US entitlement programs in jeopardy

There are Americans cashing their first Social Security checks this year who had better make backup plans. By the time they hit their early 80s, the U.S. government might cut their retirement pay by 25 percent.

As for Medicare, get ready to pay a larger share of the bills, retirees, because that crisis is coming on too, and soon — unless the country wakes up to this financial calamity hiding in plain sight.

It’s amazing what happens to runaway government spending programs that are too popular to change. They become unaffordable and ultimately unsustainable. That’s the situation for Social Security and Medicare, which are on paths to insolvency.

Next year, Social Security will need to start dipping into its $3 trillion reserve fund to continue making full payments to retirees, according to an annual government report released Monday. That fund would be depleted in 2035, at which time — by the current trajectory — retirees will get about three-quarters of their benefits.

Medicare’s also in trouble. Its big hospital insurance fund is expected to run out by 2026. If that happens, hospitals and nursing homes wouldn’t get their full compensation. Again, if Congress doesn’t reform the entitlement programs in some way — patients might have to pay out of pocket or see cuts in services. Again, unless the country takes action.

There aren’t any surprises in these premonitions. Social Security and Medicare have been in shaky condition for years, but fixing them will require that members of Congress take up the politically unpopular subject of changing and reducing benefits, or substantially increasing payroll taxes. Recent presidents, including Donald Trump, haven’t led the charge either. It’s much easier for politicians to declare entitlement programs to be too important to touch.

The opposite is true, of course: Social Security and Medicare are too important to be left as they are — shuffling toward insolvency.

Some positive news under the Trump administration is that the economy continues to grow, with unemployment low and wages rising. Because more people now are working — and collecting bigger paychecks — tax revenue is rising. That puts more money in the entitlement funds. Generally speaking, Americans are feeling better about their financial prospects for retirement, according to a new poll by the Employee Benefit Research Institute.

Faster GDP growth alone can’t preserve the solvency of these programs, however. Admitting more immigrants, which would expand the number of people making payroll tax contributions, might help. But there is no way to square the circle without curtailing the growth of benefits. There are ways to do so without hurting vulnerable people. One possibility is to curb the growth of benefits to wealthy Americans. Another is to collect more payroll tax from high earners.

There are other ideas. They need to be part of the discussion as the 2020 election ramps up.

Candidates may prefer to change the subject.

Voters, don’t let them. This is your future on the line, and your children’s future.

Social Security and Medicare are basic protections for millions of Americans. All of us should support gutsy politicians who’ll deliver reforms that would keep the programs solvent. The sooner that happens, the less draconian those reforms will be.