May 26, 2011
The Wall Street Journal tells us that:
“Republicans argue that Mr. Obama and the Democrats have no plan to rescue Medicare, despite estimates that it will be unable to pay out full benefits beginning in 2024.”
It then gives us the Democrats’ response, making it a he said/she said. It would have been helpful to inform readers about the projected gap in Medicare funding so that readers know what it would mean to “rescue” Medicare from a shortfall that it is first expected to face 13 years in the future.
The Medicare Trustees put the projected shortfall at 0.79 percent of payroll, which is approximately 0.27 percent of GDP over the program’s 75-year planning horizon. By comparison, the increase in annual spending on the military between 2000 and 2011 was more than 1.6 percentage points of GDP. This increase in spending did not cause serious harm to the economy, therefore increased spending of one-fifth this size will presumably not be a major problem.
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