of $167.7 trillion.

It’s difficult to even conceptualize that amount of money. It’s the net worth of 480 Elon Musks, the world’s richest person.

There is no clear path toward raising the needed money. The report states that there are only three ways to fill the funding gap: raise taxes, borrow more from other countries, or reduce Social Security and Medicare benefits. 

Medicare Part B, which covers “basic healthcare services” like doctor’s visits and wheelchairs, is responsible for more than half of the funding gap.

Improper payments are part of the problem

Background: One easy way to begin strengthening Medicare and Social Security is to reduce improper payments. The Centers for Medicare and Medicaid Services wasted $87 billion last year on money sent to the wrong person or for the wrong amount. The Social Security Administration lost $10.6 billion.

Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com. 

Summary: Even the mere suggestion of cuts to Social Security or Medicare can be enough to ostracize lawmakers of either party. But as the Treasury’s data shows, it’s not a matter of “if” cuts are necessary; it’s a matter of “when.”

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RealClearInvestigations and made available via RealClearWire.