Economy Allieviates Financial Constraints on Social SecurityBy Robert A. Rosenblatt
LOS ANGELES TIMES -- WASHINGTON
Social Security and Medicare, bolstered by a booming economy, will enjoy an unexpected extension of their financial solvency, government trustees reported Monday.
But President Bush, pushing hard for partial privatization of Social Security, insisted that both programs are in trouble for the long haul and need major reforms.
“Reform must include allowing younger workers the option to take some of their own money and put it in the private markets, under safe conditions,” the president told a meeting of the Hispanic Chamber of Commerce at the White House.
The rosy financial projections for Social Security and Medicare come from a flood of payroll tax revenues for both of the nation’s giant social welfare programs. In addition, experts say, Medicare also has been successful in holding down the growth in spending.
As a result, Social Security’s retirement trust fund will not run out of money until 2038, a year later than was predicted in last year’s annual report by the trustees. And Medicare’s hospital fund will have its solvency extended until the year 2029, four years beyond the previous forecast, according to the report issued Monday.
Despite the short-term good news, President Bush and the Republican majorities in Congress want to make significant alterations in both programs, including the creation of the personal investment accounts using a portion of Social Security payroll taxes. This concept -- called privatization -- would give workers a better return on their money than they receive through Social Security, according to the president and other supporters of the idea.
For Medicare, they want a redesign of the program, adding prescription drugs, and encouraging more retirees to join health maintenance organizations and other private insurance alternatives to the current Medicare system.
Democrats, hoping to recapture the political momentum from the White House, are trying to link the debate over Medicare and Social Security’s future with the fight over the president’s tax plan. They argue there isn’t enough money to protect Medicare and Social Security and also afford the $1.6 trillion tax cut advocated by the president.
“Today’s news makes it clear that we are on the right path,” said Sen. Tom Daschle (D-S.D.) the Senate minority leader.