Staying On Track To A Balanced Budget By 2012
President Bush Challenges Congress To Come Up With A Bipartisan Solution To Save Entitlement Programs For Future Generations, Pledges To Veto Appropriations Bills That Do Not Cut Earmarks
Tonight, President Bush will issue a pledge to veto any appropriations bill Congress sends him that does not cut the number and cost of earmarks in half. Last year, President Bush asked Congress to voluntarily cut the number and cost of earmarks in half, stop all wasteful and unnecessary earmarks, and to refrain from slipping earmarks into committee reports that never come to a vote in Congress. Unfortunately, these goals were not met – the FY08 appropriations bill passed by Congress in December 2007 contained nearly 11,700 earmarks totaling more than $17 billion. Much of this spending is wasteful. We have a duty to the American taxpayers to be more responsible with the hard earned money they send to their government.
The President will also challenge Members of Congress to develop a bipartisan solution to save entitlement programs like Social Security and Medicare. Millions of Americans rely on these vital programs for their retirement and health care needs. However, spending for these programs is the biggest challenge to our Nation's budgetary health – it is growing faster than inflation, faster than the economy, and faster than our ability to pay. The President has offered proposals to reform these programs, and now he is asking Members of Congress to offer their proposals. If we do not begin to act now, future generations will be faced with three bad options: huge tax increases, huge deficits, or huge benefit cuts.
Congress Should Act Now To Save Social Security
Social Security's long-term financing shortfall has not gone away simply because Congress has ignored it. According to the Social Security Trustees, the total Social Security shortfall has now grown to $13.6 trillion and is rising. With each passing year of inaction, the problem will only get worse, and the eventual corrective action will become more severe and less fair.
The cost of financing Social Security is about to rise dramatically due to the retirement of the Baby Boom generation. It now costs approximately 11 percent out of every workers' taxable wages to pay somebody else's Social Security benefits. Under current law, this toll will rise to approximately 17 percent over just the next 25 years. By 2017 – only nine years from now – the annual cost of paying benefits is expected to exceed incoming Social Security tax revenue.
The first Baby Boomers are already beginning to retire and claim Social Security benefits. The first Baby Boomer, born one second after midnight on January 1, 1946, became eligible for benefits this year. In 1950, there were 16.5 workers to support each person on Social Security. Today there are 3.3 workers, and by 2030, there will only be 2.2.
Without reform, future taxpayers would need to pay $14.4 trillion more into Social Security than they will receive back from it. Social Security cannot work well for future generations if it takes far more money from them than it returns.
Every year of inaction makes the result less fair and tends to add approximately $700 billion to the dollar amount of the shortfall. Were we to fix the system today, current seniors could continue to receive full benefits, a tax increase could be avoided, and benefits could continue to rise in real terms. Within the next decade, without action, the Social Security Trust Fund will begin to pay out more than it receives each year.
Congress Must Also Address The Unsustainable Growth In Spending For Medicare
If left unaddressed, Medicare's long-term unfunded liability will lead to increased strain on our Nation's workers, Medicare beneficiaries, and the Federal budget. Total net Medicare mandatory expenditures were $325 billion in 2006 and are expected to increase in future years at a faster pace than either workers' earnings or the economy overall. The 2007 Trustees Report predicted that Medicare spending will grow from approximately 3.1 percent of the size of the economy in 2006 to as much as 11.3 percent in 2081.
The problem is not just long-term – under current law, the Hospital Insurance Trust Fund's assets (Medicare Part A) will be exhausted by 2019. Medicare Part A helps pay for hospital, home health, skilled nursing facilities, and hospice care for the aged and disabled.
Fortunately, in part as a result of the successful competition among private plans under the new Medicare prescription drug benefit (Medicare Part D), costs have been much less than originally estimated. In 2003, President Bush signed legislation that reformed Medicare to add a prescription drug benefit and give beneficiaries more private plan choices.
President Bush Remains Committed To Balancing The Budget By 2012 Without Raising Taxes
On February 4, President Bush will submit his budget proposal for FY 2009, which will once again restrain spending, keep taxes low, and continue us on a path toward a balanced budget. The Administration worked with Congress last year to successfully complete the FY08 Budget within the reasonable and responsible spending levels set by the President, without raising taxes. There is still more to be done to rein in government spending.
In addition to earmark reform, the President has called for a line-item veto to control spending and bring accountability to the Federal budget. The legislative line-item veto would allow a President to send wasteful and unnecessary spending back to Congress for an up-or-down vote. The governors of 43 of the 50 states already have this authority.