Bush has been sounding the warning that in about 15 years Social Security will be at the Tipping Point where tax collections do not equal the retirement benefits. Early in his administration he appointed a commission that consisted of people who like Bush decided the answer was Private Accounts. That was rejected by Congress and the Vast Majority of Americans because it did not fix the funding problems with Social Security.
At the same time he was telling us how big of a problem we had with Social Security, he did nothing with a much more urgent problem which is Medicare. In fact, the Trustees have said that 2008 is the year that Medicare will reach the Tipping Point and the Medicare tax collected will not be enough to pay all the expected medical claims.
Any rational leader tackles the problems that are more immediate but not Bush. Bush did just the opposite. He sounded the alarm for a problem that is 15 years in the future while ignoring a problem that is in our face TODAY!
When the claims from Medicare are less then the taxes being collected, the Medicare Trustees must begin cashing in the IOU’s issued by the U.S. Treasury which are held in the Medicare Trust Fund. The problem is that since the Federal Government is running an annual budget deficit there is no money with which to redeem the Treasury IOU’s held by Medicare. That presents an interesting problem for Bush. He must either try to refund the Medicare IOU’s by selling MORE treasury bonds to the public or increase taxes to refund those IOU’s. It will be interesting to see how Bush deals with the Medicare funding problem in 2008!