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Home Publications Blogs Beat the Press Post Gives Us the Bad News on Medicare, Good News May Reduce Pressure for Change

Post Gives Us the Bad News on Medicare, Good News May Reduce Pressure for Change

Saturday, 01 June 2013 07:51

The Washington Post long ago eliminated any distinction between news and opinion in its reporting on Social Security and Medicare. Keeping with this pattern, it ran a front page editorial that gave us the bad news from the Medicare and Social Security trustees reports released yesterday.

"And on Friday, analysts worried that the sunnier projections, together with an improving economy and a rapidly shrinking federal budget deficit, could serve to further dampen enthusiasm in Washington for tackling the nation’s toughest fiscal problems."

Of course not all "analysts" were worried about the modest improvement shown in the Medicare trustees report and the modest improvement in the economy delaying action on "the nation's toughest fiscal problems." That was only the view of analysts whose views the Post chose to present to readers. Other analysts would have pointed out that Medicare costs are more a problem of the broken U.S. health care system (we pay more than twice as much per person for our health care than people in other wealthy countries) than a fiscal problem.

Other analysts would have also pointed out that the impact of the tax increases potentially needed to fund these programs on the living standards of most workers are swamped by the impact of the upward redistribution of income that we have been seeing over the last three decades. To obscure this fact the Post included a comment from the two public trustees, Robert Reischauer and Charles Blahous that could only have the effect of misleading the overwhelming majority of readers:

"'Even if a Social Security solution were enacted today and effective immediately, it would require financial corrections that are substantially more severe than those enacted' in the last major reforms to Social Security in 1983, they wrote in a message included in the report."

It is highly unlikely that even one percent of the Post's readers know the extent of the reforms implemented in 1983. It is possible that they do remember the tax increases and benefits cuts that were put in place in the 1980s. Most of these had already been in law, although they were moved forward by the 1983 reforms. The payroll tax for Social Security was increased by 2.24 percentage points over the course of the decade. In addition, the self-employed were required to pay the employer side of the tax as well. Since roughly 9 percent of the workforce is self-employed, this amounts to the equivalent of a 2.8 percentage point increase in the tax.

In addition, the Medicare tax was also increased by 1.9 percentage points over the course of the decade. This brings the total tax increase to 4.7 percentage points. Also, the age for collecting full benefits for Social Security was increased from 65 to 67. This increase is being phased in for people reaching age 62 in the years 2002 to 2022.

If Congress were to implement changes to the programs comparable to the ones that were actually put in place in the decade of the 1980s, it would be more than sufficient to keep them fully funded for the rest of the century according to the most recent trustees reports. If the Post had written a news story intended to inform readers it would have pointed this fact out as a clarification of the comments by Reischauer and Blahous, if it included their comments at all.

However, since this piece was written to promote the Post's agenda of pushing cuts in these programs, it opted not to put the Reischauer-Blahous statement in a context that would have made it understandable to most readers.


Comments (7)Add Comment
written by Bart, June 01, 2013 9:23

Another reform from the 1980s was an hefty off-set to prevent Federal retirees from getting a full Social Security benefit even though they had the necessary 40 quarters. It was enacted to prevent double dipping.

Congress managed to exempt themselves. During the 2008 election it came out that Senator McCain's current SS benefit was around $2000/month, making him at least a triple dipper, and possibly a potential quad upon full retirement.
Can't Win for Losing: Cheer Up America, It Could Be and Should Be Worse
written by Last Mover, June 01, 2013 11:05

"And on Friday, analysts worried that the sunnier projections, together with an improving economy and a rapidly shrinking federal budget deficit, could serve to further dampen enthusiasm in Washington for tackling the nation’s toughest fiscal problems."

Patient: I feel better after catching the deadly Acquired Immune Fiscal syndrome (AIFs) from excessive reckless spending.

Doctor: You're not better, you just think you're better. Don't celebrate too early or AIFs could return. Keep taking the Austerity cocktail of drugs until it's gone forever.

(3 months later)

So doctor, how's the new patient coming along?

Doctor: He's much better. Now he thinks he's dead.
Easy to fix - hard to get past the oligarchs
written by jumpinjezebel, June 01, 2013 11:33
Exempt the first $10,000, take the cap off and limit the growth of the maximum benefit amount to the current maximum benefit amount plus inflation each year.
written by Chrigid, June 01, 2013 3:17
[1] Remove the cap on wages

[2] Include passive income in the FICA base.
What about the disability fund?
written by Jennifer, June 01, 2013 5:14
The article states that the disability fund (which is under Social Security but is a different fund?) will run out in 2016. Dean do you have any particular comment on that?
MSM redux
written by John parks, June 01, 2013 6:39
It is really inconvenient when the beliefs of the majority are not in line with the omniscient pundits and politicians. The MSM, never ones to give up their pulpits, want to keep preaching their gospel regardless of change, reason, and fact.

It reminds me of last month when Cokie Roberts found it so inconvenient that the public was not jumping onto the war bandwagon in regards to Syria. To Cokie, "that's a problem."

Damned peasants can make it s-o-o-o hard to rule.
Revisionisn galore.
written by Rich Austin, June 02, 2013 11:26
Very recently I was in D.C. meeting with a member of Congress. He attempted to lecture me about how the original intent of Medicare has been expanded to the point that it now teeters on the brink of insolvency.

Oh, did I mention that I had already been working for seven years when Medicare was enacted? (The lawmaker, on the other hand, was just thirteen years of age.)

I told him his information is incorrect. It was our vision back in 1965 to expand Medicare to every resident. I reminded him that Ted Kennedy remarked that he'll welcome the day when Medicare is available to everyone. (He did not know Kennedy said that.)

Here is one of my points: 60% - 70% of Congress were either youngsters, or not yet born when Medicare became law. Nonetheless, these same officeholders feel qualified [have the gall?] to comment on the intent of Medicare. In doing so they are trying to re-write history. As I have already mentioned, our vision and goal was to see it expanded to everyone. Here is another point: Publicly financed, privately delivered medical care removes profit motive as a reason to gouge patients (or would-be patients if they could afford care). Publicly financed health care would render investors subservient to the needs of people. Imagine that!

Whether it be Social Security, Medicare, or Medicaid, don't let the Paul Ryan crowd revise history in their image. Hell, he was five years away from being born when Lyndon Baines Johnson handed Medicare Card #1 to Harry Truman.

The revisionists are hard at work. They fly under many banners: Concord Coalition; Fix The Debt Committee, and the Pete Peterson Foundation, for starters. (There is also the pap that Simpson and Bowles regurgitate.)

Here is a good litmus test to follow: If it is good for the working class it is good. If it isn't, it isn't. And that "ain't revisionism".

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.