‘Social Security’s Woes Are Worse Than You Think’
That’s the cheery title of my latest Bloomberg View column, which attacks the widespread view that we can ignore the program’s financing gap because Medicare has a bigger one.
Right now, we spend more money on Social Security than on Medicare, and that will remain the case for a while. The programs’ trustees project that by 2035 Social Security will consume 6.4 percent of the economy and Medicare 5.7 percent. The Medicare projection may be optimistic about recent attempts to impose cost controls, but we shouldn’t expect Medicare to become vastly larger than Social Security in the next two decades. After that point, Social Security costs start going down as demographics play out while Medicare becomes a vastly larger problem.
But our finances will be in what’s technically called a world of hurt before Social Security costs peak. Under current projections by the Congressional Budget Office, by 2025 public debt will have reached 106 percent of gross domestic product. By 2035, it will have reached 181 percent. What would happen after that point is an academic question: We can’t allow ourselves to get there.