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It's time to seat public trustees for Social Security and Medicare

It's time to seat public trustees for Social Security and Medicare
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Having concluded a bruising, hyper-partisan battle over impeachment of President TrumpDonald John TrumpMore than 300 military family members endorse Biden Five takeaways from the final Trump-Biden debate Biden: 'I would transition from the oil industry' MORE, Congress needs to show it can begin working together to address the nation’s essential business. One small but important step in this direction would be to expeditiously fill the two Social Security and Medicare public trustee positions.

Those positions have been vacant since we left them nearly five years ago, and for much of that time have been without dual nominees to fill them. That changed last week when President Trump nominated Democrat William G. Dauster, who now joins Republican James B. Lockhart III in awaiting confirmation. 

As the last occupants of these vital positions, we are calling on the Senate to act quickly to fill the vacancies and ensure the public’s interests have a voice when it comes to Social Security and Medicare, and we’re not alone. In a newly released letter, more than 100 bipartisan experts, including former cabinet secretaries, members of Congress, and Congressional Budget Office directors, have called for expedited consideration of these nominees.

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Since first being added in 1984 to complement the four administration officials who serve as trustees, the two public trustees have been integral to the oversight of Social Security and Medicare’s finances. Being independent from the administration, expert in the programs, appointed for fixed four-year terms, and members of different political parties, they have provided confidence to policymakers and the public alike that the analysis and financial projections contained in the annual trustees’ reports are objective and of the highest quality.

Such assurances are essential because these two programs have critical effects on our economy and the citizens of the nation. More than 60 million individuals received Medicare benefits last year, and 63 million received some sort of Social Security benefit. Social Security is the foundation of most Americans’ retirement security, and it is by far their single largest retirement income source.       

Not only do the public trustees affirm the credibility of the trustees’ financial reports, but they also help to communicate, in a dispassionate way, the state of the trust funds to the public. And as we have said repeatedly in trying to fill the void created by the lack of public trustees from our current positions as fellows at the Bipartisan Policy Center, the trust funds face large, looming shortfalls.   

Social Security and Medicare today account for nearly 42 percent of the federal budget. Both programs, and especially Medicare, are placing growing burdens on the already-precarious federal budget picture. In 2019, they required $431 billion in general revenues in addition to revenues collected from payroll taxes and the income taxation of Social Security benefits. Absent legislative reform, those costs will keep rising, crowding out other policy priorities.         

This year the trustees expect the first decline in the assets of Social Security’s combined trust funds since 1983. Social Security, whose primary trust fund is projected to be exhausted in 2034, faces a substantially larger financial imbalance today than was corrected back then. Moreover, Medicare’s Hospital Insurance trust fund, which finances inpatient care, is projected to be depleted in only six years, in 2026. 

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We won’t pretend solutions are easy. Closing the shortfall in the combined Social Security trust funds would require the equivalent of an immediate increase in its payroll tax rate from 12.4 percent to 15.1 percent, or a whopping 20 percent reduction in benefits for all future claimants.

Closing the shortfall in the Medicare Hospital Insurance trust fund would require the equivalent of increasing its payroll tax rate from 2.9 percent to 3.81 percent, or, alternatively, reducing all scheduled benefits by 19 percent. 

Congress can raise taxes, reduce benefits, enact some combination of the two, or find other revenue options for producing an equivalent amount necessary to restore the financial health of the trust funds. But no matter what, the costs of addressing these financing challenges will affect every American, and the cost of not addressing them would be even worse. 

Public trustees can help explain the need for action, providing vital support to lawmakers as they approach this critical task.

Most importantly, each year that policymakers delay, the financial imbalances grow and the options to fairly address them dwindle. We should not go another year without experts in these public trustee positions who will represent the public interest, provide Congress with critical information and facilitate the urgent conversations that can bring about reform.

Charles P. Blahous III and Robert Reischauer were the most recent public trustees for the Social Security and Medicare trust funds. They are continuing independent analysis of trust fund finances for the Bipartisan Policy Center. Blahous currently holds the J. Fish and Lillian F. Smith chair at George Mason University’s Mercatus Center and Reischauer is a distinguished institute fellow and president emeritus of the Urban Institute.