Trustees' Report Shows Tax Hikes Ahead Barring Social Security Reform
March 26, 2002
Saving, NCPA Senior Fellow & Trustee, Says "Status Quo Leads to Financial Troubles Ahead"
WASHINGTON, D.C. (March 26, 2002) -- Following the release of the 2002 report of the Social Security and Medicare Trustees, NCPA Senior Fellow Dr. Thomas R. Saving, who is one of two public Trustees, said the nation's retirement programs continue to face a bleak future if reforms are not made.
"If no reforms are made," said Saving, "in 2050, when today's college-age kids begin to retire, workers will face a financial burden equal in size to almost 30 percent of taxable payroll just to pay for Social Security and Medicare benefits currently promised."
According to the "intermediate projection" from the Social Security and Medicare Trustees report, in the year 2050, when today's youngest workers have begun to collect benefits:
- The nation's Social Security obligations will equal almost 18 percent of taxable payroll.
- Additionally, the burden of Medicare Part A (which mainly pays hospital bills) will be over 7 percent of payroll, bringing the total taxpayer burden 25 percent.
- And if Medicare Part B is also included, the burden expressed as a percent of payroll will grow to 29 percent. That's more than 93 percent greater than today's burden.
"The question that policy makers must answer is, will the government be able to impose the tax rates necessary to pay these benefits," said Saving. "If you're inclined to say 'no,' then you understand the need for reform."
Dr. Saving, who is also a professor of economics at Texas A&M and the director of the Private Enterprise Research Center (PERC), served on the president's recent Social Security reform commission. He is the director of the NCPA's multi-year project on reform of Social Security (www.mysocialsecurity.org).