SOCIAL SECURITY AND MEDICARE PROJECTIONS: 2008
April 30, 2008
Until recently, the combined effect of Social Security and Medicare on the rest of the federal government was relatively small. The combined deficits of both programs now require about 8 percent of general income tax revenues. As the baby boomers begin to retire, however, that number will soar, and, as a result, it will be increasingly difficult for the federal government to continue spending on other activities, says Pamela Villarreal, a policy analyst with the National Center for Policy Analysis.
In the absence of a tax increase, if the federal government keeps its promises to seniors and balances its budget:
- By 2012, the federal government will stop doing 1 in 10 other things it has been doing.
- By 2020, the federal government will stop doing 1 in 4 things.
- By 2030, about the midpoint of the baby boomer retirement years, the federal government will stop doing about 1 in 2 things.
According to the Congressional Budget Office (CBO), if Medicare spending continues to grow at the historical growth rate of total health care spending:
- Social Security, Medicare and Medicaid (the health care program for the poor) will consume nearly the entire federal budget by 2050.
- By 2082 Medicare spending alone will consume nearly the entire federal budget.
The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance the budget:
- The lowest marginal tax bracket of 10 percent would have to rise to 26 percent.
- The 25 percent marginal tax bracket would increase to 66 percent.
- The current highest marginal tax bracket (35 percent) would have to rise to 92 percent!
- Additionally, the top corporate income tax rate of 35 percent would have to increase to 92 percent.
Source: Pamela Villarreal, "Social Security and Medicare Projections: 2008," National Center for Policy Analysis, Brief Analysis No. 616, April 30, 2008.
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