If lawmakers are serious about tackling out-of-control government spending, they have no choice but to tackle entitlements. Medicare, Medicaid, and Social Security are the three largest entitlement programs and together represent 40.2 percent of the President’s fiscal year (FY) 2012 budget. For the sake of comparison, total spending on national defense amounts to less than half of that at 19.3 percent.
Though President Obama’s rhetoric acknowledges the need for reform, his actions indicate unwillingness to address the issue. The President’s FY 2012 budget includes no substantive commitment to reduce entitlement spending, and the White House has expressed that Congress should instead make the first move. The Hill reported that House Speaker John Boehner (R–OH) has “personally promised Obama that he will stand side by side with him to weather the strong political backlash expected from any proposal to cut entitlement costs.” Even so, the White House remains quiet on entitlement reform. This isn’t just irresponsible; it’s actually a disregard for the duties of the Administration under the law.
If more than 45 percent of Medicare expenditures were projected to come from general revenues (as opposed to dedicated revenues such as payroll taxes and beneficiary premiums) within a seven-year actuarial period, the trustees would issue an “excess general revenue Medicare funding” determination in their annual report. Two consecutive “excess general revenue Medicare funding” determinations generate a “Medicare funding warning,” triggering action by the President and Congress. The President is required to address the funding warning in legislation within 15 days of the next budget, and the proposal needs to receive expedited consideration in Congress.
In August, the Medicare trustees triggered the warning. President Obama released his FY 2012 budget on February 14—devoid of any mention of Medicare reform. The President then had 15 days to offer a solution to address the fiscal imbalance. That deadline came and went with nothing from the White House.
According to one official, the Administration disagrees with the metric used under the trigger. But as more of Medicare spending draws on general revenue, spending on other priorities gets crowded out. Moreover, regardless of the metric used, it is no secret that Medicare in its current form cannot be sustained long-term. Spending on the program as a share of gross domestic product is projected to triple by 2050.
The White House has also pointed to Obamacare cuts to Medicare as extending the life of the program by 12 years. However, these savings are already spoken for to fund new health care spending. Medicare’s chief actuary and the Congressional Budget Office director warn that these double-counted savings can be used only once: either to fund new programs or to extend Medicare’s solvency. Moreover, the actuary reports that the savings are unlikely to materialize as they would threaten seniors’ access to care.
This isn’t the first time liberals have ignored the Medicare trigger. For the past four years, Congress has voted to ignore the trigger altogether, despite the fact that, in 2008, President Bush did submit a proposal to address the shortfall.
Under the 112th Congress, the trigger is back in effect. That leaves the ball in President Obama’s court to address Medicare’s unaffordable spending trajectory. Unfortunately, the chance to work with Congress to reduce the insolvency of entitlement programs will likely come and go as yet another missed opportunity for the White House to demonstrate fiscal responsibility.