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Should you be worried about Social Security and Medicare?

Ricardo Alonso-Zaldivar, Associated Press | 6/10/2018, 8:52 a.m.
An unexpected weakening in the finances of Social Security and Medicare has raised concern about the bedrock programs for the ...

WHAT ARE SOME POLICY OPTIONS?

They boil down to tax increases and benefit cuts, with an effort to spare current retirees of modest means.

Options for Social Security include lifting the limit on which payroll taxes are levied (now $128,400), reducing annual cost-of-living increases, raising the underlying payroll tax rate, changing the benefit formula, and raising the full retirement age (now gradually rising to 67).

Options for Medicare include raising the eligibility age —now 65— to match Social Security's, cutting payments to medical service providers, raising premiums for beneficiaries, and raising the payroll tax.

Some groups are drawing a line against benefit cuts.

"Core Medicare coverages which exist under current law should not be diminished for current or future beneficiaries," said Judith Stein, head of the Center for Medicare Advocacy, which provides legal help to beneficiaries. "Until we actually try to negotiate Medicare drug prices, we are spending billions of dollars a year that could be saved for the program."

WHERE DO TRUMP AND LAWMAKERS STAND?

Trump promised not to cut Social Security or Medicare, and Treasury Secretary Steven Mnuchin recently suggested that tax cuts, rolling back regulations, and better trade agreements could boost economic growth and help stabilize the programs.

But nonpartisan government experts who produced the annual Social Security assessment don't seem to be buying that, forecasting "sustained moderate economic growth."

Republicans in Congress are losing their most prominent advocate for overhauling benefit programs with the retirement of House Speaker Paul Ryan of Wisconsin. Their budget credibility is seen as damaged after passing major tax cuts and spending increases.

Democrats want to expand social programs, not pare them back.

Problem-solving is becoming a lost skill in Washington, said GOP economist Douglas Holtz-Eakin.

"There used to be a playbook where the White House provided leadership and gave air cover to Congress to do hard things, so members could go home and defend their votes," said Holtz-Eakin.

"Maybe such a strategy is being hatched behind closed doors at the White House," he added, but "to date, there is no evidence." -- (AP)